AMO.L Regulatory News (AMO)

7 February 2017

AMINO TECHNOLOGIES PLC

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

FULL YEAR RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2016

Transformation completed driving strong results

Amino Technologies plc (LSE AIM: AMO), the global provider of digital TV entertainment and cloud solutions to network operators, announces audited consolidated results for the year ended 30 November 2016.

Successful integration of the acquisitions made in 2015 has served to increase Amino's scale, broadened its product and service portfolio and helped to fuel strong revenue and profit growth over the past twelve months.

Financial highlights

· Underlying (4) organic revenue growth of 7%, which is 2% ahead of management's initial expectations of 5%

· Gross margin decreased to 42.9% as a result of new product launches and larger volume customers offset by the positive impact of additional software and services sold during the year

· Adjusted profit before tax up 96% to £10.2m

· Statutory profit before tax up 867% to £2.9m

· Adjusted cash generated from operations of £15.8m representing 117% of Adjusted EBITDA (2015: 92%)

· Statutory cash generated from operations was £12.6m representing 149% of EBITDA (2015: 123%)

· Net cash of £6.2m at 30 November 2016 after paying record dividends of £4.0m

· Recommended increase in full year dividend to 6.05p per share, up by 10% year on year in line with the Company's stated progressive dividend policy. This is the fifth consecutive year the dividend has been increased since 2011.

(1) Adjusted EBITDA is a non GAAP measure and is defined as earnings before interest, taxation, depreciation, amortisation, other operating income, exceptional items and share-based payment charges

(2) Adjusted profit before tax and adjusted earnings per share are non-GAAP measures and exclude amortisation of acquired intangibles, other operating income, exceptional items and share-based payment charges

(3) Adjusted cash generated from operations excludes cash from exceptional items

(4) Excluding the impact of acquisitions and foreign exchange

Operational highlights

· Integration of 2015 acquisitions of Booxmedia and Entone successfully completed, creating a single enhanced portfolio aligned with current and future market trends

· Strengthened sales team successfully delivered 7% organic revenue growth in 2016, a strong order book and improved sales pipeline visibility into the first half of 2017

· Continued progress made in Latin America as operators see strong take up for IPTV services

· EnableTM TV software platform deployed to multiple new customers

o Contract with Cincinnati Bell Inc, to migrate its legacy IPTV devices to the Enable platform successfully delivered

o Contract won with PCCW to deploy the Enable platform to deliver new 4K UHD (Ultra High Definition) services

· New Cloud TV contracts signed with European mobile and fixed line operators

· New contracts secured with regional operators in North America including the first deployment of the Fusion Home monitoring solution

Commenting on today's results, Keith Todd CBE, Non-Executive Chairman said:

"This has been a very good year for Amino. As a result of our increased focus on sales execution, a broader product portfolio and the rapid integration of the two businesses acquired in 2015, all financial metrics are ahead of the expectations set at the beginning of the year. We now look forward to continuing the positive momentum generated in 2016 and to continue building the Group for further long-term sustainable profitable growth."

The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

For further information please contact:

About Amino Technologies plc

Amino Technologies plc specialises in the development and delivery of IPTV/OTT solutions. With over eight million devices sold to 1,000 customers in 100 countries, Amino's award-winning solutions are deployed by major network operators and service providers worldwide. Amino Technologies plc is headquartered near Cambridge, in the UK, and is listed on the AIM market of the London Stock Exchange (AIM: symbol AMO). www.aminocom.com 

Chairman's statement:

This has been a very good year for the Company. We have successfully completed the rapid integration of the two companies acquired in the previous year; executed on a challenging sales plan and strengthened the management team. As a result, the Company has delivered results ahead of market expectations as well as securing a solid order backlog.

All financial metrics are ahead of market expectations set at the beginning of the year. Revenue for the year was £75.2m (FY 2015: £41.7m) and included solid organic growth of 7%. Adjusted operating profit of £10.2m increased by 100% over the prior year (FY 2015: £5.1m). Operating profit was £2.9m (FY 2015: £0.3m). The Company continues to turn profit into cash which is reflected in the year-end cash position of £6.2m (30 November 2015: £2.1m).

