Interim Results

Amino Technologies PLC 31 July 2006 FOR IMMEDIATE RELEASE 31 July 2006 AMINO TECHNOLOGIES PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAY 2006 Amino Technologies plc ('Amino'; stock code: AMO), the Cambridge based broadband network software and systems company, presents its unaudited consolidated results for the six-month period ended 31 May 2006. Key points: â€¢ Shipments of AmiNET products increased by 95% to 199,000 units. â€¢ Since December 2003 over 700,000 AmiNET units have been shipped. â€¢ Turnover grew 73% to Â£13.5m (H1 2005: Â£7.8m), including Â£0.5m of licensing revenue. â€¢ Gross profit doubled to Â£5.3m and gross profit margins up to 39.2% (H1 2005: 33.5%). â€¢ Profit before tax was Â£0.1m (H1 2005: loss Â£0.9m) after exchange losses of Â£0.4m. â€¢ Positive cash flow increased net cash to Â£16.8m (30 November 2005: Â£14.5m). â€¢ Continued strong increase in customer adoption metrics. â€¢ New MPEG-4 hardware and software products have been launched. On outlook, Grant Masom, Chairman commented: 'Amino continues to mature as a business, balancing the demands of maintaining a strong technical and market position in a dynamic market with the need to strengthen operational and financial performance. We continue to be recognised as a market leader in IPTV and one of the largest centres of excellence in this exciting arena. 'We have a strong platform for continued growth and are confident of Amino's prospects in the second half of the year and beyond.' About Amino Amino Technologies plc (www.aminocom.com) designs and supplies electronic systems, software and consultancy for IPTV (telco triple-play applications), on-demand video and in-home multimedia distribution delivered through three operating divisions. Amino Communications supplies the AmiNETTM series of high performance IPTV set-top boxes and gateways for deployment in the telecommunications, broadcast and hospitality markets. Generally, AmiNET products are supplied with the IntActTM IPTV software stack pre-loaded. IntAct licenses hardware designs and the IntActTM IPTV software stack for customer premises solutions to OEMs enabling them to supply IPTV set-top boxes and gateways for larger scale deployments and the hospitality sector. Modelo provides systems consultancy services. Amino is partnered with world-leading companies in systems integration, middleware, conditional access, semi-conductor, head-end systems and browser technologies. Contacts Amino Technologies: 01954-234100 Grant Masom, Chairman www.aminocom.com Bob Giddy, Chief Executive Stuart Darling, Finance Director Bankside: 020-7367-8888 Steve Liebmann or Simon Bloomfield CHAIRMAN'S STATEMENT Introduction The marketplace for internet protocol TV ('IPTV') is growing rapidly and is global. This growth is neither linear nor entirely predictable and many of the largest near-term volume opportunities are within the smaller Tier 2 and Tier 3 telcos (less than 1 million subscribers) and the hospitality sector. Amino's consistent strategy has been to exploit these near-term volume opportunities and also to position itself to compete effectively for the larger Tier 2 and Tier 1 telco business for when these network operators are ready to commit to the substantial capital investment that wide-scale IPTV deployments require. Since volume shipments began in December 2003, Amino has established itself as a clear industry benchmark in terms of both performance and price, with the principal added value being represented by its IntAct software technologies incorporated within its AmiNET hardware products. The company has developed a global reach with customers and industry partners around the world. To date, approximately 700,000 units have been shipped to over 1,250 customers worldwide, representing a significant share of a market still in the early stages of development. The most recent report (Q1 2006) from ABI Research shows that Amino is still the number one supplier within its segment. In order to deliver the strategy, the interests of both shareholders and the company are served best by striking a balance between investing for the future and current profitability. The results for H1 2006 show that Amino is growing strongly in both shipments and revenue, is breaking even, gross margins are improving and it has generated cash. The structure to support its world-wide customers is now in place. The substantial investments in new platform development, key software integrations and the extension of sales and marketing reach have been made, so the