Valuation: CASTELAN LIMITED

Most recent filed accounts: FY2025, made up to 31 March 2025. That is about 18 months old today, and FY2026 (to 31 March 2026) is complete but not yet filed (due 31 December 2026). The valuation below is therefore based on a rolled-forward FY2026 figure, which widens the uncertainty band materially.

Castelan administers furniture protection and warranty policies and delivers the repair, restoration and replacement work behind them, for major UK retailers, manufacturers, insurers and leisure operators (website). Income comes from policy administration and underwriting-adjacent fees, a national technician network (Furniture Care Network), commercial furniture refurbishment contracts and care product sales. The accounts show warranty profit recognised partly on set-up or renewal with the remainder deferred over policy life, so revenue is a blend of recurring policy book economics and contracted service volume rather than pure recurring subscription.

The sector is outsourced extended warranty and protection-plan administration, with an attached field repair network, regulated by the FCA. UK extended warranty and protection products are an estimated £1.5bn to £2bn of annual gross written premium and commission, with the furniture and homewares slice perhaps £200m to £300m (estimates, not sourced). Demand is driven by retailers seeking attachment income on low-margin furniture sales, by consumers repairing rather than replacing, and by insurers outsourcing claims handling to specialists. Growth is low single digit overall: furniture retail volumes have been soft since 2022, offset by rising attachment rates and price inflation, so we assume 3 to 8% sector growth. The market is moderately consolidated at the top (a handful of national administrators and protection brands) with a long tail of regional repair networks; larger insurance services groups and claims outsourcers have been actively rolling up administrators and MGAs. The main structural risk over three to five years is regulatory: FCA Consumer Duty and fair value assessments have already reset pricing on add-on and GAP-style products, and commission compression is a live threat to margin. For a seller, acquirers of regulated administration platforms remain active and well funded, but the regulatory overhang means the window favours those who can evidence fair value compliance now rather than in two years.

Inferred from the website and general market knowledge, not sourced from filings.

• Guardsman UK (Sherwin-Williams): furniture protection plans and repair network; far larger parent.
• Uniters UK: European furniture warranty and care products; broadly comparable scale.
• Staingard: furniture protection insurance brand sold through retailers; similar niche, smaller.
• Homeserve-lineage furniture repair operators: direct heritage overlap on network repair.
• Domestic & General: warranty administration at scale; appliance-led and many times larger.

Basis: FY2025 and FY2024 figures are read from the full audited FRS 102 accounts filed 2 January 2026 (turnover less cost of sales for gross profit; operating profit plus depreciation of £127k and amortisation of £145k for FY2025 EBITDA of £1.4m). The FY2026 column is our roll-forward at 10% revenue growth (against 14.6% actual in FY2025) with gross margin held at 30% and EBITDA margin nudged to 9.3%, consistent with the directors' going concern note on strengthening trading and positive FY26/FY27 forecasts.

Debtors are derived as current assets less cash; stock is not separately disclosed in the extracted text. Working capital is exceptionally heavy for a service business: roughly £10m of receivables and prepayments against £15.7m of revenue, funded in part by an invoice discounting facility, so a buyer will set a demanding normalised working capital peg and will test the quality of that balance hard in diligence. Debt-like items at completion will include the bank mortgage secured by debenture and legal charge over the freehold, the invoice discounting drawn balance, directors' loans of £25k and the £37k owed to a director; the freehold (fair valued at £1.5m at 31 July 2024) and deferred income of £579k will both be negotiated items, and cash of £1.7m is largely operational rather than surplus.

Regulated warranty and claims administration businesses of this size typically trade at 5.0x to 7.0x EV/EBITDA, with the upper end reserved for high-margin, high-retention policy books. The most credible public precedent is BC Partners' acquisition of Davies Group, the insurance claims and administration outsourcer, in 2021, reported at a substantially higher multiple on a far larger platform (Reuters). No furniture-warranty transaction with a disclosed multiple is in the public domain, so we have not invented one.

We apply 5.0x to 6.5x to adjusted EBITDA of £1.65m, giving an indicative enterprise value of £8.3m to £10.7m. As set out in the bridge in the report opening, filed FY2025 operating profit of £1.16m plus depreciation of £127k and amortisation of £145k gives EBITDA of £1.4m; we add £180k for the FY2026 roll-forward (10% revenue growth at broadly held margin, given the accounts are 18 months old) and £37k for consultancy fees paid to a director that a buyer would not repeat, giving adjusted EBITDA of £1.65m. We have not added back directors' remuneration of £553k: the CEO, FD and COO are working executives whose roles must be replaced.

The multiple sits below the sector midpoint because, on our assumptions, EBITDA margin is only 5 to 10% and revenue quality is around 30% recurring with ±10% swings. It is lifted off the floor by 8 to 20% growth, ~2% capex intensity and an FCA permission with a 1.5m-customer footprint.

What this range hangs on:

• FY2026 delivered at least £17m of revenue at a margin no worse than FY2025.
• The £10m receivables balance is clean and collectible, not a working capital hole.
• Retailer contracts are contracted, assignable and not concentrated in one or two accounts.
• Consumer Duty fair value assessments do not force commission or premium reductions.

These bars are calibrated for UK SMEs and do not apply to midcap or larger businesses, where the thresholds are very different.

Margin is what caps the multiple: at scale of £17m you are being paid on a 9% EBITDA line, and every point of margin is worth roughly £900k of enterprise value.

Highest return: evidencing client concentration and contract terms, because without it a buyer will price the worst case and defer a large share of consideration.

A trade sale would attract insurance services groups, claims and warranty outsourcers and protection-plan brands seeking UK furniture capability and an FCA-authorised platform. Realistically that means a competitive headline price with meaningful earn-out attached to client retention, a six to nine month process with regulatory change-in-control adding time, and absorption of the Castelan brand with the founding directors exiting inside twelve months.

At your size expect a full, professionally run process with a national mid market adviser and genuine competitive tension between several bidders. Allow around nine to twelve months from starting properly to money in the bank.

At this size the single biggest determinant of price is competitive tension. A process with one buyer is a negotiation. A process with four is an auction.