At the start of the year, the Board set out a clearly defined direction, identifying two key drivers for future growth and shareholder value, namely hybrid TV - that is, TV delivery both via the Internet and via other multimedia channels such as satellite and cable - and cloud services. This strategy is shaped by the industry-wide move towards Internet Protocol (IP) as the key enabler for all media and services to be delivered on-demand from the cloud to any device, anytime and anywhere.

Four key objectives were set for the year. Firstly, to increase revenue and market share in IPTV, Amino's traditional core market. Secondly, to exploit the migration of cable TV operators to an all-IP cloud future. Thirdly, to target and scale up Amino's cloud TV offering to mobile network operators and content owners. Finally, to launch an "Internet of Things" (IoT) offering focused on home monitoring to provide cable TV and IPTV operators with a point of difference to enable them to gain customer traction.

Substantial progress has been made against all of these objectives. Amino's customer proposition is closely aligned with market trends and the revitalised sales team is performing well across key regional markets and in Latin America and North America in particular. Customer value is increasingly driven by our deep software expertise; speed of responsiveness and our ability to provide software solutions that deliver a high quality unified end-user experience across both new and legacy devices within an operator's network.

Amino has now successfully re-positioned itself as a global solutions provider for a new exciting era in entertainment service delivery. The broader and deeper portfolio, underpinned by extensive software expertise, has enabled the Company to successfully target a wider market with encouraging traction across its entire product range.

It is testimony to the staff across the Group that these transformative changes have been achieved in a short space of time, delivering positive results and a new confidence in the business both internally and externally. On behalf of the Board, I would like to thank them for their hard work and commitment.

Dividend

In line with the Company's progressive dividend policy the Board is pleased to recommend a full year dividend of 6.05p, a 10% increase on 2015. This is the fifth consecutive year that the dividend has been increased since 2011. The Board also intends to continue the Company's dividend policy of no less than 10% growth per annum for the year ending 30 November 2017.

Subject to shareholder approval at the annual general meeting to be held on 29 March 2017, the dividend will be payable on 28 April 2017, to shareholders on the register at 7 April 2017, with a corresponding ex-dividend date of 6 April 2017.

Outlook

Amino enters 2017 with a strong order book and sales pipeline providing good visibility of revenue and profits for the first half. The Board expects the positive momentum gained in 2016 to continue and result in sustainable profitable growth in 2017.

Keith Todd

Chairman

6th February 2017

Chief Executive's review:

Growing the Amino proposition in line with evolving customer needs

Amino is well positioned to capitalise on significant changes in the way entertainment is delivered to the consumer. Network operators and service providers can no longer deliver just linear television - where viewers must be in front of their televisions to watch entertainment at a given time. Today's consumer demands content at anytime, anywhere and on their choice of device, be it the television, tablet or mobile phone. This growing trend has disrupted traditional operator service delivery models and the technology enablers that have been in place for many decades.

Increasingly, operators are using Internet Protocol (IP) - the data delivery mechanism that underpins the Internet - to ensure consumers enjoy an "on demand" and always available entertainment experience, whilst at the same increasing efficiency and streamlining service delivery. The growth in consumer take up of "OTT" services, such as Netflix and Amazon Prime, which are delivered over the open Internet, has acted as a further catalyst for this trend.

Broadening the addressable market

Amino's core market remains IPTV - where operators use a managed broadband connection into the home to deliver a TV entertainment service. However, the acquisitions of Booxmedia and Entone, both of which were completed in 2015, have broadened Amino's portfolio to address adjacent sectors such as the cable TV industry. Here operators are now turning to IP to enable new levels of interactivity and multiscreen delivery, either moving to a pure IPTV delivery model or deploying "hybrid" devices which combine cable TV and IP delivery, much as Sky now deploys hybrid devices delivering satellite and IP delivery. Likewise, we now provide mobile operators with the capability to deliver TV services to mobile devices and tablets.

We are now better positioned to address this wider market and, based on our skillset and portfolio, help operators migrate to an all IP future, where services are delivered on demand via the cloud to any device. At the same time, using our software expertise, we are now helping operators maximise their existing legacy assets, including already deployed devices, to deliver new advanced services across their entire customer base.

