Good afternoon, welcome to the Calnex Solutions plc Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted anytime by the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to make the following poll. I'd now like to hand you over to Tommy Cook, CEO. Good afternoon to you, sir. Thank you. Good afternoon, good afternoon, everyone. Thanks very much for joining Ashleigh and I today, and we'll go through the results from H1 FY23. Before I do that and kind of hit the results, let me just take a few minutes to just go back over who Calnex is and what we do, just for anyone that's new to us. Calnex it develops test solutions for the telecommunications industry. We primarily make test instrumentation, it's instrumentation that's used to verify performance of critical infrastructure within the telecoms industry. We've been successful at selling to all the subsets within the telecoms industry over the years and been successful to establish a global market as well in all corners of the world. To date, we've sold product in 68 countries around the world, and sold to just under 700 customer sites. In terms of where we fit in the whole life cycle in telecoms, the main area we focus on is what we call R&D design validation and conformance testing. This is when our customers are developing new pieces of equipment that are gonna be used in the new networks in the world, and they have to really put that new design through its paces to make sure it meets the specification they are promoting to their customers, but also make sure that it complies to the various standards that are around before equipment can be deployed. This is very much an area where it's a low volume, but high value equipment and our equipment very much is used to enable their new revenue stream. If Our customers, the R&D engineers, can prove their design quickly. Quickly it means both short time, but also robustly that they know it is well, the design will work correctly, then they can get it into manufacturing, which means you start a new revenue stream. Fundamentally, our equipment allows our customers to generate new revenue streams in a timely manner. We also look at the high-end maintenance market as well, not so much in terms of installation and first level maintenance, which today in telecoms networks is a lot about just simple back-to-back tests, simple continuity tests. It is more, it is more about once there is a problem that's something to do with the network, they need to look into the network to understand what's going on, to allow them to understand how they can fix the problem. That ties into the deep insight that we give the engineers, our customers, back in the R&D phases as well, in terms of giving that added value to our customers. Our customer sets really fall into four broad categories. First of all, you've got the telecoms equipment vendors, the top left. These are the big names that you've heard of, like Nokia, Ericsson, Juniper, Huawei, Cisco. This is very much into that R&D design phase where let's say our R&D teams are using their, our products to qualify their new designs. That represents roughly 55% of our business. We've got the network operators, bottom left. These are the BTs, AT&Ts, China Mobiles of the world that build their big networks. They represent a smaller part of our business, more like 15%. A key part from a kind of, from a value chain, from a point of view when they're doing testing of new equipment, which would be the equipment from the equipment vendors, the vendors want to ensure that they test it in the same way. If they're using Calnex equipment to prove it, then it encourages the vendors to buy Calnex equipment to prove as well. They're about 15% of our business. The third part of the telecoms chain is the component manufacturers. These are your Intels, Qualcomms, Broadcoms that make very sophisticated chipsets that they sell to the vendors to build into their products. They represent single digits of our business, more like usually 6%, 7% of our business. Small part, but an important part because again, it's really closing out the whole food chain there that we sell to the component people as well as the vendors and the operators. The final group, which are an interesting group, are the enterprise hyperscale. To us enterprise, we are talking about very large enterprises that run their own networks, or the hyperscale, the Googles, the Meta, the Apples of this world that actually run the data centers. We'll talk more about them, how these are an opportunity for us in the future. Today, that represents low 20% of our business or 22%-23% of our business. That's really the customer set that we sell to. Let's talk about H1 and how we got on in H1 this year. Well, it's really been a robust financial half for us, and we are really pleased with how things have gone in the period. There's a lot of kind of macroeconomic effects happening at the moment from, as we see kind of the wider financial effects of inflation, et cetera. It doesn't seem to have affected us too badly. There's the component shortage issue, which we'll talk about a bit more, that we've managed to navigate our way through. We are pleased that we've actually delivered a healthy set of results in that sort of environment with 38% growth in revenue and 34% growth in profit. Year on year, our cash balance has gone up, and we've decided to increase our dividend this year by approximately 10% up to 0.31p as the interim dividend that will be paid in December. We've also managed to protect our margins, as you'll see when Ashleigh gives you the results. We've been able to put a price increase out in our products that the customer base has accepted, and also managing costs internally to ensure that we've kept the margins up. While there's short-term issues that we talk about, we still feel that the long-term growth drivers are in our business and are strong in our business, and we feel confident as we look forward to the full year that we can continue and meet the guidance that's out in the market space. If we kinda look at some of the highlights or the kind of key things that have been happening over the last six months, first of all, the kind of macroeconomic effects. You know, the biggest thing that's affected us as it's affecting every technology company out there is the shortage of components. What I would say is it's getting better. It is definitely not solved. It's not better. It is getting better. Some of the worst sort of scenarios we had maybe six, nine months ago is where we, for example, orders will get canceled at the last moment for components. That seems to have stopped. There seems to be a level of predictability coming back in, although we're still getting pretty long lead times from component suppliers. We feel that we're getting into a better place. It's still gonna be a problem. We do hope that through this next period, some of the excess backlog that we've been carrying through for the last few periods, simply down to the fact that we can't get units to ship, will start to reduce, but we still expect there'll be an element of this by the time we get to the end of this financial year. We do feel as if we're starting to see the light at the end of the tunnel, but nobody's expecting us to come out of it quickly. It'll still be a major focus for the operations team working with a contract manufacturer to manage the shortages. At times, we are pulling the R&D team in where we have to go and buy alternative components to make sure these alternative components are a true drop-in replacement and/or if we need to do minor changes to the software or whatever, that we are doing then to make sure we can keep, meet our customers' needs. The other thing that's happened is inflation across the