Preliminary Results

RNS Number : 5206Y
Amino Technologies PLC
27 January 2014
 



AMINO TECHNOLOGIES PLC

FINAL RESULTS

FOR THE YEAR ENDED 30 NOVEMBER 2013

STRONG GROWTH IN PROFITS AND CASH

 

DEVELOPMENT OF ENHANCED PRODUCT PORTFOLIO TO BROADEN ADDRESSABLE MARKET

 

Amino Technologies plc ("Amino" or the "Company"; stock code: AMO), the Cambridge-based leader in digital entertainment solutions for IPTV, OTT and in-home multimedia distribution, announces audited results for the year ended 30 November 2013.

 

These results demonstrate further successful delivery with strong growth in profits and cash driven by demand for Amino's higher margin products.

 

Financial results:

- Operating profit increased 46% to a record £4.1m (2012: £2.8m)

                - Operating profit before exceptional items increased by 17% to £3.3m (2012: £2.8m)

- Gross margin up 3.2 percentage points to 45.3% (2012: 42.1%)

- In line with previous guidance, revenue down 14% to £35.9m (2012: £41.7m), primarily reflecting continued demand for lower specification product coupled with a reduced level of demand from a specific customer

- Year-end net cash increased 14% to £19.5m (2012: £17.1m), equivalent to 37.0p per share (2012: 32.8p per share)

- Proposed dividend of 3.45p, an increase of 15% year on year (2012: 3p), with an expectation of continued dividend growth of no less than 15% in 2014

 

Operational highlights:

-      Development of enhanced product portfolio, including new home automation solutions, to extend addressable market

-      Continued margin and operational efficiency improvements including closure of Swedish office

-      Good traction for lower functionality product in emerging markets, including Eastern Europe and Latin America

-      Further progress attained in pure OTT markets with contract signed with Kartina TV

-      Agreements successfully signed with new partners for the delivery of value-added content

 

Commenting on the results, Keith Todd CBE, Non-Executive Chairman, stated:

"Amino has seen continued success in 2013 and has delivered growth in profits and cash whilst meeting the diverse needs of its global customer base. Due to the continued focus on margin enhancement and cash generation, I am pleased that we have been able to increase our improved final dividend.

 

"Looking further out, we are making significant progress with a number of new product initiatives which will expand our addressable market.  The Board remains confident in the outlook for the Group's profitability and cash generation in the year ahead and the positive impact on revenues of the new enhanced offering from 2015."

 

 

For further information please contact:

 

Amino Technologies plc

+44 (0)1954 234100

Keith Todd CBE, Chairman

Donald McGarva, Chief Executive Officer

 

Julia Hornby, Chief Financial Officer

 

 

 

 

FTI Consulting LLP

 

+44 (0)20 7831 3113

Matt Dixon / Chris Lane / Alex Le May

 

 

 

 

finnCap Limited

 

+44 (0)207 600 1658

Charlotte Stranner / Simon Hicks - Corporate Finance

 

 

 

Chairman's statement

 

Amino has made good progress during 2013 in delivering growth in profits and cash, increasing value to its shareholders and meeting the diverse needs of its global customer base. Further improvements have been made to its product portfolio and operational performance in an industry which is adapting as consumers access entertainment content in new ways.

 

The Company has delivered solid like-for-like growth in operating profitability and net cash which, combined with the previously announced duties rebates, has led to record pre-tax profits and a record net cash position at the year end. This is a result of increased demand for Amino's lower specification products, the continued focus on gross margin performance, tight cost control and strong cash conversion.

 

After a robust first half of the financial year, revenue was adversely impacted in the second half due to a change in product mix and reduced levels of demand from a specific customer.  More promisingly, the Company has further developed the Live advanced media centre during the year and concluded agreements with a new range of partners for the delivery of value added content as part of its offering.

 

The Company is moving into 2014 with a wider solutions-based offering.  This offering is based on innovation around Amino's IP software and the global shift towards Internet Protocol as the means of delivering content and services around the home. Development of an enhanced product portfolio, to include home monitoring and control and an updated range of devices, is progressing well, with phased launches planned towards the end of the first half of the year.

