News alert from Calnex Solutions plc

22 November 2022

Calnex Solutions plc

("Calnex", the "Company" or the "Group")

Interim Results

Calnex Solutions plc (AIM: CLX), a leading provider of test and measurement solutions for the global telecommunications sector, is pleased to announce its unaudited results for the six months ended 30 September 2022 ("H1 FY23" or "the Period").

Financial Highlights

·   Revenue increase a combination of strong underlying growth and the impact of currency movements.

·   Gross margin and Underlying EBITDA margins maintained in line with the prior period, despite the challenging external economic environment.

·   Continued planned investment in product development and operational scalability, to support future growth.

·   £1.3m cash generated in the Period after £2.3m net acquisition cash cost for the iTrinegy acquisition.

·   Solid EPS growth in line with the profit performance for the Period.

·   Interim dividend of 0.31p pence per share to be paid in December.

Operational Highlights

·   Relationship development with hyperscale customers progressing well, with new Network Synchronisation product, Sentry, due to be launched in H2, enhancing product offering for the cloud computing market.

·   Acquisition of iTrinegy Limited, enhancing the Group's position as a leading network emulation test vendor, with integration progressing as planned.

·   Successful mitigation of well-documented, global supply chain shortages to date, shipping scheduled orders as planned.

·   Continued investment in talent globally.

Outlook:

·   Strong order book as we move into H2 FY23.

·   The Board is confident that the Group's performance for FY23 will be in line with market expectations.

Tommy Cook, Chief Executive Officer, and founder of Calnex, said:"We are pleased to deliver a strong financial performance during the period, significantly increasing revenue and profit, while continuing to invest in our team's capabilities and offering. We were delighted to successfully complete the integration of the iTrinegy team into the Group during the period.

"Whilst it is sensible to look to the future with a degree of caution given the continuing component shortages and global macro-economic challenges, the Company's positive trading performance during the period and proven ability to manage component shortages underpin the Board's confidence that the Group's performance for FY23 will be in line with market expectations.

"The breadth of our customer base across multiple regions, ongoing successful expansion of the team and offering, and wealth of industry connections combine to place Calnex in a strong position to continue to benefit from the underlying long-term growth drivers in the telecoms and cloud computing markets."

¹EBITDA after charging R&D amortisation.

²The Group places surplus cash balances not required for working capital into notice and fixed term deposit accounts. 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. 

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Overview of Calnex

Calnex designs, produces and markets test instrumentation and solutions for network synchronization and network emulation, enabling its customers to validate the performance of the critical infrastructure associated with telecoms networks. To date, Calnex has secured and delivered orders to over 600 customer sites 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 worldwide distribution capability. 

Operational Review

Calnex delivered a robust financial performance during the first six months of the year, growing revenues by 38% to £12.7m (H1 FY22: £9.3m) and profit before tax by 34% to £3.1m (H1 FY22: £2.3m). The Group has experienced continued strong revenue performance across its product lines, with the ongoing transition to 5G and the growth in cloud computing continuing to drive demand for test instrumentation and network validation.

Calnex continues to successfully mitigate the impacts of the global semiconductor shortage,successfully shipping scheduled orders as planned, and has entered the second half of FY23 with a strong order book. The impact of inflation is being managed within the Group's budget and Calnex's breadth and strength of customer and supplier relationships and geographic spread, mean the Company continues to be well-equipped to deal with any wider macroeconomic risks.

The acquisition of iTrinegy has expanded the Group's offering into the application testing market and the Group's organic R&D efforts continue to enhance the existing product portfolio. Successfully expanding Calnex's product offering has supported growth in the sales pipeline and order book.

Market Opportunity

The Covid-19 pandemic accentuated the importance of communications networks around the world to support modern life.Whilst the current global market backdrop is uncertain, investmentin telecoms infrastructure to deliver next generation connectivitycontinues at pace. The requirement for key areas of design validation, conformance and maintenance testing on which Calnex is focused, to support these infrastructure investments and validate network performance, is supporting the continued growth of Calnex. The need for hyperscale and enterprise companies to drive greater efficiency and performance in their data centre operations is also expected to drive growth inthe testing market.

