CALNEX SOLUTIONS PLC — Share Issue/Capital Change 2020

Sep 21, 2020

National Storage Mechanism | Additional information

RNS Number : 5032Z

Calnex Solutions PLC

21 September 2020

NOT FOR RELEASE, DISTRIBUTION, PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

This announcement is an advertisement and not an admission document or a prospectus.  This announcement is not and does not constitute or form part of, and should not be construed as, an offer of securities for subscription or sale in any jurisdiction nor a solicitation of any offer to buy or subscribe for, any securities in any jurisdiction, nor shall it or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever.  This announcement does not constitute a recommendation regarding any securities.  Prospective investors should not subscribe for or purchase any securities referred to in this announcement except in compliance with applicable securities laws and regulation and on the basis of the information in the final admission document ("Admission Document") to be published by the Company, and any supplement thereto, in connection with the placing of its issued and to be issued ordinary shares ("Shares") and the proposed admission of the Shares to trading on the AIM market of London Stock Exchange plc.  A copy of the Admission Document will, following publication, be available for viewing on the Company's website at https://www.calnexsol.com/en/.

21 September 2020

Calnex Solutions plc

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

Intention to Float on AIM

Calnex, an established provider of test and measurement solutions for the global telecommunications sector, is delighted to announce its proposed admission to trading on AIM (the "Admission") and placing, conditional on Admission (the "Placing"), of 46,875,000 new and existing ordinary shares (the "Placing Shares") of 0.125 pence each ("Ordinary Shares"), at a price of 48.0 pence per share (the "Placing Price").

The Placing was significantly oversubscribed, having received strong support from institutional investors, and will raise a total of £22.5 million (before expenses), comprising £6.0 million for the Company and £16.5 million for existing shareholders. Cenkos Securities plc ("Cenkos") is acting as Nominated Advisor and Broker to the Company.

Admission and commencement of dealings on AIM are expected to take place at 8am on 5 October 2020, under the ticker CLX. Based on the Placing Price, the market capitalisation of the Company will be £42.0 million on Admission.  On Admission, the Company will have 87,500,000 Ordinary Shares in issue and a free float of approximately 43 per cent.

The funds raised through the Placing, along with the Company's existing cash resources, will allow Calnex to invest in business development and R&D resource, repay its existing debt facility and evaluate opportunities to acquire complementary technologies or businesses to expedite the Company's growth.

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 the telecoms networks.   To date, Calnex has secured and delivered orders from over 600 customer sites in 68 countries across the world. Customers include BT, China Mobile, NTT, Ericsson, Nokia, Intel, Qualcomm, IBM and Facebook.

Founded in 2006, Calnex is headquartered in Linlithgow, Scotland, with additional locations in Belfast, Northern Ireland 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. 

Key Strengths

·     Calnex has an established position in the test and measurement industry, providing its equipment to many of the world's leading Telecoms Network Operators, Equipment Vendors and Component Manufacturers. It has also had success with Hyperscale companies (operating large data centres) and Large Enterprises (operating their own networks).

·    Calnex has a proven track record of developing innovative and advanced test solutions for its customers. Calnex's products are often differentiated by their high specifications and the complexity of the product platforms. This has been achieved by delivering a strategy focused on R&D, IP and product development.

·    Calnex's close relationships with its customers, key regulatory bodies and leading market participants, provides valuable insight into its customers' technology roadmap and likely industry and regulatory developments, enabling Calnex to focus its R&D strategy and resources.

·    Calnex's management team has experience in successfully integrating bolt-on acquisitions, which benefit from access to the Company's global sales channels and advanced approach to product development.

·    Calnex has a strong financial track record, delivering historical revenue CAGR since FY15 of approximately 16 per cent. The Company is profitable and cash generative, with a record order backlog going into FY21 and a strong sales pipeline.

·    Calnex benefits from high levels of repeat revenues, with over 80 per cent. of its revenue over the last three years coming from repeat customers and an average length of engagement with its top ten customers in FY20 of nine years. The Company's top ten customers accounted for over 50 per cent. of revenues in FY20. In recent years the Company's top ten customers have included Non-Telecoms customers. In FY20, these Non-Telecoms customers represented 14 per cent. of the top ten customer revenue.