 

This enhanced portfolio, which is anticipated to contribute to revenue from 2015, will increase Amino's addressable market and also enable differentiated offerings to its existing customer base.  Underpinned by the Company's traditional market-leading software quality, operational agility, extensive global ecosystem and expert customer support, the Board believes that this improved offering will create a solid platform for future growth.

 

Dividend:

 

In line with existing dividend guidance, the Board is pleased to recommend a full year dividend of 3.45 pence per share (FY 2012: 3p per share), representing a 15% increase year-on-year. The Board also reiterates its expectation to grow this by no less than 15% for the year to November 2014.

 

Subject to shareholder approval at the annual general meeting to be held on 26 March 2014, the dividend will be payable on 16 April 2014, to shareholders on the register at 4 April 2014 with a corresponding ex-dividend date of 2 April 2014.

 

Outlook:

 

The Board expects to see solid progress in 2014.  For the full year, the Board expects to deliver a financial performance in line with market expectations for both profitability and cash generation. It is anticipated that revenue will show a second half seasonal weighting in line with that seen in prior years. The investment in developing a broader-based solutions offering underpins the continued innovation and momentum within the business and is an important step in increasing Amino's addressable market.  The Board is confident that these measures will have a positive effect on revenues from 2015.

 

 

Chief executive's review:

 

Current customers and markets:

 

Consumer viewing habits are changing rapidly. In response, operators are evolving their service offerings to deliver increasing levels of sophistication in customer experience, content availability and multiscreen capability. Anticipating this market trend, Amino has adapted its product suite to move away from a "one size fits all" consumer offering towards a broader-based portfolio that also has the flexibility to target discrete regional market opportunities.

 

Emerging markets, such as Latin America and Eastern Europe, have been characterised by demand for lower specification, competitively priced devices.  To meet this demand, in 2012 Amino launched a lower price point product pitched at key functionality and it was reassuring to see a number of important contracts secured during the year in both regions. The opening up of new markets in Latin America is also encouraging, with the Company winning its first order in Argentina towards the end of 2013.

 

These devices will continue to be a key focus into 2014, with a view to possible upselling of more sophisticated devices in those emerging markets as they mature and develop.

 

Focused "win back" campaigns in the established North American market helped secure a number of new contracts, from small to medium-sized operators, where the rollout of fibre to the home in certain geographies has helped stimulate the market for IPTV services.

 

In Western Europe, in line with industry trends, demand slowed and the Company was particularly impacted by reduced levels of demand from a specific customer. Sales in the Russian market continued to be impacted by market consolidation.

 

The Company has secured an important foothold in the emerging "pure OTT" market.  Here, content, often niche or targeted at specific ethnic groups, is delivered over the "open" Internet without the quality of experience and service requirements of a traditional IPTV deployment.  A contract was successfully secured with Kartina TV for the delivery of Russian language content to viewers in a range of markets around the world.  Likewise, this form of content delivery is also being used by operators to extend the "footprint" of their service offerings further extending this market opportunity.

 

Broadening Amino's addressable market

 

To meet changing demands in both emerging and mature markets, the Company is developing a more comprehensive solutions-based portfolio that will serve both existing customers and open up new and adjacent markets. This will enable customers to offer a wider range of revenue enhancing services in both the entertainment and wider connected home market.

 

Encouragingly, a key element of this portfolio, the Live advanced media centre, has already started to gain market traction ahead of wider commercial availability in the first quarter of 2014.

 

The broader offering will leverage the Company's deep expertise in Internet Protocol, which is now becoming the de facto global standard for home and wireless connectivity.  An early indication of this is the addition of new pre-integrated "cloud-based" content layers to the Live advanced media platform, underlining the wider market move towards blended IPTV/OTT service offerings.

 

Operators can now launch the Live advanced Media Centre with over 360 "made for TV" apps through a partnership that Amino has secured with leading global browser company Opera.  In North America, customers can also add a video-on-demand service from well-known US provider VuDu to their service, further enhancing their customer offering.

