REG - Calnex Solutions PLC - Interim Results
19/11/2024 07:00
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RNS Number : 6959M Calnex Solutions PLC 19 November 2024
19 November 2024
Calnex Solutions plc
("Calnex", the "Company" or the "Group")
Interim Results
Resilient trading in challenging telecoms market
Entered H2 with an increased backlog compared with the beginning of H1
Benefiting from R&D investment and growing product offering
Calnex Solutions plc (AIM: CLX), a leading provider of test and measurement
solutions for the global telecommunications and cloud computing markets,
announces its unaudited results for the six months ended 30 September 2024
("H1 FY25" or "the Period").
Financial Highlights
£000 H1 FY25 H1 FY24 YOY % change
Unaudited Unaudited
Revenue 7,359 7,847 (6%)
Underlying EBITDA (1) (1,124) (411) (173%)
Loss before tax (1,318) (599) (120%)
Closing cash including fixed term deposits 8,580 13,478 (36%)
Basic EPS (pence) (1.13) (0.42) (169%)
Diluted EPS (pence) (1.13) (0.42) (169%)
(1) A full reconciliation between Underlying EBITDA and profit before tax is
shown in the Financial Review and in note 19 to the financial statements.
Financial Highlights
· Resilient performance, delivering revenue of £7.4m (H1 FY24: £7.8m).
· Order levels improved in Q2, following a subdued Q1
· Gross margins remained robust and in line with the prior period at 74% (H1
FY24: 74%).
· Loss before tax of £1.3m (H1 FY24: loss before tax of £0.6m), driven by
lower trading volumes and an expected increase in R&D amortisation after
increased investment in product development in prior years.
· Closing cash position of £8.6m (31 Sept 2023: £13.5m), due to working
capital timing and further investment in inventory. Cash increased to £10.3m
at the end of October, driven predominantly by a £1.1m corporation tax refund
and R&D tax credit receipt.
· Proposed interim dividend of 0.31 pence per share to be paid in December (H1
FY24: 0.31 pence).
Operational Highlights
· Growing backlog reflects the positive impact of recent R&D investment into
areas showing the most near-term potential across the telecoms, cloud
computing and defence markets.
· Orders for new Paragon-neo offering, focused on the area of 800Gb/s
synchronisation testing, continue to build following successful customer
testing and release in early H2.
· The Network and Application Assurance business orders, which were forecast to
be a driver for growth in FY25, have increased on the prior period.
· Successfully onboarded new channel partners covering North America, Europe,
India, and Asia-Pacific, with first orders received and the H2 sales funnel
filling well, in line with the management team's expectations. Transitional
arrangements with Spirent are also working effectively.
Outlook
· Entered H2 with an increased order backlog balance compared with the opening
position for the Period, following improved Q2 order performance after a
subdued Q1.
· The Board expects to close the year in line with current market expectations,
although uncertainties in the wider economic environment persist.
· Product expansion strategy provides confidence in a return to growth during H2
FY25 and beyond.
Tommy Cook, Chief Executive Officer and founder of Calnex, said:
"In a challenging telecoms market, Calnex has traded resiliently. We have
entered the second half with an increased order backlog compared with the
start of the first half and our new channel strategy is tracking well. While
challenges across the telecoms market are expected to remain for the duration
of the year, good progress with our product expansion strategy provides
confidence in a return to growth during H2 FY25 and into FY26.
As previously highlighted, the fundamental drivers that underpin the build out
of the mobile network and the expansion of the data centres and cloud
computing capacity have not changed. The need for reliable testing solutions
is synonymous with investment and advancements of network infrastructure in
the telecoms sector and beyond. We remain well positioned to convert the
telecoms sales pipeline once the sector returns to normal market conditions."
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 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.
CEO Statement
Overview
In a challenging telecoms market, Calnex has traded resiliently and is on
track to report results for the year in line with market expectations. While
the wider economic environment remains unpredictable, we are encouraged that
order and revenue performance steadily improved throughout H1, and that the H2
opening backlog position increased compared to the H1 opening balance.