world is happening. We're seeing wage inflation, and we have been hiring. Through the hiring, we've seen that it's not quite as bad as the headlines have been putting out there. We have been successfully hiring people, where we are having to pay slightly more than we'd have paid a year ago to get the same people in. It's not... It's definitely manageable, and it's definitely we feel it's within the plans that we have for increasing salaries as we go into FY 2024. Again, we feel that it's manageable at the situation where we are at the moment. As I mentioned, we have been able to put our pricing, a list price increase out into the market as well, so that's counterbalancing to ensure we maintain margins. At the start of this period, we acquired iTrinegy, a company based in Stevenage. We'll talk a little more later on about what they do for us. Really the focus through this period, as we explained in our last broadcast in May, was about really the integration, bringing them into the fold, making sure they're well settled in, the team are brought in. Also to build out the team 'cause we felt that really we needed more people in our R&D team, both engineers, verification engineers as well, to basically have a more systematic approach to product verification. Importantly, what we wanted to do through this first period was really build out the route to market and understand how to really maximize the potential of this product. Really the challenge this period was to understand how we were gonna get a broader footprint to the market and a broader customer base. We've actually signed new contracts with distributors in the U.S. that are starting to work now. We've actually increased. We've brought two business development team members into the Stevenage team. One's already here, the second will start in January, and that's really to have a stronger bandwidth to basically support our channel partners and obviously support customers out there as well. Everything going to plan there. We said this year we were setting realistic expectations, looking for more growth next year because we wanted to make sure we got the integration right, we got the sales channel right before we started pushing hard to see what we can achieve with this product. The data center opportunity continues to be something that's a key opportunity a strategic focus going forward. You'll see when we come to our product slice, we've got a new product coming out that's better aligned to the needs of the data center market, called Sentry. We've also been continuing to build relationships with the hyperscale customers. I think we've talked about it before. These guys can be a bit tricky to work with at times. You need to really build relationships with them, get on the inside. It's a long process, but it can be a valuable process if it works. We're continuing to do that and making good progress at getting in, understanding their needs and using our expertise to show how we can add value, and we can help them understand how they can enhance the effectiveness of their data center by bringing in accurate time across that. Again, we're pleased with the progress that we've made there. Last, by no means least, in the telecoms world, as we reported, there's a lot of new standards activities going on. In particular, the O-RAN, which has created a new set of standards that's trying to break down the network into kind of smaller blocks that allow more companies to come in and create greater competition. More companies mean more companies need to do more testing, which is good for us. We've continued to work that opportunity, and we're seeing good progress. You know, what we've also seen is that in the standards world, which has always been a key part of our business, you know, in the early days when I started the company, I was the guy that went to the standards. For a few years, we've had another well-known face in that world, Tim Frost, who was our lead standards person. He came to the point that he retired this year, and we've hired a new person, Stefano Ruffini, based in Italy. Stefano's really well known in the standards community. He chairs one of the key groups within the ITU-T. Really, it's a good time. As often, we were sorry to lose Tim, but quite often when these things happen, it's a chance to review what you're doing in that area. We've realized that from the standards activities, there's a lot happening in a lot of standards bodies that we need to have a better visibility. Not that we're necessarily involved in all these things all the time, but a visibility and awareness so that if suddenly they start talking about conformance testing and areas that affect us, that we're aware of that and then can get involved in both direct the conformance along the lines that will be easier for us to engage with, but also just see that opportunity earlier as much as anything. Stefan has been with us a few months. He's already started to show his value in the organization, and we're gonna build that team out more as he gets settled in, and we see what we need to do to keep really good connections with the industry, which is key for our whole fundamentals of our business model. At that point, I'm gonna hand over to Ashleigh, and she's gonna give you a bit more detail on the financials. Ashleigh. Thanks, Tommy. Before I take you through the next slide, I thought it would just be useful to briefly remind you of our revenue model. Calnex generates revenues through the sale of bundled hardware and software, as well as software support and extended warranty programs. A typical customer will purchase one of our hardware products with a number of software options included at the time, and this is invoiced as one bundled sale to that customer. They can then come back for upgrades or additional options that are added to the existing hardware that they've already purchased through the provision of a license key, and we sell these as standalone software sales or upgrades. Bundled hardware and software sales pricing can differ for each order as it depends on the hardware product being purchased and the numerous software option choices that each hardware product can offer. Each customer purchases different combinations of software options for each hardware product depending on their need. As a result of this variability, the average price per product can vary from order to order, as you might expect. That revenue is recognized on dispatch if it's a hardware item or delivery of a software license key if it's standalone software, and that makes up about approximately 90% of our total revenues. You'll see that from the graph on the income statement coming up shortly. Each of our products comes with a standard warranty period, which can be extended for an extra fee. We also sell software support pro-programs, and that makes up the other 10% of our revenues. That revenue is recognized over the life of the product that's purchased because sometimes it can span over a number of years. As you'll see from what Tommy showed you on the previous slides there, our customers are some of the largest in the industry. Over the last three-year rolling period to March 2022, if you're looking at our latest annual report for the last year-end, our top 10 customers contributed to 50% of our total revenues. In addition to that, the average length of relationship we have with those customers is 10 years, which just helps to demonstrate the repeat nature of the business that we do with them. We see customers coming back to order from us frequently as they might want to either add those new software options or upgrades that I was just talking about. They might want to buy multiple bits of kit for multiple sites. Might want to grow their, like, their testing requirements, or they might want to move on to some of our newer products and functionality as we release them to the market. Repeat revenue demand is a metric we measure across our whole customer base as well as that top 10. Again, if you're looking in our annual report, the three-year... For FY 2022, sorry, the three-year rolling profile showed that repeat revenues generated were on average 79% of total revenues. Our, that metric has continued while our revenue generating customer base has also grown. Our, our revenue generating customer base was 139 in FY 2018, and it is now 233 as at March 2022. That repeat trend has continued into this half year as well. Just moving on to the performance in the period. Just give you a flavor of how our revenues have been split. We experienced growth across all our geographies in this half year. Our rest of world region saw strong revenue and order performance, with Europe in particular contributing to the robust growth in the period. North Asia saw healthy growth in revenues and orders compared to the prior half, despite the challenging backdrop of the U.S.