 

This combination of new OTT content and traditional broadcast content is closely aligned with developments within the Amino partner ecosystem. Here, considerable work has taken place to align product strategy with innovative developments in powerful new user interfaces, content security and the general industry-wide move towards ultra-high definition capabilities.

 

Further to this, a new home monitoring and control offering will be launched in the first half of the year in the United States. Complementary with  the  current product offering, existing Amino set-top boxes can be used to control and manage a portfolio of products including Wi-fi cameras, motion detectors and door sensors with alerts and live footage delivered to smartphones and tablets via a dedicated Amino app.

 

Underpinning this more extensive proposition will be an enhanced specialist support offering and software development tools to further embed Amino's offering within both new and existing customer bases.

 

Taken together, this enhanced portfolio which is anticipated to contribute to revenue from 2015, will enable the Company to offer a wider range of products to both existing customers and adjacent markets, providing a more flexible and powerful basis on which to build compelling revenue-enhancing services around the connected home.

 

Operational performance:

 

Further steps were taken during the year to improve the Company's operational efficiency. The closure of the engineering facility in Sweden at the start of year was completed successfully and the focus of all software research and development into one site in Cambridge has further enhanced these efficiency gains.

 

The improvements in the time it takes to deliver product from factory to customer evidenced during the first part of the year have continued to accelerate with lead times now down to six weeks. A number of other "cost down" initiatives have been implemented, without sacrificing quality, where the Company continues to enjoy an industry-leading exceptionally low return rate for its products.

 

Selective recruitment has taken place into a number of key areas in software engineering and product management to enhance skills levels within the organisation. Senior appointments to the executive team have also been made during the year to strengthen product management and engineering leadership.

 

Our priority:

Amino is responding to changing market demands by continuing to innovate and deliver solutions that are closely aligned with its customers' needs. Broadening and deepening the Company's portfolio will lead to opportunities to deliver more services to existing customers and will open up opportunities in a wider addressable market. 

Donald McGarva

Chief Executive Officer

 

 

Chief financial officer's report

 

Results for the year

 

In line with previous guidance, revenue for the full year was £35.9m - 14% lower than that achieved in 2012 (2012: £41.7m), largely due to stronger demand for lower priced, lower specification products coupled with reduced levels of demand from a specific customer in Western Europe.

 

As noted at the half year, lower sales have been experienced in Western Europe, particularly in Holland and Italy:

-      Dutch sales totalled £7.0m, £4.5m lower than 2012 (2012: £11.5m).  This was largely due to one specific customer which took a significant end of product life order in 2012 and as a result is unlikely to require further product until 2015

-      Italian sales of high specification product in 2012 totalled £1.4m. This customer has limited requirement for further products of this kind although it is anticipated that there may be a requirement for lower specification and lower priced product during 2015.

 

Difficulties in the Russian market that were first identified in 2011 have continued with a resulting reduction in revenue of £0.7m to £0.8m (2012: £1.5m).

 

North American sales remain broadly in line with the prior year at £15.3m (2012: £16.0m).

 

Growth has continued in Eastern Europe and Latin America where the Company has won a number of tenders with its lower cost, lower functionality product designed specifically to tackle highly competitive market dynamics in these regions.

 

The Company's continued focus on securing higher margin business and delivering continual operational improvements has been the principal driver behind the increase in gross margin by 3.2 percentage points to 45.3% (2012: 42.1%).  Such margin improvements have gone some way to mitigate the reduction in revenue with gross profits down 7% to £16.2m (2012: £17.5m).

 

Pre-exceptional operating expenses before amortisation and depreciation have decreased by £1.1m to £10.2m (2012: £11.3m). This is due to strong cost control together with more focus on new product development during 2013, resulting in an additional £0.8m in costs being capitalised during the year (2013: £2.9m; 2012: £2.1m).    

 

Year-end headcount was 100 (2012: 105) and the average number of employees during the year totalled 103 (2012: 114)

 

EBITDA before exceptional items at £6.0m is broadly in line with the prior year (2012: £6.2m).

