TIDMCLX
RNS Number : 2598A
Calnex Solutions PLC
23 May 2023
23 May 2023
Calnex Solutions plc
("Calnex", the "Company" or the "Group")
FY23 Final Results
Calnex Solutions plc (AIM: CLX) provides test and measurement
solutions for the global telecommunications sector and is pleased
to announce its audited results for the 12 months ended 31 March
2023 ("FY23" or the "Year").
Financial Highlights
GBP000 FY23 FY22 YOY
% change
Audited Audited
Revenue 27,449 22,046 25%
Underlying EBITDA(1) 7,980 6,351 26%
Profit before tax 7,208 5,973 21%
Basic EPS (pence) 6.75 5.19 30%
Diluted EPS (pence) 6.42 5.00 28%
Closing cash and fixed
term deposits (2) 19,098 15,357 24%
(1) A full reconciliation between Underlying EBITDA and profit
before tax is also shown in the Financial Review below.
(2) The Company takes advantage of high interest deposit
accounts for surplus cash balances not required for working
capital. Under IAS 7 Statement of Cash Flows, cash held on
long-term deposits (being deposits with maturity of greater than 95
days, and no more than twelve months) that cannot readily be
converted into cash is classified as a fixed term investment.
Financial Highlights
-- Revenue growth of 25% to GBP27.4m (FY22: GBP22.0m).
-- Growth in profit before tax of 21% to GBP7.2m (FY22: GBP6.0m).
-- Closing cash position, including fixed term deposits, of
GBP19.1m (31 March 2022: GBP15.4m).
-- Proposed final dividend of 0.62 pence per share, making a
total of 0.93 pence per share for FY23 (FY22: 0.84 pence).
Operational Highlights
-- Successful mitigation of well-documented supply chain
challenges, delivering all orders as planned.
-- Growing relationship with hyperscale customers, securing one
significant contract and seed unit sales into two other
hyperscalers during the year.
-- Encouraging early uptake of Sentry, our Network Synchronisation product launched in H2.
-- Full integration of iTrinegy, expected to be an important contributor to future profit.
-- Increased staffing levels across business development, sales,
R&D, and support roles, to support growing customer demand, new
product development and maximise exposure in new and existing
territories.
Outlook
-- Trading in Q1 FY24 has continued as anticipated, and the
Board is confident in delivering results for the year in line with
market expectations as revised in March 2023.
-- Whilst customer budgets continue to be restricted in the near
term, customer engagement levels remain high and Calnex's mid-term
order funnel has strengthened during Q1 FY24, although the timing
of conversion of these opportunities into orders remains
unclear.
-- The breadth of Calnex's customer base across multiple
regions, expanding product portfolio and strong balance sheet,
alongside the market's structural growth drivers, provide continued
confidence in the future.
Tommy Cook, Chief Executive Officer and founder of Calnex,
said:
" FY23 was another year of solid progress where we executed on
our strategy, increasing our addressable market, whilst
successfully navigating the supply chain challenges, achieving
revenue and profit growth, in line with market expectations.
" While customer budgets remain restricted in the short term,
customer engagement levels remain high, and we have been encouraged
to see the early signs of a more stable macro environment.
"We are confident the market's structural growth drivers will
continue to drive long-term growth opportunities for Calnex. These
include the need to build out new mobile networks to support the
transition to 5G, and ongoing data centre investment to support the
demand for cloud computing coupled with the need to be more energy
efficient.
"The breadth of our customer base across multiple regions,
expanding product portfolio and strong balance sheet, mean we look
to the future with continued confidence. "
For more information, please contact:
Calnex Solutions plc Via Alma PR
Tommy Cook, Chief Executive Officer
Ashleigh Greenan, Chief Financial Officer
+44 (0)131 220
Cenkos Securities plc - NOMAD 6939
Derrick Lee, Peter Lynch
+ 44(0) 20 3405
Alma PR 0213
Caroline Forde, Hannah Campbell, Joe Pederzolli
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.
Chair's Statement
Overview
It gives me great pleasure to present my first statement as
Chair of Calnex Solutions, following my appointment to the role in
August 2022, post the Company's AGM.
Upon joining the Board as a Non-Executive Director in January
2022, I found a company with an innovative product offering, highly
experienced leadership, an expert and dedicated team, long-standing
blue-chip customers, and strong partner relationships. These
factors have enabled Calnex to deliver strong profit and revenue
growth since IPO, which have in turn provided the means to invest
in its people and offering, while maintaining a strong balance
sheet.
A positive performance in FY23
The Group successfully delivered results in line with market
expectations. This was driven by the growth in cloud computing and
the roll out of 5G along with the introduction of new standards for
the telecoms industry, driving demand for the Group's products.
There was an improved performance in H2 as expected and for the
year the Group achieved revenue growth of 25% to GBP27.4m (FY22:
GBP22.0m) and profit before tax increased by 21% to GBP7.2m (FY22:
GBP6.0m). We closed the year with a strong cash (including short
term investments) figure of GBP19.1m (FY22: GBP15.4m).
Calnex's relationship with its long-standing partners deepened
during the year with key highlights being the renewal of the
contract with Spirent, the Company's principal distribution
partner, as well as the successful management of supply chain
issues with our contract manufacturer, Kelvinside Electronics. We
also made good progress in data centre activities and the
integration of iTrinegy has gone to plan.
ESG
The attitude of Calnex towards caring for its people and the
communities around it has always been a key feature of the
business. As a business and Board, we are committed to having a
positive impact on our society, the environment, and our team.
The Group follows the Quoted Companies Alliance Practical Guide
to ESG, which is intended to supplement The Quoted Companies
Alliance Corporate Governance Code (the QCA Code), which the Group
also follows. The QCA Practical Guide provides pragmatic steps for
small and medium sized listed companies to develop how to identify
and disclose those ESG issues that are important to them and
outlines an approach that is proportionate to the resource
availability within smaller companies, whilst also giving
stakeholders the relevant information that they need.
Within product development, our focus is increasingly on
delivering platform products that enable software upgrades in line
with customers' aspirations. Thanks to our dedicated team, their
in-depth knowledge, and market insight, our customers enjoy
hardware longevity typically between 10 and 15 years, thereby
reducing the impact our products have on the environment and
providing long-term expert support through cutting-edge upgrades
that anticipate customer requirements. Where possible, we look to
work locally. Our product packaging is manufactured by a local
supplier with a comprehensive environmental policy and our company
HQ, and the majority of our operations are based in serviced
premises leased from Oracle in Linlithgow.
In FY22 the Board committed to build a Calnex Corporate Giving
Scheme into our Financial Plan equal to 1% of the profits we
generate. An employee-led team was created in FY23 to consider
proposals from employees for donations or support for groups and
events that matter to them. We used 100% of the Calnex Corporate
Giving Scheme this year. We have two main initiatives in place to
utilise this fund - Calnex Corporate Responsibility Fund where
employees can nominate charities, clubs, or organisations for a
monetary donation each quarter and our Calnex in the Community
scheme where employees are given two days each financial year to
volunteer. In FY23 Calnex donated GBP70,000 to 84 charities and
organisations and social events across the globe through our
Corporate Giving Scheme.
As a Board, we are also committed to high standards of corporate
governance and oversight. The approach we take is set out in detail
in the Principal Risks and Uncertainties, s172 and Corporate
Governance sections of our Annual Report and Accounts.
As part of our journey to continually improve our performance,
our focus remains on ensuring a diverse workforce with a good level
of female representation on both our Board and executive management
team. The success we have delivered since IPO is a tribute to the
workforce's expertise and knowledge. Their energy and
professionalism whilst navigating the supply chain challenges has
been immense and on behalf of the Board, I would like to thank all
our staff across the globe for their hard work.
Board updates
I am delighted to have taken up the mantle as Chair during the
period and I have come to know Calnex's culture and structure well
in my time so far. We were also pleased to welcome Helen Kelisky to
the Board in 2023, who brings with her a wealth of cloud and data
centre experience, which has already proven of immense value.
I would also like to take this opportunity to thank George
Elliott who retired as Chair at last year's AGM, as well as Ann
Budge, who stepped down as Non-Executive Director in February of
this year. The importance of both George and Ann cannot be
overstated, both of whom having provided significant guidance along
the way on Calnex's growth journey.
Outlook
As described in our Trading Update issued in March 2023, the
macro-economic conditions have prompted a more cautious approach to
investment decisions by our customer base. While we are seeing
signs of a more stable macro environment, t rading in the current
financial year has continued as anticipated at that time. Customer
engagement levels are high, although the timing of orders remains
unclear, consistent with wider industry dynamics.
The Board remains confident in the delivery of results for the
year in line with the revised market expectations and believes the
breadth of product offering, and the market's structural growth
drivers, provide Calnex with a considerable long-term
opportunity.
Stephen Davidson
Non-Executive Chair
22 May 2023
CEO's Statement and Operational Review
We have delivered a strong FY23 financial performance, reporting
double digit growth across revenue and profit, in line with market
expectations. Improved performance in the second half was driven by
the successful conversion of our order book and we have continued
to make considerable operational and strategic progress during the
period.
I am proud of the way in which the team has been able to deliver
these results while dealing with well-documented supply chain
challenges. The mitigation strategies in place enabled us to shield
our customers from any impact, successfully scheduling all orders
aligned to customer needs. We continue to benefit from the
experience of our team and from the strength of the relationship
with our contract manufacturer, Kelvinside Electronics, in this
regard. We are optimistic about an improving picture and that the
process improvements we have put in place leave us well-positioned
to capitalise on the opportunities available to us.
Further execution of our growth strategy during the year has
increased Calnex's market opportunity as we move into adjacent
areas of the testing market. Relationships with hyperscalers
continue to grow and we are encouraged by the early performance of
Sentry, our newly launched Network Synchronisation product. We have
also recently initiated discussions with Data Centre and Telcom
Network operators for the supply of a Monitoring system for
synchronisation quality across their network, SyncSense. Following
the full integration of the recently acquired iTrinegy, we now see
it as an important contributor to future profit. Following further
investment into our team's capabilities during the year, we believe
we have the right team in place to continue our journey.
Following three years of revenue and profit growth since
becoming a listed business, we are now a considerably larger
business (headcount and turn-over), with strong customer
relationships across all territories. Although contending with
near-term uncertainty and delayed customer spending, we remain a
profitable, cash generative, well-managed business, with a diverse
customer base in growing markets and strong balance sheet.
