TIDMCLX
RNS Number : 1913T
Calnex Solutions PLC
23 November 2021
23 November 2021
Calnex Solutions plc
("Calnex", the "Company" or the "Group")
Interim Results
Calnex Solutions plc (AIM: CLX), a leading provider of test and
measurement solutions for the global telecommunications sector, is
pleased to announce its unaudited results for the six months ended
30 September 2021 ("H1 FY22" or "the Period").
The Board is pleased to report that the Group has experienced
continued strong levels of trading in the first half of the year
and expects this trend to continue through the second half of the
year. The Group's robust cash position has allowed the Group to
bring forward planned investment in the team to increase
operational capability, in line with order growth.
The Group continues to successfully deliver on its stated growth
strategy and the Board is confident in Calnex's ability to continue
benefitting from the underlying market growth drivers in the
telecoms market.
Financial Highlights
GBP000 H1 FY22 H1 FY21 FY21 H1 YOY
(*) % change
Unaudited Unaudited Audited
Revenue 9,251 7,721 17,978 +19.8%
Underlying EBITDA (1) 2,479 2,593 5,496 -4.4%
Adjusted Profit before
tax (2) 2,308 2,319 5,068 -0.5%
Adjusted basic EPS (pence)
(3) 2.05 3.02 5.83 -32.1%
Adjusted diluted EPS
(pence) (3) 1.99 2.42 5.21 -17.8%
Closing cash 13,643 4,511 12,668 +66.8%
Statutory measures:
EBITDA 3,877 3,424 6,554 +13.2%
Profit before tax 2,308 1,950 3,647 +18.4%
Basic EPS (pence) 2.05 2.41 4.68 -14.9%
Diluted EPS (pence) 1.99 1.93 4.18 3.1%
(*) Prior to the Company's Admission to trading on AIM, which
took place on 5th October 2020
-- Revenue growth of 20% on prior year to GBP9.3m (H1 FY21:
GBP7.7m) as a result of strong demand for telecoms testing
equipment, ahead of management's expectations at the start of
FY22
-- Planned and previously highlighted investment in product
development and operational scalability, to support future
growth
-- All profit measures ahead of management expectations at the
start of FY22, as a result of the strong revenue performance
-- Closing cash balance of GBP13.6m (H1 FY21: GBP4.5m before 5
October 2020 IPO net proceeds of GBP4.9m) after positive cash flow
of GBP0.9m in the half year driven by strong trading
performance
-- Movement in EPS compared with H1 FY21 is as a result of a
change in the number of shares in issue pre and post IPO, as well
as the subsequent issue of share options in the plc business with
no corresponding direct economic value
-- Maiden interim dividend of 0.28 pence per share in line with
the Board's intention to implement a progressive dividend policy in
the year to 31 March 2022
Operational Highlights:
-- Continued strong demand for testing instrumentation, with new
product launches having been well received
-- The Group has seen a return to pre-COVID customer spending
patterns in all regions, other than in China where demand has been
in line with the previous year
-- Industry regulation such as the new O-RAN standards continue
to drive the requirement for performance testing
-- Increased staffing levels across business development, sales,
R&D and support roles, to support new product development and
maximise exposure in new and existing territories
-- Maintained timely shipments to customers, whilst navigating
the semi-conductor component shortage
Outlook:
-- Strong levels of trading seen in H1 have continued into the second half of the year
-- Demand for telecoms testing equipment remains strong
-- Global semiconductor shortage is being closely monitored by
the Board but no negative impacts to date
-- The Board is confident in meeting the upgraded (**) market forecasts for the year
(**) Upgraded forecasts issued on 12 October 2021, following the
Company's Trading Update.
Tommy Cook, Chief Executive Officer, and founder of Calnex,
said: "These results mark another considerable step forward for
Calnex, as we continue to capitalise on the global telecom
industry's transition to 5G and the growth of cloud computing. The
results for the first half of FY22 are materially ahead of the
Board's expectations at the start of the year, as indicated in the
Company's Trading Update issued in October 2021, and confidence
levels remain high with the early signs being that sales momentum
will continue in the second half of the year . We have invested in
our team and resources and the continued positive response to the
new product launches provides optimism towards the long-term demand
for our offering.
"The breadth of our customer base across multiple regions,
combined with the ongoing successful expansion of the team, our
customer relationships and industry connections, places us in a
strong position to continue to benefit from the underlying market
growth drivers in the telecoms market."
(1) EBITDA after charging R&D amortisation, adjusted in
comparative periods also to exclude IPO costs and IPO related share
based payments
(2) Adjusted in comparative periods to exclude IPO costs and IPO
related share based payments
(3) Adjusted in comparative periods to exclude IPO costs and IPO
related share based payments, and the tax effect of these
adjustments
For more information, please contact:
Calnex Solutions plc Via Alma PR
Tommy Cook, Chief Executive Officer
Ashleigh Greenan, Chief Financial Officer
+44 (0)131 220
Cenkos Securities plc - NOMAD 6939
Derrick Lee, Peter Lynch
+ 44(0) 20 3405
Alma PR 0213
Caroline Forde, Harriet Jackson, Joe Pederzolli
Overview of Calnex
Calnex designs, produces and markets test instrumentation and
solutions for network synchronization and network emulation,
enabling its customers to validate the performance of the critical
infrastructure associated with telecoms networks. To date, Calnex
has secured and delivered orders to over 600 customer sites in 68
countries across the world. Customers include BT, China Mobile,
NTT, Ericsson, Nokia, Intel, Qualcomm, IBM and Facebook.
