Trading Update

Castleton Technology plc

("Castleton", the "Group" or the "Company")

Trading Update

Castleton (AIM:CTP), the leading provider of technology products and services to the social housing and not-for-profit sectors, announces a trading update for the year ended 31 March 2016.

Highlights

· Trading comfortably in line with market expectations:

- Adjusted EBITDA1 for the year to 31 March 2016 of £3.6 million

- Managed Services division adjusted EBITDA increasing 25% year on year

- Organic growth2 across the Software Solutions division of 20%

- Strong growth in recurring revenue base - now represents 58% of Group revenues

- Customer base expanded to over 600 customers

· Three acquisitions made during the year; integration substantially complete

· Operations established in Australia with a presence in New Zealand and South Africa; scope for further international expansion

· Castleton now offers the only truly integrated, single enterprise resource planning ("ERP") platform solution in the social housing sector

1 Adjusted EBITDA represents earnings for the year before net finance costs, depreciation, amortisation, integration and strategic costs, goodwill impairment and share-based payment charges.

2 Organic growth based on orders across the Software Solutions division comparing 12 months to 31 March 2015 with 12 months to 31 March 2016

Trading

The Group generated adjusted EBITDA1 for the year to 31 March 2016 of £3.6 million with the underlying business and all acquired businesses performing in line with the Board's expectations. There was strong growth in the Group's recurring revenue base, primarily due to the success of the Managed Services division in transitioning away from one off project revenue to revenue of a recurring nature, best reflected by the 25% year on year increase in EBITDA. The focus of the Software Solutions division has been to grow organically, and the organic growth2 of 20% on a year on year basis is reflective of the enlarged customer base of over 600 customers across the Group. This enlarged customer base has also provided significant cross-selling opportunities, with an increasing number of customers now taking more than one product or service from the Group.

During the year the Group was awarded significant new and extended contracts in both its Software Solutions and Managed Services divisions. Further hosted and managed services contracts were added as a result of cross-selling activities, supporting strong growth within the more traditional on premise solutions and support services portfolios. The Castleton management team remains focused on exploiting the significant cross-selling opportunities presented by the expansion of the Group's customer base as well as the expanded portfolio of products and services built through acquisitions.

Acquisitions and Integration

During the year, the Company made three acquisitions, Brixx Solutions Limited ("Brixx") and Impact Applications Limited ("Impact") in June 2015 and Kypera Limited ("Kypera") in February 2016.

Integration of the acquired businesses is substantially complete. With the exception of Kypera, all previous acquisitions have been merged into two divisions; Castleton Managed Services, consisting of the merged entities of Montal Computer Systems Limited and Keylogic Limited; and Castleton Software Solutions consisting of the merged entities of Documotive Limited, Opus Limited, Brixx and Impact. Kypera will be merged into Castleton Software Solutions in due course.

Castleton now offers the only truly integrated, single ERP platform solution, providing a unique "one stop" proposition to the social housing sector

Final Results

Castleton expects to report its results for the year ended 31 March 2016 in early August 2016.

Ian Smith, CEO of Castleton, commented:

"This has been a transformative year for the Group, bringing together all the acquisitions we've made, consolidating our position as the only true 'one stop' proposition for our sector. We continue to see strong demand for the Group's products and services. I'm especially pleased with the way our pipeline of additional opportunities with existing customers is building momentum, giving me great confidence in the Group's prospects."