Customer metrics
The number of customers who ordered from us this year increased
by 72 to 305 (FY22: 233 customers) and the proportion of orders
coming from non-telecoms customers was 34% (FY22: 23%). The step
change is primarily driven by sales of NE-ONE products to customers
new to Calnex. Over a three-year average basis, our top 10
customers accounted for 47% of orders (FY22: 50%) and 74% of our
orders were from repeat customers (FY22: 79%). Again, the impact of
NE-ONE new customers accounts for this significant change compared
to FY22. Our geographic spread of orders across the regions on a
three-year average basis, shows Americas receiving 34%, North Asia
receiving 27% and ROW receiving 39%.
Market backdrop
Many telecoms sector participants, including global equipment
manufacturers, have recently reported a general softening of demand
for their products and services in the short-term, albeit noting
that the long-term structural growth drivers, including the
exponential increase in network complexity and the transition to
5G, remain strong.
Importantly, our customers remain committed to the delivery of
projects which we know will rely on Calnex's test instrumentation
and solutions.
Product innovation to support the transition to 5G and entry
into cloud computing market
Continued product innovation has allowed the Group to execute on
its growth strategy to capitalise on the transition to 5G and
expand into adjacent areas of the testing market, such as cloud
computing and the data centre market.
Launch of new product to optimise entry into cloud computing
market
The need for hyperscale and enterprise companies to drive
greater efficiency and performance in their data centre operations
continues to drive growth in the testing market and Calnex's
relationship with these customers has continued to develop during
the year. In H2 we launched a new version of our Network
Synchronisation product, Sentry, which heavily leverages the
technology in Sentinel, Calnex's Field Sync solution, but with a
form, fit and function optimised for the data centre environment.
This new format enhances the ability to engage with potential data
centre customers by strengthening its usability in the data centre
environment. Following the large deal secured in FY22, our focus
has remained on building relationships with other hyperscalers and
this year we successfully secured seed unit sales into two other
hyperscalers. We are now focused on using these early units to
build relationships and develop further opportunities.
Engagement with both data centre operators and telecom network
operators has identified an emerging opportunity to offer a
monitoring system that provides an indication of the quality of
synchronisation across the network. Calnex has recently launched
its SyncSense product offering to address this need. Calnex's
reputation as experts in synchronisation enables us to provide
reassurance to network operators that we have the knowledge and
insight to collect and interpret the data obtained across the
network to identify nodes that are not operating correctly. For
telecom operators, poor timing limits the customer connectivity
that can be supported. For data centre operators, good
synchronisation between servers increases processing bandwidth and
reduces the investment required for expansion of their server
infrastructure to meet the needs of their customers.
Cloud & IT, Infrastructure Verification (SNE, SNE-X &
SNE-Ignite)
Calnex's Network Emulation products, which target customers
developing Infrastructure products (e.g. Ethernet switches,
routers, SD-WAN equipment), continued to make good progress this
year. O-RAN has also impacted positively on this product line. The
O-RAN Alliance provides recommendations for equipment deployed in
the RAN network. Synchronisation is only one element of the
functionality specified. Calnex's SNE products are being utilised
to verify performance to other aspects of these
recommendations.
This year, the Group expanded its portfolio by releasing a new
SNE (network emulation) product, SNE-X, a multi-port,
high-performance network emulator designed to drive
product/application quality and reduce the cost of testing with
rigorous, scalable test capability. In FY24 the Group plans to
release a further product, SNE-Ignite, to target applications
requiring performance and accuracy only achievable with
hardware-based implementation. With the SNE family, Calnex now has
a full suite of products capable of addressing the needs of all
applications in the target market.
Cloud & IT, Applications Verification (iTrinegy
acquisition)
In April 2022 Calnex acquired iTrinegy Limited, a leading
developer of Software Defined Test Networks technology for the
software application and digital transformation testing market.
NE-ONE hardware and software-based Network Emulation platforms
provide organisations, primarily across the technology, financial,
gaming and military / government sectors, with the ability to
accurately recreate complex, real-world network test environments
in which to analyse and verify the performance of applications,
before deployment. The acquisition of iTrinegy's NE-ONE Network
Emulation platform has enhanced the Company's position as a leading
Synchronisation Verification test vendor, and we believe Calnex is
the leading provider of Network Emulation tools for its industry
segments.
The integration of the iTrinegy team is progressing as planned,
with the focus during the period on building out the team and sales
channel, which will continue in FY24.
Financial performance
Calnex experienced another year of strong trading, achieving
results in line with market expectations. We delivered double digit
growth across revenue and profits with an improved performance in
H2, as expected. The 25% growth in revenue to GBP27.4m (FY22:
GBP22.0m) is a result of the continued strong demand for telecoms
testing equipment across the Group's core markets. Three-year
revenue CAGR is 26%, reflecting the solid performance of the
business since IPO. Revenues from the Americas region increased
36%, whilst the Rest of the World experienced a 38% uplift. North
Asia revenues saw a slight decline of 4% due to the ongoing
geopolitical tensions between the US and China. Given the overall
growth in revenues, Americas account for 35% of total revenues
(FY22: 32%), ROW 41% (FY22: 37%) and North Asia 24% (FY22:
24%).
The Group's adjusted profit before tax grew by 21% to GBP7.2m
(FY22: GBP6.0m), in line with market expectations, reflecting the
uplift in revenues and the Group's on-going investment in the
business. This year saw the Group invest in additional business
development resources, products, and inventory, such that we are in
a stronger position to successfully respond to customer demands.
The Group ended the year with a healthy closing cash position,
including fixed term deposits, of GBP19.1m (31 March 2021:
GBP15.4m).
People
We continue to invest in talent globally, to support and enhance
the fantastic work of our team, whose commitment continues to drive
the business forward. Such investment in talent, particularly
within the R&D division, is part of the Group's on-going growth
strategy. We have grown our headcount by 33 staff over the past 12
months, including the iTrinegy acquisition, bringing our total
headcount to 155 as at 31 March 2023. We continue to be able to use
Calnex's platform as a means to attract talented people and
continue to use our overseas sponsor license to hire from outside
of the UK in order to strengthen and diversify our teams.
In January 2023, we welcomed Helen Kelisky to the Board as
Non-Executive Director. Helen brings over 30 years of technology
sales leadership experience and a track record of driving top line
growth, leading national and international businesses. Her
experience across the cloud and data centre world is already
proving to be of immense value to Calnex as we exploit the growth
in the testing market, with the need for greater efficiency and
performance in data centre operations.
Following nine years on the Board, George Elliott retired as
Chair at last year's AGM. George was a significant source of
support to me and the business through our subsequent growth and
journey onto the public markets. Also, following 13 years on the
Board, Ann Budge stepped down as Non-Executive Director in February
2023. Ann was an early-stage investor in Calnex and was pivotal in
introducing the Discovery Investment Fund syndicate as seed
investors when the Group raised capital in 2007. I would like to
take this opportunity to thank both George and Ann for the valuable
roles they played in Calnex's growth journey, helping to establish
a solid platform to support the Group's financial and strategic
ambitions.
Calnex is a people first business where we help and encourage
each other, supporting the business and our colleagues in building
on our successful achievements. During 2022, we introduced a range
of programmes to support the development of our employees including
the Leadership Development, Power Skills and Psychological Safety
programmes, to ensure they can thrive in a safe and supportive
environment. I am pleased to report that in the last 12 months, the
Group's learning and development activities have led to 24
promotions and five cross-departmental moves.
During the year, we also worked closely with the UK Electronics
Skill Foundation, supporting the future talent of Engineering in
providing student placements and supporting STEM education and
development.
Our continued success at Calnex, together with the diversity of
our employees, enables us to make meaningful contributions all over
the world. Guided and driven by what is important to our teams, we
are committed to use the resources we have at our disposal and our
platform to support events, charities, and groups to demonstrate
our commitment to Environmental, Social and Governance
responsibilities.
Outlook
FY23 was another year of solid progress where we executed on our
strategy, increasing our addressable market, whilst successfully
navigating the supply chain challenges, achieving revenue and
profit growth, in line with market expectations.
In our Trading Update issued in March 2023, we described how
some customers had begun to take a more cautious approach to
investment decisions in response to the macro-economic conditions,
prompting a revision in market expectations for FY24. Trading in
the first few months of FY24 has continued as anticipated, and the
Board remains confident in delivering results for the year in line
with the revised market expectations.
Customer engagement levels remain high, and we have been
encouraged to see the early signs of a more stable macro
environment. Whilst customer budgets continue to be restricted in
the near term, we have seen our mid-term order funnel strengthen
during Q1 FY24, although the timing of conversion of these
opportunities into orders remains unclear, which is as expected and
consistent with wider industry dynamics.
We are confident the market's structural growth drivers will
continue to drive long-term growth opportunities for Calnex. These
include the need to build out new mobile networks to support the
transition to 5G, and ongoing data centre investment to support the
demand for cloud computing coupled with the need to be more energy
efficient.
The breadth of our customer base across multiple regions,
expanding product portfolio and strong balance sheet, mean we look
to the future with continued confidence.
Tommy Cook
Chief Executive Officer
22 May 2023
ESG
A meaningful impact
Calnex is a "people first" company built on trust and respect.
Not only for each other but also for the environment and for the
local communities of our employees across the globe, where we do
our best to make a meaningful impact.
Calnex is an innovative and forward-thinking business where our
employees are encouraged to share their views, contribute to
decision making, challenge each other and improve our processes to
make a positive contribution to business success. This is reflected
in the approach we take to delivering leading-edge test and
measurement solutions for 5G networking and wireless
technologies.
Our focus is increasingly on delivering platform products that
enable software upgrades in line with customers' aspirations. We
can't control how our customers use our products, but we can
influence how they benefit from additional functionality without
the need for additional hardware. Thanks to the skills of our team,
our in-depth knowledge, and market insight, many of our customers
enjoy hardware longevity of between 10 and 15 years.
Our software-first approach significantly reduces the impact our
products have on the environment by building in best-in-class
longevity and providing long-term expert support through
cutting-edge upgrades that anticipate customer requirements.
Although already a low environmental impact business, the senior
management team and our staff are keen to do more to tackle the
environmental challenges facing the planet and we are working
towards becoming an ISO14001 certified business by the end of 2023.
Our recently established employee-led environmental, social &
charity team have also had a very successful FY23.
At the end of FY22, the Board committed to build a Calnex
Corporate Giving Scheme into future Financial Plans equal to 1% of
the profits we generate. An employee-led team (with senior
management sponsorship) was created in FY23 to consider proposals
from employees for donations or support for groups and/or events
that matter to them. The Calnex senior management team want to
support groups local to our employees and offices and empower our
employees to make a difference in their community by directing the
Company to support activities/groups that they truly care
about.