Founded in 2006, Calnex is headquartered in Linlithgow,
Scotland, with additional locations in Belfast, Northern Ireland
and California in the US, supported by sales teams in China and
India. Calnex has a global network of partners, providing worldwide
distribution capability.
Operational Review
Calnex experienced strong trading during the Period. The 20%
growth in revenue to GBP9.3m (H1 FY21: GBP7.7m) is a result of the
continued strong demand for telecoms testing equipment across the
Group's core markets. Revenues from the Americas region increased
22%, whilst the Rest of the World experienced a 33% uplift. North
Asia remained flat due in part to the ongoing geopolitical tensions
between the US and China. Given the overall growth in revenues, the
geographical revenue split has shifted slightly in the first six
months, with Americas now accounting for 35% of total revenues
(FY21: 32%), ROW 41% (FY21: 35%) and North Asia 24% (FY21:
33%).
The transition to 5G and growth in cloud computing continue to
drive demand for test instrumentation, from both new and existing
customers, across each of the Group's customer categories. Factors
driving the strong performance include a sustained positive
response to the launch of the enhanced Paragon-Neo, Calnex's Lab
Sync platform which is being adopted both by existing customers and
new customers looking to deliver products addressing the new O-RAN
standards. The latest version of Sentinel, Calnex's Field Sync
platform, has also seen strong uptake from the telecoms customer
base, plus hyperscale and enterprise customers who are investing in
their own data centre operations.
The Group's adjusted profit before tax held steady at GBP2.3m
(H1 FY21: GBP2.3m), ahead of the Board's expectations for the
Period at the start of FY22, reflecting the uplift in revenues and
the Group's on-going investment in the business. During the first
six months the Group has invested in business development
resources, placing more sales team members in regions that are
experiencing strong growth, such as the US and India, as well as
adding to the operational teams to support growth.
The Group has not experienced any negative impact on product
shipments from the ongoing global semiconductor shortage to date,
however the Board continues to monitor the situation closely.
Calnex's ability to maintain shipments on time in the current
climate is testament to the strong partnership with the Group's
contract manufacturer, Kelvinside Electronics, as well as the
abilities and skills of the Calnex team who are successfully
navigating this dynamic situation.
Strategy
Product development
Continued product innovation has allowed the Group to execute on
its growth strategy to capitalise on the transition to 5G. Calnex
has experienced strong demand for its Lab Synchronisation
solutions, with its newly launched enhanced Paragon-Neo Lab Sync
Platform, a very high-speed interface, seeing strong early orders
as existing customers and new customers look to deliver products
addressing the new O-RAN (Radio Access Network) standards. O-RAN is
an industry initiative designed to open the RAN (Open Radio Access
Network) network to wider vendor competition, which is leading to
new companies entering the market, as well as additional
developments with the established vendors creating products aligned
to the O-RAN Implementation Recommendations.
The release in June of the new 5G OTA (Over-the-air) capability
in Sentinel, Calnex's Field Sync solution, has experienced
significant uptake from the telecoms customer base. This
second-generation OTA implementation addresses 3G, 4G and the
emerging 5G signal formats, and is driving growth in the telecoms
market space. In addition, sales to hyperscale customers who are
investing in their data centre operations continue to grow. The
implementation of time distribution across data centres is creating
a secondary market for testing of time distribution accuracy inside
data centres. Together, both have meant that Calnex's Sentinel
product has delivered ahead of target performance with a positive
outlook moving forward.
The O-RAN initiative is also having a positive impact on Cloud
& IT product lines as it requires testing using Network
Emulators to prove interoperation between the various network
elements defined by O-RAN.
Select M&A opportunities
Targeted acquisitions remain a favourable route to growth to
complement the Group's organic growth. The Board continually
assesses the market for select M&A opportunities, against
strict criteria to ensure that any acquisitions are strategic and
earnings enhancing. Opportunities that the Board would consider
include complementary products or technologies that can enhance
Calnex's existing portfolio, or where the acquisition target
provides the Group with access to a related or adjacent growth
market.
Market Opportunity
The requirement for design validation, and conformance and
maintenance testing is more prevalent than ever as new standards
and technology movements drive the need for network operators,
equipment and component vendors and hyperscale/enterprise customers
to validate equipment and network performance. Such evolutionary
trends affecting the telecoms sector underpin Group-wide confidence
in making further progress during the current financial year and
beyond.
At present, a considerable market opportunity lies within the
role that 5G will have to play in supporting the introduction of
new services that need higher quality connections, such as
autonomous vehicles, as well as mobile phones and smart devices.
