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CTP Castleton Technology Plc

94.75
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Castleton Technology Plc LSE:CTP London Ordinary Share GB00BYV2WV72 ORD 2P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 94.75 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Castleton Technology PLC Half-year Report (7236V)

07/11/2017 7:00am

UK Regulatory


Castleton Technology (LSE:CTP)
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TIDMCTP

RNS Number : 7236V

Castleton Technology PLC

07 November 2017

Castleton Technology plc

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

Unaudited Interim Results for the Six Months Ended 30 September 2017

Castleton Technology plc (AIM: CTP), the software and managed services provider to the public and not-for-profit sectors, today announces its unaudited interim results for the six months ended 30 September 2017.

Financial Highlights

-- Revenues increased 10.9% to GBP10.8 million (H1 FY17: GBP9.7 million), of which 63% are recurring

   --     Adjusted EBITDA* increased 11.5% to GBP2.3 million (H1 FY17: GBP2.0 million) 
   --     Cash flow from operations of GBP2.3 million (H1 FY17: GBP1.8 million) 
   --     Profit before tax for the period of GBP0.2 million (H1 FY17: GBP0.04 million) 

-- Net debt** (including deferred and contingent consideration) as at 30 September 2017 of GBP8.0 million (30 September 2016: GBP11.1 million), down from GBP9.7 million as at 31 March 2017

Operational Highlights

-- Significant new multi-year contract wins with North Hertfordshire Homes and a community regeneration and housebuilding company

   --     Delivery of integrated product suite on two milestone contracts 

-- Increase in software sales on a hosted basis leading to a stronger base of recurring revenues and greater visibility of earnings

   --     Strong customer retention with customer base now over 730 

David Payne, Chairman of Castleton, commented:

"I am pleased to report on a strong performance from the Group during the first half of the year. Whilst recording significant organic growth in both revenues and profit, underpinned by excellent cash generation, the Group has also achieved some key operational milestones, notably the delivery of our integrated product suite on two milestone contracts, which illustrate both the appetite for the proposition and our ability to deliver.

Current trading remains robust and in line with market expectations. As such, the long term prospects for the Group remain positive and we are confident that we have the foundations in place to significantly scale the business."

* Before net finance costs, tax, depreciation, amortisation, exceptional items and share based payment charges

**Including deferred and contingent considerations and interest accrued on loan notes

Enquiries:

 
 Castleton Technology      Tel. +44 (0)845 241 
  plc                       0220 
  Dean Dickinson, Chief 
  Executive Officer 
  Haywood Chapman, Chief 
  Financial Officer 
 finnCap                   Tel. +44 (0)20 7220 
  Jonny Franklin-Adams      0500 
  / Simon Hicks 
 MXC Capital Markets       Tel. +44(0)20 7965 
  LLP                       1849 
  Marc Young / Charlotte 
  Stranner 
 Alma PR                   Tel. +44(0) 203 865 
  Rebecca Sanders-Hewett    9668 
  Helena Bogle 
  Josh Royston 
 

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 is inside information for the purposes of Article 7 of Regulation 596/2014.

Chairman's Statement

Dear Shareholder

I am pleased to report the results of the Group for the six months ended 30 September 2017. The prior year was one of consolidation for the Group, with the focus on completing the integration of the seven companies acquired during the previous two years. We therefore entered FY18 with a strong platform from which Castleton could grow and maximise the opportunities in our chosen markets. The first six months of FY18 have demonstrated that we are able to capitalise on this growth potential with the results showing significant growth in our revenues, adjusted EBITDA and profit before tax, as well as strong operating cash generation.

Operational Review

During the period we have implemented a new operational structure with clearly aligned objectives. Alongside this, sales teams have been tasked with defined territories and targets to enable the Company to better execute its strategy.

Significant multi-year contracts were won during the period. The long term nature of the contracts being entered into, as well as the increasing success we are experiencing in selling our products on a hosted basis, both increases our level of recurring revenues and provides better visibility of earnings and cash flow.

The delivery of Castleton's integrated product suite on two milestone contracts illustrates Castleton's ability to be a 'one stop shop' serving the social housing sector. This followed a period of significant product development and demonstrates that Castleton is able to provide its customers with the technology and services they require to operate effectively and achieve their goals.

The Group remains focused on increasing the number of customers who take multiple products, both by winning new customers and cross selling and upselling products to our existing base, thereby driving further growth in revenues and profit. Illustrating the Group's success in cross selling, the number of customers taking more than one product has increased in the period, with 37 new product sales to 21 existing customers.

