Castleton Technology expects to maintain organic growth, shares drop

(ShareCast News) - Castleton Technology reported strong organic growth at the half-year stage and successful completion of a barrage of corporate measures.During the reporting period, the AIM-listed provider of software and managed services for the public and not-for-profit sectors acquired two outfits, Brixx Solutions and Impact Applications, carried out a £2.2m placing to help fund the purchases and converted £2.5m in loan notes.The company highlighted how the integration of all the acquired businesses was now significantly progressed, with cross-selling opportunities gaining momentum and expressed confidence that the rate of growth in its organic revenues would be maintained."Castleton has now put the building blocks in place to become a leading supplier to the public and not-for-profit sectors, specifically the social housing market. The integration of the businesses we've acquired has progressed well. I'm confident that the company will maintain its organic growth," said David Payne, Chairman of Castleton.Six-month revenues, including four months' contribution from its acquisitions, reached £8.5m, with operating profits - on a before interest, taxes, depreciation and amortisation - improving from -£0.1m a year ago to £1.7m.So-called operating profit (EBITDA) per share increased from -0.35p to 2.44p.Management also called attention to the fact that 55% of its sales were recurring."With momentum in delivery of the broadening package of solutions, and further acquisitions likely to boost the 16% organic growth, we lift our target price to 90p (74p)," analysts at finnCap said in a research note sent to clients.As of 1632 GMT shares in the £63.81m market cap firm were trading 6.17% lower at 76p.