As the roll out of 4G and 5G continues, vendors are producing equipment which conforms to the O-RAN recommendations in line with their customers' requirements. Network Emulators and Sync testers are required to test this equipment in order to prove interoperation between the various network elements, and the continued strong demand for these products has enabled Calnex to increase engagement with new and existing customers.

While the current economic environment is challenging, and may impact certain customers or geographies, Calnex's long-established global presence means the Company is well placed to withstand regional variations in end market conditions.

Product development

Launch of new product to optimise entry into cloud computing market

Relationships with hyperscale customers seeking to increase the efficiency and performance of their data centre operations are developing well and to align Calnex's product portfolio with this emerging opportunity, a new version of our Network Synchronisation product, Sentry, will be launched in the second half of FY23. This product 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. We have commenced shipping product for the significant data centre order received in FY22, with positive customer feedback.

Expansion into network emulation for application

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. 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 remain a key focus for the second half.

People

We continue to invest in talent globally, to support and enhance the fantastic work of our team, and our total headcount now sits at 138.  This has included a new head of standards engagement activities, enhancing our interaction and links with these important industry bodies.

Outlook

During the second half of the year, our focus will remain on product development, the build out of the NE-ONE sales channel and the launch of Sentry, as the expansion into adjacent markets provides the potential for further progress over the longer term.

Whilst it is sensible to look to the future with a degree of caution given the continuing component shortages and global macro-economic challenges, the Company's positive trading performance during the period and proven ability to manage component shortages underpin the Board's confidence that the Group's performance for FY23 will be in line with market expectations.

The breadth of Calnex's customer base across multiple regions, ongoing successful expansion of the team and offering, and wealth of industry connections combine to place Calnex in a strong position to continue to benefit from the underlying long-term growth drivers in the telecoms and cloud computing markets.

Tommy Cook

Chief Executive Officer

Financial Review 

The Group delivered a solid performance in the six months to 30 September 2022, with significant growth in revenues and profit compared with the prior year. Strong growth in order levels,the partial flow through of revenue from the significant data centre order received in FY22, alongside somefavourable currency movements,had a positive impact on the Group's revenue and profit figures.  Calnex ended the Period with a strong order book as the Group continues to manage the component supply chain delays. As the component shortages ease, the backlog is expected to continue to unwind through the coming months, and together with a healthy future pipeline of orders for H2 FY23, the Board is confident in meeting current market expectations for the full year. 

Key performance indicators

¹EBITDA after charging R&D amortisation.

²The Group places surplus cash balances not required for working capital into notice and fixed term deposit accounts. 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. 

A reconciliation between the statutory reported income statement and the adjusted income statement is shown in note 17 to the financial statements.

Revenue

Revenue recognised in the first half of the year was £12.7m, a 38% growth on H1 FY22 revenue of £9.3m.  With around 80% of the Group's revenues being invoiced in USD, approximately a third of the growth in Group revenues was due to the strength of the US dollar in the period. The Group experienced growth in revenues across all product lines and geographic regions.

Gross Margin

Gross margin in the Period was 76%, (H1 FY22: 76%). This gross margin is net of commissions payable to our channel partners. Gross margins can fluctuate by 1-2% through the year depending on the mix of products and the mix of the hardware and software bundles shipped.

Gross margin levels were maintained in line with the prior period. The Group increased pricing in the Period to negate increases in component costs and wages driven by inflation and foreign exchange movements, providing further protection for the gross margin in future periods. 

Underlying EBITDA

Underlying EBITDA is EBITDA stated after charging R&D amortisation.

Underlying EBITDA was £3.5m in the Period (H1 FY22: £2.5m), driven by the strong revenue performance. Underlying EBITDA margin was 27% (H1 FY22: 27%), in line with the prior year. The business has continued to investto support the growth of the business, whilst maintaining profit margins.

Administration costs excluding depreciation and amortisation were £4.7m in H1 FY23 (H1 FY22: £3.2m). 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 and overheads relating to the Stevenage site after the acquisition of iTrinegy in April, offset partially by savings in foreign exchange translation costs. 