Additionally, the testing market will grow in influence hand in
hand with the growth in the number of data centres operated by
enterprise and hyperscale companies.
People
We continue to invest in talent globally, to support and enhance
the fantastic work of our team, whose commitment continues to drive
the business forward. Such investment in talent, particularly
within the R&D division, is part of the Group's on-going growth
strategy and will continue to be a big part of our investment over
the coming period. We have hired 19 new staff over the last 12
months, bringing our total headcount to 113. The recruitment market
remains challenging with many companies seeking to hire; however,
at present Calnex continues to be able to attract talent. The
Company is also utilising its overseas sponsor license to hire from
outside of the UK to strengthen its teams.
In August, the Company recruited a new Vice President of
Operations who is tasked with advancing Calnex's internal
manufacturing capabilities. These activities will enhance processes
and procedures to ensure the Group's manufacturing capacity
continues to evolve in a sustainable way. Such investment is
aligned with our growth strategy, and we expect this to continue in
the coming period as we scale the business.
Our staff are gradually returning to the office under the hybrid
model and our experiences from the enforced lockdowns have allowed
us to enhance our working environment for all. Whilst travel costs
associated with customer site visits have remained low during the
Period, the sales team are slowly starting to hold face-to-face
customer interaction again.
The Board is delighted to report that the Company was awarded a
Gold standard accreditation from Investors in People in June 2021,
a rare achievement for companies from their first assessment by
IIP. This provides recognition of Calnex as an organisation with
the very best in people management excellence.
Outlook
These results mark another considerable step forward for Calnex,
as the Group continues to capitalise on the global telecom
industry's transition to 5G and the growth of cloud computing.
Confidence levels are high throughout the Group, with an
anticipation that sales momentum will continue in the second half
of the year. The continued positive response to the new product
launches provides optimism towards the long-term demand for our
offering.
While Calnex has not experienced any negative impact from the
ongoing global semiconductor shortage on the ability to manufacture
and ship product, the Board continues to monitor the situation
closely.
The breadth of Calnex's customer base across multiple regions,
combined with the ongoing successful expansion of the team, the
Group's customer relationships and industry connections, places
Calnex in a strong position to continue to benefit from the
underlying market growth drivers in the telecoms market.
The Board is confident in meeting the upgraded(**) market
forecasts for the year
(**) upgraded forecasts issued on 12 October 2021, following the
Company's Trading Update
Financial Review
The Group delivered a strong financial performance in the six
months to 30 September 2021, with results materially exceeding
management revenue and profit expectations set out at the start of
FY22.
Key performance indicators
GBP000 H1 FY22 H1 FY21 FY21
Unaudited Unaudited Audited
Revenue 9,251 7,721 17,978
Gross Profit 7,046 6,031 13,965
Gross Margin 76% 78% 78%
Underlying EBITDA (1) 2,479 2,593 5,496
Underlying EBITDA % 27% 34% 31%
Adjusted Profit before tax
(2) 2,308 2,319 5,068
Adjusted Profit before tax
% 25% 30% 28%
Closing cash 13,643 4,511 12,668
Capitalised R&D 1,904 1,484 3,326
Adjusted basic EPS (pence)
(3) 2.05 3.02 5.83
Adjusted diluted EPS (pence)
(3) 1.99 2.42 5.21
Statutory measures:
EBITDA 3,877 3,424 6,554
EBITDA % 42% 44% 36%
Profit before tax 2,308 1,950 3,647
Profit before tax % 25% 25% 20%
Basic EPS (pence) 2.05 2.41 4.68
Diluted EPS (pence) 1.99 1.93 4.18
(1) EBITDA after charging R&D amortisation, adjusted in
comparative periods also to exclude IPO costs and IPO related share
based payments.
(2) Adjusted in comparative periods to exclude IPO costs and IPO
related share based payments.
(3) Adjusted in comparative periods to exclude IPO costs and IPO
related share based payments and the tax effect of these
adjustments
The table below shows the reconciliation between the statutory
reported income statement and the adjusted income statement:
Reconciliation of statutory figures to alternative performance
measures
H1 FY22 H1 FY21 FY21
GBP000 Unaudited Unaudited Audited
Revenue 9,251 7,721 17,978
Cost of sales (2,205) (1,689) (4,013)
Gross Profit 7,046 6,031 13,965
Other income 93 103 530
Administrative expenses
(excl depreciation & amortisation) (3,262) (2,710) (7,941)
------------------------------------- ---------------- ---------- --------
EBITDA 3,877 3,424 6,554
Amortisation of development
costs (1,398) (1,200) (2,479)
Add back exceptional items:
IPO costs - 171 1,057
IPO related share based
payments - 198 198
Issue of SIP Free Shares
on IPO - - 166
------------------------------------- ---------------- ---------- --------
Underlying EBITDA 2,479 2,593 5,496
Other depreciation & amortisation (160) (135) (273)
Operating Profit 2,319 2,458 5,223
Finance expense (11) (139) (155)
------------------------------------- ---------------- ---------- --------
Adjusted profit before tax 2,308 2,319 5,068
Exceptional items - (369) (1,421)
------------------------------------- ---------------- ---------- --------
Profit before tax 2,308 1,950 3,647
Tax (512) (505) (194)
------------------------------------- ---------------- ---------- --------
Profit for the Period 1,796 1,444 3,453
Revenue
Revenue recognised in first half of the year was GBP9.3m,
representing 20% growth on H1 FY21 revenue of GBP7.7m and a
significant increase on targets set at the beginning of the
financial year. Order intake and revenue increased across all three
product lines. R evenues to the Americas and Rest of the World
increased, with North Asia experiencing a flattening of revenues in
the Period reflecting the ongoing US-China geopolitical tensions,
which are also exacerbating the component shortage issues in the
region . Revenue in H2 FY22 is expected to grow further on the
first half of the year, as a result of the healthy closing backlog
at 30 September 2021 and the strong pipeline of orders for H2
FY22.
