REG - Calnex Solutions PLC - Final Results
20/05/2025 07:00
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RNS Number : 2996J Calnex Solutions PLC 20 May 2025
20 May 2025
Calnex Solutions plc
("Calnex", the "Company" or the "Group")
Final Results
Calnex Solutions plc (AIM: CLX), a leading provider of test and measurement
solutions for the global telecommunications and cloud computing markets,
announces its Final Results for the year ended 31 March 2025 ("FY25" or the
"Year").
Highlights
£000 FY25 FY24 YOY % change
Audited Audited
Revenue 18,386 16,274 13%
Gross profit 13,763 11,947 15%
Gross margin % 75% 73% +2ppts
Underlying EBITDA(1) 1,151 80 1,339%
Profit/(loss) before tax 720 (384) -
Basic EPS (pence) 0.38 0.05 660%
Diluted EPS (pence) 0.36 0.04 800%
Closing cash 10,912 11,868 (8)%
(1) Refer to note 32 for explanation of the alternative performance measures
calculations. A full reconciliation between Underlying EBITDA and profit
before tax is also shown in the Financial Review below.
Financial Highlights
· Financial performance improved notably in H2, driven by a higher proportion of
high-value sales and increasing demand across cloud computing, defence and
satellite markets.
· Improved gross margin, reflecting the increased revenue volumes and product
mix in the year.
· Strong balance sheet with closing cash position of £10.9m (31 March 2024:
£11.9m), £2.3m ahead of the cash position at the half year, reflecting H2
cash generation.
· Closing trade receivables balance of £5.3m after strong Q4 trading. Majority
of balance received in April 2025, with total cash position increasing to
£12.7m at 30 April 2025.
· Cost control measures taken through the year also contributed to the return to
profit.
· Proposed final dividend of 0.62p per share. Total of 0.93p per share for
FY25 (FY24: 0.93p).
Operational Highlights
· Positive impact of recent R&D investment into areas showing the most
near-term potential.
· Successful launch of Paragon neo-S in H2, our 800Gb/s synchronisation testing
product, with orders to date demonstrating strong early uptake across the
telecoms and data centre markets.
· Network and Application Assurance (NAA) business orders have increased on the
prior year, driven by success in the US defence and enterprise sectors, cloud
computing, satellite and telecoms.
· Headcount remained broadly flat year-on-year, with targeted graduate and
specialist hires supporting new initiatives, including enhanced partner
management.
· Successfully onboarded multiple new channel partners covering North America,
Europe, India and Asia-Pacific, giving us the opportunity to expand the sales
coverage previously enjoyed with Spirent Communications.
Outlook
· Entered FY26 with an increased order backlog and growing engagement across key
sectors.
· Recently launched products are gaining traction, with growing demand for
800Gb/s synchronisation testing.
· Encouraging customer engagement to date for 1.6Tb/s synchronisation testing.
· Long-term market opportunity in telecoms, cloud computing and defence as the
industries invest in infrastructure to advance towards pervasive 5G coverage,
emergence of 6G, gen AI, and other new technologies.
· Well positioned to convert the telecoms sales pipeline once the trading
environment improves, but not reliant upon that for a positive trading
performance.
· Confident in continued growth in FY26, in line with market expectations.
Tommy Cook, Chief Executive Officer and founder of Calnex, said:
"We have made strong progress this year across key sectors, despite the
ongoing challenging telecoms market. Both the implementation of our sales
network and our product expansion strategy have progressed materially this
year, with healthy uptake of the 800Gb/s synchronisation testing solutions and
increased demand for our NAA products driving the return to growth.
We enter FY26 with a healthy order backlog, strong cash balance and increasing
customer engagement. Momentum from product development is building into FY26,
which, with stabilised trading in the telecoms market, longstanding customer
relationships across all territories and a widening footprint in a variety of
end markets, leaves us well-positioned to convert our sales pipeline and
deliver another year of growth and FY26 performance in line with market
expectations.
While macro uncertainty remains, particularly with geopolitical developments,
the telecoms industry's continued innovation around 1.6Tb/s and high-speed
application testing presents further long-term growth opportunity for Calnex.
Our strategy remains focused on scaling in cloud and defence markets,
maximising momentum behind Paragon-neo, and continuing to enhance our NAA
platform capabilities. With strong foundations and an experienced team in
place, we are confident in our ability to deliver sustained long-term growth."
For more information, please contact:
Calnex Solutions plc Via Alma
Tommy Cook, Chief Executive Officer
Ashleigh Greenan, Chief Financial Officer
Cavendish Capital Markets Limited - NOMAD +44 (0)131 220 6939
Derrick Lee, Peter Lynch
Alma Strategic Communications + 44(0) 20 3405 0213
Caroline Forde, Joe Pederzolli, Emma Thompson
Overview of Calnex
Calnex Solutions designs, produces and markets test and measurement
instrumentation and solutions for the telecoms and cloud computing industries.
Calnex's portfolio enables R&D, pre-deployment and in-service testing for
network technologies and networked applications, enabling its customers to
validate the performance of the critical infrastructure associated with
telecoms and cloud computing networks and the applications that run on it.
To date, Calnex has secured and delivered orders in 68 countries across the
world. Customers include BT, China Mobile, NTT, Ericsson, Nokia, Intel,
Qualcomm, IBM, Nvidia and Meta.
Founded in 2006, Calnex is headquartered in Linlithgow, Scotland, with
additional locations in Belfast, Northern Ireland, Stevenage, England 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.
Chair's Statement
Overview
FY25 marked a return to growth for Calnex, in line with market expectations,
despite the ongoing challenges faced across the telecoms market. The
resilience and agility of the Calnex team have yet again come to the fore and
have been demonstrated by the diligent response to trading conditions, with a
continued focus on areas of the telecoms, cloud computing and defence markets
showing the most near-term growth opportunity.
A return to growth in FY25
Revenue for the year grew by 13% to £18.4m (FY24: £16.3m) and the business
returned to profitability, delivering PBT of £0.7m. Financial performance
steadily improved throughout the year and the positive momentum which built
across H2 was underpinned by demand for the newly launched 800Gb/s
synchronisation testing solutions across both the telecoms and data centre
markets, as well as increased orders from the Network and Application
Assurance (NAA) business in the cloud computing, defence and satellite
markets.
Cost control measures implemented through the year have also contributed to
the Group's return to profit, while strong cash generation in H2 contributed
to a year-end cash position of £10.9m, £2.3m ahead of the cash position at
the half year. A large part of this balance was received the following month,
taking the cash balance up to £12.7m at the end of April 2025.
Following the review of Calnex's sales channels, the transition to a new
multichannel model has been successfully implemented during the year. The
onboarding of new partners across key territories has expanded the Group's
global coverage, and I am pleased to report that the transition has been well
managed, with minimal disruption to the business. The new model positions
Calnex to drive future growth, whilst also enabling more direct engagement
with customers and greater control over sales operations.
As always, I would like to thank our people across the business for their
continued efforts and expertise. They have been fundamental to the return to
growth delivered this year and they are key to Calnex's future ambitions.
ESG
Calnex remains committed to upholding high standards of environmental
awareness, social responsibility, and governance. Our "people first" ethos is
foundational to the company, which is built on trust and respect for each
other, for the environment, and for the local communities of our employees
across the globe.
Calnex enjoys and thrives in a diverse workforce where collaboration is
encouraged and inclusion is key to building high performing, engaged and
successful teams. Our strong values are promoted through a variety of employee
engagement and learning and development programmes. In addition, our
employee-led environmental, social, and charity group continues to thrive,
reflecting strong levels of engagement across the company. This is reflected
in the high staff retention rate of 94% over FY25.
Both Calnex's operational processes and products have a low environmental
impact, and the senior leadership team and wider staff remain committed to
further reducing our environmental footprint. Our software-first approach
enables us to significantly reduce the impact our products have on the
environment, driving increased product longevity.
Outlook
Despite geopolitical uncertainties and continuing sluggishness in certain
markets, trading this year has started well and we are confident of meeting
market expectations. Looking further ahead, the Board believes Calnex is very
well positioned to capitalise on the long-term structural drivers and deliver
long-term growth.
Stephen Davidson
Non-Executive Chair
19 May 2025
CEO Statement and Operational Review
Overview
Against a backdrop of persisting telecoms market challenges, we achieved a
return to growth, driven by the execution of our product expansion strategy
and increased demand in areas across both established and newer markets
showing near-term potential. The improvement in performance was most evident
in the second half, supported by strong uptake of our new 800Gb/s
synchronisation testing solutions, growth in other sectors such as cloud
computing and defence, and early success in operating under our new
multichannel sales model.
Customer Metrics
The number of customers who ordered from us in FY25 was 275 (FY24: 274). The
proportion of orders from customers in the cloud computing market continued to
grow, increasing to 43% (FY24: 39%), reflecting the ongoing momentum behind
NAA product sales and the broader adoption of our offerings beyond the
telecoms sector.
Our top 10 customers accounted for 45% of orders (FY24: 52%) on a 3-year
average basis, and 77% of orders were from repeat customers (FY24: 76%) on a
3-year average basis. Over the last few years we have seen a shift in our
customer dynamics, with our top customers now including hyperscalers,
government departments and vendors supplying equipment for the data centre
infrastructure. Simultaneously, robust levels of repeat business are testament
to the strength of Calnex's customer relationships.
Our regional revenue split for FY25 was: Americas 40% (FY24: 31%), North Asia
18% (FY24: 21%), and ROW 42% (FY24: 48%). The uptick in Americas revenue
reflects renewed spending in the US market for our synchronisation testing
solutions as well as the NAA platforms, whilst the performance in the ROW
region was primarily driven by Lab Sync and Network Sync order growth. The
performance in North Asia was driven by growth in China, albeit with the
backdrop of continued challenges in that market.
Market Backdrop
The telecoms sector remained subdued through the year, but there are now
cautious signs of recovery, including improved customer engagement and an
increase in quality of interactions regarding near-term purchases. The
telecoms industry has historically been through shocks and turbulent periods
and has always bounced back. Having endured sustained pressures over the past
two years and having had to adapt processes and cost structures accordingly,
it appears that telecoms providers may be more financially resilient at this
moment in time and better placed to withstand future macroeconomic shocks in
the context of the current uncertain climate.
Crucially, the significant growth potential in the telecoms market remains
intact, as the need for test instrumentation accelerates in line with the
inevitable evolution of network infrastructure and customer needs. The global
network infrastructure market has been predicted to grow by 2.1% CAGR from
2023-2028, despite the recent downturn.(1)
Elsewhere, growth in cloud, AI and data centre infrastructure continues to
create strong demand for our test and emulation platforms. Reliable test
equipment for verifying networks and application performance is increasingly
important in the context of the rapid advancement in AI and the build-out of
data centres, and demand will only continue to grow as the speed of
advancement accelerates.