We also encourage employees to donate their time to make
meaningful contributions. Group activities such as planting trees,
re-planting local flower beds and helping out at food banks are
beneficial in so many ways. Beyond the obvious benefit of the
primary task and the psychological benefit from making a positive
contribution, we recognise how significantly such activities boost
team spirit and engender pride in being associated with a company
that helps our employees make a meaningful, local difference.
We also work closely with the UK Electronics Skill Foundation
(UKESF), supporting the future talent of Engineering in providing
student placements and supporting STEM education and
development.
We are pleased to report that we used 100% of the Calnex
Corporate Giving Scheme this year. We have two main initiatives in
place to utilise this fund - the Calnex Corporate Responsibility
Fund where employees can nominate charities, clubs or organisations
for a monetary donation each quarter and our Calnex in the
Community scheme where employees are given two days each financial
year to volunteer within their local community during working
hours, without the need to book annual leave.
This financial year Calnex has donated GBP70,000 to 84 charities
and organisations and social events across the globe through our
Corporate Giving Scheme. Key charitable initiatives included:
-- Donating 120 sleeping bags to a homeless charity in Belfast,
as well as supplying 120 meals across our worldwide regions to
those in need during the festive period;
-- The Calnex September250 challenge where we encouraged our
employees across the world to either walk 250,000 steps, cycle 250
miles, or take part in 25 exercises during the month of September
to help support four worldwide charities - Mind , Sea Shepherd ,
Save the Children and National Autistic Society ;
-- Eighty employees from every region (UK, US, North Asia,
India) accepted our challenge, which resulted in Calnex donating
over GBP16,000 from our Corporate Responsibility Fund to split
between these charities. During September our employees walked
13,877,757 steps, cycled 2,752 miles and took part in 230 exercise
classes which not only raised a lot of money for charity but helped
keep our employees and their families active;
-- The Christmas Tree Gift Tag Appeal in our Linlithgow and
Belfast office. In each office we decided to put up our Christmas
trees early and attach gift tags which gave suggestions on toys to
purchase for disadvantaged children. Our employees did an amazing
job and brought in more than 100 gifts which were then donated to
Cash for Kids Northern Ireland and River Kids in Scotland;
-- The return of our Annual Christmas Charity Raffle in aid of
HopScotch , which provide a much-needed seaside holiday for
disadvantaged children in the UK;
-- 24 large bug hotels were donated to nurseries and primary
schools local to our employees across the UK, allowing the schools
to educate and base projects around the wildlife that inhabit the
hotels;
-- All 3 UK offices took part in our charity bake sale in aid of
Fare Share, who redistribute good food which would otherwise go to
waste to almost 11,000 frontline charities nationwide. With over 30
home baked goods brought in by our employees across all 3 sites and
with Calnex matching the amount raised through employee donations,
we raised GBP1,795 for Fare Share; and
-- As well as these activities organised by Calnex, 62 out of
the 84 donations to clubs, charities and organisations were
suggested by employees across the globe. A few key employee
donations were:
o GBP4,000 to SEAL Dunfermline, Scotland, who support the health
and wellbeing of young people aged between 8 - 16 who are referred
through social work and schools. As SEAL recently had their funding
reduced due to council cutbacks, this money allowed them to
continue their work;
o GBP1,000 to Stevenage Scouts Group, England, which was used to
help enable disadvantaged children to attend a trip to
Normandy;
o GBP1,000 to Operation 143, USA, who support over 30 schools
providing disadvantaged children with backpacks containing easy to
prepare food to feed them over the weekend; and
o GBP2,000 to Linlithgow Rose Community Football Club under 10s,
Scotland. The money helped purchase new kit for all the young
players.
This financial year Calnex has organised 7 Calnex in the
Community days for our employees across Northern Ireland, England,
Scotland and India, including:
-- Fife Coastal Path Clear-Up: 22 employees from our HQ office
in Linlithgow helped collect rubbish along Fife Coastal Path;
-- Assisi Animal Sanctuary: 8 employees from our Belfast office
volunteered with the sanctuary, clearing out and reorganising their
donations container and giving the walls a fresh lick of paint;
-- Five Sister Zoo: 17 employees from our HQ office in
Linlithgow volunteered with the zoo to paint their large wooden
ship play park and tidy up their Japanese inspired garden by
clearing out leaves and laying new gravel;
-- Akshaya Patra: our India-based team of 4 became our first
overseas volunteering activity. The team helped package up and
deliver lunchtime meals to disadvantaged schools in the area;
-- Muiravonside Country Park: 20 employees from our HQ office in
Linlithgow volunteered in the county park to help create a
wildflower field as well as placing, filling and planting up their
new planters, moving 8 tonnes of soil and stone in the process;
-- Shepreth Wildlife Park: 10 employees from our Stevenage
office in England volunteered to help scarify the large grass mound
where the prairie dogs lived, removing all the moss to enable their
resident donkey to move back home; and
-- Ulster Wildlife Bog Meadows: 4 employees from our Belfast
office volunteered to help plant the last of their one million
trees for the year.
Products
Our products are innovative, leading-edge test and measurement
solutions for designers and operators of the equipment and
infrastructure that enables 5G networking and wireless
technologies. 5G technologies provide enhanced mobile broadband,
mission critical communications and the Internet of Things, all of
which have a significant global impact across many aspects of
society and industry.
Our approach to product development is as follows:
-- we develop hardware platforms that can be enhanced with
downloadable software upgrades in line with customers' everchanging
needs. For example, both our Paragon-X and Sentinel platforms,
introduced in 2010, and 2013 respectively, are still supported by
the Company;
-- our products are built into test racks where they remain for
as long as the customers' products are supported. Customers expect
their products, once deployed in networks, to be utilised for 10 -
15 years;
-- this longevity feeds back through the supply chain as our
customers now expect that same longevity from test equipment
vendors;
-- our products are manufactured by a highly skilled contract
manufacturer, Kelvinside Electronics, whose close proximity allows
for excellent two-way support and communication regarding the
complex technical challenges of building and testing our products;
and
-- our bespoke product packaging is manufactured by a local
supplier with a comprehensive environmental policy including a
focus to reduce, reuse and recycle all packaging materials wherever
possible.
Environment
Both Calnex's operational processes and products have a low
environmental impact.
The majority of our staff are office-based and have the ability
to work part of the week from home where their duties allow,
performing their operations using computer and internet-based
services. Our contract manufacturer, Kelvinside Electronics, is
ISO14001 (Environmental Management Systems) certified. Our products
sales and customer support services are managed by locally-based
partners together with Calnex support staff, which greatly
minimises global travel.
Our company HQ and the majority of our operations are based in
serviced premises leased from Oracle in Linlithgow. Calnex uses the
waste recycling services provided by Oracle. Oracle have also
invested in efficient lighting and air conditioning systems which
minimise energy consumption on site.
The small amount of electrical component and circuit board waste
we generate is disposed of in accordance with the WEEE
regulations.
Our products are designed as platforms enabling our customers to
take advantage of future software upgrades and hardware
longevity.
Despite being a low environmental impact business, a project is
currently underway to gain ISO14001 certification. The ISO14001
standard defines a framework to formally manage the environmental
impact of our business operations and products.
As well as the charitable giving activities mentioned above,
other environmental initiatives include:
-- We have initiated a Product Packaging Project to measure and
improve the recyclability of our product packaging. We used a
defined measurement method to provide consistency in measurement
across all our product lines. All material included in the
packaging that we deliver to customers is identified and weighed
and assessed for its recyclability. This exercise has helped to
allocate an internal environmental score to each product in our
portfolio;
-- We are currently conducting a product design improvement
exercise to assess if we can reduce or change materials included in
our hardware designs to take environmental impact into account,
whilst also adding appropriate recycling labelling information to
customers. Every improvement identified is reviewed to ensure
changes do not have a detrimental impact on quality of the product,
protection of our intellectual property or the customer experience;
and
-- We have initiated an energy usage and business travel data
collation project which will allow us to have visibility on our
Scope 1 and 2 emissions for future reporting requirements.
People
Calnex is a people first company built on trust and respect. We
are transparent, sharing in the successes, the challenges and the
Group's ambitions moving forward. We help and encourage each other,
supporting the business and our colleagues in building on an
already successful company. Calnex also enjoys and thrives on a
diverse workforce where inclusion is key to building high
performing, engaged and successful teams.
Respectful of each other, we consider how our actions, ideas and
approaches impact others.
We work as one team.
Our strong values, as reflected in our Investors in People Gold
Award, are promoted through a variety of employee engagement
programmes:
-- Robust Recruitment Process that only ever hires top talent
and employees who value and support a positive working culture,
(each potential employee has a 'fit interview' as well as skills
and experience assessments).
-- Supportive Induction Training Programme including a
comprehensive internally delivered training programme that supports
the integration of new employees.
-- Mentoring Programme to support the development of staff and career progression.
-- Employee-built Annual Review Programme that recognises
personal achievements and supports development and career
progression.
-- Training and Development Opportunities to further develop
skillsets and/or secure educational qualifications.
-- Group-wide Compliance Training to remain legally compliant worldwide.
-- A benchmarked Benefits Package that strongly supports the
financial, physical and mental wellbeing of our people including,
amongst other things, profit share for staff, an employee share
incentive plan, a flexible/hybrid working model, an employee
wellbeing activity programme (including fitness classes, an onsite
gym, and free use of facilities at the local sports and recreation
centre, a healthcare scheme available to all staff and income
protection and life assurance polices.
-- Quality Management System that encourages inclusivity and drives process improvement.
-- Regular Culture sessions chaired by Calnex's CEO to gather
feedback on the Company's culture, practices and processes,
encouraging employees to provide their input into organisational
development.
-- Annual Employee Surveys to enable two-way dialogue on topics
such as company strategy, career progression opportunities and
other current topics affecting the working lives and wellbeing of
our employees.
In 2022, partnering with Connect Three, we have introduced
Leadership Development (LDP) and Power Skills programmes. Our LDP
is a mandatory programme for managers which supports them in
leading high performing teams, developing capability, effective
communication and leading effective change. As the business
continues to grow and change, self-awareness and psychological
safety training has also become a key element of this programme as
we strive to retain the positive, inclusive and collaborative
culture that has contributed to our success to date.
Our employee designed Power Skills programme provides all our
employees with regular access to a weekly programme of skills
sessions designed to engender confidence, understanding and
awareness of a wide variety of skills ranging from Understanding
Self and Others, Resilience and Change to Super Powering
Communication and Influencing and Developing a Global Mindset.
The introduction of our new Psychological Safety programme also
nurtures an inclusive, supportive and safe environment for our
employees to thrive in, providing a work environment where we
support each other through change and growth ensuring our positive,
people-focused culture remains at the heart of everything we
do.
In the last 12 months, our learning and development activities
have led to 24 promotions and 5 cross-departmental moves.