With the majority of the Group's costs being sterling based, the Group's overhead cost base has not been materially affected by the strengthening of the US dollar against sterling. The increase in costs related to our overseas sales team as a result of the movement in foreign exchange rates in the period has been more than offset by the upside to revenues in the Period. 

Amortisation of R&D costs in H1 FY23 was £1.6m (H1 FY22: £1.4m). The increase on the prior period is due to planned growth in R&D headcount to support new and ongoing projects. 

Profit before tax

Profit before tax was £3.1m in the Period (H1 FY22: £2.3m), being 24% of revenues (H1 FY22: 25%), with the increase in intangibles amortisation, as a result of the new intangibles brought on by the iTrinegy acquisition, driving the slight variance on the prior period. As the backlog reduces through H2, management expect the margin on profit before tax to align with expectation set at the start of the year.

Tax

The tax charge for the Period was £0.7m (H1 FY22: £0.5m) representing an effective tax rate of 21% (H1 FY22: 22.2%).

The Finance Act 2021, now substantively enacted, increases the UK corporation tax rate from 19% to 25% effective 1 April 2023. As a result, the Company's deferred tax assets and liabilities have been measured using the tax rates that are expected to apply when the reversal of the timing differences takes place.Using this methodology, an effective hybrid tax ratehas been calculated, offset partially by the availability of R&D tax credits.

Earnings per share  

Basic earnings per share was 2.78 pence in the Period (H1 FY22: 2.05 pence) and diluted earnings per share was 2.67 pence (H1 FY22: 1.99 pence), with the increases in both metrics reflecting the strong performance in the period.

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 £2.5 million fully funded from the Group's free cash.  An additional £0.5 million was paid to the vendors in exchange for them leaving all available cash (£0.7m at acquisition date) within the acquired business.  The net cash effect of the transaction was £2.3m.  A detailed summary of the transaction is set out in note 16 to the financial statements.

A further £1 million 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.

£1.3m of a fair value adjustment has been calculated as valuation of the intellectual property associated with the acquired technology, and customer relationships. The goodwill balance of £1.6 million, 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.

£0.1m has been charged to the income statement in the Period to account for the Earn-out Payment in relation to those vendors that have remained with Calnex post acquisition. In addition, £0.1m of acquisition related expenses for legal and professional fees, as well as £0.1m amortisation of acquired intangible assets have also been charged to the income statement in the Period.

The Company has a 12 month measurement period under IFRS 3 Business combinations to finalise the acquisition accounting allocations, and as such, the numbers within note 16 to the financial statements remain provisional.

Cashflows

The Group generated cash before acquisitions of £1.3m in H1 FY23 (H1 FY22: £0.9m), reflecting the strong trading in the Period.

Cashflow summary

Net cash from operating activities was £4.2m in the Period (H1 FY22: £3.1m). Working capital movements represented a cash outflow of £1.3m (H1 FY22: £0.7m), 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 Period was £2.3m (H1 FY22: £1.9m), reflecting the planned growth in the R&D team as projects resource demands increased.

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 also classed 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.

Cash spend on financing activities in the Period was £0.6m (H1 FY22: £0.1m), largely representing payment of the final dividend for the year ended 31 March 2022 of £0.5m (H1 FY22: nil)which was approved at the Company's AGM and paid on 30 August 2022.  The remainder of the cash spend reflects paymentof lease obligations. 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 30 September 2022 was £14.4m (30 September 2021: £13.6m; 31 March 2022: £15.3m).

Dividend

The Board has resolved to pay an interim dividend of 0.31 pence per ordinary share on 16 December 2022 to those shareholders on the register as at 2 December 2022, the record date (FY22 Interim dividend 0.28p). The ex-dividend date is 1 December 2022.