The defence sector has recently demonstrated strong growth potential. Here we
have seen increasing demand for our NAA products, driven by the need to ensure
reliable application performance in the military environment. This is an
exciting new opportunity for Calnex, as investment into test equipment in the
defence sector is increasing within an already substantial growth market. To
support the expansion of this customer segment we have hired a US-based
Business Development resource with the remit to expand the Group's US federal
customer base.
The Board is monitoring the effects of proposed US tariff arrangements and
will work with our customers and partners to navigate the new landscape
effectively.
Product Innovation
FY25 marked a continuation of our strategy to align R&D spend and product
innovation with opportunities showing the most near-term resilience and
potential within the established telecoms market and in the newer cloud
computing and data centre markets.
Paragon-neo supporting telecoms and data centre expansion
Paragon neo-S, our 800Gb/s synchronisation testing solution launched in H2
FY25, plays a pivotal role in addressing the industry's shift towards
ultra-high-speed interfaces. Originally developed to support higher speeds
within the telecoms industry, its relevance has quickly extended beyond
telecoms, also gaining traction across adjacent markets such as data centres
and vendors supplying equipment for deployment in data centres, reflecting
broader demand for high speed synchronisation.
Paragon neo-S has been well received by customers and contributed meaningfully
to revenue in H2, with orders to date demonstrating strong early uptake across
the telecoms and data centre markets.
In line with our product innovation strategy, investment continues to focus on
high-speed test innovation and enhancing application-specific functionality
across our platforms. With customers already engaging with us on future
1.6Tb/s synchronisation testing requirements, we have identified technology
which we believe will enable delivery of 1.6Tb/s synchronisation testing
within calendar year 2027, underlining Calnex's position at the forefront of
synchronisation testing innovation.
NAA platforms driving growth in Cloud Computing and Data Centre Markets
Our NAA platforms - SNE-X, supporting 400GbE interfaces, and NE-ONE -
delivered strong performance in FY25, particularly in the US defence and
enterprise sectors. Our products targeting these markets are now increasingly
contributing to revenue and our ongoing go-to-market strategy into wider end
markets continues. Regionally, we saw particular strength in the US, and while
conditions in China remain challenging, we trialled a Paragon enhancement in
the year that could contribute to growth in FY26 in that region.
In the data centre market, we are working directly with leading data centre
companies to tailor solutions, such as a first-to-market 400 GbE Ethernet
network emulation product for specific customer-driven performance needs. In
defence and space, our products are used as part of large-scale technology
solutions for defence contracts, and we have established partnerships on
government and academic projects for satellite and non-terrestrial networks,
collaborations that have informed our product roadmap and resulted in uptake
from other companies within this ecosystem.
In H2 we were pleased to also secure a repeat order from a major hyperscaler
that is investing in its data centre operations, highlighting the relevance of
our solutions in a rapidly scaling cloud environment. As we look to the
future, we are focused on enhancing our high-speed capabilities and extending
the application reach of our NAA platforms, ensuring continued alignment with
evolving customer requirements.
(1) ( Frost and Sullivan, "Global 5G Network Infrastructure Growth
Opportunities", Feb 2024.)
Financial performance
We report revenue of £18.4m (FY24: £16.3m) and profit before tax of £0.7m
(FY24: loss of £0.4m). Revenue and gross margin performance improved notably
in the second half of the year, driven by a higher proportion of high-value
sales and increasing demand across cloud computing, defence and data centre
end markets.
The business delivered positive cash generation in H2 and continues to benefit
from a strong cash position, with year-end cash of £10.9m (FY24: £11.9m).
Cash increased to £12.7m at the end of April 2025.
People
Our team continues to be central to our identity. Headcount remained broadly
flat year-on-year at 155, with targeted graduate and specialist hires offset
by natural attrition and a small number of retirements. Hires in the period
have supported new initiatives, including enhanced partner management and
expansion of our US federal customer base. Retention remains strong, and our
culture of inclusion and development continues to attract high-calibre talent.
Sales Channel Review
FY25 marked the first year operating under our new sales channel strategy,
following the planned transition away from Spirent. We are pleased with the
results so far, having successfully onboarded new partners across North
America, Europe, India, and Asia-Pacific, which has broadened our partner base
and expanded our sales coverage beyond what was previously achieved with
Spirent.
The transition has served as a catalyst for internal enhancements. We have
appointed dedicated channel managers, separate from the direct sales team, to
improve partner engagement. Additionally, we have implemented clearer KPIs and
improved onboarding and performance management processes. While we anticipated
some transitional impact, particularly in the first half, the year concluded
with a significantly reduced proportion of orders via Spirent compared to FY24
with order flow successfully transitioning to new partners. Second-half
trading reflected the success of the new model, contributing to revenue
growth.
Outlook
We enter FY26 with a healthy order backlog, strong cash balance and increasing
customer engagement. Momentum from product development is building into FY26,
which, with stabilised trading in the telecoms market, longstanding customer
relationships across all territories and a widening footprint in a variety of
end markets, leaves us well-positioned to convert our sales pipeline and
deliver another year of growth and FY26 performance in line with market
expectations.
Longer term, while macro uncertainty remains, particularly with geopolitical
developments, the telecoms industry's continued innovation around 1.6Tb/s and
high speed application testing presents further long-term growth opportunity
for Calnex. Our strategy remains focused on scaling in cloud and defence
markets, maximising momentum behind Paragon-neo, and continuing to enhance our
NAA platform capabilities. With strong foundations and an experienced team in
place, we are confident in our ability to deliver sustained long-term growth.
Tommy Cook
Chief Executive Officer
19 May 2025
Chief Financial Officer's Statement
The results for the year are an encouraging return to growth for revenue,
profit and margins, despite the continuing challenges in our end markets.
Gross margins have improved in the year, and we continue to benefit from a
strong balance sheet, cash balance and robust customer relationships.
Amongst our three regions, the Americas was the most impacted by the telecoms
slow down in prior years and, as a result, our focus in FY25 was on
cloud-based infrastructure and applications and on government sector
opportunities, whilst the telecoms sector was subdued. The Americas revenues
increased significantly year on year as this approach has proved successful.
Rest of World (EMEA, India, South East Asia, Australasia) was the least
affected by the slow-down in prior years. Although revenues in the year fell
very slightly in relation to the prior year, orders grew year on year and the
timing of orders to shipments in Q4 meant that some of the growth will
translate to revenues in early FY26. The ROW region benefits from a diverse
range of end customer sectors, helping to mitigate trading risks within any
one sector.
Within North Asia, revenues have remained flat year on year despite China
remaining a challenging environment for trading due to the impact of US
restrictions. We continue our focus on business in the other countries in
the region as a priority.
From a product line perspective, Lab Sync (Paragon-neo and Paragon-X)
experienced a year on year growth in orders as a result of the release of the
Paragon neo-S, the new 800Gb/s synchronisation testing solution, with timing
on orders received in Q4 pushing some of the revenue from this order growth
into opening backlog for FY26. Our Network Sync product revenues grew in the
year, predominantly driven by a repeat order from a major hyperscaler that is
investing in its data centre operations.
Our NAA network emulation product for infrastructure testing, SNE, also
experienced revenue growth after a difficult year of trading in FY24, as a
result of growing demand for our newly launched SNE-X & SNE-Ignite
product, particularly in the Americas and North Asia regions. NE-ONE, our NAA
network emulation for testing of applications product, experienced a reduction
in revenue in the year impacted by a shift in marketing focus to our new SNE
and Paragon releases in FY25. Focus is on returning this product line to
growth in FY26 with our plans for further expansion of the sales channel and
supporting marketing activity for our NAA products.
Financial KPIs
£000 FY25 FY24
Revenue 18,386 16,274
Gross Profit 13,763 11,947
Gross Margin 75% 73%
Underlying EBITDA (1) 1,151 80
Underlying EBITDA % 6% 0%
Profit/(Loss) before tax 720 (384)
(Loss)/Profit before tax % 4% (2%)
Closing cash and fixed term deposits 10,912 11,868
Capitalised R&D 4,836 5,579
Basic EPS (pence) 0.38 0.05
Diluted EPS (pence) 0.36 0.04
(1) Refer to note 32 for explanation of the alternative performance measures
calculations. A full reconciliation between Underlying EBITDA and the
statutory measures is also shown below.
Reconciliation of statutory figures to alternative performance measures -
Income Statement
FY25 FY24
£000 £000
Revenue 18,386 16,274
Cost of sales (4,623) (4,327)
Gross Profit 13,763 11,947
Other income 913 797
Administrative expenses (excluding depreciation & amortisation) (9,254) (8,884)
EBITDA 5,422 3,860
Amortisation of development costs (4,271) (3,780)
Underlying EBITDA 1,151 80
Other depreciation & amortisation (714) (697)
Operating Profit/(Loss) 437 (617)
Interest received 320 357
Finance costs (37) (124)
Profit/(Loss) before tax 720 (384)
Tax (383) 424
Profit/(Loss) for the year 337 40
Revenue
Revenue growth returned in the year with growth of 13% on the prior year to
18.4m (FY24: £16.3m), as a result of strong demand for the newly released
Paragon neo-S and increased demand across other sectors such as cloud
computing and defence. Order bookings increased in both the Sync and NAA
product families and across all regions in the year.
Revenue growth was most evident in the Americas region, with revenues
increasing 44% year on year. Americas accounted for 40% of total revenues
(FY24: 31%), ROW 42% (FY24: 48%), and North Asia 18% (FY24: 21%) in the
year.
Revenue model
Calnex generates revenues through the sale of bundled hardware and software,
alongside the provision of software support and extended warranty programmes.
The Group's core sales model is bundled hardware and software. Sales pricing
is dependent on the product type and the complexity of the software
configuration built into the product package. Calnex also sells stand-alone
software upgrades under licence.
Each of Calnex's units comes with a standard warranty period including
maintenance and software upgrade cover in the event of any software upgrades
being released for the options purchased. Calnex also sells software support
programmes which provide customers with access to future software upgrades
which are not included as part of the standard warranty. The Group also offers
extended warranty programmes to cover repairs falling outside of the standard
warranty period.
Bundled hardware and software revenues are recognised when the product is
delivered to the customer, with stand-alone software revenues recognised in
line with the length of the licence period. Revenues from software support and
extended warranty programmes are typically recognised on a straight-line basis
over the term of the contract.
