Member Info for Raleigh

I expected a notification today on the previous transactions. It has always been known the shares traded over the weeks and months were being bought, and at least some are now evident as buys at 72p. In this case I regard it as positive for the company and its share price. More than one holdings RNS soon?

IT is interesting, and we shall know no more without notification. Whatever the whys and wherefores, the fact is stock is changing hands at this price and has been for some time. That, with the company performing well, must be good for shareholders,

Everything seems to be ticking over as planned, with the last indications that results will be in line with forecasts and strong cash generation continues. Last year revenue was �20.3m. It seems distinctly possible for this financial year to increase that organically by the target of 10% minimum to �22.33m ( they did 10.9% H1 )and add on the �0.4m contributed by Kinetic. Say �22.7m. Something around that mark. Hopefully better. We have been told that the cost base has stabilised following the plethora of acquisitions and the expense of integration, so I would expect at least positive reporting on profitability. There there will be some costs arising from the Kinetic deal to be swallowed in the next accounts. One naturally remains optimistic about cross selling and the one stop shop in the UK and Ireland, and the potential for Australian growth.

And that accretive outcome applies to Mxcp's existing ordinary shares. A win/win under the circumstances for all contenders.

Something specific may have raised its head, but options are only beneficial to shareholders if they are performance related and targets achieved.

MXCP option exercise was foreseen and planned for, and has been achieved without dilution. That accounting exercise is complete, or will be next financial year, and they can no longer come back for more. The same situation applies to the directors mentioned. There will be further options granted to key employees, as an incentive, in a similar fashion to Dean Dickinson, whose is performance based. Circumstances have changed, and looking to the future rather than having historic imbalance is fair and sensible. MXCP will claim fees as advisors, as they will do in respect of the Kinetic acquisition and any to follow. The positive pre year end mini trading update is welcome.

I appeciate there are others who have passed this way before, but in a different direction. But the trend is now upwards. News flow has been reasonable and pertinent. Management has fulfilled its responsibilities. Regardless of news, as with all these investments, the price will ultimately depend upon the yearly report and what investors think of it in the round.

The last holdings notification was on 30th. October. Since then, at 63.5 and now, a very significant number of shares have changed hands in bulk. The numbers are such that notification is required if purchased by the same holder, if a 3% holder. In the absence of notification, I conclude ( provided normal practice is followed ) that there is a new large holder or holders. Today's sale ( and purchase )amounts to about 0.5% on its own. Whatever else, the last 3 or 4 months has delivered beneficial price consolidation.

I am content to follow Dean Dickinson and his remuneration package - his buy at 53p is showing him about 28% up since Jan.17. The price has done well. And whilst accepting that one can never be sure of the future, the company seems well positioned to progress.

It does not make investment headlines, but importantly, in these straitened times and whatever their financial modelling, housing providers of whatever kind are here to stay and have a requirement to invest in technology - so the market is relatively strongly insulated against decreasing consumer discretionary spend. The share price has been unaffected this week. The company is consolidating and strengthening its position within the housing market, with improving forward earnings visibility and opportunity now in Australia - Kinetic, with cross selling opportunities, will hopefully give the market penetration there that Kypera failed to provide.

The company said the intention was to transition to longer term contracts, and there we have a 10year one. Should this prove the norm for the bread and butter deals, it will greatly assist forward visibility of repeat revenue. I agree, very late for the RNS - but obviously unconcerned to rush out any good news. Sloppy, but comforting if you like.

There is added value in these extended contracts and renewals as the company proceeds with their proclaimed second phase, following integration, insofar as they don't have to be resold, project managed and implemented. In effect, revenue for the much less costly business of hosting, maintenance and updating, across the portfolio, for all clients. The U.K. and Irish businesses seem soundly positioned for steady growth. The Australian business may now progress more satisfactorily than under just Kypera - particularly with Kinetic's existing penetration of the South Australian community housing market.

No figures, but looking back a similar contract was worth �1.6mil over 4 years. Whatever it is, the main thing is the contract is extended on experience of its use by a major association. So an endorsement that others may wish to follow. Though already possibly substantially in the revenue, some companies might have dealt with this by RNS.

This is not a simple reseller agreement. It looks a matter of joint development of an existing product to fit Castleton's solutions only in the housing sector. We do not know the terms of the deal, but if the figures are correct with Castleton as seller it will add almost £3m to Castleton revenues, though how much they retain is impossible to say. Dean Dickinson has integrated the company core, has started to form a much larger customer base in Australia, and is now adding value to products by technical development and partnership. This is progressing nicely.

This second phase, following integration is building steam. The U.K. operation is progressing nicely, and now the management can put much greater focus into another geography. There is now talk of ' emerging technology ' .I know not what that might be, but no doubt a further differentiator in the social housing market.

Dean Dickinson will not let the grass grow under his feet, not least because he has to grow the share price through sales to qualify for his incentivised package, and he knows about sales. He would have been aware of future intentions when appointed. An opportunity immediately exists to pick low hanging fruit on the way to the one stop shop aspiration. The Kinetic proprietary ERP product does not for example include either simple mobile ( which as I pointed out yesterday will be entirely free to Castleton come April 2019 ) or a sophisticated document management solutions, now regarded as basic requirements in the UK. It is probable that these will form the basis of initial sales, as they did here. The company has a successful model in the UK. It may be followed in Australia, and include further acquisitions in due course, though they will need to ensure their support capabilities are commensurate with their expansion plans.

Notably the acquisition was the first step following the Kypera acquisition in building the Australian customer base. It also brings beneficial partnerships. It adds an existing �1.3m revenue. There will be work to be done to assimilate it into Castleton's Australian set up and it will become earnings enhancing next financial year. It comes at a time when Castleton has completed its U.K. integration and they can now look to expand in Australia/New Zealand, through a company used to operating in the nascent community housing environment there. Management appear confident of strong future cash generation, avoiding dilution and dischaging debt from future earnings. The annual �600k licence fee for Agile mobile will end in April 2019, equivalent to the acquisition deferred cash and additional payments, though a final dependent on performance payment of up to �300k to 365 Agile may still arise. Small and easily-accommodated price to pay today for this important strategic acquisition.

In explanation, the large share transactions amount to a total of 3150000 shares, which works out at 4% of the shares in issue.

One would expect a notification from both seller and buyer under normal circumstances, if one of each involved. The seller could be any of the known holders, but Mxcp will need to raise funds to support their new joint private venture, and Ctp is probably best placed of their investments for profit to be taken. In my book, it does not matter. The sells have been bought.

Housing is coming up the agenda again. There is much to be done. The provision of housing will always be important, with the range of 'public' providers operating under national and local governmental guidance. But thankfully, how they do it is not Castleton's concern. The company is only concerned with the provision of tech to organisations to fulfil their requirement to administer what they have, effectively and efficiently, wherever it sits in the public ( or private ) sector. The company reported in July that whilst growing overall sales it had successfully transitioned to targeting Saas based multi year revenues, likely charged per customer user, according to customers' staffing requirements, and thus a welcome increase in number of units managed may be positively but only indirectly related to Castleton revenue. The emphasis here at the moment is on selling more products to existing customers on a repeat revenue basis and promoting the Cluid type operation.