Disposal of QAD Software Consultancy Business

Castleton Technology Plc

 ("Castleton" or "the Company")

Disposal of QAD Software Consultancy Business

Castelton announces that it has agreed to sell the trade and certain assets of its QAD software consultancy business to Glantus Limited for a total cash consideration of £200,000, of which £50,000 is deferred for six months ("the Disposal"). 

The QAD software consultancy business is focussed on QAD consultancy and technical services to support ERP systems in the manufacturing and distribution sectors. QAD is a US based, Nasdaq quoted ERP vendor which previously had a formal working relationship with Maxima Information Group Ltd ("MIG"), a company acquired by Redstone plc in September 2012. QAD withdrew its support for the business some years ago and the business has been in decline since that time. The QAD software consultancy business is reliant upon the people it employs and its remaining customer relationships, both of which have been negatively impacted in recent months. The Board believes that significant financial and management investment is required to turn the business around. As a result, the Board have taken the decision to sell the business in order to allow a new management team to invest the time and resources required to return the business to growth.

In the year ended 31 March 2013 the QAD software and consultancy business and associated assets generated £877,000 of revenue and returned a profit before interest, tax and allocation of certain directly attributable overheads and expenses of £390,000. The profitability of the business and assets are expected to be lower in future financial periods and the estimated property and directly attributable overhead costs would be in excess of £250,000 per annum. The business will be transferred to Glantus Limited with assets carrying a book value of £7,000 and a small amount of WIP. Castleton will retain the existing debtors and creditors.

Following the Disposal, Castleton will retain ownership of MIG, a software business focused on supporting a range of its own developed and proprietary ERP, reservation and ticketing and payroll software products (www.ferrysoftware.co.uk). The company's services include the provision of software, hardware, development and continued support.

Castleton intends to utilise the proceeds from the Disposal to further its stated strategy of potential acquisitions within the technology sector.

Commenting on the Disposal Ian Smith, CEO said:

"The Board continues to actively consider options to maximise the value of the Company including potential acquisitions in line with our stated focus on the technology sector. We believe the consideration received from the Disposal reflects a fair return for a people based business that is in decline."

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