focus is on enabling customers to move into volume roll-out and on improving internal operating and financial efficiency. Although operating costs have increased by 98% and headcount has grown by 60% over the past 18 months, the increased maturity of the business means that for the future, growth in shipments and revenue should exceed the growth in the cost base to the benefit of profitability in the second half, for the full year and beyond. Results and finance Shipments in the first half year to 31 May 2006 increased by 95% to 199,000 units (2005: 102,000). Changes in sales mix and a weakening of the US$/Â£ exchange rate in April and May meant that revenues grew by 73% to Â£13.48 million, including Â£0.5m of licensing revenue. (2005: Â£7.78 million). However, gross margins improved to 39.2% in H1 2006, up from 33.4% in H1 2005 and 34.8% for FY 2005; gross profit more than doubled to Â£5.28 million. The profit before tax was Â£74,000 (H1 2005: loss of Â£882,000). The profit before tax was reduced by Â£371,000 as a result of adverse exchange rates. Progress was made in improving working capital over the period with the result that net cash balances increased by Â£2.3 million to stand at Â£16.8 million at 31 May 2006 (30 November 2005: Â£14.5 million). Markets and operations The health of Amino's business and its future prospects are best measured by its key business metrics which show the progression as customers move through the various stages of adoption from field trials to volume roll-out in an implementation cycle of up to three years. These metrics have continued to grow strongly: Number of 20 Jun 04 30 Nov 04 31 May 05 30 Nov 05 31 May 06 customers Large volume roll-out (over 10,000 units) 3 5 11 15 18 Small volume roll-out (over 1,000 units) 16 19 35 43 67 Field trials (100 - 999 units) 30 44 98 140 158 Laboratory trials (10 - 99 units) 24 94 163 217 267 Total 73 162 307 415 510 In the period under review, sales have been strongest in North America and Europe. Amino holds a very strong position with Tier 3 operators currently deploying MPEG2 systems. In previous statements, we have reported strong interest in emerging markets in the Far East, South America and Eastern Europe. These remain important areas of opportunity, but there are significant commercial barriers to successful profitable engagement. We continue to be active in these markets - particularly through our IntAct software licensing business - but it is difficult to predict the timing of major revenues. As noted in the AGM statement, we continue to have positive discussions with a number of Tier 1 and Tier 2 telcos and systems integrators. However, deployments through large Western Tier 1 operators are hampered by a variety of system integration issues outside of Amino's control, notably the difficulties in scaling up systems to cope with millions, rather than thousands, of subscribers. Amino has chosen to focus its energies on exploiting the market opportunities that currently exist; we remain cautious about the near-term prospects for major Tier 1 revenues. Revenues continue to be dominated by existing MPEG-2 based products. However, we anticipate a significant increase in shipments of MPEG-4 products over the next 12 months, beginning towards the latter part of the current financial year. In anticipation of this, during the first half we launched a full range of MPEG4 enabled platforms, which we believe continue to maintain Amino's price/ performance leadership. The AmiNET124, our MPEG-4/H.264 SD (standard definition) platform recently won the NAB 2006 Award for Innovation in Media. The recently launched AmiNET130, our MPEG-4/H.264 HD (high definition) product is expected to have strong appeal to Tier 1 and Tier 2 telco's and within the hospitality sector. A significant part of the increased level of investment over the past 18 months has been directed at securing Amino's long-term future as the industry moves towards MPEG-4; we are confident that these products will show a significant return on that investment over the next few years. Our IntAct business has licensed our MPEG-4 software technologies to a set-top box ('STB') manufacturer and other discussions are ongoing. We have also completed further ports of the IntAct software stack to new generations of STB processors, including a recently announced collaboration with Texas Instruments. While these developments will not produce significant immediate revenues, we believe that they are vital to sustaining Amino's leading position in IPTV technology development