Trading and Results

The Group generated revenue for the six months to 30 September 2017 of GBP10.8 million (H1 FY17: GBP9.7 million). Recurring revenues are more than 63% of total revenues, with further growth in recurring revenue expected due to the increasing number of multi-year contracts being entered into as well as the success in selling products on a hosted basis. Revenue in the Software Solutions division increased 14% and revenue in the Managed Services division increased 7% when compared to H1 FY17.

The Group generated an adjusted EBITDA* of GBP2.3 million in the period (H1 FY17: GBP2.0 million). Adjusted EBITDA* for the Software Solutions division and the Managed Services division (pre central costs) increased 20% and 5% respectively when compared to H1 FY17.

Central costs amounted to GBP0.7 million (H1 FY17: GBP0.6 million) before management recharges, excluding net finance costs, depreciation, amortisation of intangible assets, acquisition and integration costs and share based payments.

Exceptional costs amounted to GBP0.1 million (H1 FY17: GBP0.1 million) and related to restructuring costs of the Group's scanning bureau operation.

Net finance costs amounted to a P&L charge of GBP0.17 million (H1 FY17: GBP0.20 million).

As the integration of businesses is now complete the cost base has stabilised, the increase in revenues and reduction in exceptional integration and strategic costs and acquisition and reorganisation costs has contributed to a profit before tax of GBP0.18 million (H1 FY17: GBP0.04 million). This is after amortisation of intangibles of GBP1.5 million (H1 FY17: GBP1.5 million). The amortisation of intangibles and utilisation of brought forward tax losses, alongside a reduction in future tax rates have resulted in a deferred tax credit of GBP0.4 million (H1 FY17: GBP0.6 million) leading to profit after tax of GBP0.6 million (H1 FY17: GBP0.6 million).

Basic earnings per share from continuing activities was 0.80p (H1 FY17: 0.80p). Diluted earnings per share from continuing activities was 0.75p (H1 FY17: 0.72p). Adjusted diluted earnings per share was 2.73p (H1 FY17: 2.32p).

*Before net finance costs, tax, depreciation, amortisation, exceptional items and share based payment charges.

Cash Flow and Net Debt

Cash generated by operations amounted to GBP2.3 million (H1 FY17: GBP1.8 million) comprising adjusted EBITDA* of GBP2.3 million (H1 FY17: GBP2.0 million) and operating working capital movements of GBP0.07 million (H1 FY17: GBP(0.28) million). This gave a cash conversion of EBITDA of 103% (H1 FY17: 86%) with the increase on H1 FY17 being largely driven by an increase in trade and other payables.

Net finance charges paid of GBP0.06 million (H1 FY17: GBP0.15 million) reflect the cash cost of the interest on the loan with Barclays, the balance of which has decreased due to repayments of GBP0.5 million (H1 FY17: GBP0.5 million) made during the period. As at the balance sheet date, GBP3.75 million of the term loan was outstanding.

In April 2017 Group repaid GBP0.5 million of the convertible loan notes issued in January 2016 to part fund the acquisition of Kypera ("Kypera Loan Notes"). There are GBP2.7 million Kypera Loan Notes outstanding, including GBP0.3 million of accrued interest (30 September 2016: GBP3.4 million including GBP0.1 million accrued interest).

On 21 June 2017, it was agreed by the beneficiaries of the Opus loan notes issued at the time of the Company's acquisition of Opus Information Technology Limited that they would waive the remaining GBP0.2 million of loan notes in consideration of surrendering any potential warranty claims for onerous contracts under the sale and purchase agreement.

The total increase in cash and net cash equivalents was GBP0.06 million (H1 FY17: decrease GBP0.02 million). Net Debt (including contingent and deferred consideration and interest accrued on loan notes) at the period end stood at GBP8.0 million, down from GBP9.7 million as at 31 March 2017 and GBP11.1 million as at 30 September 2016.

The Board

In July 2017 Ian Smith, Deputy Chairman, stepped down from the Board. We would like to thank Ian for his instrumental role in establishing and delivering Castleton's organic and acquisitive growth strategy.

