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January 14, 2019
New partnership with PIMSS brings market-leading Asset Management to Castleton Customers
We are pleased to announce our partnership with market-leading Asset Management service providers PIMSS. Managing the full life-cycle of your property assets, Castleton’s Housing Management System is now fully integrated with the PIMSS solution. With 21 years experience built within the social housing sector, PIMSS are a great partner to the organisation, as they are the only dedicated Asset Management company in Social Housing, catering to the diverse needs of both large and small scale organisations.
PIMSS can cater to our diverse Housing Providers needs, as they recognise that based on geography, not all housing providers operate the same. The Asset Management functions are designed to meet the unique challenges of Social Housing markets across England, Scotland and Wales.
Integrated with Castleton’s Housing solution, Asset Management products will help our customers
* Spend money more effectively and efficiently
* Make better, evidence based decisions
* Plan financial outlay more effectively
* Ensure compliance with key sector standards, plus legal/health & safety requirements
* Minimise risks
* Maximise the opportunities your Asset base presents
* Improve the efficiency of field based staff with mobile working
* Evaluate the viability of your housing stock (or that of organisations you are considering merging with) against a broad range of social, economic, demographic and environmental factors.
Of little consequence, but of passing interest to investors on the numbers of units/tenants requiring administration by better technology.
Housing association starts climb 7% to more than 10,000 in quarter
NEWS
14/01/1912:01 AM
BY JACK SIMPSON
The total number of new homes started by housing associations has risen despite a fall in the number built for open market sale, new National Housing Federation (NHF) data shows.
Housing association starts climb 7% to more than 10,000 in quarter #ukhousing
The NHF’s supply survey for the three months up to and including September 2018 showed that associations had begun 10,511 homes, up 7% from 9,793 in the second quarter of 2017/18.
It is the highest Q2 figure since the NHF began the series in 2016.
The latest data, which covers 87% of all stock owned by developing associations, shows year-on-year increases in social rent, affordable rent and shared ownership homes.
However, the number of market sale homes built hit 1,321 for the period, down more than 37% on last year’s Q2 figure of 2,111 market sale starts.
The NHF’s supply survey provides the most detailed statistics on housing association delivery when compared to government and Greater London Authority (GLA) statistics, which captures only activity in their funding programmes, and does not attribute all Section 106 homes as being delivered by housing associations.
All major investors will be welcomed. PI's too!
Finncap forecast for the full year is is £26.3m, a 12.9% rise on last full year's figure. Revenue at £12.9m was up 20% at last report on the half year. So in the light of the trend, continuing progress and board confidence the full year revenue forecast is certainly achievable, and perhaps can be exceeded. And as an aside they revised the PBT upwards after the interims, as I posted before.
I am hoping that the growing strength of the company and healthy cash conversion will draw more institutions, perhaps helped by the small 1% increasing forecast dividend alongside capital growth.Nigel WRAY bought at 101.5, raising his holding from 7% to 13%. More recently FIL made their first notification at 5.43%. In the interest of a balance, Kestrel have reduced to 17.75%, but they fluctuate, trading at different levels, have been buying at 102p, and it is still a healthy holding. There is a firm institutional base, but it can be improved. Company brokers should be working on that, and FinnCap, though housebrokers, seem particularly bullish, leading me to the conclusion that Castleton will release a year end revenue figure at the top end of FinnCap forecast. I speculate that there may be some increasing institutional interest as the financial year approaches closure.
£200ks worth reported at the end. Same buyer seems likely.
Castleton Technology acquires Deeplake Digital
Georgina O'Toole, 20:32, 10 January 2019
Castleton Technology logoA perfect fit of an acquisition for Castleton Technology has been announced today, as it continues its buy and build quest (see Castleton Technology: The post-integration journey). It has agreed to pay £1.8m in cash for Deeplake Digital Limited, a company providing digital technology for landlord and tenant communications, specifically in the social housing sector. That communication, via its own proprietary software, can be via SMS, e-mail or social media.
Those who have tracked Castleton Technology through TechMarketView (see UKHotViews archive) will know that, while it describes itself as a “software and managed services provider to the public and not-for-profit sectors”, its core hunting ground is social housing. So, while this may be a small, bitesize acquisition (adding annualised revenue of £0.8m), it is clearly complementary and enhances the company’s offering.
Castleton’s existing portfolio covers a range of functions including CRM, EDRM, financials, housing, strategic modelling, Purchase to Pay, repairs, service charges and mobilisation. The company had, through a total of nine acquisitions, built up a full-service portfolio in the social housing niche. But its ambitions were to further align its offerings with market demand and the continued shift towards the digitisation and mobilisation of business processes. Adding Deeplake Digital with its Deeplake Communications Software supports that aim.
The numbers also seem to stack up. Deeplake brings 80% recurring revenues, was profitable in its last financial year (normalised EBITDA of £0.3m) and is expected to be earnings accretive in the full financial year ending 31st March 2020. But more importantly, Deeplake will bring further cross-sell opportunities; of its 90 existing housing association customers, 60 represent additional annual contracts with existing Castleton customers while 30 are annual contracts with new customer names. The move is also a good demonstration that Castleton is committed to investing in its solution – a big tick in the box when prospects are evaluating its offering.
IT was a 'late' RNS but nevertheless in my view a somewhat disappointing and surprising lack of response. Commentators may yet pick up on it. But it remains a useful acquisition in enhancing and consolidating Castleton's marketing position
'Four existing staff from Deeplake Digital will join the Castleton team, to ensure high quality delivery and continuity for customers. Deeplake Digital has strong relationships with over 100 housing associations, comprising more than 60 of Castleton’s existing customers. The acquisition will add more than 30 new customer names into which Castleton can support with wider solutions and services, with the backing of greater resources, product investment and scalability.'