Structural development within the organization due to rapid growth
over the last three years has created openings for 16 new
management positions. Our focus on internal skills and leadership
development has meant that we have been able to fill 60% of these
positions internally, which is a major positive for both the
business and the careers of those involved.
To actively support our employees' mental wellbeing, we have
also partnered with David Beeney at Breaking the Silence to deliver
interactive manager and employee workshops on managing our own
mental health and supporting our colleagues in the workplace.
Employees also have direct access to David for more personal
support.
Calnex has also engaged a Chartered Financial Planner to provide
financial wellbeing workshops for all employees and 1:1 free
financial support to our UK team.
Our continued success at Calnex, together with the diversity of
our employees, enables us to make meaningful contributions all over
the world. Guided and driven by what is important to our teams, we
are committed to use the resources we have at our disposal to
support events, charities and groups to demonstrate our commitment
to Environmental, Social and Governance responsibilities.
Tommy Cook
Chief Executive Officer
22 May 2023
Financial Review
Chief Financial Officer's Statement
The Group delivered a solid financial performance in the year to
31 March 2023, with growth in revenue, underlying EBITDA, profit
before tax and cash in the year.
Financial KPIs
GBP000 FY23 FY22
Revenue 27,449 22,046
Gross Profit 20,472 16,528
Gross Margin 75% 75%
Underlying EBITDA (1) 7,980 6,351
Underlying EBITDA % 29% 29%
Profit before tax 7,208 5,973
Profit before tax % 26% 27%
Closing cash and fixed
term deposits (2) 19,098 15,357
Capitalised R&D 4,523 3,905
Basic EPS (pence) 6.75 5.19
Diluted EPS (pence) 6.42 5.00
(1) Refer to note 33 for explanation of the alternative
performance measures calculations. A full reconciliation between
Underlying EBITDA and the statutory measures is also shown
below.
(2) The Group takes advantage of high interest deposit accounts
for surplus cash balances not required for working capital. Under
IAS 7 Statement of Cash Flows, cash held on long-term deposits
(being deposits with maturity of greater than 95 days, and no more
than twelve months) that cannot readily be converted into cash is
classified as a fixed term investment and shown separately on the
balance sheet.
Reconciliation of statutory figures to alternative performance
measures - Income Statement
FY23 FY22
GBP000 GBP000
Revenue 27,449 22,046
Cost of sales (6,977) (5,518)
Gross Profit 20,472 16,528
Other income 751 648
Administrative expenses (excluding
depreciation & amortisation) (9,928) (7,917)
---------------------------------------------- ---------- ---------
EBITDA 11,295 9,259
Amortisation of development costs (3,315) (2,908)
Underlying EBITDA 7,980 6,351
Other depreciation & amortisation (746) (358)
Operating Profit 7,234 5,993
Finance costs (26) (20)
---------------------------------------------- ---------- ---------
Profit before tax 7,208 5,973
Tax (1,297) (1,433)
---------------------------------------------- ---------- ---------
Profit for the year 5,911 4,540
Revenue
Revenues in the year increased 25% to GBP27.4m (FY22: GBP22.0m),
with growth across all of the major product lines compared to the
prior year. Revenues from the Americas and Rest of World regions
increased 36% and 38% respectively. North Asia revenues experienced
a slight 4% decline on the prior year due in part to the ongoing
geopolitical tensions between the US and China. Americas accounted
for 35% of total revenues (FY22: 32%), ROW 41% (FY22: 37%) and
North Asia 24% (FY22: 31%) 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
delivered to the customer, with stand-alone software revenues
recognised in line with 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. A customer can choose to
use Calnex's products in the knowledge that a more consistent
result may be obtained if a Calnex test solution had already been
used on a particular product.
Sources of Revenue
Revenue streams
FY23 FY22
GBP000 GBP000
Warranty support revenue - recognised over the
life of cover 2,870 2,006
Hardware and software revenue - recognised on
despatch/delivery 24,579 20,040
-------- --------
Total revenue 27,449 22,046
In FY23, 90% (FY22: 91%) of the Group's revenues were generated
from the sale of bundled hardware and software products, with 10%
(FY22: 9%) from software support and extended warranty
programmes.
Geographical split of orders (average over 3 years)
FY23
% of orders
Americas 39%
North Asia 27%
Rest of World 34%
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 orders across the three key regions was 39% for ROW (FY22: 35%),
34% for Americas (FY22: 35%) and 27% (FY22: 30%) for North Asia.
North Asia experienced a decrease in the period reflecting the
ongoing US-China geopolitical tensions.
Top 10 customer orders (average over 3 years)
FY23
% of orders
Top 10 customer revenues 47%
Other revenues 53%
In FY23, Calnex received orders from 305 customers, an increase
of 72 on 233 customers in FY22.
The Group's top ten customers in FY23 accounted for 39% of total
orders (FY22: 53%) and 47% of total orders on average over the last
three years (FY22: 50%). The step change in percentage in the year
is primarily driven by sales of NE-ONE products to customers new to
Calnex.
In FY23, no underlying customer accounted for more than 8% of
Calnex's total orders.
Repeat customers (average over 3 years)
FY23
% of orders
Repeat orders 74%
Other orders 26%
The average length of customer relationship across the top ten
customers in FY23 is 10 years (FY22: 10 years), demonstrating our
high levels of repeat demand from these customers. In addition, the
Group typically experiences a high level of repeat business from
its total customer base. In FY23, using a three year order average,
74% of orders were generated from existing customers (FY22: 79%).
The impact of NE-ONE new customers accounts for this change
compared to FY22.
During the last five years, 230 customers have placed repeat
orders with Calnex (FY22: 199).
Telecoms v non-telecoms customers (average over 3 years,
excluding NE-ONE in FY23)
FY23 FY22
% of orders
Telecoms 75% 77%
Non Telecoms 25% 23%
Calnex's sales are predominantly derived from telecoms customers
where the end-application is a telecoms (fixed and mobile) network.
Non-telecoms customers include hyperscale/data centres and
enterprise customers. On a three year average basis, and excluding
NE-ONE orders (as these are a new set of customers in FY23 only),
these non-telecoms customers represented 25% in FY23 (FY22:
23%).
Including NE-ONE in FY23, the three year average percentage of
non-telecoms customers represents 26% in FY23 (FY22: 23%).
As telecoms networks evolve, we are finding a number of
companies whose primary business is hyperscale/datacentres and IT
are also moving into the telecoms space. We classify sales to these
non-telecoms companies for use in telecoms applications as telecoms
sales for the purposes of this analysis.
Gross Profit
Gross profit increased by 24% to GBP20.5m (FY22: GBP16.5m)
reflecting the solid trading performance. Gross margin, which is
calculated after discounts to channel partners are applied, is in
line with the prior year at 75% (FY22: 75%).
Underlying EBITDA
Underlying EBITDA, which includes R&D amortisation,
increased by 26% to GBP8.0m in the year (FY22: GBP6.4m), in line
with market expectations, as a result of the strong trading
performance. Administrative expenses (excluding depreciation &
amortisation) were GBP10.0m in FY23 (FY22: GBP7.9m). This increase
relates predominantly to the planned investment in the management,
sales and support teams across the business in line with the
Group's growth strategy, increases in travel costs as COVID-19
restrictions have been lifted across the majority of our regions,
increases in US dollar based costs for our overseas sales teams as
a result of the strengthening of USD over GBP and overheads
relating to the Stevenage site after the acquisition of iTrinegy.
Administration costs also include GBP0.2m of non-recurring
acquisition related deal costs and GBP0.1m of a charge in relation
to the contingent consideration accounting in relation to the
iTrinegy acquisition.
Amortisation of R&D costs increased by GBP0.4m to GBP3.3m
(FY22: GBP2.9m) due to increased R&D investment in recent years
to support the growth in revenues.
Underlying EBITDA margin was 29% in FY23, in line with the prior
year.
Profit before tax
Profit before tax increased by 21% in the year to GBP7.2m (FY22:
GBP6.0m) driven by the growth in revenue performance. Profit before
tax margin was 26% in FY23 compared to 27% in FY22. This slight
change in profit margin is driven by the increase in other
depreciation and amortisation costs as an additional GBP0.3m
amortisation of acquired intangible assets was charged to the
income statement in the Period in relation to the iTrinegy
acquisition.
Tax
The tax charge in the year was GBP1.4m (FY22: GBP1.3m),
representing an effective tax rate of 18% (FY22: 24%).
The weighted average applicable tax rate for FY23 was 19%. The
difference between the applicable rate of tax and the effective
rate is largely due to the following:
-- Availability of enhanced 130% SME R&D deduction (decreasing the effective rate by 2.2%);
-- Deferred tax charged directly to equity (decreasing the effective rate by 2.2%);
-- Recognition of the change in tax rate to 25% on certain
deferred tax assets and liabilities as they are expected to reverse
after 1 April 2023 (increasing the effective rate by 0.7%);
-- Overseas taxes (increasing the effective rate by 2.0%);
-- Other differences, such as prior year adjustments and
disallowable expenses (increasing the effective rate by 0.7%).
The weighted average applicable tax rate for FY22 was 19%. The
difference between the applicable rate of tax and the effective
rate of 24% was largely due to the following:
-- Recognition of the change in tax rate to 25% on certain
deferred tax assets and liabilities as they are expected to reverse
after 1 April 2023 (increasing the effective rate by 5.9%);
-- Availability of R&D SME enhanced deduction (decreasing effective rate by 0.3%);
-- Impact of the super deduction in relation to fixed asset
additions (decreasing the effective rate by 0.3%); and
-- Other differences, such as prior year adjustments,
disallowable expenses and overseas tax (decreasing effective rate
by 0.3%).
The 2021 budget proposal increases the corporation tax rate to
25% from 1 April 2023. This was substantively enacted in the
Finance Act 2021 on 24 May 2021.
Earnings per share
Basic earnings per share was 6.75 pence in the Period (FY22:
5.19 pence) and diluted earnings per share was 6.42 pence (FY22:
5.00 pence), with the increases in both metrics reflecting the
strong performance in the year.
iTrinegy acquisition
The acquisition of 100% of the issued share capital of iTrinegy
Ltd (together with its wholly owned subsidiary iTrinegy Inc.)
completed on 12 April 2022 on a cash free, debt free basis, for an
initial cash consideration of GBP2.5m, fully funded from the
Group's free cash. An additional GBP0.5m was paid to the vendors in
exchange for them leaving all available cash (GBP0.7m at
acquisition date) within the acquired business. The net cash effect
of the transaction was GBP2.3m. A detailed summary of the
transaction is set out in note 13 to the financial statements.