The Group has delivered revenue of £7.4m (H1 24: £7.8m) and a Loss Before
Tax of £1.3m (H1 24: £0.6m) driven by the slightly lower revenue impact on
Gross Profit and an expected increase in R&D amortisation in the Period.
The cost base has been maintained in line with the prior year and we continue
to carefully monitor all spend. We have recorded a cash outflow of £3.3m in
the Period, driven by increases in investment in inventory to support order
expectations prior to the slowdown in customer spending and the timing of
trading volumes in the Period, and we have been pleased to see order growth
increasing towards the end of the Period. We maintain a healthy balance sheet,
with a cash balance of £8.4m at Period end, increasing to £10.3m at the end
of October as a result of corporation tax refund and R&D tax credit
receipts and cash inflows from Period end trade receivables. We expect this
cash position to continue to strengthen as we progress through the second half
of the year.
Having adjusted our engineering programme to focus on areas showing the most
near-term potential across the telecoms, cloud computing and defence markets,
we are now seeing the positive impact of recent R&D investment in our
growing backlog. Orders for our new Paragon-neo offering, focused on the area
of 800Gb/s synchronisation testing, continue to build following successful
customer testing and release in early H2. We are also encouraged that orders
for the Network and Application Assurance products, which were forecast to be
a driver of growth in FY25 due to their focus on markets such as cloud
computing and defence, have increased on the prior period.
Our successful execution of the product expansion strategy in the Period
provides confidence in Calnex's H2 performance and augers well for future
years.
Channel Partner Network Operating to Plan
The implementation of the new channel strategy is tracking well and
transitional arrangements with Spirent are working effectively. Following the
announcement that Calnex would be terminating its reseller agreement with
Spirent earlier this year, we have successfully onboarded new channel partners
covering the Group's territories of North America, Europe, India and
Asia-Pacific. The new partners are all now active, with the first orders and
the sales pipeline into H2 filling well. Throughout the process we have
maintained a positive relationship with Spirent and continue to work with them
in a more focused way.
Market backdrop
The fundamental growth drivers across the telecoms sector remain. Investment
in network complexity and the latest mobile infrastructure is essential to
meet the demand for the global move to a higher bandwidth, and with these
investments comes the need for trusted testing solutions. While overall
spending levels across the majority of telecoms operators remain subdued, we
have seen demand for 800Gb/s synchronisation testing, the next wave of
high-speed interface telecoms testing, driven by emerging technologies
continually increasing the need for higher bandwidth.
Meanwhile, newer markets such as cloud computing and defence continue to offer
significant opportunities for Calnex. In the high-stakes environment of the
defence sector, network emulation that enables customers to verify their
network or application performance is increasingly important. Similarly, in
cloud computing, the speed of advancement with the leaps forward in Artificial
Intelligence and the rapid build-out of data centres means that reliable test
instrumentation is more important than ever, not only at the network level,
but also at the level of devices and applications that incorporate cloud-based
processing with end user devices. The performance of the network can impact
the performance of the application or user experience, which can then impact
the market share of the application or end user device. With the broadest
portfolio of Network Emulators in the industry, we are well placed to offer
our customers solutions aligned to their specific needs.
Product innovation driving order growth
Innovation is the lifeblood of our business, expanding our ability to capture
a growing proportion of our customers' spend and taking us into new areas of
the testing market where our engineering expertise provides us with a
competitive edge. In the prior year, we focused R&D spend on opportunities
showing the most near-term resilience and potential within the established
telecoms market and in the newer markets of cloud computing and defence. We
believe this strategy has been proven correct and will enable Calnex to remain
at the forefront of its markets.
Our product expansion strategy is gaining momentum and the continued, targeted
investment in R&D spend is benefitting the Group, as demonstrated with the
early successes of our new products.
Targeting growth in the telecoms market
In telecoms, the focus has been delivering our 800Gb/s synchronisation testing
solution, the new Paragon-neo, which was successfully released early in the
second half of the financial year, with first shipments commencing this month.
800Gb/s is the next generation of high-speed Ethernet and marks the next step
of investment in higher speeds for the telecoms industry. We are seeing
healthy demand for 800Gb/s synchronisation testing, having already received
orders for the Paragon-neo product. In the context of the wider sector, this
demand provides us with confidence that there will be a return to normality
across the telecommunications sector, as customers look to make the necessary
investments in higher speeds and advanced technologies.