·    The Telecoms industry is currently experiencing unprecedented levels of change as a result of major evolutionary trends affecting the global Telecoms market. The migration of the mobile networks to 5G, the emergence of the Internet of Things and the shift to using cloud computing are all agents of change to the structure of Telecom networks around the world. The Directors believe that Calnex has the potential to capitalise on the opportunities created by the changes to the Telecoms market, which are expected to generate sustainable growth in the future for the Company.

·    The global market for Telecoms test and measurement equipment for mobile networks alone is forecast by Frost & Sullivan to expand at a CAGR of 11.5 per cent. from 2020 through to 2024, and the Directors believe that the Company has the potential to capitalise on the opportunities created by this expansion and generate sustainable revenue growth in the near to medium term.

Calnex has a range of test and measurement solutions ready to meet the early requirements of 5G market participants. The Company is well placed to evolve its current products, alongside the introduction of new products, to meet its customers' future requirements as the roll out of 5G progresses.

Tommy Cook, Chief Executive Officer and founder of Calnex, said:

"We are delighted to announce our proposed placing and Admission to AIM, to support the evolution of Calnex. The telecommunications industry is going through unprecedented levels of change, presenting exciting opportunities for the expansion of the business. Having demonstrated sustained growth since inception, the move onto the public markets will provide us with new capital, a raised profile and enhanced ability to execute on acquisitions, as we seek to capture an increased share of the growing market for telecoms test solutions.

"We would like to thank our existing shareholders for their ongoing support and welcome our new shareholders at this exciting time for the Company."

For more information, please contact:

Calnex Solutions plc	Via Alma PR
Tommy Cook, Chief Executive Officer Ashleigh Greenan, Chief Financial Officer
Cenkos Securities plc - NOMAD	+44 (0)131 220 9772
Derrick Lee, Peter Lynch
Alma PR	+ 44(0) 20 3405 0213
Caroline Forde, Harriet Jackson

The Company's ISIN is GB00BMBK7016  and its SEDOL is BMBK701; To find out more, please visit: https://www.calnexsol.com/en/

Board of Directors

George Elliott (Non-Executive Chairman)

George has been Chairman of Calnex since 2013. He is currently Non-Executive Chairman of Optoscribe Ltd, Design Led Products Ltd and is a Director of RITF Consultants Limited. George has extensive boardroom experience in private and public technology companies in an executive and non-executive capacity. George was until 2019 Non-Executive Chairman of AIM-listed Craneware plc (AIM: CRW), the market leader in software and supporting services for healthcare providers in the US and recently resigned as a Non-Executive Director of Indigovision Group plc following the company's acquisition by Motorola. From 2000 to 2007, he was Chief Financial Officer of Wolfson Microelectronics plc, then a leading UK-listed global provider of high performance mixed-signal semiconductors to the consumer electronics industry.

Thomas (Tommy) Cook (Chief Executive Officer)  

Tommy is the founder and CEO of Calnex. He has over 35 years' experience in telecoms test and measurement ranging from hands-on design and programme management of R&D projects through to leading business teams within the market segments in which Calnex currently operates. Tommy has participated in a number of Industry Standards forums, including the ITU-T and MEF groups.

Ashleigh Greenan (Chief Financial Officer)

Ashleigh qualified as a chartered accountant with Deloitte before spending 5 years at KPMG in transaction services. She has held senior finance and corporate development roles at Exova Group plc, the UK materials testing business, before joining Parsons Peebles Group Limited, where she was a director of a number of group companies and held the role of Chief Financial Officer until she joined Calnex in early 2020.

Ann Budge (Non-Executive Director)

Ann has been a Non-Executive Director of Calnex since 2009. Ann co-founded IT services company Newell & Budge in 1985, which successfully grew to a staff of over 1,000 across six regional offices in the UK, with a Development Centre in New Delhi, prior to its sale to Sopra Group in 2005. Since then, Ann has held a number of Non-Executive roles and has been active in the angel investment community. She is currently Executive Chair of Heart of Midlothian Football Club.

