10 Oct 2019 07:00
10 October 2019
Castleton Technology PLC
("Castleton", the "Group" or the "Company")
Trading Update and Notice of Interim Results
Castleton Technology plc (AIM: CTP), the software and managed services provider to the public and not-for-profit sectors, today announces the following update on trading for the six-month period to 30 September 2019 ("HY2019").
The Company generated revenue of not less than £11.6 million, adjusted EBITDA* of not less than £2.9 million and cash generation in the period of not less than 79% of adjusted EBITDA*, facilitating a continued reduction in the Company's net debt compared to the prior year.
Recurring revenue has increased on an absolute basis and represented approximately 65% of total revenue in the period.
Trading in HY2019 has been behind expectations, primarily due to product and professional services revenue being lower than anticipated. The increase in recurring revenue has not been enough to offset the reduction in one-off revenue, and as a result of this, revenue, EBITDA and operating cash are lower than the strong comparable period last year.
The Company is confident that revenue, EBITDA and cash generation will show a material improvement in the second half of the year. This is not expected to be sufficient to meet current market expectations. Despite this, the Board remains confident in the long-term prospects of the Group with the anticipated effects of the merging of the Company's managed services and software divisions starting to come through.
The interim results will be announced on 5 November 2019.
Dean Dickinson, CEO of Castleton, said:
"The second quarter of the financial year has been significantly weaker than we expected particularly compared to the strong comparable period last year. This is primarily due to revenues of a one-off nature. Whilst this is difficult in the short term it highlights the importance of transitioning away from one-off revenues and focusing our efforts on growing our recurring revenues. In the first quarter of the year we reorganised the Group to streamline our sales and delivery functions. Embedding this has both taken longer and been more disruptive than we anticipated, however it positions the Group well for the longer term. Despite these short term challenges, we are confident that the move to 'One Castleton' will enable us to offer customers better service and drive future growth."
*Earnings for the period from continuing operations before net finance costs, tax, depreciation and amortisation as accounted for under IFRS16. EBITDA on a similar pre IFRS16 basis to the comparative period last year would be not less than £2.7 million.
Enquiries:
Castleton Technology plc Dean Dickinson, Chief Executive Officer Haywood Chapman, Chief Financial Officer
| Tel. +44 (0)845 241 0220
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finnCap | Tel. +44 (0)20 7220 0500 |
Jonny Franklin-Adams / Simon Hicks (Corporate Finance) Andrew Burdis (ECM)
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Alma PR | Tel. +44(0) 203 405 0205 |
Rebecca Sanders-Hewett / Helena Bogle | |
About Castleton Technology plc
Castleton Technology plc is a leading supplier of complementary software and managed services to the public and not‐for‐profit sectors. The Group is a 'one stop shop', providing integrated housing systems via the Cloud, working in partnership with its customers and resellers to help drive efficiencies whilst improving controls and customer service. www.castletonplc.com
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.