By Kristy Dorsey

Shares in Calnex Solutions rose by a quarter yesterday as Scotland’s newest quoted company posted high double-digit growth in revenue and profits for the first half of the financial year.

Customer order intake during the six months to the end of September remained strong, though there were changes to spending patterns because of the pandemic. Chief executive Tommy Cook said some clients chose to accelerate their projects while other held back on spending, but “over the bundle” the two balanced each other out.

Based in Linlithgow, Calnex develops telecoms testing equipment that can measure the synchronisation within a network down to one billionth of a second. In October, it became the first Scottish company in more than two years to achieve a listing in London as it joined the Alternative Investment Market (AIM).

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Telecoms equipment vendors such as Cisco, Huawei and Ericsson, along with network operators such as BT, China Mobile and AT&T, account for the majority of the company’s sales. The rest comes from component manufacturers, as well as a growing band of “hyperscale” and enterprise clients such as Microsoft, Tencent, Facebook and Apple.

Revenues during the first half were up more than 36% on the same period a year earlier at £7.7 million, with underlying earnings 69% higher. Pre-tax profit rose by more than 71% to £2m.

Earnings and profits were boosted by savings in travel and events costs due to Covid-19 restrictions around the world, which saw the Calnex sales force shift to video meetings with clients. Mr Cook said those savings of approximately £300,000 would be replicated in part in the second half of the year as most of Europe remains in varying levels of lockdown, but in China, where the economy has for the most part opened up, the majority of customers have reverted to the preference for face-to-face meetings.

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Asked whether he thought videoconferencing would remain a permanent part of the sales strategy beyond the Covid crisis, Mr Cook speculated that would be dictated in large part by regional and cultural variations.

“It is far more efficient, but it is down to whether customers embrace it in the long-run,” he said.

The pandemic had “no impact” on the company’s supply chain or contract manufacturing operations during the period. As for potential repercussions from Brexit, Mr Cook said there were “no worries” on that front, as Calnex has consulted with its suppliers on the continent and all are “comfortable” with the UK’s new trading position after the end of the year.

“Our products are on relatively long lead times, typically four to six weeks or even eight weeks or longer, so a few days at the border will not make that much of a difference,” he said.

The need for new test instrumentation is being driven by the transition of the telecoms industry to 5G, along with exponential growth in data creation and the migration of industries to cloud computing. The company’s flotation on AIM netted it £5m in new capital that will help accelerate its growth in these markets.

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This will include the addition of about 10 more staff in the coming weeks. Calnex also remains on the lookout for acquisitions, though no deals are on the immediate horizon.

Shares in Calnex, which floated at 48p, closed 18p higher yesterday at 90p, valuing the company at £63m.

Mr Cook sold down part of his stake during the flotation, but remains the company’s largest shareholder with 21% of the issued share capital. He is followed by BGF Management on 15%, Scottish Enterprise at just less than 9% and Otus Capital Management at just less than 8.6%.

Lombard Odier Asset Management, Slater Investments and non-executive director Ann Budge round out the list of major shareholders on 8.3%, 6.2% and 3% respectively.