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Not to forget to mention the company has targeted a 40% growth in the sp for the next few years. Any dividend will therefore be a bonus if the sp does do 40%. I think the dividend will be there to attract more investors.
That's convenient. No point in paying any more than necessary to 365 Agile. Though strictly they still have the mobile for other sectors, whatever that might be worth.
I note also during my reading that the conditions for a contingency consideration payment to 365Agile will not be met.
Thus only a remaining £400k of the normal 600k pa cash consideration remains to be paid to 4th. April 2019, whereupon the mobile is Castleton's in social housing in perpetuity at no further charge - a relief of £600k per annum. There will be no final payment of £300k.
That is spot-on operationally. And measured otherwise. It is inadvisble to go too far down the road of forecasting results. None of us are in a position to do that. Slow but sure progress is the goal - achieved so far, and no reason apparent why that should change. I would add that working with customers already on the books, should result in sales at lesser cost, with profitability increasing.
Part 3
So I see it as growth plus a dividend. In that last connection, the CFO's comments on full year results should be borne in mind to avoid unnecessary disappointment at the dividend level. Earnings per share going forward (on which a dividend will be based ) will be less than reported on 19th. June, due to the application then of non-recurring exceptional and tax credits. But it will be progressive in line with EPS.
So for me, primarily interested in growth, any dividend figure ( likely with half year results ) will be acceptable. I shall be more interested in the PBT figure this time around, which for the corresponding period last year was £0.18m. Last full year was £1.82m. It would therefore be unsurprising to see a 400% plus increase in PBT this half year over H1 last, bearing in mind the announcement that this financial year started well, with trading "comfortably" in line with expectations, and also that the individual value of new contracts has started to grow.
I anticipate a trading update in October, as before, and similarly the half year results in November. With a stable and growing company like this, and in the market in which it operates ( slow moving but providing increasing contracted core revenue ) the sense of what the company has so far reported is more than likely to be what we shall get. I therefore expect to see a strong set of results, and bearing in mind the reported growth of 9% in contracted backlog of revenue at start of year, probably exceeding the company's 10% revenue growth year on year minimum target. I have mentioned an increase in PBT, though this half year will show a reduced EPS from last full year. But the bottom line and the EPS must be capable of supporting payment of a dividend.
It also seems, as the company said it would be implemented this year, that results would be a suitable time to formalise the dividend. Castleton do not report the cross-selling but we may have prior news, as the company enhances its ability to make full suite sales and secure Managed Services contracts.
Part 2
In my view, on the dividend, there is perhaps more to the future prospects giving rise to capital growth, than there is to the progressive dividend itself, which after all will be based on sustainable company growth. It is sensible to put the dividend, whatever it is but progressive, in perspective alongside retained cash to pay down debt, and for growth, because Castleton is in that mode. The CFO's comments are relevant to that growth, and point to targeting expenditure on Managed Services to provide new revenue streams.
"Given the strong cash generation of the business, the Group has the confidence to increasingly invest in customer related capex and infrastructure in the coming year as we seek to win new hosted and managed service deals. The Group will also look to continue the investment in software development."
Castleton has made it's acquisitions, and dealt with the expense of integrating the companies. The cost base has stabilised, and the dividend to come is evidence of that. Dean Dickinson is now fine-tuning the two Divisions, to better promote sales.
In the Software Division, cross-selling of solutions is progressing well, with the aim of each customer taking the full suite, and will continue for the foreseeable future, with new solutions added and development of existing. No change there.
Castleton is now seeking over time, as customers increase their number of solutions purchased, to migrate those 700 or so software customers to the more lucrative Managed Services Division ( with some recent success ) and the company, from cash, intends to target investment into customer facing managed services propositions directly linked to sales, (most of which will likely be capitalised rather than expensed ) aimed at improving it's competitive edge when tendering for contracts. There is a new emphasis here, based I believe on Castleton's comparatively recent referenceability, having stated a previous reticence to tender without the now available evidence of successful implementation and quality of service from pioneer users.
Part 1
This is factual, company RNS sourced, with a little obvious comment. I had actually prepared notes and now this brief summary. I was going to do a little more on it for my own purposes, but that will probably only amount to guessing at figures, which is not helpful to others. It is basic, and only intended as a flavour.
