27 Feb 2020 07:00
AMINO TECHNOLOGIES PLC
("Amino", the "Company" or the "Group")
FULL YEAR RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2019
Expanding our addressable market in the evolving TV industry
Amino Technologies plc, the global provider of media and entertainment technology solutions, announces its preliminary results for the year ended 30 November 2019.
Financial highlights
US$m unless otherwise stated | 2019 | 2018 |
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Revenue Adjusted gross profit (1) Adjusted operating profit (1) Adjusted operating cash flow (1) Adjusted basic earnings per share (US cents)(1) | 77.2 35.7 10.2 17.2 11.00 | 88.9 36.5 11.2 14.1 14.49 |
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Statutory gross profit Statutory operating profit (2018 restated) Statutory operating cash flow Statutory basic earnings per share (US cents)(2018 restated) | 37.2 4.3 13.8 4.04 | 38.0 7.7 14.3 10.71 |
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Net cash Dividend per share (GBP pence) | 1.4 7.32 | 20.3 7.32 |
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Expanding our addressable market in the evolving TV industry
·; Strategic repositioning reflects evolution of the media technology market towards consumer needs
·; Strong momentum for 24i (online video specialist)
o Good strategic fit, fully integrated with good progress since acquisition in July 2019
o Further expansion into the high growth online video market
o Supports drive to deliver modern video experiences driven by user experience
o First joint 24i / Amino contract (Youfone) underlines strategic rationale for acquisition
o Two major contract extensions and three new Smart App launches since July 2019
o AminoTV highly complementary to, and combined with 24i; renamed Smart Video
·; Transformation programme completed in H1 2019 and supporting improved quality of earnings
o Supports ongoing shift towards software and services
o Exceeded $5m cost savings target
o Programme completed in full, on time, in April 2019
Financial highlights
·; Improved quality of earnings after a year of transition
o Software and Services revenues up 41% and comprise 17% of total revenue (FY18: 11%)
o Recurring revenues up 44%. Exit Annual Recurring Run Rate revenue of $9.5m (FY18: $5.1m)
o Group revenues ahead of market forecasts but down 13% reflecting planned move away from lower margin, commoditised hardware revenues
·; Strong cash performance:
o Adjusted operating cash flow up 22% to $17.2m
o Net cash position maintained after the impact of the acquisition of 24i (cash consideration paid of $17.8m and net debt acquired of $2.7m) and dividend payments of $6.9m
o Full year dividend of 7.32 pence proposed
Current trading and outlook
·; Solid order book and sales pipeline visibility for FY20
·; Confident of further significant growth in software and services revenues in the year ahead
Karen Bach, Non-Executive Chairman, said:
"Amino has emerged from 2019 as a high growth software and services business serving the full spectrum of the media technology market. Our fundamental shift reflects a transition in our market, and positions us to satisfy the rapidly growing needs of consumers across online video, broadcast and Pay TV services. Our acquisition of 24i has been an important part of this shift, offering us a market leading position in delivering modern video experiences, exciting growth opportunities, and a good strategic fit with our existing AminoTV offering. Our financial performance in 2019 was strong, with results in line with expectations, excellent cash generation and improved quality of earnings following our successful transformation programme in the first half of the year.
We have a clear mission: to become the leading innovator and trusted partner in delivering agile, effective and industry-leading video entertainment experiences. Our shift to a higher growth software and services model, focused on consumer needs, supports our confidence of progress and profitable growth in 2020."
The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
For further information please contact:
Amino Media Technologies PLC | +44 (0)1223 598 197 |
Donald McGarva, Chief Executive Officer |
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Mark Carlisle, Chief Financial Officer |
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finnCap Ltd (NOMAD and Broker) | +44 (0)20 7220 0500 |
Matt Goode / Carl Holmes / Simon Hicks (Corporate Finance) Tim Redfern / Richard Chambers (ECM) |
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FTI Consulting LLP (Financial PR) | +44 (0)20 3727 1000 |
Jamie Ricketts / Chris Birt / Gregory Hynes |
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About Amino Technologies plc
Amino Technologies plc is a new breed of Media Tech business, focused on enabling operators to meet the challenge of the rapidly converging worlds of broadcast and next-generation streaming services. We believe the operators that will succeed will be those that allow consumers to control how, when and where they "watch TV" and consume video. The smart operator will enable each consumer to define what TV means to them.