-China geopolitical tensions which remain in the region. The Americas revenues also experienced strong growth in the period. Revenue from the hyperscale order we booked in FY 2022 is recognized through the region, and the growth is bolstered by these revenues. Shipments for this order will span over H1 and H2 as was planned. We also experienced healthy growth across our product lines. LabSync growth has been driven by the PAM4 release, as well as underlying growth in existing platforms. Network Sync, which includes our Sentinel and Sentry products, has performed very well as a result of the diversification of the customer base within this product line, which now includes the data center opportunities that Tommy was just talking about. Cloud and IP saw good organic growth from our SNE product sales, as well as incremental growth from our newly acquired product, the NE-ONE. Just onto the income statement itself. Revenue as you've just heard in the first half of the year was GBP 12.7 million. That's a 38% growth on last year's revenues of GBP 9.3 million. The drivers behind that are very much the regional and product line performances I've just mentioned. Additionally, we did see an incremental beneficial foreign exchange effect to the total group revenues as a result of the strengthening of the US dollar over sterling in the period. 80% of our revenues are US generated, and approximately a third of the revenue growth on the previous half year came from these positive currency movements. As Sterling has started to strengthen against the US dollar in recent weeks, we don't anticipate this currency benefit to be extrapolated for the full year. In addition, we closed the period with a much higher backlog, order backlog than we would usually carry as we continue to manage the component supply chain delays. Had it not been for these supply and delays we would have been able to unwind this order book backlog a lot quicker. As Tommy says, we're starting to see signs of the supply chain delays easing and expect that order backlog to begin to unwind over H2. Gross margin in the half was 76%, as you can see from the table, and that's in line with the prior year margin. Just as a reminder, that gross margin is net of commissions payable to our channel partners, and it can also fluctuate 1-2 percentage points either way, just depending on the mix of our products and the mix of hardware and software bundles shipped just because of the high value, low volume, model that we have. Tommy was talking about before as well, we saw a rise in cost as a result of increases in component prices and general inflation over the period. However, our discussions around increasing pricing, with our, with our distributors and our customers will help us maintain those margins going forward. Just moving then to underlying EBITDA just now before I then talk about the cost components within that. This is just as a reminder, this is EBITDA stated after charging R&D amortization to that line. That is because our R&D amortization is such a large component of the P&L, we pull this out as an alternative KPI just to aid understanding of our P&L and its drivers. Underlying EBITDA grew by GBP 1 million against the last half year, and that was driven by the strong revenue performance on the top line. The margin was 27%, which is also in line with the prior year. Despite inflationary increases and external cost pressures, we've been able to continue our planned investment in our teams and infrastructure to support the growth of the business whilst also maintaining those profit margins. The largest component of underlying EBITDA costs is, as you can see, is administration costs. Those admin costs in this table here exclude depreciation and amortization because they're split out further down the table. They totaled GBP 4.7 million in the half year, and that was an increase of GBP 1.4 million on the prior half. Those increases include those planned investments that I was just talking about around the management, the sales and support teams across the business, which are very much in line with our growth strategy. We also saw an expected increase in travel costs as COVID-19 restrictions have been lifted across the majority of our regions. We also have a small, again, expected incremental increase in overheads relating to the Stevenage site after our acquisition of iTrinegy in April. There's a slight offset, a partial offset in savings from foreign exchange translation costs as well. There's just a couple of things to pull out from the acquisition in admin costs. You've got GBP 0.1 million of one-off legal and professional fees. GBP 0.1 million, sorry, of legal and professional fees for the iTrinegy acquisition sitting in those admin costs just now. Then another GBP 0.1 million relating to the accounting for the iTrinegy earn-out which will span over this year and into next year. The majority of our overhead costs are GBP based, with exception of our overseas sales teams. As a result, the group's overhead cost base has been affected slightly by FX movements because of the overseas element, but hasn't been as material as the beneficial effect to the revenues. As you'll note, we capitalize 100% of our R&D costs and amortize these to the P&L over five years. Amortization of R&D costs is shown separately here. In the period, it was GBP 1.6 million of a charge, versus a cash cost of GBP 2.0 million, which you'll see on the cash flow in next slide. The increase on the prior period is due to the continued ramp-up in R&D headcount to support our growth strategy and our project plans. Profit before tax was GBP 3.1 million, as you can see. The margin for that was 24% compared to 25% last year. That margin differential on the prior year is driven by the increase in intangibles amortization, and that's about GBP 0.1 million for this half year. As we brought on a new intellectual property intangible onto the balance sheet as part of the iTrinegy acquisition. That balance sheet number was GBP 1.3 million, and it was added. We expect that PBT margin to align back to market guidance by the end of the year as the order backlog starts to unwind into H2. The effective tax rate was 21%, which is very much in line with where we thought it would be. We have aligned our effective tax rate calculations with the planned increases in the U.K. corporation tax rates from 19 to 25%. We've measured that calculation in line with how our deferred tax assets and liabilities drop through from a timing difference perspective. Our earnings per share saw good growth with increases across both EPS metrics, and that's coming from the very strong