Gross Margin
Gross margin in the Period was 76% (H1 FY21: 78%) and is in line
with management expectations for this point in the year. This gross
margin is net of commissions payable to our channel partners. Gross
margins can fluctuate by 1-2% through the year depending on the mix
of products and the mix of the hardware and software bundles
shipped, so can differ slightly when comparing the half year
periods.
Underlying EBITDA
Underlying EBITDA is stated after charging R&D amortisation,
also adjusted in the comparative periods to exclude IPO costs and
IPO related share based payments.
Underlying EBITDA was GBP2.5m in the Period (H1 FY21: GBP2.6m)
which represents a material increase on initial management
expectations at the beginning of FY22, driven by the strong revenue
performance. Underlying EBITDA margin was 27% (H1 FY21: 34%),
several percentage points above the original target for this point
in the year. The variance against the prior period is driven by the
planned step change in our cost base for FY22 as a result of
investment to support the continued growth of the business.
Administration costs excluding depreciation and amortisation
(adjusted in prior periods to exclude IPO costs and IPO related
share based payments) were GBP3.3m in H1 FY22 (H1 FY21: GBP2.3m).
This variance in costs predominantly relates to the planned
increase in sales, support and executive management headcount in
line with our growth strategy. New hires, in line with growth
expectations at the start of the year, are predominantly to support
the expansion of our internal manufacturing capacity and to further
enhance our sales team across the regions.
We initially expected travel costs to increase in H1 this year
as a result of COVID restrictions being eased. This increase did
not materialise as travel restrictions were predominantly still in
place throughout the Period. We expect travel costs to increase in
H2 FY22 as restrictions ease and an increase in face to face
customer meetings return.
Amortisation of R&D costs in H1 FY22 were GBP1.4m (H1 FY21:
GBP1.2m). The increase on the prior period is due to planned
increases in R&D headcount to support new and ongoing
projects.
Adjusted Profit before tax
Adjusted Profit before tax (with comparative periods adjusted to
exclude IPO costs and IPO related share based payments) was GBP2.3m
in the Period (H1 FY21 GBP2.3m).
Tax
The tax charge for the Period was GBP0.5m (H1 FY21: GBP0.5m)
representing an effective tax rate of 22.2% (H1 FY21: 25.9%).
The Finance Act 2021, now substantively enacted, increases the
UK corporation tax rate from 19% to 25% effective 1 April 2023. As
a result, the Company's deferred tax assets and liabilities have
been measured using the tax rates that are expected to apply when
the reversal of the timing differences takes place. Using this
methodology, a n effective hybrid tax rate has been calculated
(offset partially by the availability of R&D tax credits) and
we expect this rate to be aligned to the effective tax rate for the
full year.
Earnings per share
Basic earnings per share (adjusted in the comparative periods to
exclude IPO costs and IPO related share based payments and the tax
effect of these adjustments) was 2.05 pence in the Period (H1 FY21:
3.02 pence) and diluted earnings per share (adjusted in the
comparative periods to exclude IPO costs and IPO related share
based payments and the tax effect of these adjustments) was 1.99
pence (H1 FY21: 2.42 pence).
The reduction in earnings per share compared with the prior
period is as a result of a change in the weighted average number of
shares in issue pre and post the 5 October 2020 listing of the
Company's Ordinary Shares on the AIM market of the London Stock
Exchange, and the issue of share options since the listing. The
weighted average number of shares in issue at 30 September 2021
takes into account the 27,475,897 shares issued on IPO, of which
14,975,897 were issued in exercise of share options and warrants
with no corresponding direct economic value. There were also
3,122,500 share options issued since the listing (472,500 issued
since 31 March 2021), with no corresponding direct economic value,
further increasing the weighted average diluted share capital at
the end of the Period.
Cashflows
The Group generated GBP0.9m cash in H1 FY22 (H1 FY21: GBP0.9m),
reflecting the strong trading in the Period and was, as with the
performance in the income statement, significantly ahead of
management expectations at the start of FY22.
