REG - Calnex Solutions PLC - Acquisition of iTrinegy and Update on Trading

Calnex SolutionsAnnouncement

12/04/2022 07:00

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RNS Number : 0347I  Calnex Solutions PLC  12 April 2022

This announcement contains inside information

12 April 2022

Calnex Solutions plc

("Calnex", the "Company" or the "Group")

Acquisition of iTrinegy and Update on Trading

Complementary technology provides access into adjacent applications and
transformation testing market

Calnex Solutions plc (AIM: CLX), a leading provider of test and measurement
solutions for the global telecommunications sector, today announces the
acquisition of iTrinegy Limited ("iTrinegy"), a leading developer of Software
Defined Test Networks technology for the software application and digital
transformation testing market. The consideration, calculated on a cash-free,
debt-free basis, is £2.5m in cash on completion with up to a further £1.0m
dependent on achievement of agreed financial targets.

Founded in 2006 and headquartered in Stevenage, UK, iTrinegy's NE-ONE hardware
and software based Network Emulation platforms provide organisations,
primarily across the technology, financial, gaming and military / government
sectors, with the ability to accurately recreate complex, real-world network
test environments in which to analyse and verify the performance of
applications, before deployment. The NE-ONE platform provides users with
insight which enables them to reduce deployment costs and risk while at the
same time improving quality.

The iTrinegy NE-ONE platform is also applicable for cloud-based and virtual
development and testing environments, a rapidly growing sub-sector of the
application development market. Many software vendors around the world are
repurposing their on-premise hosted applications and solutions in order to
deliver these services via cloud-based hosting. iTrinegy's software includes
analytics that allow customers to analyse and predict an application's
performance when deployed in the cloud or running over distributed networks.

iTrinegy's customer base includes organisations such as Juniper Networks,
JPMorgan Chase, Ubisoft Games and the Government and Military in the UK and
US. In 2021, iTrinegy was awarded the prestigious Queens Award for Export
Achievement.  Calnex plans to scale the business by using its sales and
marketing capabilities to build, support and grow a reseller network,
particularly into the US, to accelerate sales.

iTrinegy generated revenues of approximately £1.4m in the year to 30
September 2021, with a gross margin of around 80%. Approximately 60% of
iTrinegy's revenue was from North American customers. The business is being
acquired on a cash free, debt free basis.

The consideration comprises an initial cash payment of £2.5m, with up to a
further £1.0m potentially payable in a combination of new ordinary shares in
Calnex and cash (the "Earn-out Payment"). The Earn-out Payment is subject to
the achievement of certain sales targets from iTrinegy products in the year to
31 March 2024. A maximum of 322,579 new shares will be issued under the
Earn-out Payment.

Update on Trading

Calnex has made solid progress on delivering its strategy in the 12 months to
31 March 2022 ("FY22") and continues to experience high demand for its range
of test and measurement solutions.

The Company recently noted, in the Trading Update issued on 1 March 2022, that
it had experienced reduced availability of certain components in the final
quarter of FY22, in line with the well documented and ongoing global
semiconductor shortages. The Company has successfully managed these
constraints and has shipped all orders scheduled for March as planned.

As a result of this, the Board is pleased to confirm that the results for FY22
will be slightly ahead of current market expectations.

Calnex's order book continues to build and currently sits at record levels
heading into FY23 which provides the Board with confidence in the Group's
ability to deliver significant, sustainable growth over the coming years.

The Company expects to release Final Results for the year ended 31 March 2022
on 24 May 2022 and will provide further guidance on prospects for FY23 and
FY24 at that time. The acquisition of iTrinegy is anticipated to be earnings
accretive in FY23 and to be an important contributor to Calnex Group profit in
subsequent years.

Tommy Cook, Founder and CEO of Calnex, said:

"We are delighted to welcome the iTrinegy team to Calnex. With both businesses
developing high quality, complex, technical testing solutions, trusted by some
of the world's most demanding organisations, we are particularly excited by
the strategic fit of the two organisations.

The cloud migration taking place across multiple sectors and the growth in
internet-based applications is fuelling demand for test solutions that can
analyse, predict and verify application performance over complex, distributed
networks. We see great opportunity ahead for the NE-ONE technology and look
forward to working together to accelerate iTrinegy's growth and open up new
customer segments for Calnex.

Following a strong FY22 and a record order book heading into the new financial
year, we look to the future with confidence."

For more information, please contact:

 

 Calnex Solutions plc                             Via Alma PR
 Tommy Cook, Chief Executive Officer

 Ashleigh Greenan, Chief Financial Officer

 Cenkos Securities plc - NOMAD                    +44 (0)131 220 6939
 Derrick Lee, Peter Lynch

 Alma PR                                          + 44(0) 20 3405 0213
 Caroline Forde, Hannah Campbell, 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 Meta.

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 a worldwide distribution capability.

 

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