performance in the period as well. Just on to the cash flow. As you can see from this next slide, although the group saw an overall GBP 0.9 million cash outflow in the half year on the bottom line of the cash flow, this total cash flow figure includes the net GBP 2.3 million effect of the acquisition of iTrinegy, which just demonstrates the strong underlying cash generation in the period. Cash generated before acquisitions was GBP 1.3 million in the period, and that compares to GBP 0.9 million in the prior period. That reflects the strong P&L performance in this period. Net cash from operating activities was GBP 4.2 million. The main thing to pull out there was working capital movements were an outflow of GBP 1.3 million in the half, and that's predominantly as a result of the timing and the volume of shipping to and invoicing to customers. We had a large shipment month in September, which then drove an increase in debtors for the half. We're already seeing the cash coming in from our customers for these shipments because our customers are very, very good payers. Other. Just moving down this cash flow summary table, just another couple of things to pull out before I talk about the acquisition. Cash spent on R&D activities I've talked about a minute ago, that's the capitalized element there, and that's again, as I mentioned, amortized over five years to the P&L. The dividend cash outflows that represents the dividend that we paid in August. That was our first ever final dividend, which you can see came in just under GBP 0.5 million. Just moving down to the last part of the cash flow, just a quick summary of the iTrinegy acquisition. We completed this deal on April 12, 2022, and that was on a cash-free, debt-free basis for an initial consideration of GBP 2.5 million, and that was fully funded from group free cash. The net cash effect of the transaction was GBP 2.3 million, just taking into account an element of cash that was left over on the balance sheet on acquisition. We acquired two entities, iTrinegy Limited, together with its wholly owned subsidiary, iTrinegy Inc. As I mentioned previously, and there's more detail on this in the RNS, the fair value adjustment that's been calculated for the intellectual property that's been brought on as part of that acquisition is GBP 1.2 million. That's a new addition to the balance sheet. Another new addition to the balance sheet is GBP 1.6 million of goodwill left over as part of that calculation, which represents that accelerated R&D development timeline and cost and sales channel synergies that we expect to come from the company. at the combination of the two entities together. Just moving down to the bottom of the cash flow here. Closing cash at the end of the half, and that includes cash that we keep on fixed term deposits as well, was GBP 4.4 million. That just gives us a robust cash balance to take us into the second half. In summary, before I hand back to Tommy, a strong P&L and cash performance for the first half of this year. Growth across all regions and product lines with some additional benefit gained from FX movements. We continue to manage the supply chain delays with higher than normal order backlog, and looking forward into H2, we expect that order backlog to start to unwind. Together with our pipeline of orders, we expect continued strong performance for H2. Back over to you, Tom. Okay. Thank you very much, Ashleigh. Let's just take a few minutes and have a look at some of the kind of more strategic or the wider aspects that are affecting the business. First of all, the market. I've picked up three quotes here that I've taken from the trade press. The first is not so positive. You can see that actually it's suggesting the whole telecoms market in the six-month period, first six months of the year, has actually not grown as quickly as was hoped, 3% rather than 7%. Actually by the second quote, the bit that we actually focus on, which is the build-out of the mobile infrastructure, is continuing to grow very strongly. I think you've probably seen if you've looked at any of the releases from other test vendors in the sector, they've also kind of put a word of caution out there. I think it would be folly to assume that the macroeconomic effects that are happening in the world at the moment, the inflationary effects, energy prices, that we can be completely immune to these. It makes sense that we're all keeping an eye on what's happening on the ground and where the earth is happening. We feel that, you know, there are kind of in particular companies, there are companies that are customers are announcing cuts. We haven't seen any impact directly on the programs that actually drive our business, but we're always keeping an eye on that. I think there's... The key thing for me is that underneath all this, the fundamental drivers that are driving the telecoms market has not changed. The needs still there. The desire to grow out is still there. Where there may be some minor bumps in the road, it feels to me like they are minor bumps in the road, and it's just a, you know, a fact of life. These things will happen. We do believe at the moment we are in a good, strong position, and we obviously, as you... looked at from a business point of view, we're in a strong position that we can ride through anything that happens to come in the near term. The medium, long term outlook still looks strong for us. The data center market is exactly the same, continuing to grow. Again, there's been well-publicized reductions in headcounts and people like Meta and some of the other big players. I think it's too early to say what's happening there. From what we can see at a distance, and it is at arm's length distance, it doesn't seem to be affecting the parts that we are, which is the infrastructure build out. Again, you know, if you look at the demand, the need for cloud computing, it's definitely there. There are more companies getting into that sector. I doubt that there's a fundamental shift that's happening. We feel that the overall market remains strong for us. There's always bumps in the road, but the fundamental drivers remain strong, and we should be confident we can continue to drive forward with our fundamental strategy. If you look at our product program, it's pretty much the same as you've seen before. There's two new things that we wanna talk a wee bit about there. I guess before I do, we will continue to release, as we do in all our programs, we have a continuous release process of adding new functionality, new capability aligned to customer requests and/or things that are appearing in standards and recommendations that we offer capability for. The two new ones are the Sentry product that you see in the middle under the Network Sync. Also the NE-ONE on the right-hand side, which is the product we acquired from the acquisition of iTrinegy. In terms of the Sentry product, actually from a technology point of view, there's a huge amount of leverage of the technology of the Sentinel into that product, because fundamentally, they're trying to do the same sort of test in the telecoms world, which Sentry is aimed at. It's out in the field, literally walking about outside doing testing, whereas obviously in a data center, you're inside the building, and often they want the equipment built into a rack. We've changed the form factor, so it's more aligned to what is actually needed. It's more than just a new set of clothings. Again, because different sets of customers have different requirements in terms of the number of ports they want, the configuration of different interfaces. The telecoms guys wants things slightly different to the data center, so it makes a lot of sense to create a different variant of the product that