Castleton Technology PLC Acquisition of Deeplake Digital (7729M)
10 January 2019 - 10:30PM
UK Regulatory
TIDMCTP
RNS Number : 7729M
Castleton Technology PLC
10 January 2019
Castleton Technology PLC
("Castleton " or the "Group")
Acquisition of Complementary Communications Software
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 Deeplake Digital Limited
("Deeplake Digital") for cash consideration of GBP1.8 million.
Deeplake Digital provides digital technology for landlord and
tenant communication, specifically in the social housing sector,
via SMS, e-mail and social media platforms using its own
proprietary software.
Highlights
-- Acquisition of complementary software, bolstering Castleton's
existing suite and enabling the Group to enhance its operations
across its customer base
-- Additional annualised revenue of GBP0.8 million and normalised EBITDA of GBP0.3 million
-- 80% of the revenue is recurring
-- Expected to be earnings accretive in the full financial year ending 31 March 2020
Castleton will acquire 100% of the share capital of Deeplake
Digital, which owns the proprietary Deeplake Communications Manager
software, the market leader in digital customer communication
technology for landlord and tenant communication in the UK.
Deeplake Digital has strong relationships with more than 90
housing associations, and the acquisition will add 60 additional
annual contracts with existing Castleton customers and 30 annual
contracts with new customer names to Castleton which will increase
the opportunity for Castleton to cross-sell its other products to
the enlarged customer base.
The acquisition will add annualised revenue of GBP0.8 million,
of which 80% is recurring in nature, and normalised EBITDA of
GBP0.3 million based on the year to 30 June 2018. The acquisition
is expected to be earnings enhancing in the next full financial
year to 31 March 2020. The existing key staff in Deeplake Digital
will join Castleton, ensuring high quality delivery and
continuity.
Dean Dickinson, Chief Executive of Castleton, said:
"This strategic acquisition enables us to capitalise on the
significant opportunities within the Social Housing market's
ongoing market shift towards digitalisation, building on the
capabilities that the Group has already successfully developed.
Deeplake Digital adds scale, customers, skills, market knowledge
and specific digital communication intellectual property and has a
great reputation for delivering a quality product and service,
evidenced by its high customer retention levels over the past ten
years. This acquisition provides additional cross-selling
opportunities into Deeplake Digital's customer base, in line with
the Group's growth strategy."
Enquiries:Castleton Technology plc Tel. +44 (0)845 241 0220
Dean Dickinson, Chief Executive Officer
Haywood Chapman, Chief Financial Officer
finnCap Ltd Tel. +44 (0)20 7220 0500
Jonny Franklin-Adams / Simon Hicks (Corporate
Finance) Andrew Burdis (ECM)
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 information on Deeplake Digital
Deeplake Digital has developed a modern communications
management platform using the latest Microsoft.NET technology in
line with the existing Castleton development stack.
Deeplake Digital supports more than 90 Social Landlords in the
UK with tenant communication solutions offering a range of digital
platforms including Tenant Portal, Smartphone Apps, SMS, Email and
Social Media.
Pre-configured Housing Modules allow Landlords to deploy
information very quickly by providing prepared messages, automated
workflows, data interfaces and reports pre-built for each
department. This results in a comprehensive and easy to use digital
communication solution, which integrates with customer's Housing
Management System for simple deployment.
Since the business started 10 years ago, the average retention
of Deeplake Digital's customers is over six years. In the year to
30 June 2018, the Deeplake Digital business generated revenues of
GBP0.8 million and normalised EBITDA of GBP0.3 million. Deeplake
Digital was acquired on a cash and debt free basis, with a
normalised level of working capital.
Terms of the Acquisition
Consideration for the Acquisition is an upfront cash payment of
GBP1.8 million. The cash consideration for the Acquisition is being
financed through the Group's existing cash reserves and a
refinancing of the Group's existing facilities with Barclays Plc.
Barclays have extended the existing facilities by GBP1.5 million to
GBP4.0 million with an extension of the term of 19 months and a
reduction in interest rate of 0.25% to 2.25% above LIBOR.
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END
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