Amortisation and depreciation totalled £2.7m (2012: £3.4m).  The launch of new products during 2011 resulted in higher amortisation during 2012, whereas 2013 has been a period of investment in new product development which resulted in the lower amortisation charge in the year.

 

Operating profit before exceptional items totalled £3.3m - a £0.5m improvement on the prior year (2012: £2.8m).

 

During the year, two exceptional items have been required.  Firstly, a reorganisation cost of £0.8m which largely resulted from the closure of the Swedish research and development office, which was announced in December 2012, together with other reorganisation charges in the UK.  This has improved operational efficiency by locating research and development resource to a single site in Cambridge.

 

Secondly, duties rebates totalling £1.7m were secured.  During the period, the Company received confirmation of two rebates in respect of duties paid on previously recognised international product sales. These rebates followed claims and negotiations with the tax authorities which were successfully argued and confirmations were received during March and April 2013. There remains a slightly smaller final retrospective claim in respect of other duties paid by the Company, but at this time there can be no certainty over the timing or likelihood of such a rebate.

 

Balance sheet

 

Total equity was £24.9m at the year-end (2012: £22.4m) which is equivalent to 47.2p per share (2012: 43.1p) of which £19.5m (2012: £17.1m), or 37.0p per share (2012: 32.8p per share), is represented by net cash balances.

 

Net current assets are £19.9m (2012: £17.6m), the principal components of which are net cash balances of £19.5m (2012: £17.1m), trade and other receivables of £5.2m (2012: £7.9m), stock of £2.5m (2012: £2.1m) and trade and other payables of £7.4m (2012: £9.6m). 

 

-      84% of trade receivables at 30 November 2013 are insured (2012: 71%).  Trade receivables over 60 days at 30 November 2013 but not provided for amounted to £0.0m (2012: £0.1m) demonstrating the Group's strong debtor management

-      The reduction in trade and other payables at the year-end was largely due to lower sales volumes in the second half of the year

 

The focus on growth in profits and cash, tight cost control, and strong working capital management, has delivered further improvements in the Company's cash balance, which stood at £19.5m at year end (2012: £17.1m).  This £2.4m improvement is despite total cash outflows of £2.1m in respect of dividend payments (2012: £1.0m).

 

At 30 November 2013, the Group has approximately £37m of unrecognised tax losses and other timing differences available to carry forward to set against future taxable profits.  In addition, losses of £2.8m are recognised by the deferred tax asset of £0.6m. At the current taxation rates, the unrecognised deferred tax asset is £7.8m.

 

Equity

 

The issued share capital of the Group is 57.9m (2012: 57.9m) ordinary shares of 1 pence each, of which 1.9m (2012: 2.9m) are held by the Employee Benefits Trust and 2.8m are held in treasury by the Company, leaving 53.2m (2012: 54.2m) shares held external to the Group.

  

The Board is pleased to recommend a full year dividend of 3.45 pence per share, which constitutes a 15% increase year-on-year. In line with previous guidance, the Board expects the dividend for the year to November 2014 to grow by no less than 15%.

 

Subject to shareholder approval at the Company's AGM on 26 March 2014, the dividend will be payable on 16 April 2014 to shareholders on the register on 4 April 2014.  The ex-dividend date is 2 April 2014.  

 

Julia Hornby

Chief Financial Officer

Consolidated Income Statement
For The Year Ended 30 November 2013

 

 

 

 

Notes

Year to 30 November

2013

£000s

Year to 30 November

2012

£000s

Revenue

2

35,852

41,700

Cost of sales


(19,616)

(24,160)



__________

__________

Gross profit


16,236

17,540





Other income

Operating expenses


1,650

(13,764)

-

(14,709)



__________

__________

Operating profit


4,122

2,831









Analysed as:








Gross profit


16,236

17,540





Selling, general and administrative expenses


(6,592)

(6,603)

Research and development expenses


(3,598)

(4,746)



__________

__________

EBITDA before exceptional items


6,046

6,191





Depreciation


(147)

(235)

Amortisation


(2,586)

(3,125)