It is our mission to anticipate the technological and consumer behavioural trends so that we can keep on creating the solutions that enable operators and media companies to drive growth in engagement and profitability while embracing the inevitable disruption to the video market. The Group meets these challenges through combining its award-winning IP/cloud platforms and deep deployment expertise to create solutions that enable our customers to design and deliver innovative and profitable next-generation video experiences.
Amino Technologies plc consists of two operating companies providing transformational media experiences: Amino Communications, with TV-centric solutions and 24i, focused on streaming and OTT experiences.
24i and Amino Communications are subsidiaries of Amino Technologies PLC which is listed on the London Stock Exchange Alternative Investment Market (AIM: symbol AMO), headquartered in Cambridge, Amino has offices in New York, Los Angeles, San Francisco, Amsterdam, Helsinki, Madrid, Porto, Brno and Hong Kong. For more details, visit https://investor.aminocom.com/
Notes
(1) Adjusted gross profit, adjusted operating profit, adjusted operating cash flow 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.
(2) The Board believes market forecasts for adjusted operating profit to be in the range of $10.0m to $10.1m with a consensus of $10.1m.
(3) The Board believes market forecasts for revenue to be in the range of $74.4m to $75.2m with a consensus of $74.8m.
Links to these forecasts are available in the investor section of the Amino website by following the link: http://investor.aminocom.com/shareholder-info/analyst-coverage
Chairman's statement:
In my first year as Chairman, I am pleased to report a strong performance in what has been a busy, productive and transformative year for the Company and the management team. During the year the team has delivered on the objectives of its transformation programme announced in February 2019; acquired a fast-growing online video Company in 24i and refinanced its existing loan facility. These are significant achievements and I believe set the foundation for a prosperous future for the Company. On behalf of the Board, I would like to take this opportunity to thank all our people in the Amino Technologies group for all their hard work and tireless commitment throughout the year.
Amino's mission and markets
We aim to become the leading innovator and trusted partner in delivering agile, effective and industry-leading video entertainment experiences. By providing the vital capabilities our customers need to become consumer-centric, data driven and flexible to change, it is our belief that in a highly disrupted media marketplace, Amino is addressing the seismic shifts that are forcing traditional TV and online streaming services together. While content is key; the way in which consumers discover, access, view and interact is of incredible importance too. Amino is focused on innovating technologies that optimise the entire video experience; in whichever way consumers choose to view and interact.
Strategic prioritiesAligned with Amino's mission, the Company's three strategic priorities are to:
Expand the Group's addressable market by investment in disruptive technology either organically or via M&A;
Grow margins by focussing on high growth software and services solutions as well as value-add hardware. By investing in products in these areas we aim to increase our software and recurring revenue thereby improving the visibility of revenue going forward; and
Maintain strong levels of operating cash generation to provide appropriate levels of return to shareholders as well investment for the future growth of the Company.
Progress against these strategic priorities in the year to 30 November 2019 has been good. The Group expanded its end-to-end online video product offering with the acquisition of 24i and won its first joint Amino/24i customer in Youfone. Amino's software revenues increased by 39% and recurring revenues by 44% over the prior year. The Company also generated $17.2m adjusted operating cash flow(1), converting 114% of adjusted EBITDA(1) into cash and paid $6.9m in dividends to shareholders.
Board changes
In March 2019, I succeeded Keith Todd as non-executive Chairman who had been on the Board for 12 years. At the same time Steve Vaughan and Erika Schraner were appointed as Non-Executive Directors, bringing with them a wealth of experience in leading listed technology companies as well as in strategy and business integration.