The enhanced portfolio launched during the first half of the year encompasses four key elements:

· VIEW: hybrid TV devices to deliver any content across any network to any device. This is underpinned by the Enable TV software platform

· MOVE: initially focused on mobile operators but now with increasing relevance to our broader customer base as an end-to-end entertainment service delivery platform

· ENGAGE: quality of service network management tools

· FUSION: a simple, easy to deploy Internet of Things (IoT) home monitoring solution

The breadth and depth of this offering has served to deepen our relationships with customers and has resulted in growing traction for both device and software sales to operators. In particular, our ability to support customers who are migrating TV services to an IP and cloud-based delivery model while extracting value from existing deployed systems and devices is a key differentiator in our markets.

Industry analysts IHS in May 2016 forecast continued growth in IP-connected pay TV devices from 107 million units in 2014 to over 175 million units by 2019. The transition by cable TV operators to IP is set to expand over the same period - representing a sizeable market that Amino is now addressing.

Current customers and markets

The provision of hybrid TV devices remains a core element of the business, however during the year we also delivered encouraging growth in the provision of software and cloud-based solutions to both existing and new customers.

Demand for high quality IPTV devices remains strong with excellent growth in key target regions. In Latin America, there have been substantial contract wins with both new and existing customers. Market de-regulation and the rollout of fibre networks across the region continues to help drive the market with operators seeking to deploy value-added entertainment services alongside their more traditional broadband offerings.

North America is a more mature market in which Amino has a substantial presence. Continued good growth in device sales to the tier 3 market has been complemented by a substantial contract win with leading regional tier 2 operator Cincinnati Bell, which was announced in the first quarter of the year.

The Company successfully migrated Cincinnati Bell's legacy IPTV devices to Amino's Enable™ TV software platform in a perfect demonstration of the capabilities of both the solution and the skillset within the Amino team. The challenge that Cincinnati Bell faced was to deliver an enhanced and uniform user experience across their full range of new and already installed devices. Solving this challenge for operators is a key part of the Amino offering.

In August, it was announced that Hong Kong-based Tier 1 operator PCCW would deploy the Enable platform to deliver new 4K UHD services to its customers, further underlining the increasing complexity of projects we are now able to successfully deliver for larger customers.

The changes within the cable TV industry represent an important growth opportunity for Amino as the market transitions to IP. During the year, key sales hires have been made to bring in additional industry expertise, alongside an enhanced product set, to target this market.

Market traction in cloud TV has been encouraging, with new contracts signed with European mobile and fixed line operators and content owners. We have also seen revenue from Booxmedia, our Move platform, more than doubling year-on-year.

We continue to build on our ability to deliver a wider range of complementary solutions to deepen relationships with customers. During the year, several customers - particularly in North America - purchased both IP devices and the Engage™ quality of service network management solution.

The launch of the Fusion™ IoT home monitoring solution in the second half of the year is further evidence of the innovation within the Company. Whilst sales volumes are low, operator response has been good, with several North American operators now actively deploying as a new value added service layer to their broadband and entertainment offerings.

New 4K Ultra High Definition (UHD) hybrid TV devices were also launched during the year to support operators who are now progressing their plans for 4K service deployment. Further, the Company announced a "world first" device that combines Android TV capability alongside the existing Enable™ software platform. Part of the Kamai range of devices, it has been designed for operators who require traditional TV, multiple cloud video services and a rich application framework that leverages the massive global Android development community.

Operational structure

A number of changes were made earlier in the year to better align the business with the new strategy and portfolio. Critically, the issues around sales execution towards the end of the previous year were effectively resolved with the creation of a new integrated sales team under Steve McKay, the former CEO of Entone and now President, Sales and Business Development within Amino. Dedicated teams were created for all key target regions and the year-end financial results are testimony to the successful sales execution across the business.

A global research and development team has also been established with operations in the UK, Hong Kong and Finland, improving scale and capabilities to drive innovation and met the needs of a wider set of customers.