At the same time, Paul Gibson was appointed as Non-Executive Director of the Company. Paul is a partner at MXC Capital Limited and has had a highly successful career in the TMT sector, most recently as Chief Operating Officer of Advanced Computer Software Plc ("ACS") prior to its acquisition by Vista Equity Partners for GBP725 million. In his five years at ACS Paul oversaw a period of exceptional value creation and transformation, with responsibility for driving both organic and acquisitive growth. Prior to ACS, Paul held a number of senior roles in both financial and operational capacities, latterly as Finance Director of Redac Limited, the Alchemy backed turnaround that was subsequently sold to ACS for GBP100 million. The foundations of Paul's career were built at Unigate, GrandMet (now Diageo) and Oracle. Paul is a qualified accountant and currently sits on the board of Tax Systems plc as Non-Executive Director.

Outlook

Castleton made significant progress during the first six months of the year and this has continued into the start of the second half.

We will continue to concentrate on driving further organic growth across the Group, whilst increasing profitability by providing more of our customers with our broader range of complementary services - and all the time building our core of repeat revenues.

The Group remains on course to meet market expectations for the full year and looks forward to continuing to build on the solid foundations in place, cementing Castleton's position as a 'one stop shop' serving the social housing sector.

David Payne

Non-Executive Chairman

Consolidated Statement of Comprehensive Income

 
                                                  Unaudited       Unaudited     Audited 
                                                 six months      six months        year 
                                                      ended           ended       ended 
                                               30 September    30 September    31 March 
                                                       2017            2016        2017 
                                       Note          GBP000          GBP000      GBP000 
------------------------------------  -----  --------------  --------------  ---------- 
 Revenue                                  2          10,785           9,725      20,269 
 Cost of sales                                      (3,633)         (3,073)     (5,980) 
------------------------------------  -----  --------------  --------------  ---------- 
 Gross profit                                         7,152           6,652      14,289 
 Administrative expenses                            (6,799)         (6,418)    (14,100) 
 
 
 Adjusted EBITDA*                                     2,260           2,026       4,383 
 Depreciation                                         (129)           (123)       (225) 
 Amortisation of intangibles                        (1,502)         (1,469)     (2,997) 
 Exceptional items included 
  within administrative expenses          3           (133)           (107)       (741) 
 Charges for share-based 
  payment                                             (143)            (93)       (231) 
------------------------------------  -----  --------------  --------------  ---------- 
 
 Operating profit                                       353             234         189 
 Net finance costs                                    (169)           (195)       (728) 
 
 
 Profit / (loss) on ordinary 
  activities before taxation                            184              39       (539) 
 
 Income Tax                               4             442             589       1,002 
------------------------------------  -----  --------------  --------------  ---------- 
 
 Profit for the period attributable 
  to the owners of the parent 
  company                                               626             628         463 
------------------------------------  -----  --------------  --------------  ---------- 
 
 Earnings per share                       5 
 Basic earnings per share                             0.80p           0.80p       0.59p 
 Diluted earnings per share                           0.75p           0.72p       0.54p 
------------------------------------  -----  --------------  --------------  ---------- 
 
 

*Earnings for the period from continuing operations before net finance costs, depreciation, amortisation, exceptional items, group management charges and share based payment charges.

Consolidated Statement of Comprehensive Income

 
                                                   Unaudited       Unaudited     Audited 
                                                  six months      six months        year 
                                                       ended           ended       ended 
                                                30 September    30 September    31 March 
                                                        2017            2016        2017 
 
                                        Note          GBP000          GBP000      GBP000 
------------------------------------  ------  --------------  --------------  ---------- 
 
 
 Net income                                              626             628         463 
 Exchange differences on                                                               - 
  translation of foreign operations                       29               - 
------------------------------------  ------  --------------  --------------  ---------- 
 Total comprehensive income                              655             628         463 
 

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

 
                                              Unaudited       Unaudited     Audited 
                                   Note    30 September    30 September    31 March 
                                                   2017            2016        2017 
                                                 GBP000          GBP000      GBP000 
-----------------------------  --------  --------------  --------------  ---------- 
 
 Assets 
 Non-current assets 
 Intangible assets                               32,300          33,808      33,605 
 Property, plant and 
  equipment                                         900             717         781 
 Trade and other receivables                        148             376         261 
                                                 33,348          34,901      34,647 
 --------------------------------------  --------------  --------------  ---------- 
 
 Current assets 
 Inventories                                         72              13          50 
 Trade and other receivables                      4,527           5,818       5,050 
 Current income tax 
  asset                                              91               -         145 
 Cash and cash equivalents                          571             644         586 
---------------------------------------  --------------  --------------  ---------- 
                                                  5,261           6,475       5,831 
 --------------------------------------  --------------  --------------  ---------- 
 