Many of the products and services developed and deployed by Calnex's customers
are interlinked and need to be tested independently, such as the individual
components which are then built into the equipment used in telecoms networks.
Calnex's test products can be used by a combination of equipment vendors,
component manufacturers and network operators, to carry out testing during a
new product development cycle. Products verified utilising Calnex's test
solutions can be used in the knowledge that they will deliver consistent
performance.
Sources of Revenue
Revenue streams
FY25 FY24
£000
£000
Warranty support revenue - recognised over the life of cover 3,870 3,681
Hardware and software revenue - recognised on despatch/delivery 14,516 12,593
Total revenue 18,386 16,274
In FY25, 79% (FY24:77%) of the Group's revenues were generated from the sale
of bundled hardware and software products, with 21% (FY24: 23%) from software
support and extended warranty programmes.
As bundled hardware and software revenues grew 15% on the prior year in line
with increased demand for our products, revenues from software support and
extended warranty programmes also increased 5% on prior year revenues,
demonstrating the value our customers place on ensuring they can continue to
receive support on our offerings.
Geographical split (revenues)
FY25 FY24
% of revenue % of revenue
3-year average revenues:
Americas 35% 33%
North Asia 21% 25%
Rest of World 44% 42%
In-year revenues:
Americas 40% 31%
North Asia 18% 21%
Rest of World 42% 48%
The Group's customers are located across the world. Our global customer base
and distributor network enables the Group to spread risk across our three key
regions: the Americas, North Asia and Rest of the World (ROW).
On a three-year average basis, the split of revenues across the three key
regions was 44% for ROW (FY24: 42%), 35% for Americas (FY24: 33%) and 21%
(FY24: 25%) for North Asia. The Americas region was the most impacted by the
telecoms slow down in prior years and our FY25 focus on cloud-based
infrastructure and applications and on government sector opportunities, plus
the release of the Paragon neo-S, has resulted in a return to growth in that
region. North Asia has been experiencing a steady decrease since FY20
reflecting the ongoing US-China geopolitical tensions, although FY25 revenues
in the region remained steady compared with the prior year, despite the
trading challenges.
Top 10 customer orders (3 year order average)
FY25
% of orders
Top 10 customer orders 45%
Total customer orders 55%
In FY25, Calnex received orders from 275 customers, with the number of
customers remaining relatively flat on the prior year (FY24: 274 customers)
and the order value per customer increasing in the year.
The Group's top ten customers in FY25 accounted for 46% of total orders (FY24:
51%) and 45% of total orders on average over the last three years (FY24:
52%).
In FY25, no underlying customer accounted for more than 17 % of Calnex's total
orders.
Repeat customers (3 year order average)
FY25
% of orders
Repeat orders 77%
New orders 23%
The average length of customer relationship across the top ten customers in
FY25 is 10 years (FY24: 11 years), demonstrating our high levels of repeat
demand from our customers, whilst a number of new customers are also being
added to the top ten list. In addition, the Group typically experiences a
high level of repeat business from its total customer base. In FY25, using a
three-year order average, 77% of orders were generated from existing customers
(FY24: 76%).
Telecoms v cloud computing markets customers (3 year order average)
FY25 FY24
% of orders
Telecoms 57% 61%
Cloud Computing Market 43% 39%
Calnex's sales have previously been predominantly derived from telecoms
customers where the end-application is a telecoms (fixed and mobile) network.
More recently, Calnex has seen an increase in customers from the cloud
computing markets which include hyperscale/data centre providers, defence and
enterprise customers. FY25 saw the proportion of total orders from cloud
computing customers increase from 39% in FY24 to 43% in FY25. Equipment
vendors who initially developed product for use in telecom applications are
now selling the same products into other data network applications where the
same technology is implemented, and these new applications are becoming the
primary market opportunity for our customer's products, which is contributing
to the increase in the proportion of Calnex's business attributed to the cloud
computing market.
Gross Profit
Gross profit grew by 16% to £13.8m (FY24: £11.9m) driven by the growth in
revenue and a 2 percentage point improvement in gross margin. Gross margin,
which is calculated after discounts to channel partners are applied, improved
to 75% from 73% in the prior year. Gross margin is net of commissions payable
to our channel partners and can fluctuate by 1-2% through the year depending
on the mix and timing of the hardware and software bundles shipped.
Underlying EBITDA
Underlying EBITDA, which includes R&D amortisation, increased to £1.2m in
the year (FY24: £0.1m) as a result of the improvement in revenue volumes and
gross margin.
Administrative expenses (excluding depreciation & amortisation) were
£9.2m in FY25 (FY24: £8.9m). Excluding non-capitalised and impaired R&D
costs, administrative costs were in line with the prior year, including
inflationary cost increases, as a result of tight cost management across all
categories including headcount, recruitment, legal and professional and travel
costs. The share-based payments charge also reduced by £0.3m on prior year
levels as a result of a release and forfeiture of options in the year.
In line with the prior year, no performance bonuses or profit share was
accrued at the end of the current year due to Group FY25 budgeted profit
targets not being achieved.
Amortisation of R&D costs increased by £0.5m to £4.3m (FY24: £3.8m) due
to increased R&D investment in the current and previous years to support
the product roadmap. R&D spend is capitalised and amortised to the
P&L over five years.
Underlying EBITDA margin was 6% in FY25 (FY24: nil%), with positive
operational gearing aiding the drop through of higher revenue volumes,
improved gross margin and the relatively fixed cost base.
Profit before tax
The Group returned to profitability, generating a profit before tax of £0.7m
in the year (FY24: loss of £0.4m) with the improvement in profitability
attributable to growth in revenue performance and tight cost control
management. Profit before tax margin was 4% in the year (FY24: loss of 2%).
Tax
The tax charge in the year was £0.4m (FY24: credit of £0.4m), representing
an effective tax rate of 53% (FY24: 111% credit), principally driven by one
off prior year adjustments. The normalised run rate range for the business'
effective tax rate going forward will be closer to the applicable tax rate,
which is currently 25%.
The difference between the applicable rate of tax of 25% and the effective
rate in FY25 is largely due to the following:
· Adjustments in respect of prior periods (increasing the effective rate by
12%);
· Overseas tax (increasing the effective rate by 11%)
· Timing differences not recognised in the computation (increasing the effective
rate by 9%)
· Other differences, such as disallowable expenses and deferred tax charged to
equity (decreasing the effective rate by 4%).
The new merged R&D expenditure credit (RDEC) scheme combines the
previous RDEC and the SME R&D tax reliefs into a single scheme for
accounting periods beginning on or after 1 April 2024. The merged scheme
provides a 20% expenditure credit on qualifying expenditure, which is
allocated to 'other income' in the profit and loss account and is taxable.
The 86% rate on qualifying expenditure under the previous SME scheme is no
longer available. In FY25, the RDEC earned within other income was £0.7m
(FY24: £0.5m RDEC in other income, £0.5m SME credit within the tax credit).
Earnings per share
Basic earnings per share was 0.38 pence in the year (FY24: 0.05 pence) and
diluted earnings per share was 0.36 pence (FY24: 0.04 pence), with the
increases in both metrics reflecting the improved profitability in the year.
Cashflows
Closing cash at 31 March 2024 was £10.9m (31 March 2024: £11.9m). The
Group experienced an outflow of total cash and fixed term deposits of £1.0m
in the year (FY24: £5.7m) with the overall improved trading performance being
offset slightly by timing of trade receivables receipts at the end of the
year.
Net cash from operating activities was £4.6m (FY24: net cash absorbed by
operations of £0.7m) reflecting the increased trading levels in the year and
lower working capital movements compared to the prior year.
Working capital in the year increased by £1.8m (FY24: £3.7m increase) driven
predominantly by increases in trade receivables in the period as a result of
the increased trading in Q4 and the timing of shipments towards the year end.
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 year was £4.9m (FY23: £5.6m). This reduction in spend was
mainly as a result of lower equipment purchases in the year as the majority of
the equipment spend for the Paragon neo-S, the 800 Gb/s project was made in
FY24.
There is currently no debt on the balance sheet, leading to no borrowings
related cashflows in the current or prior periods. Closing cash at 31 March
2025 was £10.9m (31 March 2024: £11.9m). The closing cash balance at the
end of April 2025 was £12.7m after a significant number of trade receivables
were collected post year end.
Dividend
The directors are proposing a final dividend with respect to the financial
year ended 31 March 2025 of 0.62p per share. The final dividend will be
proposed for approval at the Annual General Meeting in August 2025 and, if
approved, will be paid on 29 August 2025 to all shareholders on the register
as at close of business on 25 July 2025, the record date. The ex-dividend date
will be 24 July 2025.
Ashleigh Greenan
Chief Financial Officer
19 May 2025
Consolidated Statement of Comprehensive Income
_________________________________________________________________________________________________________________
Year ended Year ended
31 March 31 March
2025 2024
Note £'000 £'000
Revenue 4,5 18,386 16,274
Cost of sales (4,623) (4,327)
Gross profit 13,763 11,947
Other income 6 913 797
Administrative expenses (14,239) (13,361)
Operating profit/(loss) 7 437 (617)
Interest received 320 357
Finance costs 10 (37) (124)
Profit/(loss) before taxation 720 (384)
Taxation 11 (383) 424
Profit and total comprehensive
income for the year 337 40
Basic earnings per share 28 0.38 0.05
Diluted earnings per share 28 0.36 0.04
Consolidated and Company Statement of Financial Position
__________________________________________________________________________________________________________________
Group Company
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Non-current assets Note
Intangible assets 12 12,255 12,110 11,750 11,337
Goodwill 13 2,000 2,000 - -
Plant and equipment 14 187 341 187 341
Right-of-use assets 19 1,115 287 1,115 287
Deferred tax asset 20 299 1,246 299 1,246
15,856 15,984 13,351 13,211
Current assets
Inventories 15 5,358 5,373 5,358 5,373
Trade and other receivables 16 5,669 3,340 5,843 3,570
Corporation tax receivable 684 435 713 435
Cash and cash equivalents 17 10.912 11,868 10,757 11,683
22,623 21,016 22,671 21,061
Total assets 38,479 37,000 36,022 34,272
Current liabilities
Trade and other payables 18 5,467 4,845 5,438 4,804
Lease liabilities 19 289 220 289 220
5,756 5,065 5,727 5,024
Non-current liabilities
Trade and other payables 18 1,411 1,510 1,411 1,510
Lease liabilities 19 928 195 928 195
Deferred tax liabilities 20 2,940 2,877 2,814 2,683
Provisions 21 - 15 - 15
5,279 4,597 5,153 4,403
Total liabilities 11,035 9,662 10,880 9,427
Net assets 27,444 27,338 25,142 24,845
Equity
Share capital 27 110 109 110 109
Share premium 7,671 7,511 7,671 7,511
Share option reserve 25 1,764 1,414 1,764 1,414
Retained earnings 17,899 18,304 15,597 15,811
Total equity 27,444 27,338 25,142 24,845
The profit for the financial year of the parent company is £527,721 (2024:
£75,267). As provided for by section 408 of the Companies Act 2006, no income
statement is presented in respect of the parent company.