Net cash from operating activities was GBP3.1m in the Period (H1
FY21: GBP2.9m). Working capital movements represented a cash
outflow of GBP0.7m (H1 FY21: GBP0.7m), largely driven by movements
in trade and other receivables as a result of timing and volume of
shipping and invoicing to customers.
Cash used in investing activities is principally cash spent on
R&D activities which is capitalised and amortised over five
years. Investment in R&D in the Period was GBP1.9m (H1 FY21:
GBP1.5m), reflecting the growth in the team as R&D project
resource demands increased as planned.
Cash spend on financing activities in the Period was GBP0.1m (H1
FY21: GBP0.6m), representing payment of lease obligations. There is
currently no debt on the balance sheet, leading to no borrowings
related cashflows in the current period.
Closing cash at 30 September 2021 was GBP13.6m (30 September
2020: GBP4.5m; 31 March 2021: GBP12.7m).
Dividend
The Board has resolved to pay a maiden interim dividend of 0.28
pence per ordinary share on 17 December 2021 to those shareholders
on the register as at 3 December 2021 (FY21 Interim dividend 0p).
The ex-dividend date is 2 December 2021.
Calnex Solutions plc
Consolidated income statement
For the period ended 30 September 2021
6 months 6 months Year ended
to to
30 Sep 30 Sep 31 Mar
2021 2020 2021
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Revenue 5 9,251 7,721 17,978
Cost of sales (2,205) (1,690) (4,013)
------------ ------------ -----------
Gross profit 7,046 6,031 13,965
Other income 93 103 530
Administrative expenses (4,820) (4,045) (10,693)
------------ ------------ -----------
Operating profit 2,319 2,089 3,802
Presented as:
EBITDA 3,877 3,424 6,554
Depreciation and amortisation of non-R&D
assets (160) (135) (273)
Amortisation of R&D asset (1,398) (1,200) (2,479)
Operating profit 2,319 2,089 3,802
============ ============ ===========
Finance costs 6 (11) (139) (155)
------------ ------------ -----------
Profit before taxation 2,308 1,950 3,647
Taxation 7 (512) (505) (194)
------------ ------------ -----------
Profit and total comprehensive income for
the year 1,796 1,445 3,453
============ ============ ===========
Earnings per share (pence)
Basic earnings per share 8 2.05 2.41 4.68
Diluted earnings per share 8 1.99 1.93 4.18
Calnex Solutions plc
Consolidated statement of financial position
For the period ended 30 September 2021
6 months 6 months Year ended
to to
30 Sep 30 Sep 31 Mar
2021 2020 2021
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 9 7,982 7,009 7,525
Property, plant and equipment 10 158 19 22
Right of use assets 11 541 602 522
Deferred tax asset 730 250 613
------------ ------------ -----------
9,411 7,880 8,682
Current assets
Inventory 12 1,189 1,226 1,111
Trade and other receivables 13 2,414 2,148 1,819
Cash and cash equivalents 14 13,643 4,511 12,668
------------ ------------ -----------
17,246 7,885 15,598
Total assets 26,657 15,765 24,280
------------ ------------ -----------
Current liabilities
Borrowings - 719 -
Trade and other payables 15 4,182 2,582 4,181
Lease liability payable within
one year 11 175 162 130
Financial liabilities - 52 -
Provisions 16 291 298 291
------------ ------------ -----------
4,648 3,813 4,602
Non-current liabilities
Borrowings - 1,217 -
Trade and other payables 15 868 349 749
Lease liabilities payable later
than one year 11 417 469 436
Deferred tax liability 1,650 1,260 1,321
Provisions 16 15 15 15
------------ ------------ -----------
2,950 3,310 2,521
Total liabilities 7,598 7,123 7,123
------------ ------------ -----------
Net assets 19,059 8,642 17,157
============ ============ ===========
Equity
Share capital 109 75 109
Share premium 7,484 1,138 7,484
Share option reserve 232 266 126
Retained earnings 11,234 7,163 9,438
Total equity 19,059 8,642 17,157
============ ============ ===========
Calnex Solutions plc
Consolidated statement of cashflows
For the period ended 30 September 2021
6 months 6 months Year ended
to to
30 Sep 30 Sep 31 Mar
2021 2020 2021
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cashflow from operating activities
Profit before tax from continuing
operations 2,308 1,950 3,647
Adjusted for
IPO professional fees and commissions - 171 1,057
Finance costs 11 139 155
Foreign exchange differences - 34 (65)
Government grant income (93) (103) (204)
R&D tax credit income - - (326)
Change in fair value of assets
& liabilities - - 144
Movement in obsolescence provision (16) 89 25
Movement in provisions - 9 (14)
Share based payment transactions 105 198 275
Depreciation 160 82 167
Amortisation 1,398 1,253 2,585
Movement in inventories (63) (356) (178)
Movement in trade and other receivables (595) 141 818
Movement in trade and other payables (74) (356) 1,271
Net cash used in discontinued
operations - (202) (201)
Cash generated from operations 3,141 3,049 9,156
Interest paid (11) (154) (107)
------------ ------------ -----------
Net cash from operating activities 3,130 2,895 9,049
------------ ------------ -----------
Investing activities
Purchase of intangible assets (1,904) (1,484) (3,332)
Purchase of property, plant and
equipment (154) (3) (10)
Net cash used in investing activities (2,058) (1,487) (3,342)
------------ ------------ -----------
Financing activities
Repayment of borrowings - (340) (2,276)
Payment of lease obligations (97) (64) (193)
Share issue proceeds - - 6,000
Share options proceeds - - 328
IPO professional fees and commissions - (171) (1,057)
Payment of deferred consideration - (82) (83)
Government grant income - 96 578