 Total assets                                    38,609          41,376      40,478 
---------------------------------------  --------------  --------------  ---------- 
 
 Equity and liabilities 
 Equity attributable 
  to owners of the parent 
 Called up share capital                          1,625           1,617       1,625 
 Share premium account                           16,995          16,853      16,995 
 Equity reserve                                   2,668           2,919       2,919 
 Other reserves                                   7,966           7,966       7,966 
 Translation reserve                                 29               -           - 
 Accumulated loss                              (12,976)        (13,969)    (13,996) 
---------------------------------------  --------------  --------------  ---------- 
 Total equity attributable 
  to owners of the parent                        16,307          15,386      15,509 
---------------------------------------  --------------  --------------  ---------- 
 
 
 Consolidated Statement 
  of Financial Position 
  (cont.) 
                                                 Unaudited       Unaudited     Audited 
                                      Note    30 September    30 September    31 March 
                                                      2017            2016        2017 
                                                    GBP000          GBP000      GBP000 
---------------------------------  -------  --------------  --------------  ---------- 
 Liabilities 
 Current liabilities 
 Trade and other payables                6           8,611           8,654       8,836 
 Current income tax liabilities                          -             476           - 
 Finance leases                                         22              11          46 
 Borrowings                                          1,223           2,030       1,324 
 Convertible Loan notes                                  -             343         140 
 Deferred consideration                                717               -         838 
 Provisions                                            721             311         751 
---------------------------------  -------  --------------  --------------  ---------- 
                                                    11,294          11,825      11,935 
---------------------------------  -------  --------------  --------------  ---------- 
 
 Non-current liabilities 
 Trade and other payables                6           1,699           1,430       1,893 
 Borrowings                                          2,846           3,856       3,352 
 Convertible Loan notes                              2,353           3,336       2,957 
 Deferred consideration                                427           1,554         707 
 Contingent consideration                              748             619         748 
 Provisions                                              -             224           - 
 Deferred taxation liability                         2,935           3,146       3,377 
---------------------------------  -------  --------------  --------------  ---------- 
                                                    11,008          14,165      13,034 
---------------------------------  -------  --------------  --------------  ---------- 
 Total liabilities                                  22,302          25,990      24,969 
---------------------------------  -------  --------------  --------------  ---------- 
 Total equity and liabilities                       38,609          41,376      40,478 
---------------------------------  -------  --------------  --------------  ---------- 
 
 
 

Consolidated Statement of Changes in Equity

(Attributable to shareholders of the parent company)

 
                           (Called up share   (Share premium     Equity     Merger   Translation   (Retained earnings)   (Total equity) 
                                   capital)         account)    Reserve    reserve   reserve (c) 
                                                                    (b)        (a) 
                                   (GBP000)         (GBP000)   (GBP000)   (GBP000)      (GBP000)              (GBP000)         (GBP000) 
 (1 April 2016)                     (1,612)         (16,758)    (2,919)    (7,966)           (-)              (14,690)         (14,565) 
 (Profit for the period)                (-)              (-)        (-)        (-)           (-)                 (628)            (628) 
 (Transactions with 
 owners in their 
 capacity as owners:) 
 (Share based payments)                 (-)              (-)        (-)        (-)           (-)                  (93)             (93) 
 Conversion of loan 
  notes (d)                             (5)             (95)        (-)        (-)           (-)                   (-)            (100) 
 (At 30 September 2016)             (1,617)         (16,853)    (2,919)    (7,966)           (-)              (13,969)         (15,386) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (Loss for the period)                  (-)              (-)        (-)        (-)           (-)                 (165)            (165) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (Transactions with 
 owners in their 
 capacity as owners:) 
 Conversion of loan 
  notes (d)                             (8)            (142)        (-)        (-)           (-)                   (-)            (150) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (Share based payments)                 (-)              (-)        (-)        (-)           (-)                 (138)            (138) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (At 1 April 2017)                  (1,625)         (16,995)    (2,919)    (7,966)           (-)              (13,996)         (15,509) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (Profit for the period)                (-)              (-)        (-)        (-)           (-)                 (626)            (626) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (Other comprehensive 
  income)                               (-)              (-)        (-)        (-)          (29)                   (-)             (29) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (Transactions with 
 owners in their 
 capacity as owners:) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (Share based payments)                 (-)              (-)        (-)        (-)           (-)                 (143)            (143) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (Waiver of Opus loan 
  notes)                                (-)              (-)      (251)        (-)           (-)                 (251)              (-) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 (At 30 September 2017)             (1,625)         (16,995)    (2,668)    (7,966)          (29)              (12,976)         (16,307) 
------------------------  -----------------  ---------------  ---------  ---------  ------------  --------------------  --------------- 
 
   a)     Merger reserve 

The merger reserve arose from the acquisition of Redstone Communications Limited (GBP216,000) and Maxima Holdings Limited (GBP7.75 million) and represents the difference between the value of the shares acquired and the nominal value of the shares issued.