Calnex Solutions plc

Consolidated income statement

For the period ended 30 September 2022

Calnex Solutions plc

Consolidated statement of financial position

For the period ended 30 September 2022

Calnex Solutions plc

Consolidated statement of cashflows

For the period ended 30 September 2022

Calnex Solutions plc

Consolidated statement of changes in equity

For the period ended 30 September 2022

Calnex Solutions plc

Notes to the interim consolidated financial statements

For the period ended 30 September 2022

1.   General information

The interim consolidated financial statements cover the consolidated entity Calnex Solutions plc and the entities it controlled at the end of, or during, the interim period to 30 September 2022 ("the Group").

Calnex Solutions plc ("the Company") is a public limited company and is domiciled and incorporated in Scotland.

The registered office is:

Oracle Campus

Linlithgow

West Lothian

EH49 7LR

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 interim consolidated financial statements for the period ended 30 September 2022 are unaudited, and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. They do not therefore include all the information and disclosures required in annual statutory financial statements and should be read in conjunction with the Group annual report and accounts for the year ended 31 March 2022.

The Group annual report and accounts for the year ended 31 March 2022 were approved by the Board of Directors on 23 May 2022 and have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement made under Section 498(2) or (3) of the Companies Act 2006.

The interim consolidated financial statements for the period ended 30 September 2022 were approved by the Board of Directors on 21 November 2022.

2.   Basis of preparation

The interim consolidated financial statements for the period ended 30 September 2022 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board, endorsed by and adopted for use in the United Kingdom.

The accounting policies and methods of computation adopted are consistent with those applied in the Group's consolidated financial statements for the year ended 31 March 2022 and have been applied consistently to all periods presented.

There have been no new standards or amendments to existing standards effective from 1 April 2022 that are applicable to the Group or that has had any material impact on the financial statements and related notes as at 30 September 2022. The Directors do not anticipate that the adoption of any of the new standards and interpretations issued by the IASB and IFRIC with an effective date for the Group after the date of these interim financial statements will have a material impact on the Group's interim financial statements in the period of initial application.

3.   Going concern

The interim consolidated financial statements have been prepared on the basis that the Group will continue as a going concern.

In adopting the going concern basis, the Directors have considered the principal risks and uncertainties of the group, which remain unchanged from those reported in the Group annual report for the year ended 31 March 2022, a copy of which is available on the Company's website at: https;//investors.calnexsol.com. The uncertainties arising from the macro-economic backdrop and inflationary pressures are covered by existing identified risks, and these continue to be closely monitored.

The Board has reviewed financial profit and cashflow forecasts for the current and succeeding financial years to 31 March 2024. Based on this review, along with regular oversight of the Group's risk management framework, the Board has concluded the going concern basis to remain appropriate.

4.   Operating segments

Operating segments are based on the internal reports that are reviewed and used by the Board of Directors (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 of Directors do not consider segmentation in their review of costs or the balance sheet. The only operating segment information reviewed, and therefore disclosed, are the revenues derived from different geographies.

5.   Revenue

6.   Finance costs

7.   Taxation

The weighted average applicable tax rate for the period ended 30 September 2022 is forecast at 21%, being the current period tax charge as a percentage of profit before tax.

The Finance Act 2021, now substantively enacted, increases the UK corporation tax rate from 19% to 25% effective 1 April 2023. In accordance with IAS 12: (Income Taxes), the deferred tax asset and liability have been measured using the tax rates that are expected to apply when the reversal of the timing differences takes place.

8.   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.

9.   Intangible Assets        

Included within intangible assets are the following significant items:

·     Intellectual property representing the cost of patent applications and on-going patent maintenance fees. Intellectual property additions for the period reflect the NE-ONE product line acquired in April 2022 as part of the iTrinegy Ltd acquisition. Details of the acquisition can be found in note 16.

·     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.

10. Leases

The Group has recognised a right-of use asset and a lease liability for the lease of land and buildings for its head office in Linlithgow, Scotland.

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 Group also leases land and buildings in Belfast and one motor vehicle. These leases are 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.

Information about the right of use assets and leases for which the Group is a lessee is presented below:

11. Inventory

12. Trade and other receivables

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, and at the balance sheet date, there are no amounts outstanding beyond agreed credit terms.

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

13. Cash and cash equivalents

Cash and cash equivalent amounts included in the Consolidated Statement of Cashflows comprise the following:

Short term cash deposits of £1,508,886 are callable on a notice of 65 days.