Cloud computing and data centre markets
We are seeing good early progress within our newer markets of cloud computing
and data centres, where there is significant opportunity in the context of the
widespread investment into AI and cloud services. Performance across both
product lines within our Network and Application Assurance business
(Infrastructure validation and Applications testing) was strong in H1 and we
expect to see these products continue to drive growth into the second half and
FY26.
To take advantage of customer demand in the cloud computing and data centre
markets, we have successfully launched the SNE-X with 400GbE interfaces, our
high-speed, high port count platform designed to prove the performance of new,
real-time cloud-based applications. This product is the first network emulator
of its kind for AI infrastructure and other high-performance computing
networks and feedback from customers continues to be positive.
NE-ONE, a product that provides a solution for engineering teams developing
software applications to be hosted in-house or in cloud services, has seen
solid demand in the Period, attracting a more diverse range of customers, with
success across the Enterprise, Satellite, Defence and Government markets.
Growth in these markets, particularly in the United States, has been strong.
Outlook
We have entered the second half with an increased backlog on the first half
opening position and our new channel strategy is tracking well. While the
macroeconomic environment remains unpredictable and the challenges across the
telecoms market are expected to remain for the duration of the year, good
progress with our product expansion strategy provides confidence in a return
to growth during H2 FY25 and into FY26. The Board is confident that the
Company's performance in FY25 will be in line with current market
expectations, including positive cashflow generation in H2.
As previously highlighted, the fundamental drivers that underpin the build out
of the mobile network and the expansion of the data centres and cloud
computing capacity have not changed. The need for reliable testing solutions
is synonymous with investment and advancements of network infrastructure in
the telecoms sector and beyond and we remain well positioned to convert the
telecoms sales pipeline once the sector returns to normal market conditions.
With the diversification of our end markets, breadth of our customer base and
strong balance sheet, we look to the future with continued confidence.
Financial Review
Revenues for the period were 6% under prior period trading levels, driven by
continued challenging end market environments. Order and revenue performance
steadily improved throughout H1, with a higher order backlog balance at the
end of September compared to beginning of the Period. Gross margins have
remained robust and in line with the prior period and all cost control
measures are tracking to plan. We continue to benefit from a strong cash
balance with the Period end cash balance of £8.6m growing to £10.3m in the
month after the Period end.
Key performance indicators
£000 H1 FY25 H1 FY24 FY24
Unaudited Unaudited Audited
Revenue 7,359 7,847 16,274
Gross Profit 5,439 5,836 11,947
Gross Margin 74% 74% 73%
Underlying EBITDA (1) (1,124) (411) 80
Underlying EBITDA % (15%) (5%) 0%
Loss before tax (1,318) (599) (384)
Loss before tax % (18%) (8%) (2%)
Closing cash 8,580 13,478 11,686
Capitalised R&D 2,619 2,554 5,579
Basic EPS (pence) 1.13 (0.42) 0.05
Diluted EPS (pence) 1.13 (0.42) 0.04
(1) EBITDA after charging R&D amortisation.
A reconciliation between the statutory reported income statement and the
adjusted income statement is shown below and in note 19 to the financial
statements.
Reconciliation of statutory figures to alternative performance measures -
Income Statement
H1 25 H1 24
£000 £000
Revenue 7,359 7,847
Cost of sales (1,920) (2,011)
Gross Profit 5,439 5,836
Other income 102 111
Administrative expenses (excluding depreciation & amortisation) (4,557) (4,542)
EBITDA 984 1,405
Amortisation of development costs (2,108) (1,816)
Underlying EBITDA (1,124) (411)
Other depreciation & amortisation (348) (347)
Finance costs (8) (11)
Interest received 162 170
Loss before tax (1,318) (599)
Tax 328 223
Loss for the period (990) (376)
Revenue
Revenue generated in the first half of the year was £7.4m, a 6% decline on H1
FY24 revenue of £7.8m, driven by the continued challenging environment within
the telecoms industry. Q2 order and revenue performance improved on Q1,
leading to a stronger order position at the end of the Period.