Future growth

As a result of the positive momentum generated in 2016 by Amino's broader product portfolio, strong sales execution and a solid order backlog, the Board expects further positive progress to be made in 2017.

Donald McGarva

Chief Executive Officer

6 February 2017

Chief Financial Officer's review

Revenue for the year increased by 80% to £75.2m (2015: £41.7m) as a result of organic growth, the acquisitions of Entone and Booxmedia in 2015 and the impact of foreign exchange. Adjusted operating profit was £10.2m (2015: £5.1m). Operating profit was £2.9m (FY2015: £0.3m). In line with its progressive dividend policy the Board has recommended a full year dividend 6.05 pence per share, a 10% increase over the prior year. The Group has a strong balance sheet with cash of £6.2m (2015: £2.1m) and is debt free.

Revenue

Set out below is revenue by type on an 'as reported' and 'constant currency' basis (with 2016 revenue translated using 2015 average exchange rates). Pro-forma revenues have also been presented on a constant currency basis and have been calculated as if Booxmedia and Entone had been part of the Group for the whole of 2015. In 2016 approximately 95% of the Group's revenue and cost of sales were transacted in US Dollars. Excluding the impact of acquisitions and foreign exchange, underlying organic revenue growth was 7% which is 2% ahead of management's initial expectations of 5%.

Software and service revenues in 2016 include £5.7m of non-recurring perpetual licence and development revenue. Going forward, it is Amino's intention to focus on growing recurring revenue licence contracts rather than selling perpetual licences which will consequently impact on gross margin going forward. Booxmedia revenue grew organically by approximately 42% in 2016.

The Group's revenues are globally distributed as follows:

Amino continues to sell its products directly to tier 2 customers and to tier 3 customers via distributors. The Group has four customers each having more than 10% of total Group revenue, of which three of these customers are distributors.

Gross profit

Gross profit increased by 74% to £32.3m (2015: £18.6m). Gross margin decreased to 42.9% (2015: 44.8%). The decrease results from the impact of new product launches and larger volume customers offset by the positive impact of additional software and services sold in the year.

Operating expenses

In May 2016, the Group undertook a significant restructuring programme to realise synergies identified following the acquisition of Entone which resulted in £2.0m annualised cost reductions realised in the second half of the year. The Group continues to invest in research and in the development of new products and spent £9.5m on R&D activities (2015: £7.7m) of which £3.7m was capitalised (2015: £3.2m). Share based payment charges totalled £0.3m (2015: £0.1m).

In the second half of the year the Group's R&D and SG&A costs were denominated 51% in US and HK Dollars, 39% in British Pounds and 10% in Euros.

Exceptional items

Exceptional items included within operating expenses in 2016 comprised:

· £3.6m contingent post-acquisition remuneration in respect of the Entone acquisition;

· £0.4m post acquisition integration costs which included additional travel and contractor costs resulting from activities to integrate the enlarged Group; and

· £0.8m redundancy and associated costs.

Depreciation and amortisation

Excluding amortisation of intangibles recognised on acquisition, depreciation and amortisation increased to £3.3m (2015: £2.4m) and is expected to increase further in 2017 as further research and development costs are capitalised. Amortisation of intangibles recognised on acquisition was £2.2m (2015: £0.8m).

Operating profit

Adjusted operating profit excluding share-based payment charges, exceptional items and amortisation of intangibles recognised on acquisition was £10.2m (2015: £5.1m). Statutory operating profit was £2.9m (2015: £0.3m).

Taxation

The tax charge of £0.2m comprises a £0.7m current tax charge and £0.5m credit relating to the unwind of the deferred tax liability recognised in respect of the amortisation of intangible assets recognised on acquisition.

Profit after tax was £2.7m (2015: £0.4m).

Earnings per share

After adjusting for exceptional items, share-based payment charges and amortisation of intangibles recognised on acquisition, basic earnings per share increased by 63% to 13.64 pence (2015: 8.37 pence). Basic earnings per share was 3.81 pence (2015: 0.61 pence).

