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The more than 10% organic growth is pleasantly in line with my expectation, meeting their own target and paying down debt, and I am content with it. I posted my thoughts on 3 Sept and now would be unsurprised to see say minimum £1m profit before tax. But we shall have to wait until November for the facts, and the EPS on which the intended dividend will be based. I anticipate announcement of payment of a dividend with results in November, if it is to be paid this year as intended.

Today proves the cumulative recurring revenue model continues to be successful, with either new customers coming on board and/or existing ones taking more products. Whatever it transpires to be this half, and predominantly selling into existing satisfied customers, profitability should continue to rise exponentially against increasing revenue, being £300k pa margin to the good from last June on anyway having acquired the Strategic Modelling licence, and receive a full £600k boost next financial year, when the mobile licence fees end, without a concluding additional payment now being required as previously reported.

With their model mitigating against surprises either way, none anticipated and none occurring ( proven competitive products, longer term contracts, acquisitions made and integrated, and debt being paid down ) Castleton should be poised for steady and more rewarding progress over the next 18months.

In the light of the RNS, Oak Trust has something of the order of £400k remaining of the £2mil. The result so far is shares purchased for the benefit of employees and 'certain directors.' I had expected the buying to be done in such a way as to also benefit the share price, but a future buyback as originally envisaged remains an option. It is possible at least to take the view that Oak Trust, who though independent in law are permitted to consult with Mxcp, purchased at the best price considered likely to be available.

An assumption has been so far made that it is the EBT buying. I am neither with nor against that assumption. I simply do not know. I did not interpret buying in the market to mean the bulk buying of institutional shares, if that is the case. I do not know why Cannacord sold or who may have bought them. Unanswered questions.
As I said before, were I a long term holder, perhaps holding from 3p I would wish I had never heard of Mxcp.
But I am not, nor will others be. And starting from that point, and the current price, I take the view that there is a deal more potential upside than downside as a result of MXLG and the GIF, for the concert party and pi's, no matter how many shares Cannacord may sell.

There has been no change in sp. Presumably, again they have been bought. Why is somebody buying? As an investor, what is your view overall.

They presumably no longer want the shares.

Mxcp has investee companies at various stages of development, but for any potential investors these two paragraphs from the interim results dated 9th. May 2018 indicate the 'new' projects underway where efforts will be concentrated. In my view the share price is in the process of recovering from a June 2018 low of 1.12p, with the cash in hand to undertake a series of acquisitions into MXLG , a partnership with Liberty Global.

"We are proud to have been selected by Liberty Global plc ("Liberty Global"), the world's largest TV and broadband company, to partner with them in a joint venture to build a UK IT services business of scale over the next three years. MXC is receiving fees during the life of the joint venture and a share of the profit on its eventual disposal. Post period end, in April 2018, the joint venture announced its first investment, the acquisition of SICL Limited, a Leeds based, award winning IT infrastructure and network specialist."

"We finalised a partnership with Guernsey based investment services group Ravenscroft Limited to act as consultant to a newly launched technology fund, GIF Technology & Innovation Cell (the "GIF"), a protected cell of Guernsey Investment Fund PCC Limited. The GIF has three founding investors, the States of Guernsey, Pula Investments (the family office of Stephen Lansdown) and MXC. MXC is receiving a share of the management and performance fees payable in relation to the fund. The GIF has already made its maiden investments and intends to be an active investor in the technology sector."

Ravenscroft mentioned is an independently owned investment services group based in the Channel Islands, chaired by Stephen Lansdown, which has £4.7 billion of assets under administration for both private and institutional clients, and has recently completed the purchase of 25% of MXC Capital (UK) Limited for £2.25 million cash. MXCUK is a subsidiary of MXC and is the holding company of the Group's transactional business.

Shares are trading comfortably and above £1 from the all-time high of 105. That is healthy, following as it does the large transactions seen recently at the prices stated. Looking ahead, shareholders will take a view on the trading update in early October, and the price will reset, and possibly again in November when greater detail is reported.

I commented on 3rd. and 4th. Sept. I expect no sea changes. Personally, if the Castleton model continues as previously and as foreseen by the board, and for other reasons, I believe growth and particularly profitability are likely to make an even stronger showing next financial year.

Dates for the diary are 24th.Sept and 23rd.Oct, after which the board will be free to be more specific about the dividend, but I do not expect that until Nov. results.

There may be part of the equation. Cannacord Genuity has sold about £500k. Someone ( EBT ?) has bought them.

Looking at the new delayed trades, it appears it is not so much a question of support, but buying prior to news at lower prices.

As discussed before, I am of the view that Dean Dickinson will ensure that development work is ongoing to show Castleton embraces modern technology, keeping the products at the forefront of sector offerings and from an investors viewpoint competitive. He has said as much, and it is hand in glove with the infrastructure work being undertaken to promote sales in Managed Services. That I believe, will form most of the capital expenditure in the current financial year.
The share price is behaving itself.

On the reasonable assumption the buyer is Oak Trust, and stating the obvious, it would be better to have some PI interest in future prospects, to move the price for Oak to support, if I am properly interpreting part of the intention behind the EBT. That may mean progress is imminent, with the initial 'buybacks' a forerunner of an RNS. But perhaps that is over-thinking it.