clearly is aligned to what the data center people want, and we can foster these positive discussions in terms of what they need in the future. We've got a platform that actually aligns and can go to where our customers need to go in the future. This product, we've just literally launched it in the last few weeks, and next year we'll be pushing it, and we'll continue to engage with the hyperscale customers. Really use it as a platform to try and engage with a lot of the tier two data center companies out there, to understand what their need is in the terms of timing and whether there's an opportunity with these tier two people as well as with the tier one players. Then we've acquired the NE-ONE product from iTrinegy earlier in the year. Just to recap, you know, we have multiple network emulators, and through the period we've been able to really sharpen up our sales collateral information to really position these products strong, you know, clearly beside one another. The product we had at the bottom in the past were really aimed at people building infrastructure. These are people that are making switches and routers that will then be used to build networks. When you speak to these customers, they want to know which interfaces does this work? Does this work one gig? Does this work 25 gigs? Does this work 100 gigs? What sort of bandwidth can you stress test each of these interfaces to? What sort of combinations of packet sizes can you test? They've got very specific needs, whereas the iTrinegy product's more about testing applications. It's people that are running applications across the infrastructure. These could be your banking app that you use to do your banking, it could be gaming apps, it could be financial apps. Any sort of app where they really care about customer experience. I think the gaming one's always one we use 'cause it's the kinda easiest to get your head around. If you're sitting playing a game or if you're young and you're sitting playing a game, and you're playing against people in New York and in Tokyo, and you feel that you keep losing because they get better network performance than you're getting, there's only one thing you do, and that's leave and go and find another game to play. These guys obviously need to prove that doesn't matter where you're sitting in the world, what you're doing, doesn't matter what's happening with the network. Again, they don't know what the network is being used to run your application on. You haven't a clue which speed interface is, how far it's going, how many routers and switches it's going through. They want a kind of more conceptual view of what's happening off the network, what the kind of distance between places, what the latency is, the bandwidth that's being used. The way it's presented to the customer and used is very different. That's what that product's doing. It's very much aimed at a completely different set of customers. It's aimed at people that are building applications to run cloud networks, as opposed to the infrastructure people who are effectively building the infrastructure that cloud computing will be built on top of. We've really kind of, through this first period, focused on how do we get to these new customers? Because they're a different set of people than we've been dealing with before. Have we got the right sales partners? Have we got the right collateral to support them? It's not only ensuring that the customers are clear on which product they're after, but our sales partners are absolutely clear as well, and they don't confuse the customers. We've had a lot of good positive progress made this period. We feel, as I mentioned, that we have. We've hired more people into the business development team. We've signed contracts with new partners in the U.S., that as we go forward into next year, we're in a stronger position to really push this product to the market. We've also kinda picked out a couple of test, of kinda, case studies here to really explain to you how we build a, a customer base and build our opportunity. Ashleigh talked about how when we sell a product, like we've shown on the left-hand side, our LabSync product, we continually work with that team to sell upgrades, additional units. Also there can be other dimensions of opportunities. Once you're in here, as we showed here, where we're in one of our tier one customers that we've used for many years, worked with for many years and supplied with product with many years. Through that engagement and close customer engagement, we actually found that a team that was working with them, another group of engineers, actually needed a network emulation product. We're able to go in and work with them, get introduction, sorry. An introduction to the other team and actually then by selling the product, showing them the value, get another sale. Also we find that our customers get asked by their customers, once they deploy the equipment, how should they test it once it's deployed? Again, by having strong relationships with the equipment manufacturers, then they often will actually recommend to them, the equipment, to the network operators, "You perhaps wanna look at Calnex." At the end of the day, we need to go in and convince them that that's the product they need, but we get recommendations. There's multiple dimensions how we can expand the market by going sideways, as well as going forward. The second one on the right-hand side is another example of where we were able to do that, where we worked with a software development company that were developing a product for a kind of cloud-type application, and they needed a network emulator. We were able to successfully sell them an SME. We spent time working with them to make sure they knew how to get the maximum potential out of their SME, and obviously, hopefully, buy follow-on unit. Through that, we realized that they actually were planning to introduce their equipment and claim standards conformance to the O-RAN standards that are out there or recommendations. Through these discussions, it came clear that they actually wanted to claim conformance to the synchronization elements of these standards. we actually helped them how to figure out how to do that 'cause it's not straightforward. actually through that discussion, realized that they actually needed to buy a LabSync product to actually prove performance of the synchronization part of the product. again, you can see by that customer intimacy, spending time with your customers, it actually delivers value in many dimensions down the road. that's really what our business is built on, is building success with customers and continue working with them to get follow on business. our strategy is still the same as what I've told you the last few times. It's a three-pronged strategy here, a three-pillar strategy to continue to focus on the growth engine that's the build out of the mobile network or 5G as it's sometimes referred to. Continue to look for opportunities in there, driving the products we have there. We're always looking for other dimensions where we can either come up with new products or new aspects to our products or new sets of customers within that sector. We also continue to focus on the build-out of the cloud computing, both on the infrastructure side, working with the data center companies to provide that timing capability to the data center infrastructure. Now with the NE-ONE, working with companies that are actually moving their applications into the cloud and providing applications that are gonna run in cloud computing in the future. Hopefully as that needs expand, we can expand our business. We continue to look for M&A opportunities, whether it's partnerships or acquisitions, nothing's changed. As I've described