__________

__________

Operating profit before exceptional items


3,313

2,831





Restructuring

3

(841)

-



__________

__________

Operating profit after restructuring


2,472

2,831





Exceptional Income - duties refund

3

1,650

-



__________

__________

Operating profit


4,122

2,831









Finance expense


(2)

(1)

Finance income


112

55



__________

__________

Net finance income


110

54



__________

__________

Profit before corporation tax


4,232

2,885

Corporation tax charge


(67)

(43)



__________

__________

Profit for the period from continuing operations attributable to equity holders


4,165

2,842



__________

__________





Basic earnings per 1p ordinary share

4

7.89p

5.45p

Diluted earnings per 1p ordinary share

4

7.83p

5.40p


All amounts relate to continuing activities.

 

 

Consolidated Statement of Comprehensive Income

For The Year Ended 30 November 2013

 

 

 

 

 

Year  to 30 November

2013

£000s

Year  to 30 November

2012

£000s

Profit for the year


4,165

2,842



__________

__________

Items that will be re-classified subsequently to profit or loss:




Foreign exchange difference arising on consolidation


56

(45)



__________

__________

Other comprehensive income / (expense)


56

(45)



__________

__________

Total comprehensive income for the financial year attributable to equity holders


4,221

2,797



__________

__________

 

 

Consolidated Balance sheet

As At 30 November 2013

 



 

 

Notes

As at

30 November

2013

£000s

As at

30 November

2012

£000s

Assets






Non-current assets






Property, plant and equipment




485

579

Intangible assets




3,812

3,478

Deferred income tax assets




560

644

Trade and other receivables




162

162





_________

_________





5,019

4,863





_________

_________

Current assets






Inventories




2,537

2,097

Trade and other receivables



5

5,248

7,936

Derivative financial instruments




-

5

Cash and cash equivalents




19,521

17,103





_________

_________





27,306

27,141





_________

_________

Total assets




32,325

32,004





_________

_________

Capital and reserves attributable to equity holders of the business

Called-up share capital




579

579

Share premium




126

126

Capital redemption reserve




6

6

Foreign exchange reserves




598

542

Other reserves




16,389

16,389

Retained earnings




7,224

4,803





_________

_________

Total equity




24,922

22,445





_________

_________

 

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

 

6

7,403

9,559

 

 

 

 

_________

_________

Total liabilities

 

 

 

7,403

9,559

 

 

 

 

_________

_________

Total equity and liabilities

 

 

 

32,325

32,004

 

 

 

 

_________

_________

 

 

Consolidated Statement of Cash Flows

For The Year Ended 30 November 2013

 

 

 


 

Notes

Year to 30 November 2013

Year to 30 November 2012




£000s

£000s

Cash flows from operating activities










Cash generated from operations


7

7,193

5,968

Corporation tax received



63

312




_________

_________

Net cash generated from operating activities



7,256

6,280




_________

_________

Cash flows from investing activities





Purchases of intangible assets



(2,920)

(2,111)

Purchases of property, plant and equipment



(75)

(148)

Net interest received



110

54




_________

_________

Net cash used in investing activities



(2,885)

(2,205)




_________

_________

Cash flows from financing activities





Proceeds from exercise of employee share options



309

8

Dividends paid



(2,111)

(1,043)




_________

_________

Net cash used in financing activities



1,802

(1,035)




_________

_________

 

Net increase in cash and cash equivalents



2,569

3,040

Cash and cash equivalents at beginning of year



17,103

14,124

Effects of exchange rate fluctuations on cash held



(151)

(61)




_________

_________

Cash and cash equivalents at end of year



19,521

17,103




_________

_________

 

 

Consolidated Statement of Changes in Shareholders' Equity

For The Year Ended 30 November 2013

 

_________

_________

____  _____

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

____  _____

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

_________

 

 

1       Basis of preparation

 

The preliminary announcement for the year ended 30 November 2013 has been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

The financial information set out above, which was approved by the Board on 27 January 2014, is derived from the full Group accounts for the year ended 30 November 2013 and does not constitute the statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group accounts on which the auditors have given an unqualified report, which does not contain a statement under section 498(2) or (3) of the Companies Act 2006 in respect of the accounts for 2013, will be delivered to the Registrar of Companies and posted to shareholders in due course.