Short term cash deposits of £5,056,698 are callable on a notice of 95 days.

Cash held on long-term deposits (being deposits with maturity of greater than 95 days and no more than twelve months) that cannot be readily converted into cash have been classified as short term investments. A total of £1,500,000 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.

14. Trade and other payables

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.

Deferred income relates to fees received for ongoing services to be recognised over the life of the service rendered.

The Directors consider that the carrying amount of trade and other payables approximates their fair value.

15. Provisions

Current provisions are recognised in respect of dilapidations on leased assets. No discount is recorded on recognition of the provisions or unwound due to the short-term nature of the expected outflow and the low value and estimable nature of the non-current element.

In the period provisions totalling £140,570 were released. This provision was held with respect to potential payments to be made to overseas tax authorities, which is no longer required.

16. Business combinations

The acquisition accounting with regards to the business combination detailed within this note remains provisional as at the reporting date. The values may be retrospectively adjusted within the 12 month measurement period afforded within IFRS 3 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 £2.5 million, fully funded from Group free cash.  An additional £0.5 million was also paid to the vendors in exchange for them leaving all available cash (£0.7m at acquisition date) within the acquired business.

Up to a further £1 million consideration is potentially payable subject to the achievement of revenue growth targets 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.

TheEarn-Out Paymentin 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 theEarn-Out Paymenthas been measured at fair value as at grant date, whilst the cash element of the earn-out will be fair value assessed at each reporting date, consistent with IFRS 2 Share based payments.This results in £0.3m related to post acquisition service, and this will be charged to the Income Statement over the vesting period. In the six months to 30 September 2022, £0.1m has been charged to administrative expenses within the income statement.

£0.1m of acquisition related expenses for legal and professional fees, as well as £0.1m amortisation of acquired intangible assets have been charged to administrative expenses in the period.

The fair values of the identifiable net assets are set out below:

The fair value adjustment noted above has been derived from the valuation of the IP 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 goodwill arising of £1.6 million, 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.

The goodwill is not expected to be deductible for tax purposes.

From the date of acquisition, iTrinegy Ltd has contributed £0.6m of revenue, and £0.4m of profit before tax to the Group financial results.

As part of the integration of the iTrinegy business, the Group has transferred all iTrinegy staff and trading over to Calnex Solutions plc, with a view to the iTrinegy legal entities being 'hived up' into the existing Calnex entities by the end of this financial year.  The first stage of this restructure completed on 30 September 2022 when iTrinegy Inc. was merged with Calnex Americas Corporation, a 100% owned subsidiary of Calnex Solutions plc.    This involved a two-step process, whereby ownership of iTrinegy Inc. was first disposed of by iTrinegy Ltd and acquired by Calnex Solutions plc, followed by a merger, under US law, of iTrinegy Inc. and Calnex Americas Inc. (a 100% subsidiary of Calnex Solutions plc).  The final stage of the restructure will be to hive up the assets of iTrinegy Ltd into Calnex Solutions plc, which is scheduled for the second half of the year.

Calnex Solutions plc remains the overall controlling parent of all parties throughout the reorganisation, and thus there is no change to the consolidated group financials.

17. Alternative performance measures

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 of Directors. These APMs are not defined under IFRS and therefore may not be directly comparable with similarly identified measures used by other companies.

·   Underlying EBITDA: EBITDA after charging R&D amortisation

The table below shows the reconciliation between the statutory reported income statement and the adjusted income statement:

Reconciliation of statutory figures to alternative performance measures:

18.  Dividends paid and proposed

All dividends are determined and paid in Sterling.

An interim dividend of 0.31p per Ordinary Share (2021:0.28p per Ordinary Share) was declared by the board on 22 November 2022, and will be paid to ordinary shareholders on 16 December 2022. The dividend is payable to all shareholders on the Register of Members at the close of business on the 1 December 2022.

19. Availability of Interim Report

The Company's Interim Report for the six months ended 30 September 2022 will be available to view on the Company's website https://investors.calnexsol.com.

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