before, there are not thousands of companies out there that we would look at, but there are a number of them. We've brought a new person on board that we've worked with in the past. He used to be work with Spirent. He was our relationship manager. He took time out for kind of personal reasons. He wanted to come back in, and we've been working with him, and he's really tried to create a more systematic approach to looking at other companies out there that we can potentially continually look for the company that's got the right culture, the right position in the right product and right opportunity to enhance what we are doing to get new business. New business being a new set of customers or something in addition to sell to the people that we are at the moment. Underpinning all that is to continue to carefully manage our cost structure, manage the inflationary pressures we're seeing out there and manage, obviously, supply chain issues, so that we can continue to have a healthy financial plan and meet our customer needs. Bringing all that together and closing off, we look forward to the end of this year with confidence. We come into this, we've had a good first half. We're pleased with what we achieved. We're going into the second half with continued strong order book. It continues to be stronger than we'd want it to be because of the component shortage, and we do hope to see that starting to unwind through H2. How much it unwinds? Well, it really comes down to how much we can get the components and get our lead times right. It's starting to go the right way. We do believe that the underlying growth engines in the, in the industry are still the same as they are. There may be bumps in the road in the near term, and we'll keep an eye and manage that. We feel we're in a strong position, good relationships, good spread of customers that we can manage through, like, these situations. We continue to look for opportunities to expand our business, and we'll continue with our hiring program as we've set out in this year and next year to build the team and to scale up for hopefully build the business moving forward. At that point, I think we move to the Q&A session. Tommy, Ashleigh, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the Q&A tab, which is situated on the top right-hand corner of your screen. Just while the company take a few moments to review the questions that have been submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Tommy, Ashleigh, could I just ask you to read out the questions and give responses as appropriate to do so, and then I'll pick up from you both at the end. Okay. Thank you. I'll start off. Just start with Tom's question. How have you managed the high inflationary environment? Have you managed to increase pricing to your customers? I hope that was answered by what we talked about. I think you put that question in quite early into the presentation. Just to go back on what we said in the presentation, we worked very closely with our main distributors, Spirent, and in discussion with our customers to raise our prices at the start of this half year. It was done very much in discussion with everybody concerned. That effect has started to come through. With the sort of the relationship from our order to revenue flows, we'll start to see that come through a lot more into H2 and beyond. That will help maintain our margins. Okay. Cool. Got another one. Sorry. Steven's question is all your manufacturing subcontracted? Do you have any financial interest in your subcontractors? How is the relationship maintained and priced? Answer to the first question is yes. We have a outsourced manufacturer for our product, for all our products, excluding the NE-ONE. The outsourced manufacturer arrangement is in Concise, which is 40 minutes away from our main Linlithgow site. For NE-ONE, we've kept the existing contracted manufacturer arrangements that iTrinegy had, and that's our that's an outsourced manufacturer based in Bristol. Everything's subcontracted. We don't have any financial interest in any of our subcontractors. The relationship is very much. The main subcontractor we have, we've had since the beginning of Calnex. The relationship is a very close one. It's a daily interaction with our outsource manufacturer and daily conversations on demand plans, future forecasts, et cetera. Pricing is very much discussed like that as well. Pricing is... Any price rises that are coming from our outsource manufacturers will be discussed on a very regular basis and will be negotiated between the two teams. Okay. I can pick up a couple here, Ashleigh. There's a couple that are kinda related. Guy asked, "Who's your closest competitors?" Freddie asked, "I guess our biggest competitor for the hyperscale data center time products is the hyperscalers themselves. If so, any feedback on the success?" Let me just jump back to the slide on our products 'cause it's easier when that's up in front to just talk about this. When you look at our competition, it's actually different for each of the product families. If you look at the LabSync product, in the Paragon-Neo, the high accuracy product, we are very dominant in that market. There really isn't anybody close to us. We do have a competitor in China who have managed to keep pins in China, and they haven't really been successful at selling outside China. They really compete against the Paragon- X, which is almost our kinda previous generation platform that we still sell and get a lot of repeat purchases for. In terms of the high accuracy in the Paragon- Neo, they haven't matched that. They have talked about 25 gigabits as one interface, but not really talked about the other interfaces. In our market, people tend to flag fairly early when they've got new functionality coming. We feel we're still in a very strong position there, and we continue to support other interfaces and potentially high-speed interfaces going forward. We're in a very dominant position there. If you look at the Sentinel product, in terms of that maintenance product, again, I would say we have no competition and all our competitors say they compete against us. What am I talking about? What I'm really saying is that there is a lot of installation testers which are really more about multipurpose toolkits that can do all sorts of technology, but with limited capability. People that have that tend to tell the customers, "No, no, you don't need a specialist tester. You've got enough in this general purpose toolkit." In the sales process, we need to explain to them why they need a specialist toolkit for when we're doing synchronization. We've been successful with a number of customers there. As we move forward and the complexity of the kind of topologies of mobile networks with more and more radio heads, both the large microcell base stations you see at the side of the road, and what we call small cells, which you can imagine is like a Wi-Fi router that sticks on the side of a building, there's a lot more opportunity for interference and that whole concept of needing something specialist to manage this, we hope will actually be valuable and allow us to expand our set, our footprint. When you go into the kind of cloud and IT network emulation situation, there are a number of emulators out there. We're the only company that have a full range of emulators. Whether you're working in this pure software domain, you're working in a high complexity domain, or you're working in high accuracy domain, we've got a different emulator that can actually meet your need. We have a very strong competitive offering that we can tune the product to exactly what the customers need. Then lastly, and Sentry, Freddie asked about the hyperscalers, they do it themself. You'll obviously