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Bit of a late RNS out to cover Chelverton, as per. 6th., without damage to share price, becausethey were bought up intr-party, probably through FinnCap. May see something to cover the buyer if gone through 3%.
It's part of their offering through the associations trade body, the national housing federation.
https://www.housing.org.uk/offers-and-benefits/services-and-benefits/castleton-technology-plc/
We're waiting for news on the larger cloud based contract awards.
But there is another side to things. Tony Smith is blogging lately about the need for suppliers to provide cost effective technology for smaller housing associations, who don't want/can't spend like larger associations but still need the basic functional, scaleable technology. Apparently some suppliers won't even consider them.
Castleton Community seems to fit the bill.
https://www.castletonplc.com/business-essentials/community/
Or whatever amount now. Doesn't really matter. They're taken up and starting again.
£1.8m plus changed hands at 75.5p. Report to market by a party concerned.
Director/PDMR Shareholding
Castleton Technology plc (AIM: CTP), the software and managed services provider to the public and not-for-profit sectors, was notified today that Paul Gibson, Non-Executive Director of the Company, purchased 10,000 ordinary shares of 2 pence each in the Company ("Ordinary Shares") at a price of 66.0 pence per Ordinary Share.
Following the purchase, Mr Gibson is beneficially interested in 10,000 Ordinary Shares, representing approximately 0.01% of the Company's issued share capital.
gone live with a new self service App. This goes alongside the Alexa chatbot ( Housing Solutions association have been installing wifi in tenants' homes ) as a means of customer control to administer accounts, repairs, etc., and shifting that work from association call centres, saving money.
https://www.castletonplc.com/news/mysbha-customer-app-goes-live/
Wish away, but I won't wish you luck! It'll likely drop back from wherever it gets to though, unless one or more of those tenders makes their way into RNS'd contracts.
Well thats the resistance broken with the help of the bod buy. I doubt very much I'll see 54p again but one can always wish!
Castleton has invested in several areas of the business over the past few years. And much of that investment is having the desired results: Deeplake (see Castleton Technology acquires Deeplake Digital) has now been integrated into Castleton’s solution and is “working well”; its Indian development capabilities are contributing as expected; and its Castleton Community Solution, designed to be used by smaller housing associations, has been successful in winning a place on a National Housing Federation framework agreement as preferred supplier (available to more than 800 housing associations).
Castleton has now accounted for a reduction in hardware revenues in its outlook. And is confident that it can achieve its target for professional services for the year. The total contracted backlog is up 5% year-on-year compared to September 2018 (to £30.1m) and is expected to build. The consolidation of its software and managed services business under a ‘one Castleton’ structure (from 1st June), streamlining sales and delivery, is expected to start having more of a positive impact on cross-selling and upselling. There are still some risks to future performance - and we will be keeping a keen eye on the client retention rate which seems to have suffered - but Castleton has been working to mitigate against them. And the fundamentals of the business remain strong.
Castleton H1: highs and lows
Georgina O'Toole, 09:29, 05 November 2019
Castleton Technology logoThe highlights and lowlights of Castleton Technology’s H1 were previewed in the company’s trading update last month – see Castleton H1 behind expectations. Having spoke to management this morning, we have a clearer understanding of what’s gone on behind the numbers.
As expected, revenues decreased by 10% to £11.6m, with organic revenues declining by 13%. But within that, recurring revenues increased from £7.0m to £7.6m, comprising 66% of total revenues (vs. 55% in the comparable quarter a year ago). Reported revenues represented a significant reduction on previous expectations: £2.6m lower on hardware, and £1.6m lower on professional services. Profitability and cash conversion were also negatively impacted.
During the period, hardware revenues were impacted by a handful of clients abandoning their hardware refresh and to, instead, opt for cloud technology. In one example, Castleton had previously earnt £500-600K in hardware sales in a year and, though it won the replacement cloud delivery contract, that new-look contract is worth £1m over four years… in other words, a c50% decline in in-year revenues. Of course, this is also the reason for the welcome increase in recurring revenues.
Meanwhile, in professional services, Castleton started the year with a strong backlog of project work and good visibility. However, as it entered Q2, several clients decided to spend some time embedding their already-purchased solutions before embarking on new project work; it seems that the older generation of tenants utilising Castleton’s digital repairs system have needed a little more hand-holding to get to grips with the technology than had been expected. The result for Castleton was too many consultants on the bench; the company as now restructured to reduce the number of billable consultants.
And Mr. Dickinson's buy today puts some insider personal cash behind the RNS and FinnCap positive forecasts.
I have also yet to watch the video. I agree there is nothing very new in the results RNS, but it is pleasing to see that Dean Dickinson has his eye on costs and immediately addressed the right-sizing issue resulting from the change in market conditions. I think today's rise reflects investors acceptance that the drop was well overdone, and faith that the robust company is well placed to take advantage of the future contract prospects now presenting, and anticipated to flow through during the remainder of this financial year.