Since then, and following a further review of the Board's composition, in December 2019 I was delighted to appoint Joachim Bergman, Co-Chief Executive Officer of 24i to the Board in that capacity. This appointment reflects 24i's strategic importance to the Group. At the same time Steve McKay and Michael Clegg stepped down from their non-executive roles.
On behalf of the Board and everyone at Amino, I would like to thank Keith, Steve and Michael for their considerable contribution to the Group.
Dividend
The Board recommends a full year dividend of 7.32 GBP pence per share. The Board intends to maintain this for the coming financial year.
Karen Bach
Chairman
26 February 2020
Notes
(1) Adjusted operating cash flow and adjusted EBITDA are non-GAAP measures and defined in the Chief Financial Officer's review
Chief Executive's review:
The global Pay TV market continues to experience major changes as consumer expectations continue to evolve. As more content is being delivered to an expanding range of devices, owned by increasingly demanding customers, Pay TV is being forced to become more consumer centric. The adage of "Content is King" is still relevant when it comes to creating a service, but the consumer is in charge when it comes to the success of any video service.
The new world is one where location-independent, consumer-owned devices are used to devour streaming content. Consumers have embraced new user interfaces which present content options in new ways and provide levels of personalization not found in legacy Electronic Programming Guides. If operators cannot provide consumers with the perceived flexibility they receive from online video providers, subscribers will churn.
Data-driven services are the future. This requires correlating data from multiple sources with results that are represented in a configurable user experience. Pay TV providers must embrace these capabilities as much as online streaming services already are. Giving video providers the service capabilities needed to deliver engaging, compelling subscriber experiences, is driving Amino to expand its market reach, align with consumer driven market shifts and provide customers with more than just a set-top-box.
Acquisition of 24i
We completed the acquisition of 24i in July 2019. We are now able to provide operators and broadcasters with all the tools they need to deliver modern video experiences that place the consumer in control. This acquisition complements our existing AminoTV offering. As such we have integrated AminoTV into the 24i business.
Operational structure
With the integration of AminoTV into 24i now complete we run two business units that are closely aligned with a joint go-to-market sales strategy and sales teams: Amino, and 24i. Our Amino business focusses on its TV centric solutions and our 24i business on streaming and online video services. Modular in their product set, together they can deliver a fully integrated next generation end-to-end online video service with a compelling total cost of ownership.
Strategic Market opportunities
We continue to focus on our three strategic go-to-market opportunities which are supported by our Modern Video Eco-system:
·; IP/Cloud TV Everywhere: The market for the delivery of IP/Cloud TV Everywhere software and services are forecast to grow. A recent report by Nagra indicates that 86% of service providers are offering an online TV solution via a TV Everywhere approach. Our solutions provide cost effective and friction free ways to deploy modern multiscreen TV and video solutions.
·; Operator Ready Android TV: Android TV continues to be a force for growth in the Pay TV sector with market analysts forecasting that 70% of operators are considering Android TV. Amino's solution enables operators to integrate Android TV quickly and effectively as well as adding key functionality designed to make the system pay TV ready.
·; Upcycle legacy to next generation: AminoOS powers modern and legacy set-top-boxes. It improves performance and significantly reduces the costs of deploying modern TV experiences. S&P Global estimates this global market to grow to $800m by 2021. A further key aspect is the continuing relevance of devices. The set-top-box remains the key Pay TV experience delivery system and as a result our core business is stable with good growth potential.
Key performance indicatorsIn focussing on the Group's strategic priorities we monitor the following five key performance indicators, and which underpin the Group's financial progress:
| 2019 $m | 2018 $m |
Total revenueSoftware and services revenueAnnual run rate recurring revenue at 30 NovemberAdjusted gross margin %(2)Adjusted operating cash flow (note 9) | 77.213.09.546%17.2 | 88.99.35.141%14.1 |
The transformation programme announced in February 2019 comprised a renewed focus on software and services revenue and high value device sales. The acquisition of 24i in July 2019 (24i only sells software and services) helped increase overall software and services and recurring revenue and we expect that growth to continue organically into FY20. The decrease in overall revenues reflects the Group's stated strategy to not compete for lower margin hardware where customers are looking for a commodity product. Gross margins were improved across device and software and services revenues. Device margins improved despite significant component price increases in 2018. The Group continues to generate strong operating cash flows and adjusted operating cash flows improved by 22% in 2019 over the prior year.