hate Freddie. They like doing things themselves. That's a bit of a challenge with these boys. They kinda do like to do things, and it's almost like one of these things where if the market and the opportunities wave too big, they'll just do it themselves. We did have one of them, which I won't name who, we thought were an opportunity. They needed a very simplistic approach to what they were gonna do. We thought we'd sell, and they ended up deciding to do it themselves. We didn't take the offer or anything. We basically said, "Okay. Well, we'll work with you. We'll help you do it. We'll help you understand. We believe that our approach is too simplistic, and they'll come back to us." It is about getting in. It's building relationships with these guys, showing the actual value you can deliver and why it's better. They trust you or trust an outsider to do it or rely on an outsider, not necessarily trust them, rather than do it themselves. It can be a hard sell with these guys. They. When they want to move, you need to move fast and you need to be flexible. They're challenging guys to work with, but they obviously there's rewards to be had by being successful with them. Do you get any other questions, Ashleigh, you can jump on? Yeah. Yeah, absolutely. Fawad asked, "In an earlier RNS, it was said that you expect to be an H2 weighting in terms of performance. Do you still expect that to be the case?" The answer to that is yes. We've always in times when the supply chain was a bit more calm, we always do have an underlying weighting from an H2 perspective, from an order perspective, just because of the customer seasonality usually. It's a kind of 55, 45 split H2 to H1 usually. In this current period and with the order profiles that we have this year, yes, very, very much so an H2 weighting in line with what we have essentially previously said. Hopefully that answers that one. Melville's asked, "Can you put any numbers on size of your order backlog in relation to order intake and execution?" We don't, we don't publish our number for backlog or our kinda order pipeline. Just to give you a bit of sense of where we're sitting right now compared to what we'd usually sit with. We always carry a natural backlog. Our backlog usually spans across about one and a half to 2 months worth of revenues. We're sitting at a backlog that's a lot higher than that, more than double of that number. That's all due to the supply chain delays and which we should hopefully see start to unwind over H2. Yeah, a couple of questions. Melville, again, I see you put a second one in here, an interesting question. A key attraction of Calnex are your obvious high standards, and I imagine correspondingly strong company culture. Do you have a formal program for communicating these matters into new employees and importantly to new acquisitions? Yeah, absolutely. You know, and I think especially these days where it's hard to get people, you know, we never forget that we've got a lot of talented people in our organization, and quite frankly, they could get a job anywhere tomorrow if they wanted to. They choose to stay, so it's our problem to or our challenge to make an environment that they wish to stay and be committed to us, and you should never rely on the fact that it comes for free. We very much when people join, we introduce them. We actually have quite an extensive induction process. I think there's like 30, 35 different training programs. We're actually gonna rationalize them a wee bit. They all get a chat from me. I call it a chat. They probably think it's a lecture about how to behave and how to, you know, that at the end of the day, you know, if they enjoy working at Calnex, it's not because of the name or the badge, it's because of the people they work with, and that's the same for everybody around them. We very much try to create an environment where people enjoy working, and they feel motivated, they feel fulfilled, they feel they can be part of it, they understand what's happening, the dynamics. I think more than ever, it's important to continue to do that. Our HR manager, Claire, and myself are very passionate about making sure that we hold that. It's the same when we do acquisitions very much when we look at acquisitions. A big question we speak in the early phases, can we work with these people? Are these the sort of group of people? Because not all companies can work with each other, and that's a fact of life. It's something we look at to in all acquisitions we've done and very much work with them. In day one sitting down, making sure they understand that, you know, the culture that we're looking to embrace and bring their ideas in, but obviously making sure they understand our culture and that is that you get the positives from both worlds. It's something we feel very strongly about. I think as much as ever, it's important, and we continue to do that. Acquisitions very much, it's an element of that activity is to make sure we protect and enhance our position. There was another question there. I've actually lost it. Have you got one, Ashleigh, you can jump on? Yeah. Scott's just asked, do you envisage taking in, on any more hires this year, i.e., are there any gaps that still need filling in the organization? The answer to that is yes, we do have a plan, and this is all part of our kind of plan at the start of the year to build out headcount to. At the moment, we're sitting with 138 head or at the half year, 138 heads. We're aiming to be mid-150s by the end of the year. That's very much to, a lot of that will be to bolster and to grow the R&D teams as required. It's not necessarily gaps in the organization, but the need to kind of fill out our project teams to meet the kind of project demands going forward. That's all planned at the start of the year. I got a question from. I see if I keep asking questions from the same people you do. Scott's got another question here. With a limited pool of possible acquisitions, do you think it's likely that future acquisitions will be outside the U.K.? That's a definite possibility, Scott. You know, we've never actually restricted, although two of the three we've done have been in the U.K. That's been more by coincidence, I say. We definitely look outside the U.K. I think the culture thing, obviously it's easier within a country. Different countries have slightly different cultures. Yeah, when we are looking at companies, we're looking all over Western Europe to North America, and we would, if we find the right one, be willing to acquire a company that was outside the U.K. There's a question here from Steven. Actually, it's got two parts. The second part's for you, Ashleigh. I'll answer the first part. Two very general questions. Is there a fallout in your business from the ban on Ericsson in China? Not particularly, I would say. You know, the whole China thing has been a bit interesting, even the kind of ban on Huawei around the world. What tends to happen is, and what we've seen, 'cause even before Huawei became, got restrictions put on them, there was previous restrictions on ZTE, also a Chinese company. Although our business immediately dropped for them, everybody else tried to steal the market and actually increased their programs. In some ways, what's happened with this is, whereas Huawei is limited to what they can sell outside China, but then the Western companies like Ericsson and Nokia are limited to what they can sell in China. Effectively, the business just moves around. For us, you know, although you get kind of ripples on where the business is, it doesn't really change. It hasn't gone away. It's just another one of our customers has taken that business. It hasn't had a material impact on us. It's just kind of changed our