Castleton warns on profits following weaker-than-expected first half
Software firm Castleton issued a profit warning on Thursday following weaker-than-expected interim revenues in its product and professional services units.
Castleton said it expects to see a material improvement in its sales, underlying earnings and cash generation in the second half, but cautioned that it would not be enough for the group to meet current expectations.
The AIM-listed group expected to generate revenue of no less than £11.6m, adjusted EBITDA of at least £2.9m and cash generation of roughly 79% of adjusted EBITDA during the six months ended 30 September.
Recurring revenues increased and represented approximately 65% of total revenue in the period but were not enough to offset a reduction in one-off revenues, meaning Castleton's results would be lower across the board versus the strong comparable period a year earlier.
Despite this weak half, Castleton said it remains confident in the long-term prospects of the group, with the anticipated effects of the merging of the company's managed services and software divisions starting to come through.
As of 0845 BST, Castleton shares had tumbled 44.09% to 52p.