   b)     Equity reserve 

The equity reserve consists of the equity element of convertible loan notes that were issued as part of the consideration for the acquisition of Kypera Holdings Limited. The fair value of the equity component of convertible loan notes issued is the residual value after deduction of the fair value of the debt component of the instrument from the fair value of the loan note.

   c)     Translation reserve 

On consolidation, the balance sheet of Kypera Australia is translated into sterling at the rates of exchange ruling at the balance sheet date. Income statements and cash flows of Kypera Australia are translated into sterling at rates approximating to the foreign exchange rates at the date of the transaction. Gains or losses arising from the consolidation of Kypera Australia are recognised in the translation reserve.

   d)     Conversion of loan notes 

On 8 July 2016, the company issued 250,000 new ordinary shares of 2 pence each ("Ordinary Shares") at a price of 40 pence pursuant to the conversion of loan notes issued and on 4 October 2016 issued a further 375,000 new Ordinary Shares at a price of 40 pence pursuant to the conversion of loan notes issued as part of the previous acquisition of Opus Information Technology Limited.

 
                                                                    Unaudited 
                                                    Unaudited             six             Audited 
                                                   six months          months                year 
                                                        ended           ended               ended 
                                                 30 September    30 September            31 March 
 Consolidated Cash Flow Statement                        2017            2016                2017 
                                         Note          GBP000          GBP000              GBP000 
--------------------------------------  -----  --------------  --------------  ------------------ 
 
 Cash flows from operating 
  activities 
 Cash generated from operations             7           2,331           1,751               4,581 
 Exceptional items                                      (395)           (404)               (797) 
 Income tax received                                       54             110                 133 
 Net finance charges paid                                (64)           (147)               (256) 
--------------------------------------  -----  --------------  --------------  ------------------ 
 Net cash flows generated 
  from operating activities                             1,926           1,310               3,661 
 
 Cash flows from investing 
  activities 
 Receipt of deferred consideration 
  from sale of businesses                                  31              24                  53 
 Acquisition of businesses, 
  net of cash acquired                                      -               -               (450) 
 Purchase of intangible assets                          (340)           (150)               (309) 
 Purchase of property, plant 
  and equipment                                         (230)           (191)               (297) 
 Net cash flows used in investing 
  activities                                            (539)           (317)             (1,003) 
--------------------------------------  -----  --------------  --------------  ------------------ 
 
 Cash flows from financing 
  activities 
 Settlement of deferred consideration                   (300)           (500)               (500) 
 Repayment of borrowings                              (1,030)           (513)             (1,558) 
 Net cash flows used in financing 
  activities                                          (1,330)         (1,013)             (2,058) 
--------------------------------------  -----  --------------  --------------  ------------------ 
 
 Net increase/(decrease) 
  in cash and cash equivalents                             57            (20)                 600 
 Cash and cash equivalents 
  at beginning of period                                  270           (330)               (330) 
 Effect of changes in exchange 
  rate and other                                           29               -                   - 
 Cash and cash equivalents 
  at end of period                                        356           (350)                 270 
--------------------------------------  -----  --------------  --------------  ------------------ 
 
 

Comprising:

 
 Cash and cash equivalents       571     644     586 
 Overdrafts                    (215)   (994)   (316) 
----------------------------  ------  ------  ------ 
                                 356   (350)     270 
 ---------------------------  ------  ------  ------ 
 

Notes to the half-yearly financial information

   1.     Basis of preparation and general information 

The interim financial information is unaudited. This condensed consolidated interim financial information was approved by the Directors and authorised for issue on 6 November 2017.

The Company is a public limited liability company incorporated and domiciled in England. The address of its registered office is Castleton Technology plc ("Castleton"), 100 Fetter Lane, London, EC4A 1BN. The Company is listed on the AIM market of the London Stock Exchange.