------------ ------------ -----------
Net cash from financing activities (97) (561) 3,297
------------ ------------ -----------
Net increase in cash and cash
equivalents 975 847 9,004
Cash and cash equivalents at the beginning
of the period 12,668 3,664 3,664
Cash and cash equivalents at the
end of the period 13,643 4,511 12,668
============ ============ ===========
Calnex Solutions plc
Consolidated statement of changes in equity
For the period ended 30 September 2021
Share
Share Share option Retained Total
capital premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 30 September
2020 75 1,138 266 7,163 8,642
Share options 18 362 (140) 266 506
Share Issue 16 5,984 - - 6,000
Profit for period ended
31 March 2021 - - - 2,009 2,009
--------- --------- ---------- ---------- --------
Balance at 31 March 2021 109 7,484 126 9,438 17,157
Share options - - 106 - 106
Profit for period ended
30 September 2021 - - - 1,796 1,796
--------- --------- ---------- ---------- --------
Balance at 30 September
2021 109 7,484 232 11,234 19,059
========= ========= ========== ========== ========
Calnex Solutions plc
Notes to the interim consolidated financial statements
For the period ended 30 September 2021
1. General information
The interim consolidated financial statements cover the
consolidated entity Calnex Solutions plc and the entities it
controlled at the end of, or during, the interim period to 30
September 2021 ("the Group").
Calnex Solutions plc ("the Company") is a public limited company
and is domiciled and incorporated in Scotland.
The registered office is:
Oracle Campus
Linlithgow
West Lothian
EH49 7LR
The principal activity of the Group is the design, production
and marketing of test instrumentation and solutions for network
synchronisation and network emulation.
The interim consolidated financial statements for the period
ended 30 September 2021 are unaudited, and do not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. They do not therefore include all the information and
disclosures required in annual statutory financial statements and
should be read in conjunction with the
Group annual report and accounts for the year ended 31 March
2021.
The Group annual report and accounts for the year ended 31 March
2021 were approved by the Board of Directors on 24 May 2021 and
have been delivered to the Registrar of Companies. The auditor's
report on those accounts was unqualified, did not draw attention to
any matters by way of emphasis and did not contain a statement made
under Section 498(2) or (3) of the Companies Act 2006.
The interim consolidated financial statements for the period
ended 30 September 2021 were approved by the Board of Directors on
22 November 2022.
2. Basis of preparation
The interim consolidated financial statements for the period
ended 30 September 2021 have been prepared in accordance with IAS
34 'Interim Financial Reporting' as issued by the International
Accounting Standards Board, endorsed by and adopted for use in the
United Kingdom.
The accounting policies and methods of computation adopted are
consistent with those applied in the Group's consolidated financial
statements for the year ended 31 March 2021 and have been applied
consistently to all periods presented.
There have been no new standards or amendments to existing
standards effective from 1 April 2021 that are applicable to the
Group or that has had any material impact on the financial
statements and related notes as at 30 September 2021. The Directors
do not anticipate that the adoption of any of the new standards and
interpretations issued by the IASB and IFRIC with an effective date
for the Group after the date of these interim financial statements
will have a material impact on the Group's interim financial
statements in the period of initial application.
3. Going concern
The interim consolidated financial statements have been prepared
on the basis that the Company will continue as a going concern.
The business has not seen any detrimental impact on trading as a
result of the COVID-19 pandemic and the Group has not required the
assistance of government funding. Appropriate safety measures have
been put in place to protect staff while the Group continues to
operate in line with government guidance across our various
locations. The Directors continue to closely monitor the situation,
with rolling cashflow forecasting and visibility over the order
pipeline being key to provide early indication of required action
in order to mitigate against any future risk of further lockdowns
or new virus threats.
The Board has reviewed financial profit and cashflow forecasts
for the current and succeeding financial years to 31 March 2023.
Based on this review, along with regular oversight of the Company's
risk management framework, the Board has concluded that given the
Company's cash reserves available and access to additional
liquidity through banking facilities, the Company will continue to
trade as a going concern.
4. Operating segments
Operating segments are based on the internal reports that are
reviewed and used by the Board of Directors (who are identified as
the Chief Operating Decision Makers) in assessing performance and
determining the allocation of resources. As the Group has a central
cost structure and a central pool of assets and liabilities, the
Board of Directors do not consider segmentation in their review of
costs or the balance sheet. The only operating segment information
reviewed, and therefore disclosed, are the revenues derived from
different geographies.
