By Kristy Dorsey

Scotland’s Calnex is preparing to make its first dividend payment since becoming a listed company in October of last year after posting a double-digit increase in revenues for the six months to September 30.

The company, which makes telecoms testing equipment, said it is “confident” it will continue to benefit from underlying growth drivers in the market. This is despite the ongoing global shortage of semiconductors which is being “closely monitored” but has had no negative impact to date on the business.

With customer spending back to pre-Covid patterns in all regions except China, Calnex will pay a maiden interim dividend of 0.28p per share.

“We have had another very strong half, and are feeling very good about the next half,” chief executive Tommy Cook said. “We are in a nice position.”

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Revenues during the first half were 19.8 per cent higher on the same period a year earlier at £9.3 million, while pre-tax profit rose 18.4% to £2.3m. After adjustments to exclude the costs of last year’s market listing, pre-tax profits were flat.

Ashleigh Greenan, chief financial officer of Calnex, said the company has experienced a “step change” in its cost base because of planned investment in the business. This has included the addition of sales staff in the US and India as well as the extra administrative costs of being a listed company, and the launch of a share incentive scheme for employees.

Headcount is up by 19 since last year at 113 full-time equivalent employees, all but 16 of whom are based at the Calnex headquarters in Linlithgow. That is expected to grow to 125 by the end of next year.

Revenue growth has come from both new and existing customers across all categories, driven by a robust performance from the launch of Calnex’s Paragon-Neo platform. Designed to meet the needs for the continuing roll-out of 5G mobile networks, Paragon-Neo operates on the new O-RAN (Open Radio Access Network) standards designed to promote competition and encourage new entrants into the telecoms industry’s hardware and software markets.

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Using O-RAN, telecoms companies are assured that equipment from different suppliers will operate together properly. Sellers of this equipment require testing solutions from firms such as Calnex to validate their products, and telecoms companies similarly require testing of their O-RAN solutions.

Calnex works with component manufacturers, equipment vendors and network operators, as well as “hyperscale” and enterprise clients. Customers include the likes of Apple, AT&T, BT, China Mobile, Cisco, Facebook and Microsoft.

“These results mark another considerable step forward for Calnex as we continue to capitalise on the global telecom industry’s transition to 5G and the growth of cloud computing,” said Mr Cook, who set up Calnex in 2006 and remains its largest shareholder with a 21% stake in the business.

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

In its trading update on October 12, Calnex said revenues and profits for the full fiscal year would be “materially ahead” of previous expectations. House broker Ian McInally of Cenkos Securities is anticipating a pre-tax profit of £5.6m on revenues of £20.2m, up from £3.6m and £18m respectively.

With the company stating its intention to implement a progressive dividend policy, Mr McInally is forecasting a total payment of 0.56p for the year to the end of March.

Shares in Calnex, which rose by as much as 22% in the weeks after its October 12 trading update, finished yesterday’s session 6.4% lower, down 8.5p at 123.5p.