over the next few years. Board We are pleased to announce today the strengthening of Amino's Board by the appointment of David Gammon as a non-executive Director with effect from 1 August 2006. David has more that 20 years experience advising technology companies and working within financial markets and private equity. Outlook Amino continues to grow rapidly and is widely regarded as a market leader in its chosen section of the IPTV market. Whilst this growth poses challenges, it creates many opportunities which Amino is well placed to exploit. The company has successfully balanced the need for investment in worldwide sales and support, new systems and new products, with the need to achieve profitability. The Board is confident about the outlook for the remainder of this year and beyond. Grant Masom 31 July 2006 Chairman Consolidated profit and loss account For the six months ended 31 May 2006 Notes Six months Six months Year to 30 ended 31 May ended 31 May November 2005 2006 Unaudited 2005 Unaudited Audited Â£ Â£ Â£ Turnover 3 13,480,815 7,784,383 23,460,756 Cost of sales (8,196,634) (5,179,457) (15,292,251) __________ __________ __________ Gross profit 5,284,181 2,604,926 8,168,505 Selling, general and administrative expenses (3,830,547) (2,420,514) (5,699,309) Research and development expenses (1,656,120) (1,151,616) (2,808,771) __________ __________ __________ Group operating loss (202,486) (967,204) (339,575) Interest receivable and similar income 282,743 95,448 418,782 Interest payable and similar charges (5,864) (10,129) (15,293) __________ __________ __________ Group profit/(loss) on ordinary activities before taxation 74,393 (881,885) 63,914 Tax on profit/(loss) on ordinary activities 29,571 721,000 - __________ __________ __________ Group profit/(loss) on ordinary activities after taxation being profit/(loss) for the financial period 103,964 (160,885) 63,914 __________ __________ __________ Basic earnings/(loss) per 1p ordinary share 4 0.19p (0.33)p 0.1p Diluted earnings/(loss) per 1p ordinary shares 4 0.18p (0.33)p 0.1p Statement of group total recognised gains and losses for the six months ended 31 May 2006 Notes Six months Six months Year to 30 ended 31 May ended 31 May November 2005 2006 Unaudited 2005 Unaudited Audited Â£ Â£ Â£ Profit/(loss) for the financial period 103,964 (160,885) 63,914 Exchange translation difference on consolidation 9 (35,911) 89,911 (22,383) __________ __________ __________ Total recognised gains and losses for the period 68,053 (70,974) 41,531 __________ __________ __________ Consolidated balance sheet As at 31 May 2006 Notes As at As at As at 31 May 31 May 30 November 2006 2005 2005 Unaudited Unaudited Audited Â£ Â£ Â£ Fixed assets Intangible assets 5 1,105,359 206,967 295,297 Tangible assets 1,330,166 984,733 1,023,610 _________ _________ _________ 2,435,525 1,191,700 1,318,907 _________ _________ _________ Current assets Stocks 2,653,022 2,210,216 1,460,756 Debtors: amounts falling due after one year 195,406 161,563 190,898 Debtors: amounts falling due within one year 9,951,348 8,624,120 12,846,599 Short-term investments 470,000 430,000 430,000 Cash at bank and in hand 16,308,118 17,088,485 14,038,271 _________ _________ _________ 29,577,894 28,514,384 28,966,524 Creditors: Amounts falling due within one year 6 (3,176,303) (1,590,936) (1,964,581) _________ _________ _________ Net current assets 26,401,591 26,923,448 27,001,943 Total assets less current liabilities 28,837,116 28,115,148 28,320,850 Creditors: Amounts falling due after more than one year (48,498) (93,088) (71,285) _________ _________ _________ Net assets 28,788,618 28,022,060 28,249,565 _________ _________ _________ Capital and reserves Called-up share capital 7 582,630 582,630 582,630 Shares to be issued 5 471,000 - - Share premium account 21,807,240 21,807,240 21,807,240 Merger reserve 16,388,755 16,388,755 16,388,755 Profit and loss account (10,461,007) (10,756,565) (10,529,060) _________ _________ _________ Equity shareholders' funds 8 28,788,618 28,022,060 28,249,565 _________ _________ _________ Consolidated cash flow statement For the six months ended 31 May 2006 Notes Six months Six months Year to ended 31 May ended 31 May 30 November 2006 2005 2005 Unaudited Unaudited Audited Â£ Â£ Â£ Net cash outflow from operating activities 9 3,166,675 (4,087,680) (7,154,539) Returns on investments and servicing of finance Interest received 282,743 58,380 418,782 Interest paid (5,864) (10,129) (15,293) __________ __________ __________ Net cash inflow from returns on investments 