Up to a further GBP1m is potentially payable to the vendors
subject to the achievement of revenue growth targets from the
NE-ONE product line in the year ended 31 March 2024. This "Earn-Out
Payment" would be paid as a combination of cash and new shares
issued in Calnex Solutions plc.
The Earn-Out Payment in relation to those iTrinegy vendors who
have remained as employees of the new Group has been treated as
remuneration, with the fair value expensed to the income statement
(using current forecasts, the Earn Out Payment is assumed to be
paid out at 50% of the maximum). This results in a charge of
GBP0.3m related to post acquisition service, and this will be
charged to the Income Statement over the vesting period. In the
current year, GBP0.1m has been charged to administrative expenses
within the Income Statement.
GBP1.3m of a fair value adjustment has been calculated as
valuation of the intellectual property associated with the acquired
technology, and customer relationships (offset by a GBP0.3m
deferred tax liability recognised in relation to the fair value
uplift on the intangibles balance). The goodwill balance of GBP2.0m
represents an accelerated R&D development timeline, cost and
sales channel synergies expected from combination, as well as
intangible assets not qualifying for separate recognition, such as
workforce in place.
GBP0.2m of acquisition related expenses for legal and
professional fees, as well as GBP0.3m amortisation of acquired
intangible assets have also been charged to the income statement in
the year.
Cashflows
The Group generated cash before acquisitions of GBP6.0m in FY23
(FY22: GBP2.7m), reflecting the solid trading performance and
working capital movements in the year.
Cashflow summary
FY23 FY22
GBP000 GBP000
Net cash from operating activities 11,111 7,350
Investing activities - intangible and property,
plant and equipment (4,704) (4,213)
Dividends paid (761) (245)
Other financing and investing activities 358 (203)
----------------------------------------------------- -------- --------
Increase in cash before acquisitions and transfers
to fixed term investments 6,004 2,689
----------------------------------------------------- -------- --------
Purchase of subsidiary: net of cash acquired (2,263) -
Fixed term investment: fixed term deposit (15) (1,500)
----------------------------------------------------- -------- --------
Increase in cash per consolidated cashflow
statement 3,726 1,189
----------------------------------------------------- -------- --------
Net cash from operating activities was GBP11.1m in the year
(FY22: GBP7.4m). Working capital movements represented a cash
outflow of GBP0.4m (FY22: GBP1.5m), predominately as a result of
the timing and volume of shipping and invoicing to customers.
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 GBP4.5m (FY22:
GBP3.9m), reflecting the planned growth in the R&D team as
projects resource demands increased.
Cash spend on financing activities in the year was GBP0.6m
(FY22: GBP0.4m), largely representing dividends paid in the year of
GBP0.8m (FY22: 0.3m), which included the final dividend for FY22 of
0.56p per share, approved at the Company's AGM and paid on 30
August 2022, and the interim dividend for FY23 of 0.31 pence per
share, paid on 16 December 2022. This was offset by GBP0.4m of cash
received for the final tranche of the Scottish Enterprise
government grant, which came to the end of its term in January
2023. The remainder of the cash spend on financing activities
reflects payment of lease obligations.
The Group places surplus cash balances not required for working
capital into notice and fixed term deposit accounts. Under IFRS,
cash held on long-term deposits (being deposits with maturity of
greater than 95 days, and no more than twelve months) that cannot
readily be converted into cash is classified as a fixed term
investment. This is shown separately on the balance sheet and is
accounted for as a cash outflow within investing activities in the
consolidated cashflow statement for the year ended 31 March 2022.
It is added back in the non-statutory cash flow reconciliation
above as we regard this as cash generated and owned by the Group in
the year.
There is currently no debt on the balance sheet, leading to no
borrowings related cashflows in the current or prior periods.
Closing cash, including fixed term deposits, at 31 March 2023 was
GBP19.1m (31 March 2022: GBP15.4m).
Dividend
The directors are proposing a final dividend with respect to the
financial year ended 31 March 2023 of 0.62p per share. The final
dividend will be proposed for approval at the Annual General
Meeting in August 2023 and, if approved, will be paid on 30 August
2023 to all shareholders on the register as at close of business on
28 July 2023, the record date. The ex-dividend date will be 27 July
2023.
Ashleigh Greenan
Chief Financial Officer
22 May 2023
Consolidated statement of Comprehensive Income
Year Year
ended ended
31 March 31 March
2023 2022
Note GBP'000 GBP'000
Revenue 5 27,449 22,046
Cost of sales (6,977) (5,518)
-------- --------
Gross profit 20,472 16,528
Other income 6 751 648
Administrative expenses (13,989) (11,183)
-------- --------
Operating profit 7,234 5,993
Finance costs 10 (26) (20)
-------- --------
Profit before taxation 7,208 5,973
Taxation 11 (1,297) (1,433)
-------- --------
Profit and total
comprehensive
income for the year 5,911 4,540
======== ========
Basic earnings per
share 29 6.75 5.19
Diluted earnings
per share 29 6.42 5.00
Consolidated and Company Statement of Financial Position
__________________________________________________________________________________________________________________
Group Company
31 31 31 March 31 March
March March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets Note
Intangible assets 12 10,565 8,424 9,525 8,424
13,
Goodwill 14 2,000 - - -
Plant and equipment 15 404 274 404 274
Right-of-use assets 21 533 791 533 791
Deferred tax asset 22 272 304 272 304
13,774 9,793 10,734 9,793
Current assets
Inventories 16 2,748 998 2,748 998
Trade and other receivables 17 3,130 4,997 3,455 5,197
Cash and cash equivalents 18 17,583 13,857 17,186 13,592
Short term investment 18 1,515 1,500 1,515 1,500
--------------------- --------- --------- --------
24,976 21,352 24,904 21,287
Total assets 38,750 31,145 35,638 31,080
--------------------- --------- --------- --------
Current liabilities
Trade and other payables 20 5,988 5,569 5,806 5,549
Corporation tax 843 - 741 -
Lease liabilities 21 260 193 260 193
Provisions 23 - 141 - 141
--------- --------
7,091 5,903 6,807 5,883
Non-current liabilities
Trade and other payables 20 1,396 718 1,356 718
Lease liabilities 21 431 664 431 664
Deferred tax liabilities 22 2,457 2,017 2,197 2,017
Provisions 23 15 15 15 15
4,299 3,414 3,999 3,414
Total liabilities 11,390 9,317 10,806 9,297
--------------------- ---------
Net assets 27,360 21,828 24,832 21,783
===================== ========= ========= ========
Equity
Share capital 28 109 109 109 109
Share premium 7,495 7,484 7,495 7,484
Share option reserve 26 873 502 873 502
Retained earnings 18,883 13,733 16,355 13,688
--------------------- ---------
Total equity 27,360 21,828 24,832 21,783
===================== ========= ========= ========
Consolidated Statement of Changes in Equity
_________________________________________________________________________________________________________________
Share
Share Share option Retained Total
capital premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March 2021 109 7,484 126 9,438 17,157
Transactions with owner in
their capacity as owners
Share options - - 376 - 376
Dividends paid - - (245) (245)
------- ------- ------- ---------- -------
Total transactions with owner
in their capacity as owners 376 (245) 131
Total comprehensive income
for the year - - - 4,540 4,540
Balance at 31 March 2022 109 7,484 502 13,733 21,828
Transactions with owner in
their capacity as owners
Share options exercised 0 11 - - 11
Share options - - 371 - 371
Dividends paid - - - (761) (761)
------- ------- ------- ---------- -------
Total transactions with owner
in their capacity as owners 0 11 371 (761) (379)
Total comprehensive income
for the year - - - 5,911 5,911
Balance at 31 March 2023 109 7,495 873 18,883 27,360
------- ------- ------- ---------- -------
Company Statement of Changes in Equity
__________________________________________________________________________________________________________________
Share
Share Share option Retained Total
capital premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March 2021 109 7,484 126 9,452 17,171
Transactions with owner in
their capacity as owners
Share options - - 376 - 376
Dividends paid - - - (245) (245)
------- ------- ------- ---------- -------
Total transactions with owner
in their capacity as owners 376 (245) 131
Total comprehensive income
for the year - - - 4,481 4,481
Balance at 31 March 2022 109 7,484 502 13,688 21,783
Transactions with owner in
their capacity as owners
Share options exercised 0 11 - - 11
Share options - - 371 - 371
Dividends paid - - - (761) (761)
------- ------- ------- ---------- -------
Total transactions with owner
in their capacity as owners 0 11 371 (761) (379)
Total comprehensive income
for the year - - - 3,428 3,428
Balance at 31 March 2023 109 7,495 873 16,355 24,832
------- ------- ------- ---------- -------
Consolidated and Company Cash Flow Statement
__________________________________________________________________________________________________________________
Group Company
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Cashflows from operating
activities
Profit before tax from continuing
operations 7,208 5,973 4,459 5,872
Adjusted for:
Finance costs 26 20 26 20
Interest received (160) - (160) -
Government grant income (201) (197) (201) (197)
R&D tax credit income (390) (457) (390) (457)
Movement in provisions - (150) - (150)
Share-based payment transactions 574 262 574 262
Depreciation 371 252 371 252
Amortisation 3,690 3,014 3,422 3,014
Impairment of investment - - 2,436 -
Movement in inventories (1,554) (38) (1,557) (38)
Movement in obsolescence
provision (122) 150 (122) 150
Movement in trade and other
receivables 1,619 (2,815) 1,484 (2,567)
Movement in trade and other
payables (329) 1,129 (770) 1,108
-------------- ------------ -------- --------
Cash generated from operations 10,732 7,143 9,572 7,269
Movement in provisions (overseas
tax) (140) - (140) -
Corporation & foreign tax
payments (70) - - -
R&D tax credit refunds received 589 207 589 207
-------------- ------------
Net cash from operating
activities 11,111 7,350 10,021 7,476
-------------- ------------ -------- --------
Investing activities
Purchase of intangible assets (4,523) (3,913) (4,523) (3,913)
Purchase of property and
equipment (181) (300) (181) (300)
Purchase of subsidiary: net
of cash acquired (2,263) - (2,263) -
Distribution from subsidiary from
pre-acquisition reserves - - 767 -
Dividend received from subsidiary
of post-acquisition reserves - - 191 -
Short term investment: fixed
term deposit (15) (1,500) (15) (1,500)
Interest received 160 - 160
-------- --------
Net cash used in investing
activities (6,822) (5,713) (5,864) (5,713)
-------------- ------------ ======== ========
Financing activities
Payment of lease obligations (245) (203) (245) (203)
Dividends paid (761) (245) (761) (245)
Share options proceeds 11 - 11 -
Government grant income 432 - 432 -
-------- --------
Net cash from financing
activities (563) (448) (563) (448)
-------------- ------------ ======== ========
Net increase in cash and
cash equivalents 3,726 1,189 3,594 1,315
Cash and cash equivalents
at beginning of the year 13,857 12,668 13,592 12,277
Cash and cash equivalents
at end of the year 17,583 13,857 17,186 13,592
-------------- ------------ ======== ========
Notes to the Financial Statements
____________________________________________________________________________________________________________
1. General information
Calnex Solutions plc ("the Company") is a public limited company
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 27.