Buyback or not, there has been fair buying at 1.28 - 1.30 over the month, culminating in today's trades. Certainly no sign of dropping back, as we wait for them to share progress. The partnership with Liberty was announced in November, only one acquisition of several has been made, and the cash required has been pulled in. Presumably the next acquisition(s) are being worked up.

And then there is whatever, notably, MXLG has to offer. I think the second acquisition, said on 9th. May to be expected in the 'near term' will likely make more impact, when commentators can consider the combination with SICL. Mxcp has the cash at its disposal, which together with a co-investor and Liberty Global should prove sufficient to fund a number of acquisitions of the size of SICL, without detriment to shareholders.
Muted response today. But if nobody else is picking up on this and buying, it is known that Oak Trust will.

Completed. £2m paid to Oak Trust (Guernsey ) Ltd. who administer the EBT. The trust is a separate legal entity, and the payment is initially a loan, for reasons best known to those involved. Oak Trust may now buy MXCP shares into the EBT at their discretion.

About 2/3rds. of the 60 working day period ( without complication ) for the FCA to consider change of control has now elapsed. Completion can then take place. ( RNS 19th. July )

We smaller investors rely upon the larger ones and their resources to hold managements to account, and where honesty prevails, in looking after their own interests they look after ours. In this case, those holding sway believe the new resolution to be sufficiently appropriate. A diverse range of major investors can therefore be of some importance - one of the reasons I prefer to see new investors buying in to the company.

I have had to look at that, and am always ready to be corrected on these things. I believe I am right in saying we are a little better off than that, in respect of the original loan notes outstanding for Kypera. The original loan notes were £1.5m MXCP and £2m BGF. Mxcp were paid off during the current period. It therefore leaves the BGF - 5% interest rolled up into the loan, which will need paying by Feb. 2021, with Castleton permitted to settle Feb. 2019 on without dilution, and BGF able to convert at any time and in the money ( according to me ) today to the tune of say £570k on conversion, taking the rolled up interest into account. It is, as you know, all catered for as part of Castleton's debt. Without taking any other consideration into account, if I was BGF I would convert, now or later. If I was Castleton, I would want to prevent that. They will be talking to each other.
I have always had confidence in Dean Dickinson and the CFO.

It does not seem out of the way, does it.
That is revenue, but there are other matters when considering the bottom line of the future and the dividend.There is also the improvement of margins on individual products and overall.
I have frequently mentioned the Agile mobile agreement. Castleton has been paying £600k per year since April 2016. That will end in March 2019. £600k to the good going forward.
With Castleton Strategic Modelling ( formerly HousingBrixx ) Castleton has been paying £300k per year since May 2015. That ended in June. £300k to the good going forward.

Those are one-offs, but taken together are significant savings every year going forward compared to previous years, and are on top of further sales revenue and profit. Increase in margins.

Then there is the repeat revenue, subject to existing, multi year contract. "Recurring revenue represents 60.1% of total revenues (2017: 64.8%), the decrease in percentage terms due to the strong performance of non-recurring revenues, predominately implementation revenues, during the year." Excellent service has to be provided, and contracts retained, but they do not have to be resold. Increase in margins.

So increasing revenue is very important, and with 60% of the 700 or so customers only taking one of many Castleton products, sales penetration is still very low, and with continued success there is much more that may be achieved through cross-selling and subsequent lucrative migration to Managed Services, under contract. But profitability is in truth the bottom line, and that is what Dean Dickinson is working towards - increasing cumulative repeat revenue, thus increasing repeat profit, at improved margins.

I note also during my reading that the conditions for a contingency consideration payment to 365Agile will not be met.
Thus only a remaining £400k of the normal 600k pa cash consideration remains to be paid to 4th. April 2019, whereupon the mobile is Castleton's in social housing in perpetuity at no further charge - a relief of £600k per annum. There will be no final payment of £300k.

Part 3

So I see it as growth plus a dividend. In that last connection, the CFO's comments on full year results should be borne in mind to avoid unnecessary disappointment at the dividend level. Earnings per share going forward (on which a dividend will be based ) will be less than reported on 19th. June, due to the application then of non-recurring exceptional and tax credits. But it will be progressive in line with EPS.

So for me, primarily interested in growth, any dividend figure ( likely with half year results ) will be acceptable. I shall be more interested in the PBT figure this time around, which for the corresponding period last year was £0.18m. Last full year was £1.82m. It would therefore be unsurprising to see a 400% plus increase in PBT this half year over H1 last, bearing in mind the announcement that this financial year started well, with trading "comfortably" in line with expectations, and also that the individual value of new contracts has started to grow.

I anticipate a trading update in October, as before, and similarly the half year results in November. With a stable and growing company like this, and in the market in which it operates ( slow moving but providing increasing contracted core revenue ) the sense of what the company has so far reported is more than likely to be what we shall get. I therefore expect to see a strong set of results, and bearing in mind the reported growth of 9% in contracted backlog of revenue at start of year, probably exceeding the company's 10% revenue growth year on year minimum target. I have mentioned an increase in PBT, though this half year will show a reduced EPS from last full year. But the bottom line and the EPS must be capable of supporting payment of a dividend.

It also seems, as the company said it would be implemented this year, that results would be a suitable time to formalise the dividend. Castleton do not report the cross-selling but we may have prior news, as the company enhances its ability to make full suite sales and secure Managed Services contracts.