276,879 48,251 403,489 __________ __________ __________ Taxation 48,171 - - __________ __________ __________ Capital expenditure and financial investment Purchase of tangible fixed assets (448,537) (283,863) (479,085) Purchase of intangible fixed assets (82,319) (64,417) (216,689) __________ __________ __________ Net cash outflow for capital expenditure and financial investment (530,856) (348,280) (695,774) __________ __________ __________ Acquisitions net of cash acquired (617,702) - - __________ __________ __________ Net cash inflow/(outflow) before use of liquid resources and financing 2,343,167 (4,387,709) (7,446,824) __________ __________ __________ Management of liquid resources Increase in short-term deposits with banks (40,000) - - __________ __________ __________ Financing Issue of ordinary share capital - 15,843,100 15,840,250 Expenses of share issue deducted from share premium - (534,637) (534,637) Cash received from exercise of share options - 106,479 224,329 (Decrease)/increase in other borrowings (33,320) (18,619) (38,455) Increase/(decrease) in bank borrowings - 80,119 (6,144) __________ __________ __________ Net cash inflow from financing - 15,476,442 15,485,343 __________ __________ __________ Increase/(decrease) in net cash 2,269,847 11,088,733 8,038,519 __________ __________ __________ Reconciliation of net cash flow to movement in net funds Opening net funds 14,468,271 6,423,608 6,423,608 Increase in net cash 2,269,847 11,088,733 8,038,519 Increase in deposits 40,000 - - (Increase)/decrease in borrowings - (80,119) 6,144 __________ __________ __________ Closing net funds 16,778,118 17,432,222 14,468,271 __________ __________ __________ Notes to the interim financial statements Six months ended 31 May 2006 1 Basis of preparation The consolidated financial statements of Amino Technologies plc have been presented under merger accounting rules. This means that the financial statements of Amino Technologies plc and those of its wholly owned subsidiary, Amino Holdings Limited have been aggregated and presented as if the two companies have always been together. The figures for the six-month periods ended 31 May 2006 and 31 May 2005 have not been audited. The figures for the year ended 30 November 2005 have been extracted from but do not constitute the consolidated financial statements of Amino Technologies plc for that year. Those financial statements have been delivered to the Registrar of Companies and included an auditors' report, which was unqualified and did not contain a statement under Section 237 Companies Act 1985. 2 Accounting policies These interim financial statements for the six months ended 31 May 2006, which have been prepared in accordance with the accounting policies set out in the consolidated financial statements of Amino Technologies plc for the year ended 30 November 2005, do not constitute statutory accounts for the purpose of section 240 of the Companies Act 1985. 3 Turnover Turnover is wholly attributable to the Group's principal activities of developing enabling technologies and providing price competitive, flexible and rapidly deployable designs to manufacturers and vendors of set top boxes, home gateways and other communications devices. The analysis of turnover by destination is set out below. Six months Six months Year to ended ended 30 31 May 2006 31 May 2005 November 2005 Unaudited Unaudited Audited Â£ Â£ Â£ United Kingdom and Europe 6,455,789 3,706,678 9,903,108 North America 6,704,958 2,750,687 10,988,350 Asia Pacific and Africa 320,068 1,327,018 2,569,298 __________ __________ __________ 13,480,815 7,784,383 23,460,756 __________ __________ __________ 4 Earnings/(loss) per share Six months Six months Year to ended ended 30 31 May 2006 31 May 2005 November 2005 Unaudited Unaudited Audited Â£ Â£ Â£ Earnings/(loss) attributable to shareholders 103,964 (160,885) 63,914 _________ _________ _________ Weighted average number of shares (Basic) 55,796,444 48,471,852 52,126,170 _________ _________ _________ Weighted average number of shares (Diluted) 57,415,012 - 54,482,187 _________ _________ _________ The calculation of basic earnings/(loss) per share is based on profit/(loss) after taxation and the weighted average number of ordinary shares of 1p each in issue during the period. