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Maiden results

Calnex accelerating growth plans on strong demand

Tommy Cook

Tommy Cook: looking at M&A opportunities

Scottish telecoms testing firm Calnex Solutions said it had seen strong demand across all three areas of its business during the first half.

Announcing maiden results following its IPO on 5 October the Linlithgow firm said “exponential growth” of data creation and migration of industries to cloud computing, along with the long-term transition of the telecoms industry to 5G, continue to drive a need for new test instrumentation.

This is presenting the company with significant, long-term growth opportunities.

Reduced travel and event costs during the lockdown helped boost revenue in the six months to 30 September by 37% to £7.7m (H1 FY20: £5.7m) and adjusted profit before tax is up 89.6% to £2.3m (H1/20: £1.2m). Underlying EBITDA was up 69% to £2.6m (H1 FY20: £1.5m).

Chief executive Tommy Cook said: “Our successful IPO, completed in early October, has provided us with the springboard to execute on our growth strategy.


“The strength of our relationships within the telecoms sector, breadth of customer base and established market position, provide us with a strong platform for future growth.

“We will continue to invest in business development and R&D to capitalise on the opportunities arising from the evolution of the telecoms market and look to the future with confidence.”

Calnex was the first Scottish company to seek an IPO for two years and its shares have increased c44.8% since its admission to AIM although they continue to trade at a 34.4% discount to the peer average.

Speaking to Daily Business after the statement was issued, Mr Cook said the company remained on the lookout for acquisition opportunities though there was nothing imminent.

“It is definitely something we are looking at, but there is nothing in the near term. It would the cherry on the top of organic growth,” he said, adding that the company had learned a lot about the process from three previous deals.

The company has been hiring throughout the pandemic and will add about 10 more staff to the payroll in the weeks ahead.

Ian McInally an analyst at Cenkos said: “Calnex’s recent admission to trading on AIM and net £5m new capital raised is being deployed to accelerate its growth plans, with R&D investment now accelerating ahead of our previous expectations.

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“We estimate that Calnex should increase the number of R&D engineers by around 50% by end FY22E, versus the beginning of FY21E.

“We have increased forecast total operating expenses in FY22E by c£1.0m, versus our previous increase of c£0.5m, an incremental cost increase of £0.5m.

“This increase reflects the greater confidence within Calnex to accelerate its growth plans more quickly than we had previously expected, particularly the expansion of the R&D engineering team.”

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