24i
I am pleased to report that the integration of 24i into the Group has been completed.
Since 24i joined the Group in July 2019 it has continued to go from strength to strength. During that period, we have signed contract extensions with two major customers. We have also launched three new Smart App services in that period. Two for US based content owners including a new service for Broadway HD. We have also launched our first operator solution based on 24i's next generation Smart Apps platform with Slovak Telecom in Europe.
The AminoTV product has now been integrated into the 24i product suite and renamed Smart Video.
Smart Video continues to gain significant traction in EMEA. Our base of active users grew by 34% during FY19. Significantly we rolled out Smart Video on its first multi-tenant platform to Delta (the number one internet provider in Zeeland, in the Netherlands) and Caiway (the Dutch internet, TV and telephony firm).
We continue to invest in the 24i product set to drive efficiencies and ensure that the business scales profitably. The launch of our first customer on our next generation platform is a key stepping-stone to achieving that.
Amino
In North America, our performance was on target. We continue to work hard to mitigate the impact of US tariffs which were imposed on set-top-boxes in September 2019 and it remains uncertain as to when these will be removed.
In EMEA, we secured new business wins at Delta and Caiway as well as a new multi-year set-top-box supply agreement with existing customer Moldtelecom.
Progress in LATAM has also been good. Orders from key customers like GTD and Pontis alongside new customer wins with us supporting Entel, the National telecommunications operator in Bolivia, in a country-wide fibre roll-out.
In APAC we launched our first ODM customer deployment with a leading APAC tier one telecommunications operator. We have also in recent months secured our first client in Japan, with Android TV.
We completed two upcycling projects in 2019 in LATAM and EMEA and continue to see strong demand from operators for these projects. We have also seen increased demand for our SaaS device management platform with active devices managed increasing by 90% in the year.
Operationally, we exceeded our $5m annualised cost saving target through the transformation programme. We remain focused on improving key component costs in our supply chain and on delivering value to customers. Consequently, gross margins in the Amino business have increased by 5% over the prior year, although we do not expect any further improvement in 2020.
Future growth opportunities
Our first joint Amino/24i contract, an agreement with Youfone (Dutch mobile virtual network operator) to provide a fully integrated, end-to-end video solution, is the first proof point that our strategy to combine 24i and Amino is the correct one. Amino and 24i continue to work jointly together on a number of upcycling opportunities in North America. The Group has a healthy pipeline of sales opportunities in our key growth market segments and that is providing confidence in our longer-term strategy and focus.
Amino has also been unveiled by Netflix as a Hailstorm Partner. Hailstorm is the Netflix initiative designed to reduce the effort of integration and time-to-market for partners looking to launch Netflix services as part of their consumer offering. Amino is one of only nine service providers globally with this accreditation.
Current trading and outlook
Trading year to date is consistent with meeting management's full year expectations, with the Group's recently acquired business 24i having made good operational progress, as evidenced by several new contract wins and extensions including Amino and 24i's first joint contract.
As has widely been reported, following the outbreak of COVID-19 the Chinese government extended the end of the Lunar New Year holiday from 30 January to 9 February 2020. Factories in China involved in Amino's supply chain were therefore closed over this period. Production resumed on 10 February at a reduced capacity to ensure all health guidelines are met, and to address the irregular flow of raw materials in the region. The Group has good demand from its customers as well as a solid order book and sales pipeline visibility to the end of the financial year, and is working closely with its customers and supply chain partners to meet this demand while accommodating higher ex-factory leadtimes.
Overall, the addition and successful integration of 24i, allied to the Group's expanded portfolio, reinforces the Board's confidence of significant growth in software and services revenues in the year ahead.
Donald McGarva
Chief Executive Officer
Notes
(2) Adjusted gross margin is a non-GAAP measure and excludes exceptional items included in cost of sales as set out in note 4.
