First dividend

Calnex unveils maiden payout amid robust trading

Tommy Cook of Calnex

Tommy Cook: step forward

Telecoms testing firm Calnex is paying a maiden interim dividend of 0.28 pence per share as it experiences continued strong levels of trading.

The Linlithgow-based firm said it expects performance in the first six month months to continue through the second half.

The group has seen a return to pre-COVID customer spending patterns in all regions, other than in China where demand has been in line with the previous year

Its robust cash position has allowed it to bring forward planned investment in the team to increase operational capability, in line with order growth.

It continues to deliver on its stated growth strategy and the board is confident in its ability to continue benefiting from the underlying market growth drivers in the telecoms market.

Revenue growth of 20% on prior year to £9.3m (H1 FY21: £7.7m) as a result of strong demand for telecoms testing equipment, ahead of management’s expectations at the start of FY22. Profit before tax was up 18.4% to £2.3m (£1.95m).

Shares in the company, which have doubled since its flotation on the AIM in October last year, closed 8.5p, or 6.4% lower at to 123.5p.

Tommy Cook, chief executive and founder, said: “These results mark another considerable step forward for Calnex, as we continue to capitalise on the global telecom industry’s transition to 5G and the growth of cloud computing.

“The results for the first half of FY22 are materially ahead of the board’s expectations at the start of the year, as indicated in the company’s trading update issued in October 2021, and confidence levels remain high with the early signs being that sales momentum will continue in the second half of the year. 

“We have invested in our team and resources and the continued positive response to the new product launches provides optimism towards the long-term demand for our offering.

“The breadth of our customer base across multiple regions, combined with the ongoing successful expansion of the team, our customer relationships and industry connections, places us in a strong position to continue to benefit from the underlying market growth drivers in the telecoms market.”

In a call with Daily Business, Mr Cook said: “It is reassuring that growth is coming from a number sources.”

Skills shortages remain a problem and the company is “slightly behind where we wanted to be in a tough market”.

Headcount stands at 113 of which all but 16 are based in Linlithgow. The short term target is 125.

“We have a licence to bring people in from overseas and we have brought in workers from India and Turkey,” he said.

The company is offering a hybrid working model, with staff expected to be in the office three days each week.

“We are feeling more confident about the second period,” he said.

Market reaction

Cenkos analyst Ian McInally says: ‘With the telecom infrastructure, networking and services markets seeing an expanding number of market participants requiring testing solutions, the growth outlook for Calnex remains secure.

“Following the maiden interim dividend of 0.28p, we forecast 0.56p in total for FY22E. The order backlog at H1/22 and strong order pipeline for H2/22E should drive further revenue growth for FY22E and FY23E.”

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