footprint there. Ashleigh, this was Steven's second part was for you. Don't you think you should be expensing all your R&D against revenue rather than largely capitalizing it and then amortizing it? This, by the way, is the Japanese accounting model. A few things there. The useful life of our products out in the marketplace is absolutely more than the five years that we amortize the cost to the P&L. The average useful life of our products is 10 years, if not more. We choose a very sort of prudent position to amortize our costs through to the P&L. The method of or the reason behind capitalizing and then amortizing it to the P&L is to match that revenue generation with the costs associated with it. We feel that's a better match. Also, that's also why we bring in the sort of underlying EBITDA metric as well, just to bring a little bit of balance between what sort of pure EBITDA would give you as a metric to what we call underlying EBITDA, to bring that sort of R&D cost back into the conversation when talking through KPIs. Also, we're very much we're holding to the IFRS way of doing things as well. A bit of a mix of different drivers there. There was another one I spotted as well. Another question from Tom. If I have understood correctly, roughly a third of your revenue increase is due to the US dollar rise versus GBP. If that's correct, when GBP recovers to a stable 1.2 USD per GBP, what volume increase would you require to maintain steady state revenues? Is it, is this exchange rate the biggest risk to revenue growth, or is demand a bigger risk? The answer to the first question is, the way that we budgeted at the start of the year and the way that our plans are built at the start of the year is our budget rate takes into account or we are not relying on any further FX gains, and we don't see that FX gain that we have had this half to be extrapolated to the end of the year. We don't. We're already The plans that we have to meet the numbers at the end of the half don't include any sort of catch up for any risk for FX there. Our budget rates take that into account. Our budget rates are higher than what the stable 1.2 is at the moment. Exchange rate is, isn't the biggest risk. Demand in a sort of general business model sense, demand for us is a much larger risk to exchange rate movements for the way that our business is built, if we're talking for holistic risks. A question here. Have you had any feedback on Sentry from customers and any traction from other hyperscalers? Not a lot of direct feedback from Sentry 'cause we just launched it now. You know, at the end of the day, we collect a lot of input from customers before we do any product. We've just internally launched it a couple of weeks ago, which means we're just starting to promote it into the market and going to other people. It has been viewed by a couple of customers. We've had pretty good feedback from the one or two that have actually seen it and are wanting to engage with us. Really through the next period is when we'll start to get more wider feedback on that. Yeah, we're speaking to all the hyperscalers at the moment at different levels of discussion. Some are at quite early stage, some quite developed in terms of basically having regular meetings with them and discussions about what sort of technology they might need in the future. It's a kind of mixed packet there, but it is something that we're continuing to do and we'll look to do continually over the next period until we develop out this market opportunity for us. Freddie asked, "What extent is there operational gearing within the business due to bottom line growth to track or exceed revenue growth?" We should expect some operational gearing in future years from an administration cost. If you take an admin cost as a percentage of revenue, at the moment, we're sitting at like a mid 30%. We wouldn't expect. We are still going through a period of ramp up. The company is still growing at quite a significant rate. At the moment, the support staff that are required and the support structures that are required behind the business, the costs will over the ne... If you're looking at the kinda numbers for the next couple of years, there won't be any sort of material operational gearing coming out of that period. As the company starts to kinda go into the kinda next phase, you should see some operational gearing from that cost base. However, the R&D amortization model, and the fact that we'll continue to build our R&D teams to meet future project needs. You'll see less of a sort of operational gearing effect on that number as the teams grow to kinda meet revenue demands in the future years. We haven't built any of that, any operational gearing in for the next couple of years just due to the ramp up that we're currently going through. Okay. Maybe I'll take this last question and then we'll wrap up. I guess from Jeff, he says, "With PTP as a product for upgrade, what other 5G six solutions do you recommend to your customers?" Well, I guess most of our customers are actually developing the equipment, so we don't directly recommend. I guess in terms of networks, I don't know how to build a network. I know how to test it, but I don't know how to build it. You know, again, we provide insight there. In terms of some ways, the whole O-RAN is creating new requirements. There are customers who are building equipment. They're both building it to conform to the ITU-T standards. There are some new customers we've had that are building to conform to the O-RAN, but actually even the original customers that are doing ITU-T standards are also wanting to show that they align to the O-RAN standards as well. The more of these sort of standards recommendations there are, inherently it's better for us because it means there's more people involved and there's more customers looking to do qualification and prove performance standards, which means they need to buy some test equipment, which is good. Tommy, Ashleigh, thank you very much for that. I think you've actually addressed all those questions from investors. Of course the company will review all the questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to you both, Tommy, could I just ask you for a few closing comments? Sure. Well, thanks very much everyone for coming today. You know, when I look back through the period, in some ways it's unremarkable, in that nothing is, you know, nothing particularly exciting happened. It was business as usual but maybe today business as usual is exciting. You know, we feel we've made steady progress in all areas and all our programs we've made steady progress, in all our geographies we've made steady progress. The integration the iTrinegy teams made good progress. Things are going well. You know, we think we're in a good position at the moment. We feel confident looking forward to the end of the year that we can hit the guidances that's in the market space. As I said, there may be... There's still macro challenges, whether it's a component, whether it's inflationary effects around the world that we all have to deal with. They may cause some minor bumps along the road, we still feel that the market's strong that we're in. The drivers remain in place that are actually gonna create growth in the markets that we're in, that will hopefully we can then deliver growth going forward on a sustainable value. Thanks very much for your time today. Tommy, Ashleigh, thank you very much for updating investors today. Could I please ask investors now to close the session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few minutes to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Calnex Solutions plc, we'd like to thank you for attending today's presentation and good afternoon to you all.