Gross Margin
Gross Profit for the Period was £5.4m, £0.4m lower than the prior period as
a result of the lower trading volumes.
Gross margins remained robust and in line with the prior period at 74% (H1
FY24: 74%) driven by a strong product mix. Gross margin is net of commissions
payable to our channel partners and can be affected by product mix and timing
of the hardware and software bundles shipped in a Period.
Underlying EBITDA
Underlying EBITDA is EBITDA stated after charging R&D amortisation.
Underlying EBITDA was a £1.1m loss in the Period (H1 FY24: £0.4m loss),
£0.7m lower than the prior period driven by the £0.4m reduction in trading
volumes flowing through from Gross Profit and a £0.3m increase in R&D
amortisation in the Period. Underlying EBITDA margin was -15% (H1 FY24:
-5%).
Administration costs excluding depreciation and amortisation were held in line
with the prior year at £4.5m (H1 FY24: £4.5m) as a result of the
continuation of cost control measures put in place across the business during
FY24. The Group has continued the pause on headcount growth, excluding
graduate and key replacement hires, as the challenging trading environment
continued and, as a result, headcount was slightly reduced to 157 by the end
of the Period (31 March 2024: 160).
Whilst cost controls have continued across all cost lines and departments, the
Group has not implemented any investment reduction programmes as maintaining
investment in product development and customer engagement at this point is
fundamental to support future growth. Excluding graduate hires (of which
there were two in the Period), there have been no headcount increases in the
R&D team in the Period.
Amortisation of R&D costs in H1 FY24 was £2.1m (H1 FY24: £1.8m). The
increase on the prior period is due to the impact of the 5-year amortisation
profile and growth in capital spend in prior years.
Profit before tax
Loss before tax was £1.3m in the Period (H1 FY23: £0.6m loss), with the
variance on the prior period due to the Underlying EBITDA drivers detailed
above.
Tax
The Group's loss-making position resulted in a tax credit of £0.3m for the
Period (H1 FY24: £0.2m), based on an effective tax rate of 25% for this point
in the year.
Earnings per share
Basic earnings per share was a loss of 1.13p in the Period (H1 FY24: 0.42p)
and diluted earnings per share was also a loss of 1.13p (H1 FY23: 0.42p), with
the movement compared to the prior period attributed to the higher loss-making
position in the current Period.
Cashflows
The Group experienced a cash outflow of £3.3m in the period, reflecting the
loss made in the Period and movement in working capital.
Working capital in the period increased by £1.3m (H1 FY24: £3.3m) driven
predominantly by an increase in inventory to support the previous order
expectations and increased levels of semi-finished products to increase
responsiveness to order intake and net movements of receivable and payables
balances.
The Group paid £0.8m in tax in the prior period based on the profit generated
in FY23. £1.1m has since been received post Period end in relation to this
refund, including an additional cash receivable balance from the FY24 R&D
tax claim.
Cash used in investing activities is principally cash spent on R&D
activities which is capitalised and amortised over five years. Investment in
R&D in the Period was £2.6m, in line with the prior period (H1 FY24:
£2.6m), with cost control measures offsetting a graduate headcount increase
of two.
The Group places surplus cash balances not required for working capital into
high interest deposit accounts, either overnight, weekly or notice accounts.
As at 30 September 2024, the Group was taking advantage of higher rates on
overnight accounts, so did not hold any cash in notice accounts at that time.
Closing cash at 30 September 2024 was £8.6m (30 September 2024: £13.5m; 31
March 2024: £11.9m). Closing cash balances increased to £10.3m at 31 October
2024, driven predominantly by the receipt of the £1.1m HMRC corporation tax
monies and positive working capital movements.
Dividend
The Board retain full confidence in future growth and accordingly has resolved
to pay an interim dividend of 0.31 pence per ordinary share on 16 December
2024 to those shareholders on the register as at 29 November 2024, the record
date (FY24 Interim dividend 0.31p). The ex-dividend date is 28 November 2024.