Chief Financial Officer's review
Overview
In February 2019, the Group announced a transformation programme to focus on monetising its higher margin core software capabilities and increasing the quality and nature of its revenues. The financial results of the year to 30 November 2019 reflect this transformation programme as well as the Group's acquisition of 24i, a high-growth software and services company. As a result:
·; Software revenues have increased by $3.7m to $13.0m (FY 2018 $9.3m) and represent 17% of total revenues.
·; Recurring revenues have increased by $2.2m to $6.9m (FY 2018 $4.7m) and represent 9% of total revenues; and
·; Adjusted gross margin has also increased overall from 41% to 46%.
Total revenue declined by 13% to $77.2m (FY 2018: $88.9m) which reflects the Group's stated strategy to not compete for lower margin hardware where customers are looking for a commodity product.
The Group continued to generate strong operating cash flows. Adjusted operating cash flow before restructuring and acquisition costs was $17.2m (FY 2018: $14.1m) representing an adjusted EBITDA cash conversion of 114% (FY 2018: 84%). Operating cash flow was $13.8m (2018: $14.3m).
After the impact of the acquisition of 24i (cash consideration paid of $17.8m and net debt acquired of $2.7m) and dividend payments of $6.9m, the Group had net cash of $1.4m at 30 November 2019 (30 November 2018: $20.3m). The Group signed a three-year $15m multicurrency revolving credit facility with Barclays on 25 November 2019.
On 12 July the Group acquired 87% of the share capital of 24i for €21.4m. Following a concurrent reorganisation to recapitalise 24i and transfer 100% of the share capital of Amino Communications Oy to 24i, the Group owns 92% of 24i, with the balance owned by the founders of 24i. 24i is an online video specialist, providing Apps as well as user experience solutions and services, complementary to Amino's existing offering.
Revenue
| 2019 $m | 2018 $m | Change |
Software and services Devices including integrated software | 13.0 64.2 | 9.3 79.6 | 39% (19%) |
Revenue | 77.2 | 88.9 | (13%) |
% Recurring | 9% | 5% |
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Software and services revenues represent revenues from our 24i division, our AminoOS software (sold independently from devices), as well as support for our AminoVU devices. Software and services revenues increased by 39% in the year as a result of the acquisition of 24i and growth across all these revenue streams and are now 17% of total revenues for the period (FY 2018: 11%). At 30 November 2019 annual run rate recurring revenues increased to $9.5m (30 November 2018: $5.1m).
Segment result
| Revenue |
| Segment result | ||
| 2019 $m | 2018 $m |
| 2019 $m | 2018 $m |
24i | 8.8 | 5.5 |
| 0.0 | 0.8 |
Amino | 68.4 | 83.4 |
| 17.1 | 17.8 |
Central costs | - | - |
| (2.3) | (1.8) |
Total | 77.2 | 88.9 |
| 14.8 | 16.8 |
The segment result shown above is in accordance with those shown to the Chief Operating Decision Maker. Segment result has been calculated as Adjusted EBITDA for each segment. Adjusted EBITDA is a company specific measure which is calculated as operating profit before depreciation, interest, tax, amortisation, exceptional items and employee share-based payment charges. This is consistent with the way the financial performance of the Group is presented to the Board and Chief Operating Decision Maker. The Directors believe that this provides a more meaningful comparison of how the business is managed and measured on a day-to-day basis.
24i segment result
| 2019 $m | 2018 $m |
Software and services | 8.8 | 5.5 |
Devices including integrated software | - | - |
Revenue | 8.8 | 5.5 |
Cost of Sales | (1.9) | (1.7) |
Gross margin | 6.9 | 3.8 |
Gross margin % | 78% | 69% |
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Operating costs | (6.9) | (3.0) |
Segment result | 0.0 | 0.8 |
Segment margin | 0% | 15% |
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Capitalised development costs | 1.9 | 1.9 |
The 24i segment comprises the results of 24i Media, acquired in July 2019 and the results of the Amino Communications Oy company that was contributed to the 24i division at that time. Amino Communications Oy runs the AminoTV online video service which has now been renamed SMART Video.
