Member Info for Aphrodite

updated its diary. Taking opportunities to showcase new developments at end of year.
https://www.castletonplc.com/events/

There is a board to construct. There is working capital to be found. I cannot find the articles of association ( maybe somebody can post a link ) but I believe the existing boards old authority to issue shares died last general meeting and it now has no authority until the new resolution is passed on 2nd. August. I believe that also extends to convertible loan notes. Somebody may put me right. However, there are structural matters to address. No doubt Al Maktoum and his office had these things in mind when he made his investment, and so I expect basic housekeeping to be dealt with as soon as possible.

Bit more on the website on that contract. One more for the technically minded maybe. But what I get from it is there's people out there with a pressing need to replace ageing systems and future-proof new ones, and if they're one of Castleton's 600 existing customers like D and G Castleton has a foot in the door and is well placed to deliver.

https://www.castletonplc.com/news/dghps-digital-transformation-journey/

Well, I see it like this. Castleton's done me very well over the years. It's grown and matured. And Mr. Dickinson and Mr. Chapman plainly have their feet on the ground. If we can get somewhere between the LTIP 133p and FinnCap 140p I'll be very happy. In fact, I'd be satisfied with less. Say FinnCaps original 125p plus.

We're said to be moving towards net cash account wise at end of year, and in my view risk here is absolutely minimal, with sufficient cash flow to pay a tiny but meaningful progressive dividend ( if I invested for divi itself I wouldn't be here ) whilst paying down the £5m or so debt over time. They'll still have cash ( and facilities ) available for acquisitions too - so no dilution foreseen.

It's a slow moving market for sure, but Castleton is very active and innovative within it and has put itself ahead of the game ( FinnCaps analysis of the competition shows that it's well ahead in terms of offerings) is sharpening up its service levels, and with its U.K. and Indian in house developers it can respond quickly to changing demands.

Surely, each side will settle for the best they can get. This company won't be that abnormal.

The position according to public information is/will be something like this.

Richard Carter. Non executive Chairman.
Stefan Oliver. CEO
Al Maktoum President in non-board role ( appointment to be 'formalised', and with the right to appoint somebody to the board )

Next
New Chairman ( upon which Oliver leaves company )
Richard Carter becomes Interim CEO

Carter being interim, a new CEO is required, and headhunting firm retained, with a view 'in due course' to recruiting into 'key executive management' positions and the appointment of non-executive directors.

It seems sensible to deal with working capital as required and substantially sort out the management, who will have to carry things forward before starting on new plans and initiatives and whatever funding is required for that.

The RNS turned it.

In the absence of anything else, I feel we're waiting now on cloud take-up, with improved margins. That seems logical in view of the recent capital expenditure and company emphasis, and growing referenceability.

You will know there are two reasons for fundraise here. One for working capital and one to enable investment and leverage. This is the oil business. The last will be greater than the first. Much is made of Al Makhtoums access to capital. I presume, and I can only read into what has been said publicly, that it is foreseen that investors/lenders of his choosing will have first opportunity.( I'm guessing that that is what gave rise to auditors query, the suggestion being it is not in the hands of the existing board)

Whatever may or may not happen in the interim, it will be for the new board to take things forward. The existing board's 'autonomy ' has been curtailed, as evidenced at the recent general meeting, I presume largely by Al Makhtoum. New board, new group-think, and with whatever funding, new purpose.

I am currently out, and considering reentry. It seems inevitable that a fund raise will be an early event in the scheme of things. I have little doubt that that will be successfully completed. It will be debt or equity finance. Public information indicates the latter, meaning issue of new shares, at a price, though anything is possible.

Kestrel been decreasing slowly overall. Their last holdings RNS 5th. Feb gave them 13460275 at 16.55%. Seems very probable BGF been buying some of theirs.

"BGF is a different kind of investor. We help you build your business, your way. We’re the world’s most active investor in growing companies, backing businesses with promise across the UK and Ireland."

BGF is British Growth Fund rebranded. They supported the acquisition of Kypera in Feb 2016 through £2m in loan notes, convertible @ 85.6. They have not taken that option for whatever remains.They're now buying shares.