Calnex Solutions plc
Consolidated Statement of Comprehensive Income
For the period ended 30 September 2024
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Revenue 4,5 7,359 7,847 16,274
Cost of sales (1,920) (2,011) (4,327)
Gross profit 5,439 5,836 11,947
Other income 102 111 797
Administrative expenses (7,013) (6,705) (13,361)
Operating loss (1,472) (758) (617)
Presented as:
EBITDA 984 1,405 3,860
Depreciation and amortisation of non-R&D assets (348) (347) (697)
Amortisation of R&D asset (2,108) (1,816) (3,780)
Operating loss (1,472) (758) (617)
Finance costs 6 (8) (11) (124)
Interest received 162 170 357
Loss before taxation (1,318) (599) (384)
Taxation 7 328 223 424
(Loss)/profit and total comprehensive income for the period (990) (376) 40
Earnings per share (pence)
Basic (loss)/earnings per share 8 (1.13) (0.42) 0.05
Diluted (loss)/earnings per share 8 (1.13) (0.42) 0.04
Calnex Solutions plc
Consolidated statement of financial position
For the period ended 30 September 2024
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Non-current assets
Intangible assets 9 12,483 11,168 12,110
Goodwill 10 2,000 2,000 2,000
Plant and equipment 11 271 434 341
Right of use assets 12 169 409 287
Deferred tax asset 533 691 1,246
15,456 14,702 15,984
Current assets
Inventory 13 6,086 3,837 5,373
Trade and other receivables 14 2,956 4,676 3,340
Corporation tax receivable 1,148 42 435
Cash and cash equivalents 15 8,580 13,478 11,868
18,770 22,033 21,016
Total assets 34,226 36,735 37,000
Current liabilities
Trade and other payables 16 3,258 5,515 4,845
Lease liability payable within one year 12 127 271 220
3,385 5,786 5,065
Non-current liabilities
Trade and other payables 16 1,976 1,096 1,510
Lease liabilities payable later than one year 12 147 280 195
Deferred tax liability 2,497 2,663 2,877
Provisions 17 15 15 15
4,635 4,054 4,597
Total liabilities 8,020 9,840 9,662
Net assets 26,206 26,895 27,338
Equity
Share capital 109 109 109
Share premium 7,511 7,495 7,511
Share option reserve 1,814 1,327 1,414
Retained earnings 16,772 17,964 18,304
Total equity 26,206 26,895 27,338
Calnex Solutions plc
Consolidated cashflow statement
For the period ended 30 September 2024
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Cashflow from operating activities
Loss before tax from continuing operations (1,318) (599) (384)
Adjusted for:
Finance costs 8 11 124
Interest received (162) (170) (357)
Government grant income (102) (111) (218)
R&D tax credit income - - (579)
Gain on disposal - - (4)
Share based payment transactions 400 450 746
Depreciation 90 211 424
Amortisation 2,365 1,952 4,053
Movement in inventories (982) (1,234) (2,820)
Movement in obsolescence provision 268 145 195
Movement in trade and other receivables 386 (1,546) (211)
Movement in trade and other payables (1,020) (649) (903)
Cash (outflow)/inflow generated from operations (67) (1,540) 66
Corporation and foreign tax payments (52) (885) (850)
Net cash outflow from operating activities (119) (2,425) (784)
Investing activities
Purchase of intangible assets (2,620) (2,554) (5,598)
Purchase of plant and equipment (20) (117) (111)
Short term investment: fixed term deposit - 1,515 1,515
Interest received 162 170 357
Net cash outflow from investing activities (2,478) (986) (3,837)
Financing activities
Payment of lease obligations (149) (151) (296)
Dividends paid (542) (543) (814)
Share options proceeds - - 16
Net cash outflow from financing activities (691) (694) (1,094)
Net decrease in cash and cash equivalents (3,288) (4,105) (5,715)
Cash and cash equivalents at the beginning of the period 11,868 17,583 17,583
Cash and cash equivalents at the end of the period 8,580 13,478 11,868
Calnex Solutions plc
Consolidated statement of changes in equity
For the period ended 30 September 2024
Share Share premium Share option reserve Retained earnings Total
capital Equity
£'000 £'000 £'000 £'000 £'000
Balance as at 30 September 2023 109 7,495 1,327 17,964 26,895
Transactions with owners in their capacity as owners
Share options exercised - - (195) 195 -
Share options - 16 282 - 298
Dividend - - - (271) (271)
- 16 87 (76) 27
- - - 416 416
Profit for period ended 31 March 2023
Balance as at 31 March 2024 109 7,511 1,414 18,304 27,338
Transactions with owners in their capacity as owners
Share options - - 400 - 400
Dividend - - - (542) (542)
- - 400 (542) (142)
Loss for period ended 30 September 2024 - - - (990) (990)
Balance as at 30 September 2024 109 7,511 1,814 16,772 26,206
Calnex Solutions plc
Notes to the interim consolidated financial statements
For the period ended 30 September 2024
1. General information
The interim consolidated financial statements cover the consolidated entity
Calnex Solutions plc and the entities it controlled at the end of, or during,
the interim period to 30 September 2024 ("the Group").
