TIDMCTP
RNS Number : 2160Y
Castleton Technology PLC
04 December 2017
Castleton Technology PLC
("Castleton", the "Company" or the "Group")
Acquisition of Kinetic Information Systems Pty Ltd
Castleton Technology plc (AIM: CTP), the software and managed
services provider to the public and not-for-profit sectors, is
pleased to announce the acquisition of Kinetic Information Systems
Pty Ltd ("Kinetic"), the leading provider of software solutions to
the Community Housing sector in Australia, for an initial cash
consideration of AU$2.0 million (GBP1.14 million*) and a deferred
cash payment of AU$0.5 million (GBP0.3 million*) (the
"Acquisition"). A further cash payment of up to AU$0.5 million
(GBP0.3 million*) may also be payable dependent on financial
performance.
Highlights
-- Kinetic is Australia's leading provider of enterprise
resource planning ("ERP") software solutions for the Australian
Community Housing sector
-- Proprietary Kinetic Housing Schema software platform
-- Strong relationships with Community Housing providers,
Government Housing departments and other key industry
stakeholders
-- Consistent track record of strong revenue and EBITDA growth
-- Revenue of AU$2.3 million (GBP1.3 million*) and normalised
EBITDA of AU$0.6 million (GBP0.3 million*) for the year to 30 June
2017
-- Strategic acquisition to enable Castleton to leverage
Kinetic's market leading status and enhance the Group's existing
operations in Australia's growing Community Housing sector
-- Kinetic adds scale, customers, skills, market knowledge and specific Australian IPR
-- Kinetic adds over 50 customers into which Castleton can
cross-sell its other products with the combined customer base
giving Castleton circa 40% of the market share for Tier 1 providers
in Australia
-- Kinetic management and staff to remain within the Group to
target further growth in Australia
-- Acquisition is expected to be earnings enhancing in the
coming financial year to 31 March 2019
-- Ability to expand Kinetic's offering into other geographies
such as New Zealand and additional sectors such as Aged Care and
the National Disability Insurance Scheme
Dean Dickinson, Chief Executive of Castleton, said:
"This strategic acquisition enables us to capitalise on the
significant opportunities that Australia's growing Community
Housing sector presents, using the capabilities that the Group has
developed to successfully serve the UK market. Kinetic has a great
reputation for delivering quality software and services on time and
on budget, evidenced by its near 100% customer retention over the
last 10 years. The Acquisition also enables us to cross-sell
Castleton's other products and services into Kinetic's customer
base, a strategy which continues to bear fruit among our customers
in the UK and Ireland."
* calculated with an exchange rate of AU$1: GBP0.57
Enquiries: Castleton Technology Tel. +44 (0)845 241
plc 0220
Dean Dickinson, Chief
Executive Officer
Haywood Chapman, Chief
Financial Officer
finnCap Limited Tel. +44 (0)20 7220
Jonny Franklin-Adams 0500
/ Simon Hicks
MXC Capital Markets Tel. +44(0)20 7965 1849
LLP
Marc Young / Charlotte
Stranner
Alma PR Tel. +44(0) 7780 901979
Rebecca Sanders-Hewett/
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.
Further Details on Kinetic
Kinetic is a specialist ERP software and implementation services
provider focusing on the Community Housing sector in Australia.
ERP Software
Kinetic initially provided solutions to organisations through
the resale of ERP and Business Intelligence ("BI") software.
Kinetic has now developed a proprietary system, Kinetic Housing
Schema, which is a Community Housing solution that transforms the
standard ERP and BI software into a fully integrated solution for
the Community Housing sector. This proprietary technology is
combined with third party products dependent on client
requirements. The three pillar offerings underpinning Kinetic's ERP
software solutions are:
-- MYOB Greentree: MYOB Greentree is a low-cost, high
performance Tier 2 ERP software solution purpose built for the
mid-size market. Greentree is a fully integrated, modular system
making it a solution that can be readily adapted to meet the needs
of a diverse range of businesses across various industries.
-- Kinetic Housing Schema: this has been developed over the past
7 years by Kinetic and takes Greentree's core functionality,
integrates it with BI solutions, and tailors these to the Community
Housing sector. Kinetic has also created a data warehouse for
Kinetic Housing Schema to allow regulatory, statutory and KPI
measurement that is specific to both Local, State and Federal
levels of Government.
-- QlikView: QlikView is a business intelligence software
solution that aims to deliver true self-service business
intelligence without the use of intermediaries. It aggregates and
consolidates data from a variety of data sources and integrates
these into a single end-user interface.
ERP Implementation Consulting Services
Kinetic has also developed consulting methodologies covering the
implementation and support of ERP projects termed IMPACT and
MOMENTUM respectively.
-- IMPACT: the Kinetic IMPACT methodology was developed to
handle the successful implementation of Tier 2 ERP solutions by
taking the useful aspects of the Tier 1 solution, Prince 2, and
refining them to meet the speed and practicalities that Tier 2
requires. This is combined with Kinetic's project management skills
to provide structured and seamless implementation.
-- MOMENTUM: the MOMENTUM support offering provides ongoing
support and includes the resolution of day to day or operational
issues as well as the continual evaluation of ERP systems to ensure
they are fully functional and still aligned with the business'
objectives.
Kinetic has over 50 customers, the majority of whom are
Community Housing providers with average retention of 10 years. In
the year to 30 June 2017, Kinetic generated revenues of AU$2.3
million (GBP1.3 million*) and normalised EBITDA of AU$0.6 million
(GBP0.3 million*). As at 30 June 2017 the business had gross assets
of AU$1.6 million (GBP0.9 million*), including cash of AU$1.2
million (GBP0.7 million). Kinetic was acquired on a cash and debt
free basis, with a normalised level of working capital.
The Acquisition is expected to be earnings enhancing in the
coming financial year to 31 March 2019.
Terms of the Acquisition
Consideration for the Acquisition was an initial cash payment of
AU$2 million (GBP1.14 million*) with a deferred cash payment of
AU$0.5 million (GBP0.3 million*) payable on the second anniversary
of completion. A further cash payment of up to AU$0.5 million
(GBP0.3 million*) may be paid to the vendors on or before 31
October 2018 dependent on Kinetic's EBITDA for the year ended 30
June 2018.
The initial cash consideration for the Acquisition was financed
through the Company's existing facilities with Barclays Plc.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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