I see from the website that this complementary acquisition will only increase Castleton headcount by four employees - so not much in the way of ongoing cost there when set against the cross selling and other advantages.
A 'late' acquisition notification to the market. Deeplake is said to be a market leader in the field, so a continuation of the acquisitions of 'best in breed' solutions, this time focusing on the communication between associations and their tenants, seen as paramount in the services provided by Castleton Customers. Slowly but surely Castleton is tightening its grip on the social housing market - another one for the one stop shop. It is also proof of board confidence that the company continues to spend on growth plans, whilst promising the start of a progressive dividend for this full year.
Good acquisition which will enhance ctp’s customer base even further and allow for additional cross selling.
From cash and bank facility. Yet another growth enhancing move by Mr. Dickinson, who summarises.
"This strategic acquisition enables us to capitalise on the significant opportunities within the Social Housing market's ongoing market shift towards digitalisation, building on the capabilities that the Group has already successfully developed. Deeplake Digital adds scale, customers, skills, market knowledge and specific digital communication intellectual property and has a great reputation for delivering a quality product and service, evidenced by its high customer retention levels over the past ten years. This acquisition provides additional cross-selling opportunities into Deeplake Digital's customer base, in line with the Group's growth strategy."
Thank you. They are house brokers but ' a year to excel' is even so strong language. The LTIP target of 133p for financial year starting April was not plucked out of the air either. As I have frequently stated, if all goes to plan Castleton's traction in a solid market, with proven and innovative integrated solutions, should accelerate with the new referenceability over the next full period.
Sector: Technology & Telecoms
Castleton Technology (CTP) : Corp
Contract win and client go-live
Key data
Share price (p) 93.5
Target price (p) 125.0
Market cap (£m) 76.0
Enterprise value (£m) 80.7
Castleton has opened 2019 with the announcement of its selection as Housing Technology Partner for Connect Housing Association, with a £1.3m five-year contract for the entire suite of integrated Castleton solutions; and the go-live for Cluid Housing Association in Ireland, the first customer to take the complete suite, providing important referenceability for future customers. With proof points delivered for the full Housing ERP, and a large new customer, Castleton’s route to growth is being demonstrably delivered and we look forward to 2019 as a year to excel. Target 125p reiterated.
There's a bit more on the website
https://www.castletonplc.com/latest/news/
It all goes to cumulative contracted repeat revenue, with profitability increasing following the earlier greater costs of securing the contract and implementation/project management dropping away, and additionally affording forward improving visibility of earnings ( hence the promised dividend )
And previously awarded contracts also going through the same process.
The full revenue from the Connect contract is for the future, though there will be set up fees, but put in perspective the one contract amounts to a healthy 1.1% increase over last full year figures.
The Cluid go live demonstrates the effectiveness of Castleton's implementation of a fully integrated complete suite, a process which I understand can sometimes be a difficult one, and adds to referenceability when tendering for contracts. There are, it appears, more full product suite implementations under way - "and we look forward to delivering this to other clients in the period ahead."
Continuing sales of the same proven products and services, as has been said, whilst keeping them updated and bringing new products to market.
( housebroker) reaffirms corporate 125p in this mornings note.
Further evidence of the one stop shop and full integration on mobile appeal.
LTIP - Done it or on the edge for year one I mean.
Your summary is good. The LTIP announced in March is 40% a year over 3 years from 68p., for full vesting in stages. We don't know the exact terms of the LTIP, but they've either done it or are on the very edge of it, sp having drifted back. Operationally not looking for anything 'new' here, 'just' more of the same.
The various acquisitions bought in the already successful solutions in the UK and Australia - the one stop shop, with business in those geographies and the Irish Republic. Integrating those solutions on mobile was key. Development work in-house and expansion into India has taken that further and Castleton is now tailoring the packages to individual need, and bringing new products quickly to market. They are now compatible with competitors software facilitating easier and piecemeal changeover. Something for everybody. The intended trend to private cloud in Managed Services seems to be gaining traction, saving associations the cost of infrastructure coupled with 'easy' payments, and increasing Castleton profitability. Taking into account existing backlog in both Software and Managed Services reported in November and implementation time on new customers/products, Castleton are working towards bringing new cumulative revenue streams onboard next financial year, with £600k a year licence fees dropping away this current financial year with nothing extra to pay for the ongoing full housing sector licence and the company will then be able to attack FinnCap's 125p ( from last June ) and senior managers' LTIP 133p targets for next financial year, raise the EPS, and progress the dividend then being paid. Longer term achievable aspirations, and usual caveats apply.
In relation to the Indian development offices, it can only be that Mr Dickinson's previous experience with the individuals concerned, and the .Digital success is such that there is proven advantage to achieving first mover advantage on new solutions ( and improved ongoing service ) by bringing their collaborative partners in house.
They must therefore be seeing encouraging results from the collaborative period..
Without knowing what the future holds, and without more information, I imagine the two offices are ' inherited' from the existing set-up, with developers working at each, and the geography within India so far as Castleton is concerned is unimportant just at the moment.
As you say, things are being 'tee'd up' for next year.
We all theorise from time to time. But with established Castleton the reality is that the working share price will ultimately depend upon the published results. As I have said before, it is in that context that I believe next year will prove particularly beneficial, consequent upon reduced outgoings, and the benefits of the recent, and now forthcoming products, and managed services strategy flowing through into the accounts.
Extending on my last, I've often thought that Kestrel, by trading as they do, play a key role in maintaining the price at what might be seen as an acceptable level.
Maybe unduly cynical, but it's possible a potential rise in share price would be more 'beneficial' all round next financial year. Just a passing thought really.