Calnex Solutions plc ("the Company") is a public limited company and is
domiciled and incorporated in Scotland.
The registered office is:
Oracle Campus
Linlithgow
West Lothian
EH49 7LR
The principal activity of the Group is the design, production and marketing of
test instrumentation and solutions for network synchronisation and network
emulation enabling its customers to validate the performance of critical
infrastructure associated with telecommunications networks, enterprise
networks and data centres.
The interim consolidated financial statements for the period ended 30
September 2024 are unaudited, and do not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. They do not therefore
include all the information and disclosures required in annual statutory
financial statements and should be read in conjunction with the Group annual
report and accounts for the year ended 31 March 2024.
The Group annual report and accounts for the year ended 31 March 2024 were
approved by the Board of Directors on 20 May 2024 and have been delivered to
the Registrar of Companies. The auditor's report on those accounts was
unqualified, did not draw attention to any matters by way of emphasis and did
not contain a statement made under Section 498(2) or (3) of the Companies Act
2006.
The interim consolidated financial statements for the period ended 30
September 2024 were approved by the Board of Directors on 18 November 2024.
2. Basis of preparation
The interim consolidated financial statements for the period ended 30
September 2024 have been prepared in accordance with IAS 34 'Interim Financial
Reporting' as issued by the International Accounting Standards Board, endorsed
by, and adopted for use in, the United Kingdom.
The accounting policies and methods of computation adopted are consistent with
those applied in the Group's consolidated financial statements for the year
ended 31 March 2024 and have been applied consistently to all periods
presented.
There have been no new standards or amendments to existing standards effective
from 1 April 2024 that are applicable to the Group or that has had any
material impact on the financial statements and related notes as at 30
September 2024.
The Directors do not anticipate that the adoption of any of the new standards
and interpretations issued by the IASB and IFRIC with an effective date for
the Group after the date of these interim financial statements will have a
material impact on the Group's interim financial statements in the period of
initial application.
3. Going concern
The interim consolidated financial statements have been prepared on the basis
that the Group will continue as a going concern.
In adopting the going concern basis, the Directors have considered the
principal risks and uncertainties of the group, which remain unchanged from
those reported in the Group annual report for the year ended 31 March 2024, a
copy of which is available on the Company's website at:
https://investors.calnexsol.com. The uncertainties arising from the
macro-economic backdrop and inflationary pressures are covered by existing
risks, and these continue to be closely monitored.
The Board has reviewed cashflow forecasts and availability of cashflow to fund
the ongoing operations of the Group. Based on this review, along with regular
oversight of the Group's risk management framework, the Board has concluded
the going concern basis to remain appropriate.
4. Operating segments
Operating segments are based on the internal reports that are reviewed and
used by the Board of Directors (who are identified as the Chief Operating
Decision Makers) in assessing performance and determining the allocation of
resources. As the Group has a central cost structure and a central pool of
assets and liabilities, the Board of Directors do not consider segmentation in
their review of costs or the balance sheet. The only operating segment
information reviewed, and therefore disclosed, are the revenues derived from
different geographies.