Graeme Bissett (Non-Executive Director)

Graeme is an experienced corporate financier and qualified chartered accountant, having previously been a partner with Arthur Andersen LLP and finance director of international groups. He is currently a Non-Executive Director of publicly traded Smart Metering Systems plc and Aberforth Split Level Income Trust plc, along with a number of private companies. Graeme was formerly Chairman of Macfarlane Group PLC and acted as a Non-Executive Director of businesses including Interbulk Group plc and Belhaven Group plc. He currently undertakes a number of pro bono appointments including as Vice-Convenor of Court at the University of Glasgow.

Important Information

This announcement does not constitute, or form part of, any offer or invitation to sell, allot or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment therefor.

Recipients of this announcement who are considering subscribing for or acquiring Shares following publication of the Admission Document are reminded that any such acquisition or subscription must be made only on the basis of the information contained in the final Admission Document, which may be different from the information contained in this announcement.  No reliance may be placed, for any purpose whatsoever, on the information or opinions contained in this announcement or on its completeness.  To the fullest extent permitted by applicable law or regulation, no undertaking, representation or warranty, express or implied, is given by or on behalf of the Company or Cenkos, or their respective parent or subsidiary undertakings or the subsidiary undertakings of any such parent undertakings or any of their respective directors, officers, partners, employees, agents, affiliates, representatives or advisers or any other person as to the accuracy, sufficiency, completeness or fairness of the information, opinions or beliefs contained in this announcement and, save in the case of fraud, no responsibility or liability is accepted by any of them for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred, howsoever arising, from any use, as a result of the reliance on, or otherwise in connection with this announcement.

Cenkos is acting exclusively for the Company and no one else in connection with the Placing and Admission referred to herein. Cenkos will not regard any other person as its client in relation to the Placing and Admission referred to herein, and will not be responsible to anyone other than the Company for providing the protections afforded to their clients or for giving advice in relation to the Placing and Admission or any transaction or arrangement referred to herein.

This announcement is only addressed to, and directed at, persons in member states of the European Economic Area who are qualified investors within the meaning of Article 2(e) of the Prospectus Regulation (EU 2017/1129) ("Qualified Investors"). In addition, in the United Kingdom, this announcement is addressed to and directed only at Qualified Investors who are: (i) persons having professional experience in matters relating to investments, i.e., investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); (ii) high net-worth companies, unincorporated associations and other bodies within the meaning of Article 49 of the FPO; and (iii) persons to whom it is otherwise lawful to communicate it to.  It is not intended that this announcement be distributed or passed on, directly or indirectly, to any other class of person and in any event, and under no circumstances should persons of any other description rely on or act upon the contents of this announcement.

Neither this announcement nor any copy of it may be: (i) taken or transmitted into or distributed, directly or indirectly, in the United States (within the meaning of regulations made under the US Securities Act of 1933, as amended); (ii) taken or transmitted into, distributed, published, reproduced or otherwise made available or disclosed in Canada, Australia, New Zealand or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws; or (iii) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such a solicitation or offer.  Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.

The Shares have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.  No securities commission or similar authority in Canada has in any way passed on the merits of the securities offered hereunder and any representation to the contrary is an offence.  No document in relation to the proposed placing of the Shares has been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance.  Accordingly, subject to certain exceptions, the Shares may not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into or from a restricted jurisdiction or offered or sold to a person within a restricted jurisdiction.

The date of Admission may be influenced by factors such as market conditions.  There is no guarantee that the Admission Document will be published or that the Placing and Admission will occur, and you should not base your financial decisions on the Company's intentions in relation to the Placing and Admission at this stage.  Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested.  The value of shares can decrease as well as increase.  This announcement does not constitute a recommendation concerning the Placing.  Persons considering an investment in such investments should consult an authorised person specialising in advising on such investments.

This announcement contains certain statements that are, or may be, forward looking statements with respect to the financial condition, results of operations, business achievements and/or investment strategy of the Company. Such forward looking statements are based on the Company's board of directors' (the "Board") expectations of external conditions and events, current business strategy, plans and the other objectives of management for future operations, and estimates and projections of the Company's financial performance.  Though the Board believes these expectations to be reasonable at the date of this announcement they may prove to be erroneous.  Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, achievements or performance of the Company, or the industry in which the Company operates, to be materially different from any future results, achievements or performance expressed or implied by such forward looking statements.

Certain figures in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly to the total figure given.

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