The accounts were approved by the Board of Directors and authorised for issue
on 19 May 2025. The accounts are signed on their behalf by:
………………………………………………………..
Ashleigh Greenan
Director
Consolidated Statement of Changes in Equity
_________________________________________________________________________________________________________________
Share
Share Share option Retained Total
capital premium reserve earnings equity
£'000 £'000 £'000 £'000 £'000
Balance at 31 March 2023 109 7,495 873 18,883 27,360
Transactions with owner in their capacity as owners
Share options exercised 0 16 (195) 195 16
Share options - - 736 - 736
Dividends paid - - - (814) (814)
Total transactions with owner in their capacity as owners 0 16 541 (619) (62)
Total comprehensive income for the year - - - 40 40
Balance at 31 March 2024 109 7,511 1,414 18,304 27,338
Transactions with owner in their capacity as owners
Share options exercised 1 160 (72) 72 161
Share options - - 422 - 422
Dividends paid - - - (814) (814)
Total transactions with owner in their capacity as owners 1 160 350 (742) (231)
Total comprehensive income for the year - - - 337 337
Balance at 31 March 2025 110 7,671 1,764 17,899 27,444
Company Statement of Changes in Equity
__________________________________________________________________________________________________________________
Share
Share Share option Retained Total
capital premium reserve earnings equity
£'000 £'000 £'000 £'000 £'000
Balance at 31 March 2023 109 7,495 873 16,355 24,832
Transactions with owner in their capacity as owners
Share options exercised 0 16 (195) 195 16
Share options - - 736 - 736
Dividends paid - - - (814) (814)
Total transactions with owner in their capacity as owners 0 16 541 (619) (62)
Total comprehensive income for the year - - - 75 75
Balance at 31 March 2024 109 7,511 1,414 15,811 24,845
Transactions with owner in their capacity as owners
Share options exercised 1 160 (72) 72 161
Share options - - 422 - 422
Dividends paid - - - (814) (814)
Total transactions with owner in their capacity as owners 1 160 350 (742) (231)
Total comprehensive income for the year - - - 528 528
Balance at 31 March 2025 110 7,671 1,764 15,597 25,142
Consolidated and Company Cash Flow Statement
__________________________________________________________________________________________________________________
Group Company
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Cashflows from operating activities
(Loss)/profit before tax from continuing operations 720 (384) 868 (403)
Adjusted for:
Finance costs 10 37 124 37 124
Interest received (320) (357) (320) (357)
Government grant income 6 (200) (218) (200) (218)
R&D tax credit income 6 (713) (579) (713) (579)
Gain on disposal of fixed asset - (4) - (4)
Share-based payment transactions 24 432 746 432 746
Depreciation 14 182 424 182 177
Amortisation 12,19 4,803 4,053 4,535 4,032
Impairment of intangibles 12 167 - 167 -
Movement in inventories 15 (405) (2,820) (405) (2,820)
Movement in obsolescence provision 15 421 195 421 195
Movement in trade and other receivables 16 (2,334) (211) (2,272) (14)
Movement in trade and other payables 18 738 (903) 748 (737)
Cash generated from operations 3,528 66 3,480 141
Movement in provisions 21 (15) - (15) -
Corporation & foreign tax payments 635 (850) 713 (713)
R&D tax credit refunds received 435 - 435 -
Net cash from (absorbed by) operating activities 4,583 (784) 4,613 (572)
Investing activities
Purchase of intangible assets 12 (4,864) (5,598) (4,864) (5,598)
Purchase of property and equipment 14 (28) (111) (28) (111)
Short term investment: fixed term deposit - 1,515 - 1,515
Interest received 320 357 320 357
Net cash used in investing activities (4,572) (3,837) (4,572) (3,837)
Financing activities
Payment of lease obligations 19 (314) (296) (314) (296)
Dividends paid 31 (814) (814) (814) (814)
Share options proceeds 27 161 16 161 16
Net cash used in financing activities (967) (1,094) (967) (1,094)
Net increase (decrease) in cash and cash equivalents (956) (5,715) (926) (5,503)
Cash and cash equivalents at beginning of the year 11,868 17,583 11,683 17,186
Cash and cash equivalents at end of the year 10,912 11,868 10,757 11,683
Notes to the Financial Statements
____________________________________________________________________________________________________________
1 General information
Calnex Solutions plc ("the Company") is a public limited company, limited by
shares, domiciled and incorporated in Scotland. The registered office is
Oracle Campus, Linlithgow, West Lothian, EH49 7LR.
The Company (together with its subsidiary, the "Group") was under the control
of the directors throughout the period covered in the financial statements.
The list of the subsidiaries consolidated in the financial statements is shown
in Note 26.
The principal activity of the Group is the design, production and marketing of
test instrumentation and solutions for network synchronisation and network
emulation, enabling its customers to validate the performance of critical
infrastructure associated with telecoms networks, enterprise networks and data
centres.
The financial statements were authorised for issue, in accordance with a
resolution of directors, on 20 May 2025. The directors have the power to amend
and reissue the financial statements.
2 Basis of preparation
(a) Statement of compliance
The financial reporting framework that has been applied in their preparation
is applicable law and UK-adopted International Accounting Standards and, as
regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
The financial information does not include all information required for full
annual financial statements and therefore does not constitute statutory
accounts within the meaning of section 435(1) and (2) of the Companies Act
2006 or contain sufficient information to comply with the disclosure
requirements of UK-adopted International Accounting Standards. These should be
read in conjunction with the Financial Statements of the Company for the year
ended 31 March 2025 which were approved by the Board of Directors on 19 May
2025. The report of the auditors for the year ended 31 March 2025 was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report,
and (iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
(b) Basis of accounting
The financial statements have been prepared under the historical cost
convention, except for certain financial assets and liabilities including
financial instruments, which are stated at their fair values.
The preparation of the financial statements in conformity with UK-adopted IAS
requires the directors to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and
liabilities, income and expense. The estimates and judgements are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making judgements about carrying amounts of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from
these estimates. The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented.
(c) Functional and presentation currency
The financial statements are presented in pounds Sterling, which is the
functional and presentation currency of the Group. Results in these financial
statements have been prepared to the nearest thousand.
(d) Basis of consolidation
The consolidated financial statements incorporate those of Calnex Solutions
plc, and all its subsidiaries. A subsidiary is an entity controlled by the
Group, i.e. the Group is exposed to, or has the rights, to variable returns
from its involvement with the entity and has the ability to affect those
returns through its current ability to direct the entity's relevant activities
(power over the investee). All intra-Group transactions, balances, and
unrealised gains on transactions between Group companies are eliminated on
consolidation. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. The total
comprehensive income, assets and liabilities of the entities are amended,
where necessary, to align the accounting policies.
The Group applies the acquisition method to account for all acquired
businesses, whereby the identifiable assets acquired and the liabilities
assumed are measured at their acquisition date fair values (with a few
exceptions as required by IFRS 3 Business Combinations).
The cost of a business combination is the fair value at the acquisition date
of the assets given, equity instruments issued and liabilities incurred or
assumed, plus costs directly attributable to the business combination. The
excess of the cost of a business combination over the fair value of the
identifiable assets, liabilities and contingent liabilities is recognised as
goodwill.
The acquisition of assets that falls outside the scope of IFRS 3 are accounted
for by bringing the assets and liabilities of the acquired entity into the
financial statements at their nominal value from the date of acquisition.
Comparative information is not restated.
(e) Going Concern
The financial information for the year to 31 March 2025 has been prepared on
the basis that the Group and the Company will continue as a going concern.
The Board has approved financial forecasts for the current and succeeding
financial years to 31 March 2027. 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 of £10.9m, the Company will
continue to trade as a going concern.
3 Significant accounting policies
(a) Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided
in the normal course of business, net of sales related taxes and discounts and
is recognised at the point in time when the relevant performance obligation is
satisfied.
Where revenue contracts have multiple elements, all aspects of the transaction
are considered to determine whether these elements can be separately
identified. Where transaction elements can be separately identified and
revenue can be allocated between them on a fair and reliable basis, revenue
for each element is accounted for according to the relevant policy below.
Where transaction elements cannot be separately identified, revenue is
recognised over the contract period.
The Group recognises revenue from the following major sources:
Hardware & software revenue
Revenue from the sale of bundled hardware and software, is recognised when the
Group transfers the risk and rewards to the customer, and the bundled product
is delivered to the customer. Each unit sale comes with a standard warranty
period during which the Group agrees to provide warranty cover, maintenance
cover and software upgrade cover in the event of any software upgrades being
released. This is recognised as a separately identifiable obligation from the
provision of the hardware and is recognised over the life of the cover
provided, being a year.
For the sale of stand-alone software, the licence period and therefore the
revenue recognition, commences upon delivery.
Extended warranty programme
The Group enters into agreements with purchasers of its equipment to perform
necessary repairs falling outside the Group's standard warranty period. As
this service involves an indeterminate number of acts, the Group is required
to 'stand ready' to perform whenever a request falling within the scope of the
program is made by a customer. Revenue is recognised on a straight-line basis
over the term of the contract.
This method best depicts the transfer of services to the customer as:
i) The Group's historical experience demonstrates no statistically significant
variation in the quantum of services provided in each year of a multi-year
contract; and
ii) no reliable prediction can be made as to if and when any individual customer
will require service.
Software support programme
The Group enters into agreements with purchasers of its equipment to provide
software support and access to future software updates. Revenue is recognised
on a straight-line basis over the term of the contract.
Grant income
The Group has obtained grant funding from the Scottish Government in prior
years in the form of reimbursement for research and development costs eligible
for reclaim under the grant agreement. Costs were incurred before they were
reclaimed under the grant agreement and revenue only recognised after receipt
of the funds from the government. Grant funds received are recognised over
five years, in line with the amortisation policy on capitalised research and
development costs.
(b) Retirement benefit costs
Payments to defined contribution schemes are charged to the Statement of
Comprehensive Income as an expense as they fall due.