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Americas 2,905 1,893 5,042
North Asia 1,764 1,527 3,396
Rest of world 2,690 4,427 7,836
Total revenue 7,359 7,847 16,274
5. Revenue
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Sale of goods 5,544 5,981 12,593
Rendering of services 1,815 1,866 3,681
Total revenue 7,359 7,847 16,274
6. Finance costs
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Interest expense on lease liabilities 8 11 20
Unwinding of discount on contingent consideration - - 104
Total finance costs 8 11 124
7. Taxation
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Current taxation
UK corporation tax on profits for the period - - -
Foreign current tax expense 52 46 192
Adjustments relating to prior years - (42) (42)
Deferred taxation
Origination and reversal of temporary differences (380) (233) (580)
Adjustments relating to prior years - 6 6
Taxation credit (328) (223) (424)
Loss before tax for the year (1,318) (599) (384)
Effective tax rate 25% 37% 111%
8. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of Ordinary Shares in
issue during the year.
Diluted earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the total of the weighted average number of
Ordinary Shares in issue during the year and adjusting for the dilutive
potential Ordinary Shares relating to share options.
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
(Loss)/profit after tax attributable to shareholders (990) (376) 40
Weighted average number of shares used in calculation:
Basic earnings per share 87,546 87,524 87,530
Diluted earnings per share 92,827 92,430 92,749
(Loss)/earnings per share - basic (pence) (1.13) (0.42) 0.05
(Loss)/earnings per share - diluted (pence) (1.13) (0.42) 0.04
9. Intangible Assets
Included within intangible assets are the following significant items:
· Intellectual property representing the cost of patent
applications and on-going patent maintenance fees.
· Acquired intellectual property from business combinations.
· Capitalised development costs representing expenditure relating
to technological advancements on the core product base of the Group. These
costs meet the requirement of IAS 38 (Intangible Assets) and will be amortised
over the future commercial life of the related product. Amortisation is
charged to administrative expenses.
Intellectual Development
property Costs Total
£'000 £'000 £'000
Cost
At 1 April 2024 3,545 34,260 37,805
Additions 11 2,609 2,620
Disposals - - -
At 30 September 2024 3,556 36,869 40,425
Amortisation
Balance at 1 April 2024 2,756 22,939 25,695
Charge for the period 139 2,108 2,247
Eliminated on disposal - - -
At 30 September 2024 2,895 25,047 27,942
Net book value
31 March 2024 789 11,321 12,110
30 September 2024 661 11,822 12,483
10. Goodwill
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Cost 2,000 2,000 2,000
The Group tests goodwill for impairment annually, or more frequently if there
are indications that the goodwill has been impaired. The Group has an annual
impairment testing date of 31 March. As at 30 September 2024, management has
reviewed goodwill for indicators of impairment, and has considered the Group's
trading performance, the Group's principal risks and uncertainties, and the
other assumptions utilised in the value in use calculation. Management has
performed sensitivity analyses 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 balance sheet date.
11. Plant & equipment
Plant and
equipment
£'000
Cost
At 1 April 2024 676
Additions 20
Disposals -
At 30 September 2024 696
Amortisation
Balance at 1 April 2024 335
Charge for the period 90
Eliminated on disposal -
At 30 September 2024 425
Net book value
31 March 2024 341
30 September 2024 271
12. Leases
The Group has recognised a right-of use asset and a lease liability for the
lease of land and buildings for its head office in Linlithgow, Scotland.
The Group leases IT equipment with contract terms ranging between 1 to 2
years. The Group has recognised right-of use assets and lease liabilities
for these leases.
The Group leases office space in Belfast and Stevenage, as well as one motor
vehicle. These leases are low-value, so have been expensed as incurred. The
Group has elected not to recognise right‑of‑use assets and lease
liabilities for these leases.
Information about the right of use assets and leases for which the Group is a
lessee is presented below:
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Right of use assets
Balance at 1 April 287 533 533
Additions to right of use assets for the period - - -
Depreciation charge for the period (118) (124) (246)
NBV carried forward for the period 169 409 287
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Lease liabilities
Balance brought forward in the period 415 691 691
Lease additions for the period - -
Payment of lease expense (149) (151) (296)
Interest on lease expense 8 11 20
Balance carried forward for the period 274 551 415
Represented as:
Due within 1 year 127 271 220
Due in more than 1 year 147 280 195
Total amounts due 274 551 415
13. Inventory
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Finished goods 6,856 4,315 5,876
Provision for obsolescence (770) (478) (502)
6,086 3,837 5,373
14. Trade and other receivables
Trade receivables are consistent with trading levels across the Group and are
also affected by exchange rate fluctuations.
