Capture the Castleton

But for suppliers, such niches can represent significant market opportunities, as proved by Castleton Technology (CTP). Having spent prior years incorporating seven acquired businesses, Castleton enjoyed a pivotal 12 months to March 2018 – developing into a 'one-stop shop' supplier of integrated software products and managed services to the social housing sector.

On the software side, which contributed just over half of group revenue for FY2018, Castleton provides business processes to social housing landlords including tenant management, rent collection and repairs management. On the managed services side, it offers IT infrastructure services, and can act as an outsourced IT department.

And there’s plenty of room for growth. Castleton currently provides software and services to around 600 of the UK’s 1,700 housing associations, meaning there are many potential clients out there to win. Moreover, it is exploiting significant opportunties to cross-sell products to existing customers, which last year accounted for 77 per cent of new sales. All the same, at the year-end 60 per cent of customers were only using one product. They could go on to purchase more.

Castleton also offers good visibility of earnings, which is helped by the fact that recurring revenues represented 60 per cent of last year's sales. And while total sales rose 14.9 per cent to £23.3m, the group’s contracted backlog – revenue not yet realised – also grew 9 per cent. Meanwhile, recent deals for Castleton’s fully-integrated product offering, which was launched last September, will last as long as 10 years – bringing additional visibility.

The group also is also attempting to grow in overseas markets. The Aus$2m (£1.1m)  December acquisition of Kinetic boosted its fledgling Australian operation expanding Castleton’s presence in its secondary geography by bringing in 50 new clients and more cross-selling opportunities. This financial year, Castleton has purchased the perpetual licence underpinning its financial modelling platform for £1.6m in cash and shares. This will eliminate licence fees, which will benefit the group to the tune of £0.3m per year.