Reading the holdings RNSs, it can be seen that substantial numbers of shares have recently changed hands in bulk transactions at the then existing market prices ( primarily as a result of the founders, Mxc Capital, realising funds to persue new investments ) I see that as current consolidation around this price, though there has been a small pull back from the all-time high. In the interest of balance the CFO's recent sale of shares ( RNS ) from options rates a mention, but bearing in mind this represents only a portion of the options available to him now or later, and undisputable current progress sufficient to justify a dividend, and though nice for him, I do not personally see that as significant to us non option-holders.
As half year end approaches, and shareholders make their minds up on price against progress, it was useful to read back for my own understanding of where the company sees itself at this point. It seems straightforward. I summarise.
Castleton trades in a slow moving market. Potential customers come from a position of having disparate software, from various providers, under contract, and in some cases dated infrastructure. Associations carefully consider their choices and associated costs going forward, as they review their IT with a view to increased efficiency. Castleton has become a major supplier of fully integrated products in that competitive market, to the extent it is able to say of 21st. August contract "that further enforces our strategy of becoming the single service provider capable of delivering innovative software in the cloud with managed services."
That last summarises it, and it is all in the RNSs. I have a few notes pulling some of the RNSs together. I shall make them readable and post. Very basic, straightforward, but so is the company from an operational viewpoint.. Guessing results is not for me, but I am, I believe with reason, optimistic about the future. A pull back following the recent rise is unsurprising,
As Aphrodite said, all in RNS's.
Highlights:
Low debt - getting paid off
Profit making
Divi paying -progressive
Growing company
Negatives:
Possible pullback in sp after recent rises. Maybe best to wait for RSI and Stoch to drop from being over bought.
It's all in the RNSs. It's on your watchlist. Can you say what you're watching for in particular?
Like the look of this. Doing more research before I buy. Any insights from investors here?
19th. June 2018
"Given our confidence in future prospects, the Board intends to implement a progressive dividend policy during the current year."
Unusually close spread at the moment. Buys at 104.2 and above.
A satisfactory day, following on from yesterday's further consolidation primarily as a result of MXCP final exit. Investors appear to have grasped the future benefits of that.
Senior managers will benefit in due course from the LTIP. Dean Dickinson and Heywood Chapman will not, so though unexpected it is hardly surprising that the CFO decided to take some of his substantial incentive options.
Old Mutual increased from 4.67% to 7.46%. Still a lot outstanding.
CFO also sold 270k plus shares yesterday, at 97p. Still has 2% in options.
Pleased about that. Company trading consistently well, allowing the original cornerstone investors to exit their getting on 30% and options over time, to further their new plans, with buyers to hand. Bit of a milestone in the Castleton journey really. And one or two investors like it too.
Well there it is. MXCP fully out at 97p. I'm guessing they have another company lined up to invest in. Good that the sp has held up nicely.
If I'm right, and it seems too much of a coincidence to be otherwise, then that's them done and dusted, options and all.
And new holders. See what we get tomorrow or next couple days.
Thank you.
It must be MXCP coming out completely. That largest figure of 5685423 shares is their remaining holding as per. Mxcp last RNS. The rest may well be the buys.
One would expect a notification of holdings RNS. Perhaps it is MXCP selling. Whoever is selling and buying,, and knowing how well Castleton is performing ( not lost on the buyer(s) it is yet further good news for us smaller investors.
Pick the bones out of that lot!
Yes. They're all here for anyone who hasn't seen them.
https://www.piworld.co.uk/category/company-videos-a-to-z/castleton-technology-ctp/?orderby=ratings
The effect now is exactly what Dean Dickinson says in his presentations. Castleton now has fully integrated products sufficient for the needs of associations, committed to driving down costs through technology, and that he can evidence that through fairly recently signed existing users. He will quickly bring new products as required to market using the third party Indian developers alongside Castleton's own.
Everything has been costed in, and foresight of earnings - and costs over and above day to day expenditure, probably limited to development spend - will permit the payment of a perhaps small dividend at this stage. There will be more in October about that. Very healthy position to be in, with the company paying down debt and as I have said before, an extra £600000 pa freed up from cash and available for the bottom line once the mobile licensing agreement is fulfilled at the turn of the financial year.
Bank Holiday Weekend always welcome.