New holdings RNS answers that for the buyer. BGF again.

Whatever else may be made of it, I'd say at least £750k changed hands at £1, and maybe twice that.

Back to the Future
There's a bit more on the Grand Union contract here. https://www.castletonplc.com/news/multi-cloud-the-best-fit-for-grand-union-housing-group/
They were an existing customer, but this is a new contract and I think the real point is take up of the new cloud offering, with Castleton responding to increased demand as Mr. Dickinson said on 15th May ( and referred to by Mr" Chapman as "increased interest" in the results.

Castleton Cloud is " a reliable, super-secure and high performing environment, using the latest technologies to deliver super-fast connectivity, enhanced Back Up and superior Disaster Recovery with over 99% availability. Castleton chose the facility, as it’s is one of the most efficient data centres in the UK,with extremely low PUEs and is future proof as a result of the modular construction model it uses.
With unrivalled physical, human and systems security, our multi-layered approach meets the UK government’s highest standards. We can also offer highly secure colocation and hosting so you can be assured that your assets and data are protected, thanks to the deployment of the highest security techniques available."

From my reading it seems that cloud usage is steadily increasing, but there have been some concerns in housing about privacy and data security, which Castleton has addressed as far as is possible. Castleton has 600 customers. If they want the Cloud, and are happy with Castleton, then there is a high prospect of future migration to Cloud by a proportion of that 600, increasing revenue and profit margin.
I think the significance of the new contract may have been overshadowed by the results RNS.

I'll wind up historic Australia with this from FinnCap:-

Castleton’s target market in the UK holds significant capacity for growth even with Castleton’s reach into both the Irish and Australian markets. The Australian Government’s move from State provision to Social Housing provision continues to justify the expansion into Australia, with successful trading back on track while the track record in Ireland speaks for itself, offering the first contract wins and go-lives of the Integrated Platform.
So we're back on track, but they say elsewhere the business there will be £1m revenue down on stuff expected to flow into the accounts this year, but that won't effect the overall profit forecast which remains unchanged. Nuisance, but that is all. Not getting as much this year as anticipated last year - maybe next.

I agree with that. I have ridden out a lot of ups and downs, including the long selling down ages ago ( actually added then when Mr. Dickinson bought and came out well )

I was just looking at what might be seen as negative in what I see as a positive RNS, development and so on, though the Australian thing is a nuisance, and soured the RNS for me. A waste of time and revenue available to be had due to poor individual management there. But in fact, the individual left last October, has been replaced by inside promotion, and in January this year we had this on the website.
https://www.castletonplc.com/news/castleton-australia-goes-from-strength-to-strength/
So Australia doing well, despite a past 'execution' issue previously resolved - but it's held the company back from where it anticipated it would be by now.
That's it. Financially, the company announced a maiden dividend and at the same time FinnCap forecasts we'll be pretty much debt free this time next year. If all goes well, and I can't see why they shouldn't.

It's all gone flat. Results not resonated with pi's that's for sure, and I can understand that, whilst not agreeing it for myself.
There's the Australian thing ( 10% of the business there, and resolved they say.) And there's increased expenditure as against profit. But you have to spend to add value for the company as well as from a customer's standpoint, and that's been done.
From a shareholders perspective, just on P/E, last year's actual at 107.5p was 17. That's reasonable. This year if Finncaps target of 140p met it'll be 19.9, and at the same time on unchanged profit forecast Castleton will be just £200k shy of being debt free. I know it's forecasts, but FinnCap discussed with CFO and amended their figures accordingly, set against a background of company success and FinnCap correct ( more or less ) forecasting, so it's the best I've got.
So I'm running with that.
We're in the doldrums price wise just now. Maybe there'll be new news on success arising from recent expenditure The Cloud and all that. We'll have to wait for that, and for interims for Australian news unless they do something viewed as remarkable before then.

Been at near enough this price for weeks. Over 1mil volume today, and we're down just under 1%. I'm thinking, hoping, we must have established a base level here. Anyway, all those shares over the past weeks and today starting again at this price.