(c) Share-based payments
Equity-settled and cash settled share-based compensation benefits are provided
to some employees. Equity-settled transactions are awards of shares, or
options over shares that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions is measured at fair value on grant
date. Fair value is independently determined using the Black-Scholes option
pricing model, or a Monte-Carlo analysis that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at
grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option,
together with non-vesting conditions that do not determine whether the Group
receives the services that entitle the employees to receive payment. There are
no other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a
corresponding increase in equity over the vesting period. The cumulative
charge to profit or loss is calculated based on the grant date fair value of
the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting
date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date
until vested, determined by applying the Black-Scholes option pricing model,
taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the
liability is calculated as follows:
● during the vesting period, the liability at each reporting date is the fair
value of the award at that date multiplied by the expired portion of the
vesting period.
● from the end of the vesting period until settlement of the award, the
liability is the full fair value of the liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate
cost of cash-settled transactions is the cash paid to settle the liability.
If equity-settled awards are modified, as a minimum an expense is recognised
as if the modification has not been made. An additional expense is recognised,
over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the Group or employee,
the failure to satisfy the condition is treated as a cancellation. If the
condition is not within the control of the Group or employee and is not
satisfied during the vesting period, any remaining expense for the award is
recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on
the date of cancellation, and any remaining expense is recognised immediately.
If a new replacement award is substituted for the cancelled award, the
cancelled and new award is treated as if they were a modification.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised. Deferred tax
is charged or credited in the income statement, except when it relates to
items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
Deferred tax assets and liabilities are offset when the relevant requirements
of IAS 12 are satisfied.
(d) Taxation
The tax expense represents the sum of the current tax and deferred tax charge
for the year. The tax currently payable is based on taxable profit for the
year. The Group's liability for current tax is calculated using the tax rates
that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is measured on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases,
as used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be
available. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in
a business combination) of financial assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit.
(e) Business Combinations
The acquisition method of accounting is used to account for business
combinations regardless of whether equity instruments or other assets are
acquired.
The consideration transferred is the sum of the acquisition-date fair values
of the assets transferred, equity instruments issued or liabilities incurred
by the Group to former owners of the acquirer. All acquisition costs are
expensed as incurred to profit or loss. On the acquisition of a business,
the Group assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual
terms, economic conditions, the Group's operating or accounting policies and
other pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer is recognised at
the acquisition-date fair value. Subsequent changes in the fair value of the
contingent consideration classified as an asset or liability is recognised in
profit or loss.
The difference between the acquisition-date fair value of assets acquired and
liabilities assumed and the fair value of the consideration transferred is
recognised as goodwill. If the consideration transferred is less than the fair
value of the identifiable net assets acquired, a bargain purchase is
recognised as a gain directly in profit or loss by the Group on the
acquisition-date.
Business combinations are initially accounted for on a provisional basis. The
Group retrospectively adjusts the provisional amounts recognised and also
recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that
existed at the acquisition-date. The measurement period ends on either the
earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
(f) Intangible assets
Intangible assets acquired as part of a business combination, other than
goodwill, are initially measured at their fair value at the date of the
acquisition. Intangible assets acquired separately are initially recognised at
cost. Indefinite life intangible assets are not amortised and are subsequently
measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The method
and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted
for prospectively by changing the amortisation method or period.
Research costs are expensed in the period in which they are incurred.
Development costs are capitalised when it is probable that the project will be
a success considering its commercial and technical feasibility; the Group is
able to use or sell the asset; the Group has sufficient resources and intent
to complete the development; and its costs can be measured reliably.
Capitalised development costs are amortised on a straight-line basis over the
period of their expected benefit, being their finite life of 5 years.
Significant costs associated with patents and trademarks are deferred and
amortised on a straight-line basis over the period of their expected benefit,
being their finite life of 10 years. Amortisation is charged to
administrative expenses in the Statement of Comprehensive Income.
Goodwill and other intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset's fair value less costs of disposal and
value-in-use. The value-in-use is the present value of the estimated future
cash flows relating to the asset using a pre-tax discount rate specific to the
asset or cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a cash-generating
unit.
(g) Financial assets
Where there is no publicly quoted market value, other investments, including
subsidiaries, are shown at cost less provisions for impairment.
(h) Plant and equipment
Plant and equipment are shown at cost, net of depreciation and any provision
for impairment. Depreciation is provided on all property, plant and
equipment at varying rates calculated to write off cost less residual value
over the useful lives. Depreciation is charged to administrative expenses in
the Statement of Comprehensive Income. The principal rates employed are:
Plant and
machinery
25-33% straight line
The carrying values of property, plant and equipment are reviewed for
impairment when events or changes in circumstances indicate these values may
not be recoverable. If there is an indication that impairment does exist,
the carrying values are compared to the estimated recoverable amounts of the
assets concerned.
The recoverable amount is the greater of an asset's value in use and its fair
value less the cost of selling it. Value in use is calculated by discounting
the future cash flows expected to be derived from the asset. Where the
carrying value of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down through the income statement to its
recoverable amount.
An item of property, plant and equipment is written off either on disposal or
when there is no expected future economic benefit from its continued use.
Any gain or loss (calculated as the difference between the net disposal
proceeds and the carrying value of the asset) is included in the income
statement in the year.
(i) Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The
right-of-use asset is measured at cost, which comprises the initial amount of
the lease liability, adjusted for, as applicable, any lease payments made at
or before the commencement date net of any lease incentives received, any
initial direct costs incurred, and, except where included in the cost of
inventories, an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the
unexpired period of the lease or the estimated useful life of the asset,
whichever is the shorter. Where the Group expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its
estimated useful life. Right-of use assets are subject to impairment or
adjusted for any re-measurement of lease liabilities.
(j) Inventories
Inventories are valued at the lower of cost and net realisable value. In
determining the cost of raw materials, consumables and goods for resale, the
average purchase price is used. For work in progress and finished goods,
cost is taken as production cost which includes an appropriate proportion of
overheads.
Inventories are assessed for indicators of impairment at each year end and
where a provision is required the income statement is charged directly.
(k) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest method, less any
allowance for expected credit losses.
The simplified approach to measuring expected credit losses has been applied,
this uses a lifetime expected loss allowance. To measure the expected credit
losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for
expected credit losses.
(l) Cash and cash equivalents
Cash at bank and in hand are basic financial assets and include cash in hand,
deposits held at call with banks, other short-term liquid investments with
original maturities of 95 days or less, and bank overdrafts. Bank overdrafts
are shown within borrowings in current liabilities.
(m) Short term investments
Cash at bank on fixed term deposit, and other liquid investments with
maturities of greater than 95 days, but less than 12 months at the reporting
date.
(n) Borrowings
Interest-bearing loans and bank overdrafts are initially recorded at the fair
value of proceeds received and are subsequently stated at amortised cost.
Finance charges, including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accruals basis in the income
statement using the effective interest method and are added to the carrying
amount of the instrument to the extent that they are not settled in the period
in which they arise.
(o) Trade and other payables
Trade payables are non-interest-bearing and are measured at amortised cost.
(p) Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation arising as a result of a past event, it is probable that an outflow
of economic benefits will be required to settle the obligation and a reliable
estimate can be made. Provisions are measured at the present value of the
expenditure expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of money and
the risks specific to the obligation. The increase in the provision due to the
passage of time is recognised as an interest expense.
(q) Financial liabilities
Financial liabilities are recognised on the Group's Statement of financial
position when the Group becomes a party to the contractual provisions of that
instrument.
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently re-measured to their fair value
at each reporting date. The changes in fair value are recorded in the
statement of comprehensive income.
(r) Lease
liabilities
A lease liability is recognised at the commencement date of a lease. The lease
liability is initially recognised at the present value of the lease payments
to be made over the term of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the
Group's incremental borrowing rate. The lease term is the non-cancellable
period of the lease plus extension periods that the group is reasonably
certain to exercise and termination periods that the group is reasonably
certain not to exercise. Lease payments comprise of fixed payments less any
lease incentives receivable, variable lease payments that depend on an index
or a rate, amounts expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The
variable lease payments that do not depend on an index or a rate are expensed
in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest
method. The carrying amounts are re-measured if there is a change in the
following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is re-measured, an adjustment is
made to the corresponding right-of use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written down.
The Group has elected not to recognise a right-of-use asset and corresponding
lease liability for short-term leases with terms of 12 months or less and
leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
(s) Foreign currency
In preparing the financial statements, transactions in currencies other than
pounds sterling are recorded at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated to sterling at the foreign
exchange rate ruling at that date. Exchange differences arising on
translation are recognised in the consolidated Statement of comprehensive
income for the period.
Non-monetary assets and liabilities denominated in foreign currencies that are
stated at fair value are translated at the rates prevailing at the dates when
the fair value was determined. Non-monetary assets and liabilities that are
measured at historical cost in a foreign currency (e.g. property, plant and
equipment purchased in a foreign currency) are translated using the exchange
rate prevailing at the date of the transaction. Exchange differences arising
on the translation of net assets are affected through the Statement of
Comprehensive Income.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period and recognised in the
Statement of Comprehensive Income.
(t) Dividends
Dividends are recognised when declared during the financial year. The
declaration of dividends is at the discretion of the directors.
(u) Value Added Tax
Revenues, expenses and assets are recognised net of the amount of associated
VAT, unless the VAT incurred is not recoverable from the tax authority. In
this case it is recognised as part of the cost of the acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the amount of VAT receivable
or payable. The net amount of VAT recoverable from, or payable to, the tax
authority is included in other receivables or other payables in the statement
of financial position.
Commitments and contingencies are disclosed net of the amount of VAT
recoverable from, or payable to, the tax authority.
(v) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
the shareholders, excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued
during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued
for no consideration in relation to dilutive potential ordinary shares.
(w) Critical judgements in applying the Groups accounting estimates
In the process of applying the Group's accounting policies, the directors have
made the following estimates that have the most significant effect on the
amounts recognised in the financial statements.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value is determined by using the Black-Scholes
model or a Monte-Carlo analysis taking into account the terms and conditions
upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no
impact on the carrying amounts of assets and liabilities within the next
annual reporting period but may impact profit or loss and equity.
Useful lives
The Group uses forecast cash flow information and estimates of future growth
to assess whether goodwill and other intangible fixed assets are impaired, and
to determine the useful economic lives of its intangible assets. If the
results of operations in a future period are adverse to the estimates used a
reduction in useful economic life may be required.
Intangible assets
Intangible assets acquired as part of a business combination, other than
goodwill, are initially measured at their fair value at the date of the
acquisition. Intangible assets acquired separately are initially recognised at
cost. Indefinite life intangible assets are not amortised and are subsequently
measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The method
and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted
for prospectively by changing the amortisation method or period.