The principal activity of the Group during the period was the provision of software and managed services to the public and not-for-profit sectors, predominantly the social housing sector.

Castleton and its subsidiaries have not applied IAS 34, Interim Financial Reporting, which is not mandatory for UK AIM listed companies, in the preparation of this half-yearly financial report.

This condensed, consolidated interim financial information for the six months ended 30 September 2017 does not comply, therefore with all the requirements of IAS 34, 'Interim financial reporting' as adopted by the European Union. The consolidated interim financial information should be read in conjunction with the annual financial statements of Castleton for the year ended 31 March 2017, which have been prepared in accordance with IFRS as adopted by the European Union.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2017 were approved by the Board of directors on 17 July 2017 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under sections 498 (2) or (3) of the Companies Act 2006.

Accounting policies

The accounting policies used in the preparation of the financial information for the six months ended 30 September 2017 are in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") as adopted by the European Union and are consistent with those which will be adopted in the annual statutory financial statements for the year ending 31 March 2018.

While the financial information included has been prepared in accordance with the recognition and measurement criteria of IFRS, as adopted by the European Union (EU), these financial statements do not contain sufficient information to comply with IFRSs.

Going concern

The consolidated interim financial information of Castleton has been prepared on the going concern basis.

The Directors have prepared detailed cash flow projections including sensitivity analysis on key assumptions. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance and the timing of key strategic events, show the Group will be able to operate within the level and conditions of available funding. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

Based on these facts, the Directors consider that the adoption of the going concern basis is appropriate.

   2.     Segment reporting 

Operating segments are reported in a manner consistent with the internal reporting to the Chief Operating Decision Makers ('CODM'). The CODM has been identified as the Executive Board.

The Group is comprised of the following main operating segments:

Managed Services In this segment are the results of Castleton Managed Services Ltd for the six months ended 30 September 2017.

Software Solutions This segment comprises the results of Castleton Software Solutions Ltd, Kypera Limited and Kypera Australia Pty for the six months ended 30 September 2017.

Six months ended 30 September 2017 - unaudited

 
                                                          Software 
                                      Managed Services   Solutions    Central     Total 
Continuing                                      GBP000      GBP000     GBP000    GBP000 
------------------------------------  ----------------  ----------  ---------  -------- 
Revenue                                          4,957       5,828          -    10,785 
------------------------------------  ----------------  ----------  ---------  -------- 
Operating profit/(loss) 
 before amortisation of intangibles 
 assets and management charge                    1,464         985      (594)     1,855 
Amortisation of acquired 
 intangibles                                     (484)     (1,000)       (18)   (1,502) 
Management charge                                (607)       (204)        811         - 
------------------------------------  ----------------  ----------  ---------  -------- 
Operating profit /(loss)                           373       (219)        199       353 
------------------------------------  ----------------  ----------  ---------  -------- 
Finance income                                       9           1          6        16 
Finance costs                                        -        (25)      (160)     (185) 
------------------------------------  ----------------  ----------  ---------  -------- 
Profit/(loss) before tax                           382       (243)         45       184 
Adjusted EBITDA*                                 1,551       1,371      (662)     2,260 
------------------------------------  ----------------  ----------  ---------  -------- 
 
 
 
   Assets and liabilities 
 Segment assets                   11,427     29,384   (2,202)     38,609 
------------------------------  --------  ---------  --------  --------- 
 
   Segment liabilities           (2,933)   (12,206)   (7,163)   (22,302) 
------------------------------  --------  ---------  --------  --------- 
 
   Net assets / (liabilities)      8,494     17,178   (9,365)     16,307 
------------------------------  --------  ---------  --------  --------- 
 

*Earnings for the period from continuing operations before net finance costs, tax, depreciation, amortisation, exceptional items, group management charges and share based payment charges.