No interest is charged on the trade receivables.
The Group has performed a review for estimated irrecoverable amounts in
accordance with its accounting policy, and at the balance sheet date, there
are no amounts outstanding beyond agreed commercial terms.
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Trade receivables 2,589 2,675 2,922
Other receivables 7 180 61
Prepayments and accrued income 360 1,821 357
2,956 4,676 3,340
The Directors consider that the carrying amount of trade and other receivables
approximates their fair value.
15. Cash and cash equivalents
Cash and cash equivalent amounts included in the Consolidated Statement of
Cashflows comprise the following:
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Cash at bank 8,580 8,222 11,748
Cash on short term deposit - 5,256 120
Total cash and cash equivalents 8,580 13,478 11,868
16. Trade and other payables
Trade and other payables are consistent with trading levels across the Group
but are also affected by exchange rate fluctuations. Trade payables and
accruals principally comprise amounts outstanding for trade purchases and
ongoing costs. The Group has financial risk management policies in place to
ensure all payables are paid within the agreed credit terms.
Deferred income relates to fees received for ongoing services to be recognised
over the life of the service rendered.
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Trade payables 400 2,038 913
Other taxes and social security 204 217 211
Other payables 91 84 95
Accruals 628 783 663
Deferred income 1,935 2,393 2,963
3,258 5,515 4,845
Amounts due in more than one year
Deferred income 1,976 1,096 1,510
Total amounts due 5,234 6,611 6,355
The Directors consider that the carrying amount of trade and other payables
approximates their fair value.
17. Provisions
Current provisions are recognised in respect of dilapidations on leased
assets. No discount is recorded on recognition of the provisions or unwound
due to the short-term nature of the expected outflow and the low value and
estimable nature of the non-current element.
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Non-current provisions
Dilapidations 15 15 15
18. Dividends paid and proposed
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Proposed but not yet recognised
Interim dividend 2024: 0.31 per share 271 - -
Declared and paid
Final dividend 2022: 0.56p per share - 543 543
Interim dividend 2023: 0.31p per share - - 271
Final dividend 2023: 0.62p per share 542 - -
An interim dividend of 0.31 pence per Ordinary Share (FY24 interim dividend:
0.31 pence per Ordinary Share) was declared by the board on 19 November 2024
and will be paid to ordinary shareholders on 16 December 2024. The dividend is
payable to all shareholders on the Register of Members at the close of
business on 29 December 2024.
All dividends are determined and paid in Sterling.
19. 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 of Directors.
These APMs are not defined under IFRS and therefore may not be directly
comparable with similarly identified measures used by other companies.
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Underlying EBITDA (1,124) (411) 80
Underlying EBITDA % (15%) (5%) 0.5%
Capitalised R&D spend 2,609 2,554 5,579
· Underlying EBITDA: EBITDA after deducting R&D amortisation.
Reconciliation of statutory figures to alternative performance measures -
Income Statement
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Revenue 7,359 7,847 16,274
Cost of sales (1,920) (2,011) (4,327)
Gross profit 5,439 5,836 11,947
Other income 102 111 797
Administrative expenses (excl depreciation and amortisation) (4,557) (4,542) (8,884)
EBITDA 984 1,405 3,860
Amortisation of development costs (2,108) (1,816) (3,780)
Underlying EBITDA (1,124) (411) 80
Other depreciation and amortisation (348) (347) (697)
Operating loss (1,472) (758) (617)
Finance costs (8) (11) (124)
Interest received 162 170 357
Loss before tax (1,318) (599) (384)
Tax 328 223 424
(Loss)/profit for the period (990) (376) 40
20. Availability of Interim Report
The Company's Interim Report for the six months ended 30 September 2024 will
be available to view on the Company's website https://investors.calnexsol.com.
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