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Americas 3,293 2,704 5,767
North Asia 2,140 2,145 5,945
ROW 3,818 2,872 6,266
Total revenue 9,251 7,721 17,978
========= ========= ===========
5. Revenue
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Sale of goods 8,268 7,173 16,509
Rendering of services 983 548 1,469
Total revenue 9,251 7,721 17,978
========= =========== ===============
6. Finance costs
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Interest expense for borrowings at
amortised cost - 120 107
Interest expense on lease liabilities 11 34 63
Unwinding on discount for deferred
consideration - (15) (15)
Total finance costs 11 139 155
========= =========== ===============
7. Taxation
6
months 6 months Year
to to ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Current taxation
UK corporation tax on profits for
the period 291 - 67
Foreign current tax expense 5 32 12
Adjustments relating to prior years - - (9)
Deferred taxation
Effect of timing differences 104 473 61
Adjustments relating to prior years - - 63
Effects of changes in tax rate 112 - -
Taxation charge 512 505 194
======== ========== ==========
Profit before tax for the year 2,308 1,950 3,647
Effective tax rate 22% 26% 5%
The effective tax rate forecast at 30 September 2020 for the
year ended 31 March 2021 was 26%, influenced predominantly by
significant non-allowable expenditure projected ahead of the
Company listing on the AIM on 5(th) October 2020.
The actual effective tax rate for the year ended 31 March 2021
was 5%. The delta between the rates at half year and year end being
driven by:
-- Tax relief on exercise of share options on IPO, on which no
deferred tax asset had previously been recognised (reduction of 16%
on effective tax rate)
-- Availability of R&D SME enhanced deduction which had not
been claimed in the prior period (reduction of 4% on effective tax
rate)
-- Other cumulative variances (1% reduction on the effective tax rate)
The effective tax rate forecast at 30 September 2021 for the
year ended 31 March 2022 is 22%. The Finance Act 2021, now
substantively enacted, increases the UK corporation tax rate from
19% to 25% effective 1 April 2023. In accordance with IAS 12:
(Income Taxes) the deferred tax assets and liabilities have been
measured using the tax rates that are expected to apply when the
reversal of the timing differences takes place.
8. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of Ordinary Shares in issue during the year.
Diluted earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders by the total of the
weighted average number of Ordinary Shares in issue during the year
and adjusting for the dilutive potential Ordinary Shares relating
to share options.
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Profit after tax attributable to shareholders 1,796 1,445 3,453
Weighted average number of shares
used in calculation:
Basic earnings per share 87,500 60,024 73,672
Diluted earnings per share 90,375 75,000 82,575
Earnings per share - basic (pence) 2.05 2.41 4.68
Earnings per share - diluted (pence) 1.99 1.93 4.18
9. Intangible Assets
Included within intangible assets are the following significant
items:
-- Intellectual property representing the cost of patent
applications and on-going patent maintenance fees.
-- Capitalised development costs representing expenditure
relating to technological advancements on the core product base of
the Group. These costs meet the requirement of IAS 38 (Intangible
Assets) and will be amortised over the future commercial life of
the related product. Amortisation is charged to administrative
expenses.
Intellectual Development
property Costs Total
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2021 2,348 24,438 26,786
Additions 4 1,904 1,908
Disposals - - -
------------- -------------- ----------
At 30 September 2021 2,352 26,342 28,694
------------- -------------- ----------
Amortisation
Balance at 1 April 2021 2,140 17,121 19,261
Charge for the period 53 1,398 1,451
Eliminated on disposal - - -
------------- -------------- ----------
At 30 September 2021 2,193 18,519 20,712
------------- -------------- ----------
Net book value
31 March 2021 208 7,317 7,525
============= ============== ==========
30 September 2021 159 7,823 7,982
============= ============== ==========
10. Property, plant and equipment
The Group annually reviews the carrying value of tangible fixed
assets recognising the expected working lives of the plant and
equipment available to the Group and known requirements.
Depreciation is charged to administrative expenses.
Plant and
equipment
total
GBP'000
Cost
At 1 April 2021 120
Additions 151
Disposals (35)
-----------
At 30 September 2021 236
-----------
Amortisation
Balance at 1 April 2021 98
Charge for the period 15
Eliminated on disposal (35)
-----------
At 30 September 2021 78
-----------
Net book value
31 March 2021 22
===========
30 September 2021 158
===========
11. Leases
The Group has recognised a right-of use asset and a lease
liability for the lease of land and buildings for its head office
in Linlithgow, Scotland.
The Group leases IT equipment with contract terms ranging
between 1 to 2 years. The Group has recognised right-of use assets
and lease liabilities for these leases.
The Group also leases land and buildings in Belfast and one
motor vehicle. These leases are low-value, so have been expensed as
incurred. The Group has elected not to recognise right -- of -- use
assets and lease liabilities for these leases.