2      Geographical external customer revenue analysis


_________

_________


_________

_________

_________

_________

For this disclosure revenue is determined by the location of the customer.

3       Exceptional Items


The Group incurred exceptional costs of £841,282 during the year (2012 - £nil).  These costs largely relate to the closure of the Group's Swedish office, as detailed below, and also include some additional reorganizational costs in the UK.

As announced in December 2012, it was decided to close the Group's Swedish office and focus all research and development in Cambridge. The process was completed to plan and the benefits are now starting to feed through in terms of team working.

During the period, the Company confirmed two rebates totalling £1,650,000 in respect of duties paid on previously recognised international product sales. These receipts followed claims and negotiations with the tax authorities which were successfully argued and settlement was agreed in April 2013. There remains a slightly smaller final retrospective claim in respect of other duties paid by the Company but at this time there can be no certainty over timing or likelihood of such a rebate.

4       Profit per share

 


Year to 30 November

2013

Year to 30 November

2012





Profit attributable to ordinary shareholders


4,165,264

2,841,953

Profit attributable to ordinary shareholders excluding exceptional items


3,356,546

2,841,953



_________

_________









Weighted average number of shares (Basic)


52,761,398

52,131,082



_________

_________

Weighted average number of shares (Diluted)


53,184,135

52,583,136



_________

_________





Basic earnings per share


7.89p

5.45p



________

________

Diluted earnings per share


7.83p

5.40p



_________

_________









Basic earnings per share excluding exceptional items


6.36p

5.45p



________

________

Diluted earnings per share excluding exceptional items


6.31p

5.40p



________

________

 

The calculation of basic earnings per share is based on profit after taxation and the weighted average of ordinary shares of 1p each in issue during the period. The Company holds 2,844,857 of its own shares in treasury and these are excluded from the weighted average above. The basic weighted average number of shares also excludes 2,286,797 being the weighted average shares held by the EBT in the year.

 

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 shares; those share options where the exercise price is less than the average market price of the Company's ordinary shares during the year.

 

The profit attributable to ordinary shareholders excluding exceptional items is derived by adding back the exceptional restructuring costs of £841,282 and subtracting the exceptional duties rebate of £1,650,000 disclosed on the face of the income statement.

 

5    Trade and other receivables



As at 30 November

2013

£000s

As at 30 November

2012

£000s






Current assets:





Trade receivables



4,753

7,024

Less: provision for impairment of receivables



(549)

(187)




_________

_________

Trade receivables (net)



4,204

6,837

Other receivables



74

54

Corporation tax receivable



15

60

Prepayments



955

985




_________

_________




5,248

7,936




_________

_________






Non current assets:





Other receivables



162

162




_________

_________






Other receivables comprise rent deposits.

 

 

6    Trade and other payables








As at 30 November

2013

£000s

As at 30 November

2012

£000s

Trade payables



2,444

4,629

Social security and other taxes



197

205

Other payables



62

63

Accruals



4,175

4,468

Deferred income



525

194




_________

_________




7,403

9,559




_________

_________






 

 

7    Cash generated from operations


Year  to 30 November

2013

£000s

Year  to 30 November

2012

£000s

Operating profit before exceptional items


3,313

2,831

Adjustments for:




Restructuring costs


(841)

-

Duties rebate


1,650

-



_________

_________

Operating profit


4,122

2,831

Amortisation charge


2,586

3,125

Depreciation charge


147

235

Loss on disposal of property, plant and equipment


21

5

Share-based payment charge


57

56

Loss on derivative financial instruments


5

37

Exchange differences


208

16

(Increase)/Decrease in inventories


(440)

1,919

Decrease in trade and other receivables


2,642

2,147

(Decrease) in trade and other payables


(2,155)

(4,403)



_________

_________

Cash generated from operations


7,193

5,968



_________

 _________





 

 

 

Ends

 

 

 

 


This information is provided by RNS
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