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The group has only one category of dilutive potential ordinary share options: those share options where the exercise price is less than the average market price of the company's ordinary shares during the period. There is no dilutive effect in respect of the six months to 31 May 2005 since the Group made a loss. 5 Acquisition On 21 January 2006, the Company purchased 100% of the issued share capital of SJ Consulting Limited for a total consideration of approximately Â£1.3m. The Company operates in the UK providing network software and systems solutions. The goodwill arising on the acquisition of SJ Consulting Limited is being amortised on a straight line basis over 6 years. The directors estimate that the book values underlying the business acquired approximate to the fair value of the underlying assets. Book value and fair value Â£ SJ Consulting Limited acquisition Tangible fixed assets 14,532 Debtors 221,065 Cash 216,449 Creditors (738) _________ Net assets acquired 451,308 Goodwill 853,843 _________ Consideration 1,305,151 Consideration satisfied by: Shares to be issued (300,000 ordinary shares of 1p each) 471,000 Cash 834,151 _________ 1,305,151 _________ The shares to be issued are dependent upon continued service of the key employees. 6 Creditors: Amounts falling due within one year As at As at As at 31 May 31 May 30 November 2006 2005 2005 Unaudited Unaudited Audited Â£ Â£ Â£ Bank loans and overdrafts - 86,263 - Other loans 32,090 40,656 42,623 Trade creditors 2,317,515 537,682 1,100,453 Taxation and social security 225,804 215,932 166,029 Corporation tax 18,600 48,171 48,171 VAT - 36,025 - Accruals and deferred income 582,294 626,207 607,305 _________ _________ _________ 3,176,303 1,590,936 1,964,581 _________ _________ _________ 7 Called-up share capital Ordinary shares of 1p each As at As at Year to 31 May 31 May 30 November 2006 2005 2005 Unaudited Unaudited Audited Â£ Â£ Â£ Authorised Nominal value 1,000,000 1,000,000 1,000,000 _________ _________ _________ Number 100,000,000 100,000,000 100,000,000 _________ _________ _________ Allotted, called-up and fully-paid Nominal value 582,630 582,630 582,630 _________ _________ _________ Number 58,263,052 58,263,052 58,263,052 _________ _________ _________ In respect of the acquisition of SJ Consulting Limited the company has the contingent obligation to issue 300,000 ordinary shares of 1p each. 8 Reconciliation of movements in shareholders' funds Six months Six months Year to ended ended 30 November 31 May 2006 31 May 2005 2005 Unaudited Unaudited Audited Â£ Â£ Â£ Opening shareholders' funds 28,249,565 12,678,092 12,678,092 Profit/(loss) for the period 103,964 (160,885) 63,914 Exchange differences on consolidation (35,911) 89,911 (22,383) Issue of ordinary share capital - capital - 72,250 72,250 Shares to be issued 471,000 - - Issue of ordinary share capital - share premium - 15,770,850 15,768,000 Issue of ordinary share capital to - - - Employee Benefit Trust Expenses of share issue - (534,637) (534,637) Exercise of employee share options - 106,479 224,329 _________ _________ _________ 28,788,618 28,022,060 28,249,565 _________ _________ _________ 9 Reconciliation of operating loss/ to net cash outflow from operating activities Six months Six months Year to ended ended 30 November 31 May 2006 31 May 2005 2005 Unaudited Unaudited Audited Â£ Â£ Â£ Operating loss (202,485) (967,204) (339,575) Depreciation and amortisation charge (including loss on disposals) 282,613 177,223 397,510 Increase in stocks (1,192,266) (848,877) (99,417) Decrease/(increase) in debtors 3,111,808 (1,738,491) (6,748,373) Increase)/(decrease) in creditors 1,202,916 (800,242) (342,301) Exchange differences on consolidation (35,911) 89,911 (22,383) _________ _________ _________ Net cash inflow/(outflow) from continuing operating activities 3,166,675 (4,087,680) (7,154,539) _________ _________ _________ Independent review report to Amino Technologies plc Introduction We have been instructed by the company to review the financial information which comprises the consolidated profit and loss account, consolidated balance sheet, consolidated cash flow statement, statement of Group total recognised gains and losses and the related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report and the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 May 2006. PricewaterhouseCoopers LLP Chartered Accountants Cambridge 28 July 2006 Notes: (a) The maintenance and integrity of the Amino Technologies plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the website. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions This information is provided by RNS The company news service from the London Stock Exchange END IR SEWFWASMSEIW

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