Research costs are expensed in the period in which they are incurred.
Development costs are capitalised when it is probable that the project will be
a success considering its commercial and technical feasibility; the Group is
able to use or sell the asset; the Group has sufficient resources and intent
to complete the development; and its costs can be measured reliably.
Capitalised development costs are amortised on a straight-line basis over the
period of their expected benefit, being their finite life of 5 years.
Significant costs associated with patents and trademarks are deferred and
amortised on a straight-line basis over the period of their expected benefit,
being their finite life of 10 years. Amortisation is charged to
administrative expenses in the Statement of Comprehensive Income.
Goodwill and other intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset's fair value less costs of disposal and
value-in-use. The value-in-use is the present value of the estimated future
cash flows relating to the asset using a pre-tax discount rate specific to the
asset or cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a cash-generating
unit.
(x) New accounting standards
There have been no applicable new standards, amendments to standards and
interpretations effective from 1 April 2023 that have been applied by the
Group which have or are expected to result in a significant impact on its
consolidated results or financial position.
4 Operating Segments
Operating segments are based on the internal reports that are reviewed and
used by the Board (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 does not consider segmentation in their review of costs
or the statement of financial position. The only operating segment information
reviewed, and therefore disclosed, are the revenues derived from different
geographies.
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Americas 7,258 5,042
North Asia 3,333 3,396
Rest of World 7,795 7,836
Total revenue 18,386 16,274
5 Revenue
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Sale of goods 14,516 12,593
Rendering of services 3,870 3,681
Total revenue 18,386 16,274
43% (2024: 67%) of the Group revenue has been generated through the network of
the Group's ex-principal distribution partner. In the current year, one
customer accounted for 17% of the Group's revenue (2024: 15%)
6 Other income
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Government grant income 200 218
R&D tax credit 713 579
913 797
7 Material operating profit items
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Operating profit for the year is stated after charging/(crediting):
Equity settled share-based payments 445 756
Cash settled share based payments (13) (10)
Reversal of non-employee vendor contingent consideration - (334)
Unwinding of discount on contingent consideration for non employee vendors - 104
Inventory recognised as an expense 3,186 3,111
Non R&D depreciation and amortisation 714 423
Amortisation of R&D asset 4,271 4,053
Auditor's remuneration
Fees payable to the Group's auditor and its associates for the audit of the 53 47
Group's annual accounts
Total fees payable for audit services 53 47
No fees were payable to the Group's auditor and its associates for other
services.
8 Employee benefits costs
Average monthly number of employees
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Development staff 78 79
Administrative staff 73 76
Management staff 11 11
162 166
Year ended Year ended
31 March 31 March
2025 2024
Employee costs during the year (including directors remuneration) amounted £'000 £'000
to:
Wages and salaries 9,269 8,846
Social security costs 833 889
Defined contribution pension 351 423
Share incentive scheme 142 226
Equity-settled share-based payment 445 756
Cash-settled share-based payment (13) (10)
11,027 11,130
Total gross wages and salaries capitalised in the year, included in the 4,677 4,451
analysis above
9 Key management personnel emoluments
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Wages and salaries 535 575
Social security costs 61 77
Defined contribution pension 8 7
Equity-settled share-based payment 61 77
665 736
The number of directors who accrued benefits under the company pension
plans:
1 1
Defined contribution plans
Remuneration of the highest paid director in respect of qualifying services:
Aggregate remuneration 171 211
Key management refers to the directors of the Group.
10 Finance costs
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Interest expense on lease liabilities 37 20
Unwinding of discount on contingent consideration - 104
37 124
11 Taxation
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Current taxation
UK corporation tax on profits for the year 160 -
Foreign current tax expense 30 192
Adjustments relating to prior years (794) (42)
(604) 150
Deferred taxation
Origination and reversal of temporary differences 27 (580)
Adjustments relating to prior periods 960 6
987 (574)
Total taxation charge/(credit) 383 (424)
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Profit/(loss) before tax for the year 720 (384)
Tax thereon at 25% (2024: 25%) 180 (96)
Effects of:
Expenses disallowable for tax purposes (63) (321)
Adjustments in respect of prior periods - current tax (872) (42)
Adjustments in respect of prior periods - deferred tax 960 6
R&D credit 59 (530)
Timing differences not recognised in the computation 64 460
Deferred tax (charged)/credited directly to equity (23) (20)
Overseas tax 78 119
Taxation charge / (credit) 383 (424)
12 Intangible assets
Included within intangible assets are the following significant items:
· Acquired intellectual property from business combinations, 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 Group
property Costs Total
£'000 £'000 £'000
Cost
At 1 April 2024 3,545 34,260 37,805
Additions 28 4,836 4,864
Disposals (14) (2,343) (2,357)
Impairments - (229) (229)
At 31 March 2025 3,559 36,524 40,083
Amortisation
At 1 April 2024 2,756 22,939 25,695
Charge for the year 281 4,271 4,552
Eliminated on disposal (14) (2,343) (2,357)
Impairments - (62) (62)
At 31 March 2025 3,023 24,805 27,828
Net book value
31 March 2024 789 11,321 12,110
31 March 2025 536 11,719 12,255
Intellectual Development Company
property Costs Total
£'000 £'000 £'000
Cost
At 1 April 2024 2,237 34,260 36,497
Additions 28 4,836 4,864
Disposals (14) (2,343) (2,357)
Impairments - (229) (229)
At 31 March 2025 2,251 36,524 38,775
Amortisation
At 1 April 2024 2,221 22,939 25,160
Charge for the year 13 4,271 4,284
Eliminated on disposal (14) (2,343) (2,357)
Impairments - (62) (62)
At 31 March 2025 2,220 24,805 27,025
Net book value
31 March 2024 16 11,321 11,337
31 March 2025 31 11,719 11,750
During the year, a review of the carried development costs brought forward has
resulted in a disposal of £2,342,833 (2024: £1,714,991), and elimination of
amortisation of £2,342,833 (2024: £1,714,991) resulting in a net book value
impact of £nil (2024: £nil). This reflects removal of aged spend on product
features that are now considered to be superseded by current product
developments.
Following the impairment review of the R&D asset, capitalised R&D of
£229,321 with accompanying amortisation of £61,917, NBV £167,404 was fully
impaired, and removed from the intangible asset base.
13 Goodwill
The goodwill arising in a business combination is allocated, at acquisition,
to the cash generating units that are expected to benefit from the business
combination. The Board consider the Group to consist of a single cash
generating unit, reflective of not only the manner in which the Board (who
operate as the Chief Operating Decision Makers) assess and review performance
and resource allocation of the group, but also the centralised cost structure
and pooled assets and liabilities which are critical to revenue generation
across all platforms. The determination of a single cash generating unit
within the group therefore reflects accurately the way the Group manages its
operations and with which goodwill would naturally be associated.
Group
31 March
2025
£'000
Cost
As at 31 March 2024 2,000
As at 31 March 2025 2,000
The Group test goodwill for impairment annually, or more frequently if there
are indications that the goodwill has been impaired. Goodwill is tested for
impairment by comparing the carrying amount of the cash generating unit,
including goodwill, with the recoverable amount. The recoverable amounts are
determined based on value-in-use calculations which require assumptions. The
calculations use cashflow projections based on financial budgets approved by
the Board covering a two year period, together with management forecasts for a
further three year period. These budgets and forecasts have regard to
historical financial performance and knowledge of the current market, together
with the Group's views on the future achievable growth and the impact of
committed cashflows. Cashflows beyond this are extrapolated using estimated
growth rates.
Key assumptions used in the value in use calculation:
· The terminal cash flows are extrapolated in perpetuity using a growth rate of
2%, (2024: 2%) which has been based on management judgement reflecting sector
and industry experience. This is not considered to be higher than the average
long-term industry growth rate.
· The discount rate is based on the weighted average cost of capital (WACC) of
12.7% (2024: 8.2%), which would be anticipated for a market participant
investing in the Group. WACC was tested for materiality based on movement of
up to 1.1% before there was elimination of headroom indicating impairment.
Management has performed sensitivity analysis on the key assumptions both with
other variables held constant and with the other variables simultaneously
changed. Management has concluded that there are no reasonable changes in the
key assumptions that would cause the carrying amount of goodwill to exceed the
value in use for the cash generating unit.
No evidence of impairment was found at the balance sheet date.
14 Plant and equipment
The Group annually reviews the carrying value of tangible fixed assets taking
recognition of the expected working lives of the plant and equipment available
to the Group and known requirements. Depreciation is charged to administrative
expenses.
Group Company
Plant and Plant and
equipment equipment
Total Total
£'000 £'000
Cost
At 1 April 2024 676 676
Additions 28 28
Disposals (4) (4)
At 31 March 2025 700 700
Depreciation
At 1 April 2024 335 335
Charge for the year 182 182
Eliminated on disposal (4) (4)
At 31 March 2025 513 513
Net book value
31 March 2024 341 341
31 March 2025 187 187
15 Inventories
Group Company
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Finished goods 6,281 5,875 6,281 5,875
Provision for obsolescence (923) (502) (923) (502)
5,358 5,373 5,358 5,373
Cost of inventories recognised as an expense 3,186 3,111 3,186 3,111
Group inventories reflect the following movement in provision for
obsolescence:
At start of the financial year 502 307 502 307
Utilised - - - -
Provided 421 195 421 195
At end of the financial year 923 502 923 502
16 Trade and other receivables
Group Company
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Amounts due within one year
Trade receivables 5,313 2922 5,314 2,922
Other receivables - 61 - 61
Amounts owed by group companies - - 173 230
Prepayments and accrued income 356 357 356 357
5,669 3,340 5,843 3,570
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.
The Group's credit risk is primarily attributable to its trade and other
receivables. Management has a credit policy in place and the exposure to
credit risk is monitored on an ongoing basis. Credit evaluations are
performed on customers as appropriate to the level of credit extended. In
addition, credit insurance would be sought for major areas of exposure,
although this has not been required in the year under review.
The Group reviews trade receivables past due but not impaired on a regular
basis and considers, based on experience, that the credit quality of these
amounts at the balance sheet date has not deteriorated since the date of the
transaction.
Included in the Group's trade receivables balance are debtors with a carrying
amount of £1,383,956 (2024: £143,109), which are past due at the reporting
date but for which the Group has not provided against. As there has not been a
significant change in credit quality, the Group believes that all amounts
remain recoverable.