Information about the right of use assets and leases for which
the Group is a lessee is presented below:
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Right of use assets
NBV brought forward in the period 522 660 660
Additions to right of use assets
for the period 112 20 20
Depreciation charge for the period (93) (78) (158)
NBV carried forward for the period 541 602 522
========= ========= =============
6 months 6 months 6 months
to to to
30 Sep 30 Sep 30 Sep
2021 2020 2021
GBP'000 GBP'000 GBP'000
Lease liabilities
Balance brought forward in the period 566 676 676
Lease additions for the period 112 20 20
Payment of lease expense (97) (99) (193)
Interest on lease expense 11 34 63
--------- ---------
Balance carried forward for the period 592 631 566
========= ========== ===========
Represented as:
Due within 1 year 175 162 130
Due in more than 1 year 417 469 436
--------- ---------- -----------
Total amounts due 592 631 566
========= ========== ===========
12. Inventory
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Finished goods 1,452 1,568 1,390
Provision for obsolescence (263) (342) (279)
1,189 1,226 1,111
========= =========== ================
Group inventories reflect the following movement in provision for
obsolescence:
At start of the financial year 279 253 253
Utilised (48) (98) (98)
Provided 32 187 124
--------- ----------- ----------------
At end of the financial year 263 342 279
========= =========== ================
13. Trade and other receivables
Trade receivables are consistent with trading levels across the
Group and are also affected by exchange rate fluctuations.
No interest is charged on the trade receivables.
The Group has reviewed for estimated irrecoverable amounts in
accordance with its accounting policy, and at the balance sheet
date, there are no amounts outstanding beyond agreed credit
terms.
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Trade receivables 1,538 1,670 988
Less provision for bad debt - (16) -
Other receivables 691 110 700
Prepayments and accrued income 185 384 131
2,414 2,148 1,819
========= ========= ===========
The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
14. Cash and cash equivalents
Cash and cash equivalent amounts included in the Consolidated
Statement of Cashflows comprise the following:
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Cash at bank 7,131 4,511 7,668
Cash on short term deposit 6,512 - 5,000
Total cash and cash equivalents 13,643 4,511 12,668
========= ========= ===========
Short term cash deposits of GBP6,511,647 are callable on a
notice of 95 days.
15. Trade and other payables
Trade and other payables are consistent with trading levels
across the Group but are also affected by exchange rate
fluctuations. Trade payables and accruals principally comprise
amounts outstanding for trade purchases and ongoing costs. The
Group has financial risk management policies in place to ensure all
payables are paid within the agreed credit terms.
Deferred income relates to fees received for ongoing services to
be recognised over the life of the service rendered.
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Trade payables 884 909 944
Taxes 131 112 126
Other payables 172 50 51
Accruals 1,481 312 1,561
Deferred income 1,514 1,199 1,499
4,182 2,582 4,181
Amounts due in more than one year
Deferred income 868 349 749
Total amounts due 5,050 2,931 4,930
========= ========= ===========
The Directors consider that the carrying amount of trade and
other payables approximates their fair value.
16. Provisions
Current provisions are recognised in respect of potential
payments to be made to overseas tax authorities, and potential
payments to be made in respect of dilapidations on leased assets.
No discount is recorded on recognition of the provisions or unwound
due to the short-term nature of the expected outflow and the low
value and estimable nature of the non-current element.
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Current provisions
Overseas tax 291 298 291
========= =========== ===============
Non-current provisions
Dilapidations 15 15 15
========= =========== ===============
Total provisions 306 313 306
========= =========== ===============
17. Alternative performance measures
The performance of the Group is assessed using a variety of
performance measures, including APMs which are presented to provide
users with additional financial information that is regularly
reviewed by the Board of Directors. These APMs are not defined
under IFRS and therefore may not be directly comparable with
similarly identified measures used by other companies.
6 months 6 months
to to Year ended
30 Sep 30 Sep 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Underlying EBITDA 2,480 2,593 5,496
Underlying EBITDA % 27% 34% 31%
Adjusted profit before tax 2,308 2,319 5,068
Adjusted profit before tax % 25% 30% 28%
Adjusted basic EPS (pence) 2.05 3.02 5.83
Adjusted diluted EPS (pence) 1.99 2.42 5.21
Capitalised R&D spend 1,904 1,484 3,326
-- Underlying EBITDA: EBITDA including R&D amortisation,
adjusted to exclude discontinued operations and IPO transaction
costs and IPO related share based payments
-- Adjusted profit before tax: Adjusted to exclude discontinued
operations, IPO transaction costs and IPO related share based
payments
-- Adjusted basic and diluted EPS Adjusted to exclude
discontinued operations, IPO related costs and the tax effect of
these adjustments
18. Post balance sheet event
The Board has resolved to pay a maiden interim dividend of 0.28
pence per ordinary share on 17 December 2021 to those shareholders
on the register as at 3 December 2021 (FY21 Interim dividend 0p).
The ex-dividend date is 2 December 2021.
19. Availability of Interim Report
The Company's Interim Report for the six months ended 30
September 2021 will be available to view on the Company's website
(www.calnexsol.com).
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END
IR KLLFLFFLFFBF
(END) Dow Jones Newswires
November 23, 2021 02:00 ET (07:00 GMT)
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