Six months ended 30 September 2016 - unaudited

 
                                                           Software 
                                      Managed Services    Solutions    Central        Total 
Continuing                                      GBP000       GBP000     GBP000       GBP000 
------------------------------------  ----------------  -----------  ---------  ----------- 
Revenue                                          4,619        5,106          -        9,725 
------------------------------------  ----------------  -----------  ---------  ----------- 
Operating profit/(loss) 
 before amortisation of intangibles 
 assets and management charge                    1,416        1,064      (777)        1,703 
Amortisation of acquired 
 intangibles                                     (485)        (984)          -      (1,469) 
Management charge                                (617)         (46)        663            - 
------------------------------------  ----------------  -----------  ---------  ----------- 
Operating profit /(loss)                           314           34      (114)          234 
------------------------------------  ----------------  -----------  ---------  ----------- 
Finance income                                      10            -          1           11 
Finance costs                                        -          (5)      (201)        (206) 
------------------------------------  ----------------  -----------  ---------  ----------- 
Profit/(loss) before tax                           324           29      (314)           39 
Adjusted EBITDA*                                 1,476        1,143      (593)        2,026 
------------------------------------  ----------------  -----------  ---------  ----------- 
 
 
 Assets and liabilities 
 
 Segment assets                              12,572     28,688                116              41,376 
------------------------------  -------------------  ---------  -----------------  ------------------ 
 
   Segment liabilities                      (3,628)   (12,638)            (9,724)            (25,990) 
------------------------------  -------------------  ---------  -----------------  ------------------ 
 
   Net assets / (liabilities)                 8,944     16,050            (9,608)              15,386 
------------------------------  -------------------  ---------  -----------------  ------------------ 
 

*Earnings for the period from continuing operations before net finance costs, tax, depreciation, amortisation, exceptional items, group management charges and share based payment charges.

   3.     Exceptional costs 

In accordance with the Group's policy in respect of exceptional costs the following charges were incurred:

 
                                                            Unaudited 
                                            Unaudited             six     Audited 
                                           six months          months        year 
                                                ended           ended       ended 
                                         30 September    30 September    31 March 
                                                 2017            2016        2017 
                                               GBP000          GBP000      GBP000 
-------------------------------------  --------------  --------------  ---------- 
 Integration and strategic costs                    -              71         278 
 Acquisition and reorganisation 
  costs:                                            -              36         448 
 Creation of restructuring provision                -               -          15 
 Restructuring costs                              133               -           - 
 Waiver of Opus loan note                       (215)               -           - 
 Creation of provision in respect 
  of onerous Opus contracts                       215               -           - 
                                                  133             107         741 
-------------------------------------  --------------  --------------  ---------- 
 

Restructuring costs relate to closure of the scanning bureau in the period.

On 21 June 2017, it was agreed by the beneficiaries of the Opus loan notes issued at the time of the company's acquisition of Opus Information Technology Limited that they would waive the remaining GBP0.2 million of loan notes in consideration of surrendering any potential warranty claims for onerous contracts under the sale and purchase agreement.

During the 6 months ended 30 September 2017, a provision was created in respect of onerous contracts associated with the acquisition of Opus Information Technology Limited.

   4.     Taxation 

Tax on profit on ordinary activities

 
                                                       Unaudited 
                                       Unaudited             six     Audited 
                                      six months          months        year 
                                           ended           ended       ended 
                                    30 September    30 September    31 March 
                                            2017            2016        2017 
                                          GBP000          GBP000      GBP000 
--------------------------------  --------------  --------------  ---------- 
 Corporation Tax 
 Current tax on profit / (loss) 
  for the year                                 -               -       (571) 
 Deferred tax 
 Origination and reversal of 
  timing differences                       (442)           (290)       (431) 
 Changes in rates of tax                       -           (299)           - 
 Total tax credit                          (442)           (589)     (1,002) 
--------------------------------  --------------  --------------  ---------- 
 

The rate of UK corporation tax for the year beginning 1 April 2017 is 19% (year beginning 1 April 2016 it was 20%). From the year starting 1 April 2020 the UK corporation tax rate drops to 17%. Deferred tax has been measured on the basis of these rates and reflected in the financial statements.

   5.     Earnings per share 

Basic earnings per share and diluted earnings per share are calculated using a weighted average number of shares of 78,714,832 and 82,919,847 respectively (30 September 2016: weighted average number of shares of 78,204,586 and 86,743,592 respectively and at 31 March 2017: weighted average number of shares of 78,339,832 and 86,215,879 respectively).

Adjusted diluted EBITDA* per share has been shown on the grounds that it is a common metric used by the market in monitoring similar businesses.

 
                                                         Unaudited 
                                         Unaudited             six     Audited 
                                        six months          months        year 
                                             ended           ended       ended 
                                      30 September    30 September    31 March 
                                              2017            2016        2017 
 
   Basic and diluted earnings per 
   share: 
 Basic earnings per share                    0.80p           0.80p       0.59p 
 Fully diluted                               0.75p           0.72p       0.54p 
 Adjusted diluted EBITDA* per 
  share                                      2.73p           2.32p       5.08p 
 

*Earnings for the period from continuing operations before net finance costs, tax, depreciation, amortisation, exceptional items and share based payment charges.