Ageing of past due but not impaired trade receivables
Group Company
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Overdue by
0-30 days 1,181 56 1,181 56
30-60 days 191 13 191 13
60+ days 12 74 12 74
1,384 143 1,384 143
The Directors consider that the carrying amount of trade and other receivables
approximates their fair value.
Note 22 includes disclosures relating to the credit risk exposures and
analysis relating to the allowance for expected credit losses. The calculated
credit risk is £24,739 (2024: £9,183). Due to the immaterial nature of the
balance, no provision has been recognised.
17 Cash and cash equivalents
Cash and cash equivalent amounts included in the Consolidated Statement of
Cashflows comprise the following:
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Cash at bank 10,786 11,748 10,631 11,563
Cash on short term deposit 126 120 126 120
Total cash and cash equivalents 10,912 11,868 10,757 11,683
Short term cash deposits of £126,034 (2024: £120,084) are callable on a
notice of 95 days.
The directors consider that the carrying value of cash and cash equivalents
and short-term investments approximates their fair value. Details of the
Group's credit risk management are included in note 22.
18 Trade and other payables
Group Company
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Amounts due within one year
Trade payables 987 913 969 897
Other taxes and social security 226 211 226 211
Other payables 88 95 88 95
Accruals 739 663 731 656
Deferred income 3,427 2,963 3,424 2,945
5,467 4,845 5,438 4,804
Amounts due after one year
Deferred income 1,411 1,510 1,411 1,510
1,411 1,510 1,411 1,510
Total amounts due 6,878 6,355 6,849 6,314
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.
The directors consider that the carrying amount of trade and other payables
approximates their fair value.
19 Leases
Right of use assets
The Group leases land and buildings for its head office in Linlithgow,
Scotland. The current lease was agreed on 1 December 2024 and will run for the
5 year period to 30 November 2029. On 4 March 2022 the Group agreed an
additional premises lease for office space in Belfast. This lease has an
initial 5 year term and will run until 4 March 2027.
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 carrying value of right of use assets, and lease obligations recognised
with respect to these leases are shown below:
Building Group Company
Lease IT equipment Total Total
£'000 £'000 £'000 £'000
Cost
At 1 April 2024 1,044 170 1,214 1,214
Additions 1,079 - 1,079 1,079
Disposals (761) (91) (852) (852)
At 31 March 2025 1,362 79 1,441 1,441
Amortisation
At 1 April 2024 772 155 927 927
Charge for the year 236 15 251 251
Eliminated on disposal (761) (91) (852) (852)
At 31 March 2025 247 79 326 326
Net book value
31 March 2024 272 15 287 287
31 March 2025 1,115 - 1,115 1,115
Right-of-use assets Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Balance at 1 April 287 533 287 533
Additions to right of use assets 1,079 - 1,079 -
Disposals of right of use assets (852) - (852) -
Amortisation charge for the year (251) (246) (251) (246)
Amortisation eliminated on disposal 852 - 852 -
Balance at 31 March 1,115 287 1,115 287
Lease liabilities
Group Company
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Balance at 1 April 415 691 415 691
Acquisition of new leases 1,079 - 1,079 -
Payment of lease liabilities (314) (296) (314) (296)
Interest expense on lease liabilities 37 20 37 20
Balance at 31 March 1,217 415 1,217 415
Disclosed as
Current 289 220 289 220
Non-current 928 195 928 195
1,217 415 1,217 415
During the year, the Group also leased additional land and buildings in
Stevenage and four motor vehicles. These leases were 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.
Lease commitments for short-term and low value leases
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Motor vehicles 108 49 108 49
Land and buildings 72 72 72 72
180 121 180 121
Amounts recognised in the income statement
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Depreciation charge - building lease 236 218 236 218
Depreciation charge - IT equipment 15 28 15 28
Interest on lease liabilities 37 20 37 20
Low value lease rental 180 121 180 121
Amounts recognised in statement of cashflows
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Total cash outflow for leases (314) (296) (314) (296)
A maturity analysis of contractual cashflows relating to lease liabilities is
included in note 22 (d).
20 Deferred tax
Deferred tax asset
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Opening balance 1,246 272 1,246 272
Recognised in statement of comprehensive income (947) 974 (947) 974
Closing balance 299 1,246 299 1,246
Deferred tax assets arise as follows:
Unused tax losses 248 1,143 248 1,143
Share-based remuneration 29 76 29 76
Other timing differences 22 27 22 27
Total deferred tax asset 299 1,246 299 1,246
Deferred tax liability
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Opening liability 2,877 2,457 2,683 2,197
Recognised in statement of comprehensive income 41 399 109 465
Recognised in equity 22 21 22 21
Closing liability 2,940 2,877 2,814 2,683
Deferred tax liabilities arise as follows:
Deferred tax on acquisition 126 193 - -
Timing differences on development costs 2,793 2,606 2,793 2,605
Accelerated capital allowances 21 78 21 78
Total deferred tax liability 2,940 2,877 2,814 2,683
21 Provisions
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Non-current provisions
Dilapidations - 15 - 15
Provisions released pertain to potential payments to be made in respect of
dilapidations on leased assets. These have been considered as part of the new
right of use liability created, in accordance with IFRS 16.
22 Financial instruments
The Group's activities expose it to a variety of financial risks: market risk
(including foreign currency risk, price risk and interest rate risk), credit
risk and liquidity risk. The Group's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Group. When required, the
Group uses derivative financial instruments in the form of forward foreign
exchange contracts to hedge certain risk exposures. Derivatives are
exclusively used for hedging purposes, and not as trading or other speculative
instruments. The Group uses different methods to measure different types of
risk to which it is exposed. These methods include sensitivity analysis in the
case of interest rate, foreign exchange and other price risks and ageing
analysis for credit risk.
Capital management
The Board's policy is to maintain a strong capital base so as to cover all
liabilities and to maintain the business and to sustain its development. The
Board defines capital as total equity, as recognised in the statement of
financial position, plus net debt. Net debt is calculated as total borrowings
less cash and cash equivalents. In order to maintain or adjust the capital
structure, the Group may return capital to shareholders, issue new shares or
sell assets to reduce debt.
There were no changes in the Group's approach to capital management during the
year.
Neither the Company nor any of its subsidiaries are subject to externally
imposed capital requirements.
(a) Categories of financial instruments
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Financial assets (current and non-current) at amortised cost
Trade and other receivables 5,313 2,922 5,314 3,072
Cash and cash equivalents 10,912 11,868 10,757 11,683
Short term investments - - - 2,173
Financial liabilities (current and non-current) at amortised cost
Lease liabilities 1,217 416 1,217 416
Trade and other payables 1,815 1,671 1,788 1,648
Unless otherwise stated, the carrying amounts of financial instruments reflect
their fair value. Under the fair value three-level hierarchy, based on the
lowest level of input that is significant to the entire fair value
measurement, being:
• Level 1: Quoted prices (unadjusted) in active markets for identical
assets or liabilities that the Group can access at the measurement date;
• Level 2: Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly; and
• Level 3: Unobservable inputs for the asset or liability.
There have been no Level 3 fair value measurements in the current or prior
financial year.
Financial risk management objectives
The Group's senior management team manage the financial risks relating to the
operations of each department. These risks include market risk, credit risk
and liquidity risk.
Where appropriate, the Group seeks to minimise the effects of market risks by
using financial instruments to mitigate these risk exposures as appropriate.
The Group does not enter into or trade in financial instruments for
speculative purposes.
(b) Market risks
Foreign currency risk
The Group's activities expose it primarily to the financial risks of changes
in foreign currency exchange rates.
As at 31 March 2025 Sterling Euro US Dollar Total
£'000 £'000 £'000 £'000
Trade receivables 286 84 4,943 5,313
Lease liabilities (1,217) - - (1,217)
Trade payables (946) (41) (987)
Cash and cash equivalents 7,490 229 3,193 10,912
5,613 313 8,095 14,021
Based on this exposure, had Pound Sterling weakened by 5% the Group's profit
before tax would have been £420,400 lower. The percentage change is based on
management's assessment of reasonable possible fluctuations.
As at 31 March 2024 Sterling Euro US Dollar Total
£'000 £'000 £'000 £'000
Trade receivables 415 82 2,425 2,922
Lease liabilities (416) - - (416)
416
Trade payables (856) - (57) (913)
Cash and cash equivalents 10,117 145 1,606 11,868
9,260 227 3,974 13,461
Based on this exposure had Pound Sterling weakened by 5% the Group's profit
before tax would have been £210,050 lower. The percentage change is based on
management's assessment of reasonable possible fluctuations.
Interest rate risk
The Group is not exposed to any significant interest rate risk as borrowings
are obtained at fixed rates.
Other market price risk
The Group is not exposed to any other significant market price risks.
(c) Credit risk management
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's receivables from
customers.
The Group's principal financial assets, other than business assets, are trade
and other receivables and cash and cash equivalents. These represent the
Group's maximum exposure to credit risk in relation to financial assets.
Group Company
Year ended Year ended Year ended ended Year ended
31 March 31 March 31 March 31 March
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Trade and other receivables 5,313 2,921 5,314 3,072
Cash and cash equivalents 10,912 11,868 10,757 11,683
16,225 14,789 16,071 14,755
Trade and other receivables
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer.
The balance presented in the balance sheet is net of allowances for doubtful
receivables and returns, estimated by the Group's management based on prior
experience and their assessment in the current economic climate. No adjustment
has been estimated for the allowance for credit loss.
The Group's main concentration of credit risk relates to where a credit risk
management approach is employed, including strict retention of title, customer
stock holding visibility and the use of credit insurance.
The Group applies the IFRS 9 Financial Instruments simplified model of
recognising lifetime expected credit losses for all trade receivables as these
items do not have a significant financing component.
In measuring the expected credit losses, the trade receivables have been
assessed on a collective basis as they possess shared credit risk
characteristics. They have been grouped based on the days past due.
The expected credit loss for trade receivables as at 31 March 2025 and 31
March 2024 were determined as follows:
Days past due 0 1-30 31-60 >60 Total
2025
Balance outstanding (£'000) 3,930 1,181 191 12 5,314
Historic loss rate 0% 0% 0% 0%
Estimated credit loss provision 0.25% 1% 1.5% 2%
Potential credit loss allowance (£'000) 10 12 3 0 25
Days past due 0 1-30 31-60 >60 Total
2024
Balance outstanding (£'000) 2,779 56 12 74 2,921
Historic loss rate 0% 0% 0% 0%
Estimated credit loss provision 0.25% 1% 1.5% 2%
Potential credit loss allowance (£'000) 7 1 0 1 9
Due to the immaterial nature of the assessed credit risk, no provision has
been recognised for 31 March 2025 or 31 March 2024.