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 22 May 2023. The
directors have the power to amend and reissue the financial
statements.
2. Basis of preparation
(a) Statement of compliance
This 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
International Financial Reporting Standards. These should be read
in conjunction with the Financial Statements of the Group as at and
for the year ended 31 March 2023. The report of the auditors for
the year ended 31 March 2023 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.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
2. Basis of preparation (continued)
(e) Going Concern
The financial information for the year to 31 March 2023 has been
prepared on the basis that the Company will continue as a going
concern.
The Board has approved financial forecasts for the current and
succeeding financial period to 31 March 2025. 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 and access to additional liquidity through
banking facilities 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. 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.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
3. Significant accounting policies (continued)
Grant income
The Group obtains grant funding from the Scottish Government in
the form of reimbursement for research and development costs
eligible for reclaim under the grant agreement. Costs are incurred
before they can be reclaimed under the grant agreement and revenue
is 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 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.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
3. Significant accounting policies (continued)
(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.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
3. Significant accounting policies (continued)
(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.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
3. Significant accounting policies (continued)
(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.
Notes to the Financial Statements continued
____________________________________________________________________________________________________________
3. Significant accounting policies (continued)
(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 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.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
3. Significant accounting policies (continued)
(w) Critical judgements in applying the Groups accounting estimates (continued)
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 goodwill and 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 acquired through business combination
Where Intangible assets are acquired through business
combination for which no active market for the asset exists, fair
value is determined by discounting estimated future net cashflows
generated by the asset. Estimates relating to the future cashflows
and discount rates used may have a material effect on the reported
amounts of finite lived intangible assets.
(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 resulted 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 Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Americas 9,644 7,066
North Asia 6,475 6,780
Rest of World 11,330 8,200
27,449 22,046
======== ========
5 Revenue
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Sale of goods 24,579 20,040
Rendering of services 2,870 2,006
Total revenue 27,449 22,046
69% (2022: 76%) of the Group order intake has been generated
through the network of the Group's principal distribution partner.
Included within orders there are no customers which exceed 10% of
the Group's orders (2022: GBP3,656,051 from one customer exceeded
10% of Group orders).
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
6 Other income
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Government grant
income 201 191
R&D tax credit 390 457
Interest received 160 -
751 648
======== ========
7 Material operating profit items
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Operating profit for the year is stated after
charging/(crediting):
Share-based payments 574 262
Legal and professional fees associated with acquisition
of subsidiary 200 -
Depreciation of tangible and ROU assets 371 252
Amortisation of intangible
assets 3,690 3,014
-------- --------
Auditor's remuneration
Fees payable to the Group's auditor and its associates
for the audit of the Group's annual accounts 44 44
Total fees payable
for audit services 44 44
Fees payable to the Group's auditor and its associates
for other services:
Audit related services - 2
Tax related services - -
Other services - -
Total fees payable to the Group's auditor and
its associates 44 46
-------- --------
8 Employee benefits costs
Average monthly number of employees
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Development staff 70 64
Administrative staff 68 42
Management staff 11 10
149 116
-------- --------
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Employee costs during the year (including directors
remuneration) amounted to:
Wages and salaries 8,560 7,694
Social security costs 875 630
Defined contribution
pension 418 251
Share incentive scheme 233 210
Equity-settled share-based
payment 531 249
Cash-settled share-based
payment 43 13
10,660 9,047
-------- --------
Total gross wages and salaries capitalised in
the year, included in the analysis above 3,837 3,138
-------- --------
Notes to the Financial Statements continued
_________________________________________________________________________________________________________________
9 Key management personnel emoluments
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Wages and salaries 636 638
Social security costs 100 67
Defined contribution
pension 7 6
Equity-settled share-based
payment 29 29
--------
772 740
-------- --------
The number of directors who accrued benefits under
the company pension plans:
Defined contribution plans 1 1
-------- --------
Remuneration of the highest paid director
in respect of qualifying services:
Aggregate remuneration 237 255
-------- --------
Key management refers to the directors
of the Group.
10 Finance costs
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Interest expense on lease
liabilities 26 20
-------- --------
Notes to the Financial Statements continued
_______________________________________________________________________________________________________________
11 Taxation
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Current taxation
UK corporation tax on
profits for the year 1,143 373
Foreign current tax expense 149 46
Adjustments relating
to prior years (4) (120)
1,288 299
Deferred taxation
Origination and reversal
of temporary differences (46) 799
Adjustments relating
to prior periods - (46)
Effect of changes in
tax rates 55 381
9 1,134
Total taxation charge 1,297 1,433
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Profit before tax for
the year 7,208 5,973
======== ========
Tax thereon at 19% 1,369 1,134
Effects of:
Expenses disallowable
for tax purposes 40 67
Adjustments in respect of prior periods
- current tax (4) (120)
Adjustments in respect of prior periods
- deferred tax - (46)
Change in tax rate on opening balance 55 381
SME R&D credit (161) (9)
Timing differences not recognised
in the computation 19 -
Impact of super deduction (10) (20)
Deferred tax (charged)/credited
directly to equity (160) -
Overseas tax 149 46
Taxation charge 1,297 1,433
======== ========
The weighted average applicable tax rate for the year ended 31
March 2023 was 19% (2022: 19%). The effective rate of tax for the
year, based on the taxation charge for the year as a percentage of
the profit before tax is 18% (2022: 24.0%) The (1.0) percentage
point difference between the applicable rate of tax and the
effective rate is largely due to the following:
-- Availability of enhanced 130% SME R&D deduction
-- Overseas taxes
The 2021 budget proposal increases the corporation tax rate to
25% from 1 April 2023. This was substantively enacted in the
Finance Act 2021 on 24 May 2021.
Notes to the Financial Statements continued
_________________________________________________________________________________________________________________
12 Intangible assets
Included within intangible assets are the following significant
items:
-- 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 Group
property Costs Total
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2022 2,224 27,238 29,462
Additions - 4,523 4,523
Acquired through business
combination 1,308 - 1,308
Disposals (6) (1,366) (1,372)
At 31 March 2023 3,526 30,395 33,921
------------ ----------- -------
Amortisation
At 1 April 2022 2,114 18,924 21,038
Charge for the year 375 3,315 3,690
Eliminated on disposal (6) (1,366) (1,372)
At 31 March 2023 2,483 20,873 23,356
------------ ----------- -------
Net book value
31 March 2022 110 8,314 8,424
------------ ----------- -------
31 March 2023 1,043 9,522 10,565
------------ ----------- -------
Intellectual Development Company
property Costs Total
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2022 2,224 27,238 29,462
Additions - 4,523 4,523
Disposals (6) (1,366) (1,372)
At 31 March 2023 2,218 30,395 32,613
------------ ----------- -------
Amortisation
At 1 April 2022 2,114 18,924 21,038
Charge for the year 107 3,315 3,422
Eliminated on disposal (6) (1,366) (1,372)
At 31 March 2023 2,215 20,873 23,088
------------ ----------- -------
Net book value
31 March 2022 110 8,314 8,424
------------ ----------- -------
31 March 2023 3 9,522 9,525
------------ ----------- -------
During the year, a review of the carried development costs
brought forward has resulted in a disposal of GBP1,365,530, and
elimination of amortisation of GBP1,365,530 resulting in a net book
value impact of GBPnil. This reflects removal of aged spend on
product features that are now considered to be superseded by
current product developments.
Within Group intellectual property, additions of GBP1,308,000
are included relating to the fair value assessment of intellectual
property on the NE-ONE product range resulting from the business
combination of iTrinegy. This intellectual property addition has
also resulted in GBP267,970 of amortisation being charged to
administration expenses in the year. Details of the business
combination are included in note 13.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
13 Business combinations
On 12 April 2022, Calnex Solutions plc acquired 100 per cent of
the issued share capital of iTrinegy Ltd, a leading developer of
Software Defined Test Networks technology for the software
application and digital transformation testing market. The core
product, the NE-ONE hardware and software based Network Emulation
platforms, provide organisations, primarily across the technology,
financial, gaming and military/government sectors, with the ability
to accurately recreate complex, real-world network test
environments in which to analyse and verify the performance of
applications, before deployment. The NE-ONE platform, provides
users with insight which enables them to reduce deployment costs
and risk, whilst also addressing the needs of the cloud-based and
virtual development environments, a rapidly growing sub-sector of
the application development market.
This acquisition was made on a cash free, debt free basis, for
an initial cash consideration of GBP2.5 million, fully funded from
Group free cash. An additional GBP0.5 million was also paid to the
vendors in exchange for them leaving all available cash (GBP0.7m at
acquisition date) within the acquired business. Up to a further
GBP1 million consideration is potentially payable subject to the
achievement of revenue growth from the NE-ONE product line in the
year ended 31 March 2024 (the 'Earn-Out Payment'). This Earn-Out
Payment will be realised as a combination of cash and new ordinary
shares issued in Calnex Solutions plc. The maximum number of new
ordinary shares that may be issued as a result of the Earn-Out
Payment targets being met in full is 322,579.
The Earn-Out Payment in relation to those iTrinegy vendors who
have remained as employees of the new Group has been treated as
remuneration, with the fair value expensed to the income statement.
The share-based element of the Earn-Out Payment has been measured
at fair value as at grant date, whilst the cash element of the
Earn-Out Payment will be fair value assessed at each reporting
date, consistent with IFRS 2 Share-based Payment. This results in a
charge of GBP0.3m related to post acquisition service, and this
will be charged to the Income Statement over the vesting period. In
the current year, GBP0.1m has been charged to administrative
expenses within the Income Statement.
GBP0.2m of acquisition related expenses for legal and
professional fees, as well as GBP0.3m amortisation of acquired
intangible assets have been charged to administrative expenses in
the period.