   6.     Trade and other payables 
 
                                                     Unaudited 
                                     Unaudited             six     Audited 
                                    six months          months        year 
                                         ended           ended       ended 
                                  30 September    30 September    31 March 
                                          2017            2016        2017 
                                        GBP000          GBP000      GBP000 
------------------------------  --------------  --------------  ---------- 
 Current 
 Trade payables                            653           1,011         298 
 Other payables                            100             291          67 
 Taxation and social security              502             680         646 
 Accruals                                1,063             680       1,180 
 Deferred income                         6,293           5,992       6,645 
                                         8,611           8,654       8,836 
 Non current 
 Deferred income                         1,414           1,430       1,718 
 Accrued interest                          285               -         175 
------------------------------  --------------  --------------  ---------- 
                                         1,699           1,430       1,893 
------------------------------  --------------  --------------  ---------- 
 
   7.     Net cash flows from operating activities 
 
                                                             Unaudited 
                                             Unaudited             six     Audited 
                                            six months          months        year 
                                                 ended           ended       ended 
                                          30 September    30 September    31 March 
                                                  2017            2016        2017 
                                                GBP000          GBP000      GBP000 
--------------------------------------  --------------  --------------  ---------- 
 Profit/(loss) on ordinary activities 
  before tax                                       184              39       (539) 
 Adjustments for: 
 Exceptional items                                 133             404         797 
 Net finance costs                                 169             195         727 
 Depreciation of property, plant 
  and equipment                                    129             123         225 
 Amortisation of intangible assets               1,502           1,469       2,997 
 Equity-settled share based payment 
  charge                                           143              93         231 
 Movements in working capital: 
 Decrease in trade and other 
  receivables                                      518             661       1,514 
 Decrease in provisions                          (101)           (208)       (558) 
 Increase/(decrease) in trade 
  and other payables                               332           (975)     (1,235) 
 (Decrease)/increase in deferred 
  income                                         (656)           (224)         285 
 (Increase)/decrease in inventories               (22)             174         137 
 Cash generated from operations 
  before exceptional items                       2,331           1,751       4,581 
--------------------------------------  --------------  --------------  ---------- 
 
   8.     Net debt 
 
                                                            Unaudited 
                                            Unaudited             six     Audited 
                                           six months          months        year 
                                                ended           ended       ended 
                                         30 September    30 September    31 March 
                                                 2017            2016        2017 
                                               GBP000          GBP000      GBP000 
-------------------------------------  --------------  --------------  ---------- 
 Cash                                             571             644         586 
 Overdraft                                      (215)           (994)       (316) 
 Barclays Loan                                (3,750)         (4,777)     (4,250) 
 Mortgage (Documotive)                          (104)           (113)       (110) 
                                       --------------  --------------  ---------- 
 Net debt before loan notes and 
  deferred/contingent consideration           (3,498)         (5,240)     (4,090) 
 Loan notes and accrued interest 
  on loan notes*                              (2,638)         (3,681)     (3,272) 
                                       --------------  --------------  ---------- 
 Net debt before deferred/contingent 
  consideration                               (6,136)         (8,921)     (7,362) 
 Deferred consideration:                      (1,144)         (1,554)     (1,545) 
 Contingent consideration:                      (748)           (619)       (748) 
 Net debt                                     (8,028)        (11,094)     (9,655) 
-------------------------------------  --------------  --------------  ---------- 
 

* Accrued interest on loan notes is presented within "Accrued Interest" in Trade and other payables.

Advisers

Nominated Adviser and Broker

FinnCap, 60 New Broad Street London, EC2M 1JJ

Financial Adviser

MXC Capital Limited, 25 Victoria Street, London SW1H 0EX

Auditors

RSM UK Audit LLP, Portland, 25 High Street, Crawley, West Sussex, RH10 1BG

Solicitors

Beachcroft LLP, 100 Fetter Lane, London, EC4A 1BN

Registrars

Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU

Principal Bankers

Barclays Bank plc, 1 Churchill Place, London, E14 5HP

Company Number

03336134

Further details can be found on the Castleton website at the following address: www.castletonplc.com

This information is provided by RNS

The company news service from the London Stock Exchange

END

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(END) Dow Jones Newswires

November 07, 2017 02:00 ET (07:00 GMT)

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