Results and things14 Jul 2017 07:30
All the information released by the company throughout the year has been positive. They have RNS'd the contracts they consider particularly significant. Indications are all is to plan and going well. Certainly not stagnant.
The various product solutions bought in with the acquisitions have now been technically integrated to easily complement each other ( historically a problem for customers faced with different solutions from a mix of providers ) The company continues cross selling from the combined acquisitions in the UK, as well as attracting new business, and will have been driving things forward in social housing Australia on the back of the Wentworth contract and with their other customers there.
We know integration of the several acquisitions proved a bit 'sticky', and held things back, but that's in the past and acquired businesses are now integrated, and associated expenditure should have been left behind in previous accounts. They are operating on a repeat revenue model, minimising cost of sales from cross selling, and moving to longer term contracts, giving greater forward visibility and with a view to increasing margins.
At the end of the financial year and prior to last trading update CEO bought in and MXCP similarly added. Blackrock also appears to have been buying ( no RNS, but appeared as a 3% shareholder ) Original investor Kestrel has been buying too, and now they and MXCP have 25% apiece. Somebody is still buying up everything coming on (and has been solidly at this price since 15th. May) Possibly Kestrel continuing.
Castleton has been loss making in the previous four years. The last interims were encouraging, showing a profit taking the tax credit into account. The company now seeks a black bottom line.
The trading update of 5th. April was pretty upbeat, saying
'revenue and profitability for the year are in line with market expectationps. Operating cash generation in the period was significantly better than market expectations, facilitating a continued reduction in the Company's net debt,' and
'meeting our financial targets whilst demonstrating the profitable and cash generative nature of our business is reassuring'.
I know of no market expectations other than the forecasts provided by FinnCap. They forecast revenue for these results of £21.1m, and profit before tax of £3.6m. They additionally spoke of £4.4m profit on £22.7m revenue for the current financial year.
FinnCap are house brokers and some of that may prove a little over-optimistic, but the cash is on the up and rolling in because they've said so, and on the basis of FinnCap's numbers and Castleton's trading update it would not be unreasonable to take the view that a profit of some sort is very much on the cards - optimistically a meaningful one in the upper half of the forecast.
Any black bottom line would represent a pivotal change in Castleton's fortunes. If this transpires to be a meaningful profit to the e