The fair values of the identifiable net assets are set our
below:
Fair
value
Book Adjustment Fair
value value
GBP'000 GBP'000 GBP'000
Intangible assets - 1,308 1,308
Deferred tax liability - (311) (311)
Plant & equipment 8 - 8
Cash and cash equivalents 737 - 737
Trade and other receivables 397 - 397
Inventories 74 - 74
Trade and other payables (1,010) - (1,010)
------- ---------- -------
Total identifiable assets 206 997 1,203
Goodwill on acquisition 2,000
Total consideration 3,203
-------
Satisfied by:
Initial cash consideration 3,000
Contingent consideration 203
3,203
-------
Cashflow
Initial cash consideration 3,000
Cash acquired (737)
Net cashflow impact of
acquisition 2,263
=======
The fair value adjustment noted above has been derived from the
valuation of the intellectual property associated with acquired
technology, and customer relationships. These intangible assets
have been assigned a useful life of between three and five
years.
The book value of all other assets and liabilities recognised at
acquisition date have been determined to approximate their fair
value. Trade and other receivables acquired were mainly trade
receivables, of which no recovery issues were identified
post-acquisition.
The values identified in relation to the acquisition of iTrinegy
are final as at 31 March 2023.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
13 Business combinations (continued)
The acquired business contributed revenues of GBP1.3m and profit
after tax of GBP0.2m profit for the period 12 April 2022 to 31
March 2023. If the acquisition had occurred on 1 April 2022 the
full year contributions to revenue and profit after tax would have
been GBP1.3m and GBP0.2m profit after tax. The proximity of the
acquisition date to the beginning of the financial year resulted in
a significant amount of the acquired business transactions for
financial year being captured post acquisition.
The directors have reviewed the GBP2.0m goodwill valuation and
are comfortable it benchmarks consistently with similar
acquisitions within the sector. Goodwill carried reflects the
inherent value of an accelerated R&D development timeline to
address the network emulation market with the NE-ONE product,
coupled with significant cost and sales channel synergies the group
will be able to leverage from its more mature organisational and
sales structure. Goodwill also includes intangible assets not
qualifying for separate recognition, such as workforce in
place.
The goodwill is not expected to be deductible for tax
purposes.
As part of the integration of the iTrinegy business, the Group
has transferred all iTrinegy staff and trading over to Calnex
Solutions plc, with the iTrinegy legal entities being 'hived up'
into the existing Calnex entities. Details of the group structure
changes in the year are detailed in note 27.
14 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
2023
GBP'000
Cost
As at 1 April 2022 -
Acquisitions (note 13) 2,000
As at 31 March 2023 2,000
Goodwill of GBP2,000,000 has been recognised in the Group in the
year, following the acquisition of iTrinegy Ltd.
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%, 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 11.7%, which would be anticipated for a market
participant investing in the Group.
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 balance sheet date.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
15 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 Plant
and and
equipment equipment
Total Total
GBP'000 GBP'000
Cost
At 1 April 2022 335 335
Additions 235 235
Acquired through business
combination 8 8
Disposals (8) (8)
At 31 March 2023 570 570
---------
Depreciation
At 1 April 2022 61 61
Charge for the year 113 113
Eliminated on disposal (8) (8)
At 31 March 2023 166 166
--------- ---------
Net book value
31 March 2022 274 274
========= =========
31 March 2023 404 404
16 Inventories
Group Company
Year Year Year Year
ended ended ended ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Finished goods 3,055 1,427 3,055 1,427
Provision for obsolescence (307) (429) (307) (429)
2,748 998 2,748 998
======== ======== ======== ========
Cost of inventories recognised
as an expense 5,744 4,811 5,685 4,811
Group inventories reflect the following movement in provision
for obsolescence:
At start of the financial
year 429 279 429 279
Utilised (122) (23) (122) (23)
Provided - 173 - 173
At end of the financial
year 307 429 307 429
===== ==== ===== ====
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
17 Trade and other receivables
Group Company
Year Year Year Year
ended ended ended ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Amounts due within one
year
Trade receivables 2,605 4,120 2,605 4,120
R&D tax credit repayments - 598 - 598
Other receivables 213 150 213 150
Amounts owed by group
companies - - 325 201
Prepayments and accrued
income 312 129 312 128
3,130 4,997 3,455 5,197
======== ======== ======== ========
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 GBP339,366 (2022: GBP103,605), 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 Year Year Year
ended ended ended ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Overdue by
0-30 days 322 104 322 104
30-60 days 3 - 3 -
60+ days 14 - 14 -
339 104 339 104
The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
Note 24 includes disclosures relating to the credit risk
exposures and analysis relating to the allowance for expected
credit losses. The calculated credit risk is GBP9,214 (2022:
GBP11,080). Due to the immaterial nature of the balance, no
provision has been recognised.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
18 Cash and cash equivalents
Cash and cash equivalent amounts included in the Consolidated
Statement of Cashflows comprise the following:
Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 12,439 7,330 12,042 7,065
Cash on short term deposit 5,144 6,527 5,144 6,527
Total cash and cash equivalents 17,583 13,857 17,186 13,592
-------- -------- -------- --------
Short term investment:
fixed term deposit 1,515 1,500 1,515 1,500
-------- -------- -------- --------
Short term cash deposits of GBP12,974 (2022: GBP1,501,049) are
callable on a notice of 65 days.
Short term cash deposits of GBP5,130,587 (2022: GBP5,025,495)
are callable on a notice of 95 days.
Cash held on long-term deposits (being deposits with maturity of
greater than 95 days) that cannot readily be converted into cash
have been classified as a short term investment. A total of
GBP1,515,000 (2021: GBP1,500,000) is currently held on fixed term
deposit, with a maturity on this investment of less than twelve
months at the reporting date.
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 24.
19 Borrowings
The Group currently has a GBP3,000,000 revolving credit
facility, at an interest rate of 2.25% above the Bank of England
base rate and secured with a floating charge over the Group assets.
The total amount drawn from the borrowing facility as at 31 March
2023 was GBPnil. (31 March 2022: GBPnil)
This facility is subject to the following financial
covenants:
i) Leverage covenant: Gross borrowings to R&D adjusted
EBITDA: The ratio of Gross Borrowings at the end of each relevant
period to R&D Adjusted EBITDA for such Relevant Period shall
not exceed 1.75 to 1.
R&D adjusted EBITDA is defined as EBITDA less capitalised
development expenditure in the period.
ii) Interest Cover Covenant: EBIT to Net Financing Costs: The
ratio of EBIT for each Relevant Period to Net Financing Costs for
such Relevant Period shall not fall below 4.00 to 1.
The Group has passed all covenant tests during the review
period.
20 Trade and other payables
Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Amounts due within one
year
Trade payables 1,770 924 1,767 911
Other taxes and social
security 197 149 197 149
Other payables 75 60 75 60
Accruals 1,275 2,406 1,264 2,399
Deferred income 2,671 2,030 2,503 2,030
5,988 5,569 5,806 5,549
Amounts due after one
year
Deferred income 1,166 718 1,126 718
Other payables 230 - 230 -
-------- -------- -------- --------
1,396 718 1,356 718
Total amounts due 7,384 6,287 7,162 6,267
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
20 Trade and other payables (continued)
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.
Deferred income relates to fees received for ongoing services to
be recognised over the life of the service rendered, and grant
proceeds received but not yet released to the Statement of
Comprehensive Income.
21 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
2019 and will run for the 5 year period to 30 November 2024. On the
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
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2022 1,044 170 1,214 1,214
Additions - - - -
Disposals - - - -
-------
At 31 March 2023 1,044 170 1,214 1,214
------- -------
Depreciation
At 1 April 2022 336 87 423 423
Charge for the year 218 40 258 258
Eliminated on disposal - - - -
At 31 March 2023 554 127 681 681
-------
Net book value
31 March 2022 708 83 791 791
-------- ------------ ------- -------
31 March 2023 490 43 533 533
--------
Right-of-use assets Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 791 522 791 522
Additions to right of
use assets - 473 - 473
Depreciation charge for
the year (258) (204) (258) (204)
Balance at 31 March 533 791 533 791
======== ======== ======== ========
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
21 Leases (continued)
Lease liabilities
Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 857 566 857 566
Acquisition of new leases 53 474 53 474
Payment of lease liabilities (245) (203) (245) (203)
Interest expense on lease
liabilities 26 20 26 20
Balance at 31 March 691 857 691 857
======== ======== ======== ========
Disclosed as
Current 260 193 260 193
Non-current 431 664 431 664
--------
691 857 691 857
======== ======== ======== ========
During the year, the Group also leased additional land and
buildings in Belfast and one motor vehicle. 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 Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Motor vehicles 17 17 17 17
Land and buildings 58 51 58 51
75 68 75 68
-------- -------- -------- --------
Amounts recognised in the income statement
Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Depreciation charge -
building lease 218 162 218 162
Depreciation charge -
IT equipment 40 42 40 42
Interest on lease liabilities 26 20 26 20
Low value lease rental 75 68 75 68
Amounts recognised in statement of cashflows
Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Total cash outflow for
leases (245) (203) (245) (203)
A maturity analysis of contractual cashflows relating to lease
liabilities is included in note 24 (d).
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
22 Deferred tax
The 2021 budget proposal increased the corporation tax rate to
25% from 1 April 2023. This was substantively enacted in the
Finance Act 2021 on 24 May 2021.
Deferred tax asset
Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Opening balance 304 613 304 613
Recognised in statement of comprehensive
income (192) (424) (192) (424)
Recognised in equity 160 115 160 115
--------
Closing balance 272 304 272 304
-------- -------- -------- --------
Deferred tax assets arise
as follows:
Share-based remuneration 250 265 250 265
Other timing differences 22 39 22 39
Total deferred tax asset 272 304 272 304
-------- -------- -------- --------
Deferred tax liability
Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Opening liability 2,017 1,321 2,017 1,321
Recognised in statement of comprehensive
income 440 696 180 696
Recognised in equity - - - -
Closing liability 2,457 2,017 2,197 2,017
======== ======== ======== ========
Deferred tax liabilities
arise as follows:
Deferred tax on acquisition 260 19 - 19
Timing differences on
development costs 2,108 1,915 2,108 1,915
Accelerated capital allowances 89 83 89 83
-------- --------
Total deferred tax liability 2,457 2,017 2,197 2,017
======== ======== ======== ========
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
23 Provisions
Group Company
Year Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Current provisions
Overseas tax - 141 - 141
-------- -------- -------- --------
Non-current provisions
Dilapidations 15 15 15 15
-------- -------- --------
Total provisions 15 156 15 156
======== ======== ======== ========
The movement in the
total provision liability
At start of financial
year 156 306 156 306
Recognised in profit
and loss (141) (150) (141) (150)
At end of financial year 15 156 15 156
======== ======== ======== ========
Following submission and acceptance of all required
documentation, provisions recognised in respect of potential
payments to be made to overseas tax authorities of GBP141,000 have
been released in the current year.
Remaining provisions pertain to potential payments to be made in
respect of dilapidations on leased assets.
