Castleton Technology plc (LON: CTP), the software and managed services provider to the public and not-for-profit sectors, today announced its unaudited interim results for the six months ended 30 September 2018.
Financial Highlights
· Revenues increased 20% to £12.9 million (H1 FY18: £10.8 million). Organic(i) revenue growth of 12%.
· Adjusted EBITDA(ii) increased 31% to £3.0 million (H1 FY18: £2.3 million). Organic(i) Adjusted EBITDA grew by 18%.
· Cash generated from operations of £3.0 million (H1 FY18: £2.3 million) which is 102% cash conversion(iii) (H1 FY18 103%).
· Strong Professional Services growth in the period of 44% has led to a change in revenue mix. Recurring revenues of £7.0m comprise 55% of total revenue (H1 FY18: recurring revenues of £6.8m comprise 63% of total revenue).
· Profit before tax for the period of £0.5 million (H1 FY18: £0.2 million)
· Net debt(iv) as at 30 September 2018 of £5.3 million (30 September 2017: £8.0 million), down from £6.3 million as at 31 March 2018
· Intention to implement a progressive dividend policy for the full year
Operational Highlights
· Significant new Managed Services contract win with Dumfries and Galloway Housing Partnership (“DGHP”)
· Significant Managed Services contract extension with existing customer Circle Voluntary Housing Association (“Circle”) following a full tender process
· Acquisition of perpetual software licence in relation to the platform upon which Castleton’s modelling solution(v) is based with no more licence fees payable, enhancing the Group’s gross margin by c.£0.3 million per annum.
· Organisational integration and legal hive up of Kinetic Information Systems Pty Ltd (‘Kinetic’) completed, with cross sell of Castleton solutions to the Kinetic customer base underway.
· Growth in contracted backlog of 12% in Software Solutions and 14% in Managed Services year on year
· Strong customer retention and visibility over revenues with social housing customer base now 564, compared to 552 as at 31 March 2018.
Post-Period Highlights
· Launch of Castleton.DIGITAL, an interactive platform designed to improve the services between residents and housing providers
· Shareholder and Court approval for capital reduction, giving the Company the ability to make distributions to shareholders
David Payne, Chairman of Castleton, commented:
“I am pleased with the progress the Group has made in the first six months of FY19, with the strong organic growth achieved demonstrating Castleton is delivering against its stated strategy. Additionally, new contract wins and the acquisition of the perpetual software licence in relation to the platform upon which Castleton’s modelling solution(v) is based further strengthens Castleton’s position in the market and offering to customers. The Board remains optimistic about the Group’s success and is confident that the growth achieved during the period will continue as we further cross-sell into our customer base. Since the period end, the Company has successfully obtained approval for a capital reduction process which gives the Company the ability to make distributions to shareholders and it is our intention to commence a progressive dividend policy for the full year.”
As of July 2018, MXC Capital Ltd (LON:MXCP) holds a 15.39% share in Castleton Technology
MXC Capital (LON:MXCP) is a specialist technology adviser and investor with a track record of investing in and advising companies in the TMT sector. We bring together a deep knowledge of technology, first-hand experience of managing companies in the sector, an ability to make meaningful investments and a highly experienced corporate advisory team in support, all of which we combine to grow shareholder value.
