(Alliance News) - Castleton Technology PLC on Thursday warned that revenue and adjusted earnings will be lower in the first half of its financial year than a year ago but will show material improvement in the second half of financial 2020.
Shares in the software and managed services provider were down 41% at 55.00 pence each in London.
Trading in the six months to September 30 has been behind expectations due to product and professional services revenue being lower than anticipated, Castleton said. As a result revenue, adjusted earnings before interest, taxes, depreciation and amortisation, and operating cash will be below last year.
Castleton said it expects to have generated revenue of not less than GBP11.6 million and adjusted Ebitda of at least GBP2.9 million in the first half. In the first half of financial 2019, the company recorded revenue of GBP12.9 million and adjusted Ebitda of GBP3.0 million.
Recurring revenue increased in the first half, but has not been enough to offset the fall in one-off revenue, Castleton said. Recurring revenue represented approximately 65% of total first half revenue.
"The second quarter of the financial year has been significantly weaker than we expected particularly compared to the strong comparable period last year. This is primarily due to revenues of a one-off nature," said Chief Executive Dean Dickinson.
"In the first quarter of the year we reorganised the group to streamline our sales and delivery functions. Embedding this has both taken longer and been more disruptive than we anticipated, however it positions the group well for the longer term. Despite these short term challenges, we are confident that the move to 'One Castleton' will enable us to offer customers better service and drive future growth," Dickinson added.
By Tapan Panchal; tapanpanchal@alliancenews.com
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