Cash flow

Adjusted cash flow from operations was £15.8m (2015: £6.9m) and represented 117% of adjusted EBITDA (2015: 92%). Exceptional cash flows in 2016 totalled £3.3m and comprised £1.7m paid in respect of Entone deferred consideration treated as remuneration and £1.6m of restructuring and integration costs. The final Entone deferred consideration payment of US$1.5m (£1.2m) is due to be paid in August 2017. After these exceptional cash out-flows cash generated from operations was £12.6m (2015: £5.8m).

During the year the Group spent £0.7m (2015: £0.1m) on capital expenditure, primarily related to the new office in Hong Kong and capitalised £3.7m of research and development costs. The Group paid £0.4m deferred consideration in respect of the Booxmedia acquisition and paid dividends of £4.0m in the year.

Financial position

The cash balance at 30 November 2016 was £6.2m (2015: £2.1m), ahead of management's expectations. The Group also has a £15.0m multicurrency working capital loan facility which runs to August 2020 and was undrawn at the year end.

At 30 November 2016 the Group had equity of £45.9m (2015: £45.1m) and net current assets of £1.9m (2015: £3.4m). 39% of trade receivables were insured (2015: 36%) and debtor days were 42 days (2015: 52 days).

Dividend

The Board has recommended a full year dividend of 6.05 pence per share, a 10% increase over the prior year. The Board also intends to continue the Company's dividend policy of no less than 10% growth per annum for the year ending 30 November 2017. Subject to shareholder approval at the Company's AGM on 29 March 2017, the final dividend of 4.659 pence per share will be payable on 28 April 2017 to shareholders on the register on 7 April 2017. The ex-dividend date is 6 April 2017.

Mark Carlisle

Chief Financial Officer

6 February 2017

All amounts relate to continuing activities.

Notes

For the year ended 30 November 2016

1 Basis of preparation

The preliminary announcement for the year ended 30 November 2016 has been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and interpretations (collectively IFRS) as adopted by the EU 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 6 February 2017, is derived from the full Group accounts for the year ended 30 November 2016 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 2016, 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

There were no exceptional items within other operating income in the year ended 30 November 2016. A final rebate of £744k in respect of duties paid on previously recognised international product sales was received following the favourable ruling with respect to duties rebate at a tax tribunal in January 2015.

Exceptional items within operating costs comprise:

4 Profit per share

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 year. The Company holds 3,092,018 (2015: 4,139,898) of its own shares in treasury and these are excluded from the weighted average above. The basic weighted average number of shares also excludes 380,673 (2015: 962,816) 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 exceptional items, share-based payment charges and amortisation of acquired intangibles of £7,371,412 (2015: £5,581,593) and subtracting the tax effect thereon £449,829 (2015: £157,681) and the exceptional duties rebate of £nil (2015: £743,565) disclosed on the face of the income statement, within other operating income.

Adjusted basic and diluted earnings per share have been restated for 2015 to exclude share based payment charges and amortisation of acquired intangibles, net of tax effects, as detailed above.

5 Trade and other receiveables

6 Trade and other payables

7 Cash generated from operations

Adjusted operating cash flow before exceptional cash outflows was £15.8m (2015: £6.9m).

8 Acquisition of subsidiaries

Entone Inc.

On 11 August 2015, the Group acquired 100% of the issued share capital of Entone Inc., obtaining control of Entone Inc.. Entone Inc. is a provider of broadcast hybrid TV and connected home solutions. Entone Inc. was acquired to increase Amino's global footprint and scale and to consolidate a director competitor.

The fair value adjustments in respect of the acquisition of Entone Inc. during the year ended 30 November 2015 were provisional adjustments made using information available at that point and should have been described as such.

Since that time, an additional fair value adjustment of £1,883k has been made to non-current trade and other payables as these values have been further refined during the integration process, which has resulted in a corresponding increase in goodwill.

The revised identifiable assets acquired and liabilities assumed are as set out in the table below:

9 AGM / Annual Report

Pursuant to AIM Rule 20, the Annual Report and Accounts for the financial year ended 30 November 2015 ("Annual Report") is available to view on the Group's website: www.aminocom.com and will be posted to shareholders shortly. Amino will hold its AGM on 29 March 2017.