No retraces for me, thanks! If Castleton can achieve the £5m PBT forecast for this year today, then that will put this change of market conditions to bed, and set up to take advantage as now. We're still waiting on the tenders, which is a drawn out process. We weren't told about one of them, so I hope they will RNS them as contracts are signed.
I was lucky and sold out before the drop just keeping my profits running. I'm gutted I have not been able to rebuy due to funds tied up.
Looking good this morning but it is hitting resistance now. If i'm lucky it will retrace back to 54p and i'll be able to buy. It can be a bit of a slow burner, so proof of turn around may be needed in the next results to see this go to the broker rating of 130p and shoe the profits warning as a one off and a buying opp.
Interims – mapping out a steady second half
Interims reveal performance in line with unchanged expectations, bar IFRS16 amendments and minor tweaks since the October update. The merging of the two former divisions to create ‘One Castleton’ is expected to deliver benefits, along
with rightsizing of the Professional Services team and a focus away from competing for low-margin Hardware revenue. New contract wins such as three Managed Services deals in the period show the continuing opportunity, as well as gaining preferred supplier status to the National Housing Federation (the Housing Association industry body). The Housing Association customer base has increased to 595 (FY19: 591), of whom 52% (FY19: 50%) take more than one product; the
contracted order backlog has increased 5% since 1H19; recurring revenues constitute 66% of revenue into 2H20, giving confidence in forecasts; and the group remains well placed once the customer base assesses and commits to the inevitable future in cloud or hybrid software delivery. With 48% of revenue and 44% of EBITDA delivered in the first half (1H19: 49% and 47%), we look to the benefits of execution to deliver a solid 2H and a return to cloud-derived growth in visibility and
quality of earnings into FY21. Target 130p reiterated.
Interims for the period to September 2019 delivered EBITDA of £2.9m (pre IFRS16 £2.7m vs 1H19: £3.0m) from revenue of £11.6m (£12.9m), -13% organic. Postponement or cancellation of expected contract wins affected 1H and FY expectations (adjusted accordingly in October), even as 1H20 vs 1H19 recurring revenue grew from £7.0m to £7.6m and order backlog grew 5%. Net debt of £4.1m (March 2019: £4.9m; September 2018: £4.9m) highlights continuing positive cash flow, comfortably funding the maiden dividend and an increase in capex to drive future growth.
Customer cloud transition led to reduced one-off revenue (particularly Hardware and Professional Services) and accelerated transition to recurring revenue. Movement in the order backlog included decline in one-off orders (£15.5m to £14.9m), even as the recurring revenue backlog grew from £13.1m to £15.2m. New contract wins included Grand Union (£1m over 4 years); Suffolk Housing (£0.5m over 3 years) and Colne House (£0.4m, over 2 years). 73% of sales in the period were to new customers, highlighting opportunities within the group as well as through the National Housing Federation, to target smaller HAs. 1H challenges were met with a robust response to cost management, and we look forward to further proof of execution as the balance sheet strengthens to net cash during FY21. Target 130p reiterated.
I haven't watched the video yet. The printed results add little to what was already known to us, That one off revenue decreased due to changes in market conditions as associations mull over their direction of travel, and the aim is to replace it from longer term cloud based recurring revenue. It looks as though customers are moving towards that now, with 3 such contracts in the period and tendering for several more - which will presumably give rise to the material increase in revenue and so on during this current second half, alongside continued cross selling.
Whatever that £54k deferred publication trade amounts to, it's effects were limited to retaining a bit of blue on the ask since midday. It's been absorbed into the works.
I hesitate to speak too soon, but the share price is very slowly trying to head upwards. I suspect that things will move a lot more quickly once at least some of the contracts they are bidding on come to fruition. From what we know about Castleton, it seems inevitable. The company has some early movers, and the recent referenceability that goes with them.
That goes along with FinnCap's positive outlook and £1.30 "in the near term the contemplation of moving to the cloud has changed customer buying habits and slowed decision making – meaning the long-term growth opportunities from recurring revenue growth are stronger than ever, but the instant fillip of one-off revenue, which boosted prior years, is not yet offset. "
The strategy, of preparing for cloud migration, cross-selling and working towards larger multi year contracts ( primarily from the existing 600 customer base) has not changed. One-offs having waned, the trading update appears to indicate that the promised material improvement is likely to relate to additional contracted recurring revenue, fulfilling management's aspiration of gaining greater visibility of forward earnings. The trading update and 40% loss came as a complete surprise. But the strength of the company in the social housing market remains unchanged. A loss for holders, but still a very positive outlook.
All 3 "material" mind. They must have sight on that.
Haha. It's one of those things they call a no brainer on these boards when you /FinnCap put it like that.
And, anyway, although insufficient to meet previous expectations, "the Company is confident that revenue, EBITDA and cash generation will show a material improvement in the second half of the year."
They do not all show on this website. Someone has sold and someone has bought. I have a vested interest, but can easily see the truth of FinCaps statement that the worst thing that can happen now is that Castleton is acquired ( at a premium ) for its tech and 600 customers. I am therefore firmly on the side of the buyer.
£2.8m+ just changed hands at 56.5. That should put a bottom under it.