Cash
Cash is held with banks in the UK and US with high credit ratings and no
financial loss due to the banks' failure to meet their contractual obligations
is expected.
(c) Liquidity risk management
The Group manages liquidity risk through the monitoring of forecast cash flows
and through the use of bank loans when required, thereby maintaining
sufficient liquid assets to fund its contractual obligations and maintain the
ongoing development of the Group.
The table below provides an analysis of the Group's financial liabilities to
be settled on a gross basis by relevant maturity categories from the balance
sheet date to the contractual settlement date. The table includes both
interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in
the statement of financial position.
1 year or 1 to 2 to Over 5 Total
less 2 years 5 years years liabilities
31 March 2025 £'000 £'000 £'000 £'000 £'000
Trade payables 987 - - - 987
Other payables 1,044 - - - 1,044
Lease liabilities 289 312 278 338 1,217
2,320 312 278 338 3,248
1 year or 1 to 2 to Over 5 Total
less 2 years 5 years years liabilities
31 March 2024 £'000 £'000 £'000 £'000 £'000
Trade payables 913 - - - 913
Other payables 970 - - - 970
Lease liabilities 220 133 64 - 417
2,103 133 64 - 2,300
23 Retirement benefits
Contributions by Group companies are charged to the income statement as an
expense as they fall due. The amount recognised as an expense in relation to
defined contributions plans was £351,251 (2024: £422,669).
24 Share-based payments
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Charged to administration expenses:
Equity settled share-based payments 445 756
Cash settled share-based payments (13) (10)
Total share-based payments 432 746
During the year 386,000 share options were granted (2024: 26,550) exclusive of
the management LTIP. The fair value of share options granted has been
estimated at the date of the grant using the Black-Scholes model. Expected
volatility in the current year was determined by calculating the historical
volatility of the Group's share price over the previous year, which the Board
consider to be representative of future volatility.
The following table gives the assumptions made in arriving at the share-based
payment charge and the fair value:
Year ended Year ended
31 March 31 March
2025 2024
Options issued 386,000 26,550
Weighted average share price (pence) 57 113
Weighted average exercise price (pence) 1 113
Expected volatility (%) 42.8%-66.6% 51.8%
Vesting period (years) 3-5 3-5
Option life (years) 10 10
Risk free rate (%) 5.0 5.0
Dividend yield (%) 1.25 1.0
Fair value at grant date (£'000) 175 11
Equity options in issue at 31 March 2024 5,191,183
Equity options issued in the year 386,000
Equity options realised in the year (333,334)
Equity options forfeited in the year (379,999)
Equity options in issue at 31 March 2025 4,863,850
As at 31 March 2025 Tranche Tranche Tranche Tranche
Number of option awards in issue 386,000 1,959,633 2,463,217 55,000
Exercise price (pence) 1 48 112-118 155-158
Share price as at 31 March 2025 (pence) 46 46 46 46
Weighted average share price for year ended 31 March 2025 (pence) 57 57 57 57
Number of options available to exercise at 31 March 2025 - 1,242,966 492,834 -
Average period remaining of options in issue (months) - 109 119 -
During the year 25,000 cash settled options were granted (2024: £nil). The
fair value has been measured at the reporting date using the Black-Scholes
model. Due to the proximity of the reporting date to the issue of equity
settled share options granted, the model assumptions on volatility, risk free
rate, and dividend yield used for the cash settled options do not materially
differ from those in the table above.
Year ended Year ended
31 March 31 March
2025 2024
Options issued 25,000 -
Weighted average share price (pence) 46 -
Weighted average exercise price (pence) 1 -
Vesting period (years) 3-5 -
Option life (years) 10 -
Fair value at reporting date (£'000) 9 -
As at 31 March 2025
Number of awards in issue 25,000 188,500
Exercise price (pence) 1 115-118
Share price as at 31 March 2025 (pence) 46 59
Weighted average share price for year ended 31 March 2025 (pence) 46 92
Number of options available to exercise at 31 March 2025 nil nil
During the year a further management long term incentive plan ('LTIP') was
created inclusive of market based vesting conditions. To determine fair value,
a Black-Scholes model was utilised for the EPS tranche, and a Monte Carlo
valuation for the TSR tranche. Further details can be found on the LTIP
vesting criteria within the Remuneration Committee report. The cumulative
charge to overhead for the year from the management LTIPs in issue was
£111,549 (2024: £158,389).
Due to the inclusion of performance-based measures beyond only the passage of
time, these performance-based employee share options have been treated as
contingently issuable shares in the calculation of both basic and diluted
earnings per share. The performance measures will be assessed (based on
audited data) by the Remuneration Committee at the end of the 3-year period.
As at 31 March 2025
TSR Tranche EPS Tranche Revenue Tranche Total
Options in issue FY24 Management LTIP 157,181 314,361 157,181 628,723
Fair value (£'000) 72 340 170 582
Exercise price (pence) 1 1 1
Options available to exercise at 31 March 25 Nil Nil Nil
Options in issue FY25 Management LTIP 393,172 393,173 - 786,345
Fair value (£'000) 24 177 - 201
Exercise price (pence) 1 1 -
Options available to exercise at 31 March 25 Nil Nil -
25 Share option reserve
Year ended Year ended
Share option reserve reconciliation 31 March 31 March
2025 2024
£'000 £'000
Opening balance 1,414 873
Equity settled share-based payments 445 756
Share options realised or forfeited (72) (195)
Deferred taxation on share options: charge recognised in equity (23) (20)
Total share option reserve 1,764 1,414
26 Group companies
Country of
registration
% of direct shares held
Subsidiary
undertakings or
incorporation
Principal
activity
2025 2024
Calnex Americas Corporation
USA
Sales and marketing
100% 100%
Support services to
Calnex Solutions
plc
27 Called up share capital
As at 31 March 2025, the Company had 87,891,636 (2023: 87,558,302) issued and
fully paid Ordinary Shares held at a nominal value of 0.125p. During the year,
exercise of share options resulted in 333,334 shares being issued.
Group and Company
31 March 31 March
2025 2024
£'000 £'000
Ordinary shares of 0.125p each 110 109
In issue at the start of the financial year 109 109
Share options exercised 1 0
In issue at end of the financial year 110 109
28 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 and warrants.
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Profit after tax attributable to shareholders 337 40
Weighted average number of ordinary shares used in calculating:
Basic earnings per share 87,614 87,530
Diluted earnings per share 92,852 92,749
Earnings per share - basic (pence) 0.38 0.05
Earnings per share - diluted (pence) 0.36 0.04
29 Notes to the Statement of Cashflow
Reconciliation of changes in liabilities to cashflows arising from financing
activities
Lease
liabilities Total
£'000 £'000
Balance at 31 March 2024 415 415
Lease repayment (314) (314)
Interest payments 37 37
Total changed from financing cashflows (277) (277)
Acquisition of new lease 1,079 1,079
Total other changes 1,079 1.079
Balance at 31 March 2025 1,217 1,217
30 Share schemes
The company operates a number of share incentive plans on behalf of its
employees, details of which can be found in the Remuneration Committee
report. Included in these are the UK Share Incentive Plan and a cash settled
phantom plan for Non-UK employees:
UK Employee Share Incentive Plan (UK SIP)
The UK SIP is an all-employee HMRC approved share plan open to employees based
in the UK. Employees can elect to invest up to £150 each month (£1,800 per
year), deducted from their gross salary, which is used to purchase shares at
market value as "partnership" shares. The Company offers participants
"matching" shares, which are subject to forfeiture for three years, on the
basis of one free matching share for each partnership share purchased.
Non-UK Employee Incentive Plan
Under the UK SIP Plan, shares may only be awarded to UK based employees of the
Group. As the Board also wanted to have the discretion to grant awards to
contractors and overseas employees, it was necessary to set up a separate
Non-UK Employee Incentive Plan under the rules of the Notional Plan (refer to
the Remuneration Committee Report for more detail). This Plan acts as a
non-tax advantaged shadow equity interest plan to the UK SIP, mirroring the UK
SIP awards for overseas employees and contractors with equity ownership being
replaced by cash settlement. The non-UK Employee Incentive plan is therefore
available to employees in countries other than the UK, on a cash-settled
basis. Employees can elect to save funds up to £150 each month (£1,800 per
year), deducted from their pre-tax salary, for a 12-month period, and matched
by the Group. In the cash settled model, these savings are then returned to
the participant at the prevailing market share price at the end of the savings
period, had the funds been used to purchase Calnex Solutions plc shares
(returns being fully funded by the Group). Employees participating in this
scheme during the period under review included those based in China, Hong Kong
and India and the USA. The fair value assessment of this obligation at the
year-end was £70,000 (2024: £110,500) and is included within other
creditors.
31 Dividends
All dividends are determined and paid in Pound Sterling.
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Declared and paid in the year
Final dividend 2023: 0.62p per share - 543
Interim dividend 2024: 0.31p per share - 271
Final dividend 2024: 0.62p per share 543 -
Interim dividend 2025: 0.31p per share 271 -
Proposed for approval at the Annual General Meeting (not recognised as a
liability at 31 March 2024)
Final dividend 2025: 0.62p per share 545 -
The directors are proposing a final dividend with respect to the financial
year ended 31 March 2025 of 0.62p per share, which will represent £544,928 of
a dividend payment. The final dividend will be proposed for approval at the
Annual General Meeting in August 2025 and, if approved, will be paid on 29
August 2025 to all shareholders on the register as at close of business on 25
July 2025, the record date. The ex-dividend date will be 24 July 2025.
32 Alternative performance measures (APMs)
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. These APMs are
not defined under IFRS and therefore may not be directly comparable with
similarly identified measures used by other companies.
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Underlying EBITDA 1,151 80
Underlying EBITDA % 6% 0%
Capitalised R&D 4,836 5,579
Key performance measures:
· Underlying EBITDA: EBITDA after charging R&D amortisation
Reconciliation of statutory figures to alternative performance measures -
Income Statement
FY25 FY24
£000 £000
Revenue 18,386 16,274
Cost of sales (4,623) (4,327)
Gross Profit 13,763 11,947
Other income 913 797
Administrative expenses (excluding depreciation & amortisation) (9,254) (8,884)
EBITDA 5,422 3,860
Amortisation of development costs (4,271) (3,780)
Underlying EBITDA 1,151 80
Other depreciation & amortisation (714) (697)
Operating Profit / (loss) 437 (617)
Interest received 320 357
Finance costs (37) (124)
Profit/(loss) before tax 720 (384)
Tax (383) 424
Profit for the year 337 40
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