No discount is recorded on recognition of the provisions or
unwound due to the low value and estimable nature of the
non-current element.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
24 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 Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets (current and
non-current) at amortised cost
Trade and other receivables 2,605 4,279 2,930 4,480
Cash and cash equivalents 17,583 13,857 17,186 13,592
Short term investments 1,515 1,500 1,515 1,500
======== ======== ======== ========
Financial liabilities (current
and non-current) at amortised cost
Lease liabilities 691 857 691 857
Trade and other payables 4,636 3,391 4,600 3,371
======== ======== ======== ========
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.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
24 Financial instruments (continued)
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 2023 Sterling Euro US Dollar Total
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 400 378 1,827 2,605
Lease liabilities (691) - - (691)
Trade payables (1,706) (2) (62) (1,770)
Cash and cash equivalents 13,309 517 3,757 17,583
Short term investments:
fixed term deposit 1,515 - - 1,515
--------- --------
12,827 893 5,522 19,242
---------
Based on this exposure, had Pound Sterling weakened by 5%
the Group's profit before tax would have been GBP320,750
lower. The percentage change is based on management's assessment
of reasonable possible fluctuations.
As at 31 March 2022 Sterling Euro US Dollar Total
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 89 93 3,938 4,120
Borrowings - - - -
Lease liabilities (857) - - (857)
Trade payables (818) - (106) (924)
Cash and cash equivalents 12,989 207 661 13,857
Short term investments:
fixed term deposit 1,500 - - 1,500
--------
12,903 300 4,493 17,696
-------- ------- --------- -------
Based on this exposure had Pound Sterling weakened by 5% the
Group's profit before tax would have been GBP239,650 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.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
24 Financial instruments (continued)
(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 Year Year Year
ended ended ended ended
ended
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 2,605 4,075 2,930 4,276
Cash and cash equivalents 17,583 13,857 17,186 13,592
Short term investments 1,515 1,500 1,515 1,500
21,703 19,432 21,631 19,368
======== ======== ======== ========
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
2023 and 31 March 2022 were determined as follows:
Days past due 0 1-30 31-60 >60 Total
2023
Balance outstanding (GBP'000) 2,267 322 2 14 2,605
Historic loss rate 0% 0% 0% 0%
Estimated credit loss provision 0.25% 1% 1.5% 2%
----- ---- ----- --- -----
Potential credit loss allowance
(GBP'000) 6 3 0 0 9
===== ==== ===== === =====
Days past due 0 1-30 31-60 >60 Total
2022
Balance outstanding (GBP'000) 4,016 104 - - 4,120
Historic loss rate 0% 0% 0% 0%
Estimated credit loss provision 0.25% 1% 1.5% 2%
----- ---- ----- --- -----
Potential credit loss allowance
(GBP'000) 10 1 - - 11
===== ==== ===== === =====
Due to the immaterial nature of the assessed credit risk, no
provision has been recognised for 31 March 2023 or 31 March
2022.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
24 Financial instruments (continued)
(c) Credit risk management (continued)
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.
(d) 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 Over
or 1 to 2 to 5 Total
less 2 years 5 years years liabilities
31 March 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 1,770 - - - 1,770
Other payables 2,834 230 - - 3,064
Lease liabilities 293 269 143 - 705
4,897 499 143 - 5,539
------- ------- ------- ------- -----------
1 year Over
or 1 to 2 to 5 Total
less 2 years 5 years years liabilities
31 March 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 924 - - - 924
Other payables 2,615 - - - 2,615
Lease liabilities 243 239 674 - 1,156
3,782 239 674 - 4,695
------- ------- ------- ------- -----------
25 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
GBP417,521 (2022: GBP250,504).
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
26 Share-based payments
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Charged to administration
expenses:
Equity settled share-based
payments 531 249
Cash settled share-based
payments 43 13
-------- --------
Total share-based payments 574 262
During the year 0.8m share options were granted (2022: 1.9m).
The fair value of share options granted has been estimated at the
date of the grant using the Black-Scholes binomial model. The
following table gives the assumptions made in arriving at the
share-based payment charge and the fair value:
Year Year
ended ended
31 March 31 March
2023 2022
Options issued 797,500 1,917,000
Weighted average share
price (pence) 117 118
Weighted average exercise
price (pence) 117 118
Expected volatility (%) 63.4-67.1 77.2-
105.2
Vesting period (years) 3-5 3-5
Option life (years) 10 10
Risk free rate (%) 0.75-4.25 0.02
Dividend yield (%) 1.0 1.0
Fair value at grant date
(GBP'000) 399 1,071
Equity options in issue
at 31 March 2022 4,474,935
Equity options issued
in the year 797,500
Equity options realised
in the year (23,935)
Equity options forfeited
in the year (49,500)
---------
Equity options in issue
at 31 March 2023 5,199,000
---------
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.
During the year 38,000 cash settled options were granted (2022:
150,500). The fair value has been measured at the reporting date
using the Black-Scholes binomial 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 Year
ended ended
31 March 31 March
2023 2022
Options issued 38,000 150,500
Weighted average share
price (pence) 115 117
Weighted average exercise
price (pence) 115 117
Vesting period (years) 3-5 3-5
Option life (years) 10 10
Fair value at reporting
date (GBP'000) 18 80
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
26 Share-based payments (continued)
Year Year
ended ended
Share option reserve 31 March 31 March
reconciliation
2023 2022
GBP'000 GBP'000
Opening balance 502 126
Equity settled share-based
payments 531 249
Deferred taxation on share options: charge
recognised in equity (160) 127
-------- --------
Total share option reserve 873 502
27 Group companies
Country of registration % of direct shares held
Subsidiary undertakings or incorporation Principal activity 2023
2022
Calnex Americas Corporation USA Sales and marketing 100%
100%
Support services to
Calnex Solutions plc
iTrinegy Ltd UK Development and marketing 100% -
of software defined test
network technology
On 12 April 2022, Calnex Solutions plc acquired 100 per cent of
the issued share capital of iTrinegy Ltd. The operations and
trading of iTrinegy Ltd have been hived up into the Calnex
Solutions plc entity, and the company is currently in the process
of strike-off, which is expected to complete in the proceeding
financial year. As part of the integration of the iTrinegy
business, the Group has transferred all iTrinegy staff and trading
over to Calnex solutions plc, with the iTrinegy legal entities
being 'hived up' into the existing Calnex entities.
The first stage of this reorganisation completed on 30 September
2022 when iTrinegy Inc a 100% owned subsidiary of iTrinegy Ltd. Was
merged with Calnex Americas Corporation, a 100% owned subsidiary of
Calnex Solutions plc.
On 31 December 2022, all of the assets of iTrinegy Ltd were
transferred to Calnex Solutions plc. The directors are currently in
the process of striking off iTrinegy Ltd. It is anticipated this
will complete within the first half of the FY24 financial year.
Movement in fixed asset investments
Company
Shares in
group undertakings
GBP'000
Cost or valuation
As at 1 April 2022 -
Cost recognised for acquisition
of iTrinegy Ltd 3,203
Dividends received from pre-acquisition
reserves of subsidiary (767)
Impairment of investment value (2,436)
As at 31 March 2023 -
-------------------
As at 31 March 2022 -
-------------------
As a result of the intention to strike off the remaining
iTrinegy Ltd entity, investment value impairment of GBP2,436,000
has been recognised within the Company in the current year.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
28 Called up share capital
As at 31 March 2023, the Company had 87,523,935 (2022:
87,500,000) Ordinary Shares held at a nominal value of 0.125p.
During the year, an exercise of share options resulted in 23,935
shares being issued.
Group and Company
31 March 31 March
2023 2022
GBP'000 GBP'000
Ordinary shares of 0.125p each 109 109
========== =========
In issue at the start of the financial
year 109 109
Share options exercised 0 -
In issue at end of the financial
year 109 109
29 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 Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Profit after tax attributable to
shareholders 5,911 4,540
Weighted average number of ordinary
shares used in calculating:
Basic earnings per share 87,520 87,500
Diluted earnings per share 92,070 90,845
Earnings per share - basic (pence) 6.75 5.19
Earnings per share - diluted (pence) 6.42 5.00
30 Notes to the Statement of Cashflow
Reconciliation of changes in liabilities to cashflows arising
from financing activities
Lease
liabilities Total
GBP'000 GBP'000
Balance at 31 March 2022 857 857
Lease repayment (245) (245)
Interest payments 26 26
------------ --------
Total changed from financing
cashflows 638 638
Acquisition of new lease 53 53
Total other changes 53 53
Balance at 31 March 2023 691 691
------------ --------
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
31 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
GBP150 each month (GBP1,800 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 GBP150 each month (GBP1,800 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 GBP180,000 (2022: GBP150,000) and is included
within other creditors.
32 Dividends
All dividends are determined and paid in Pound Sterling.
Year Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Declared and paid in the year
Interim dividend 2022: 0.28p per
share - 245
Final dividend 2022: 0.56p per
share 490
Interim dividend 2023: 0.31p per
share 271
Proposed for approval at the Annual General
Meeting (not recognised as a liability at 31
March 2023)
Final 2023: 0.62p per share 543
The directors are proposing a final dividend with respect
to the financial year ended 31 March 2023 of 0.62p per share,
which will represent GBP542,648 of a dividend payment. The
final dividend will be proposed for approval at the Annual
General Meeting in August 2023 and, if approved, will be
paid on 30 August 2023 to all shareholders on the register
as at close of business on 28 July 2023, the record date.
The ex-dividend date will be 27 July 2023.
Notes to the Financial Statements continued
__________________________________________________________________________________________________________________
33 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 Year
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Underlying EBITDA 7,979 6,351
Underlying EBITDA % 29% 29%
Capitalised R&D 4,523 3,905
Key performance measures:
* Underlying EBITDA : EBITDA after charging R&D
amortisation
Reconciliation of statutory figures to alternative performance
measures - Income Statement
FY23 FY22
GBP000 GBP000
Revenue 27,449 22,046
Cost of sales (6,977) (5,518)
Gross Profit 20,472 16,528
Other income 751 648
Administrative expenses (excluding
depreciation & amortisation) (9,928) (7,917)
---------------------------------------------- ---------- ---------
EBITDA 11,295 9,259
Amortisation of development costs (3,315) (2,908)
Underlying EBITDA 7,980 6,351
Other depreciation & amortisation (746) (358)
Operating Profit 7,234 5,993
Finance costs (26) (20)
---------------------------------------------- ---------- ---------
Profit before tax 7,208 5,973
Tax (1,297) (1,433)
---------------------------------------------- ---------- ---------
Profit for the year 5,911 4,540
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FR PPUQCAUPWGMP
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May 23, 2023 02:00 ET (06:00 GMT)
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