Amino segment result
| 2019$m | 2018$m |
Software and services | 4.2 | 3.8 |
Devices including integrated software | 64.2 | 79.6 |
Revenue | 68.4 | 83.4 |
Cost of Sales | (39.6) | (50.7) |
Gross margin | 28.8 | 32.7 |
Gross margin % | 42% | 39% |
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Operating costs | (11.7) | (14.9) |
Segment result | 17.1 | 17.8 |
Segment margin | 25% | 21% |
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Capitalised development costs | 2.2 | 2.6 |
The Amino segment comprises the results of the sales of AminoVU devices, related support as well as the AminoOS middleware and AminoSM device management platform.
Amino continues to sell its products directly to tier 2 customers and to tier 3 and 4 customers via distributors. The Group has two customers which each have more than 10% of total Group revenue, both of whom are Amino customers and are distributors.
Central costs
| 2019$m | 2018$m |
Operating costs | (2.3) | (1.8) |
Segment result | (2.3) | (1.8) |
Central costs comprise the costs of the Board, including executive directors as well as costs associated with the Company's listing on the London Stock Exchange.
Adjusted EBITDA
Adjusted EBITDA for the year to 30 November 2019 was $14.8m (2018: $16.8m). Adjusted EBITDA is a non-GAAP company specific measure. It is presented here consistently with the way the financial performance of the Group is presented to the Board and Chief Operating Decision Maker. The Directors believe that this provides a more meaningful comparison of how the business is managed and measured on a day-to-day basis.
| 2019 $m | 2018 $m |
Revenue | 77.2 | 88.9 |
Cost of Sales | (41.5) | (52.4) |
Gross margin | 35.7 | 36.5 |
Gross margin % | 46% | 41% |
Research and development | (8.7) | (6.5) |
SG&A | (12.2) | (13.2) |
Adjusted EBITDA | 14.8 | 16.8 |
The Group continues to invest in research and in the development of new products and spent $12.8m on R&D activities (FY 2018: $11.0m) of which $4.1m was capitalised (FY 2018: $4.5m).
A reconciliation of Adjusted EBITDA to operating profit is provided as follows:
| 2019$m | 2018$m |
Adjusted EBITDA | 14.8 | 16.8 |
Exceptional items: |
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·; Within cost of sales | 1.5 | 1.5 |
·; Within operating expenses | (2.5) | (2.8) |
·; Within operating income | - | 2.7 |
Employee share-based payment charge | (0.8) | (1.4) |
Depreciation and amortisation (2018 restated) | (8.7) | (9.1) |
Operating profit | 4.3 | 7.7 |
Exceptional items
Exceptional items within cost of sales in 2019 comprised a $1.5m credit in respect of royalty costs recognised in prior years which have subsequently been renegotiated.
Exceptional items included within operating expenses in 2019 comprised:
·; $0.7m restructuring costs incurred in February during a further rationalisation of the cost base to remove $5m of annualised costs following a business review performed in December 2019;
·; $1.1m costs incurred in respect of the acquisition of 24i Unit Media BV; and
·; $0.6m contingent post-acquisition remuneration in respect of the acquisition of 24i Unit Media BV.
Depreciation and amortisation
Excluding amortisation of intangibles recognised on acquisition, depreciation and amortisation increased to $4.6m (FY 2018: $5.6m). Amortisation of intangibles recognised on acquisition was $4.1m (FY 2018 restated: $3.5m).
Taxation
The tax charge of $0.6m comprises:
·; a $1.0m current tax charge relating to current year and $0.2m relating to prior year profits;
·; a $0.1m deferred tax charge relating to a reduction in the deferred tax asset as a result of losses used in the year; and
·; a $0.7m 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 $2.9m (FY 2018 restated: $7.8m).
Cash flow
Adjusted cash flow from operations was $17.2m (FY 2018: $14.1m) and represented 114% of adjusted EBITDA (FY 2018: 84%). Exceptional cash flows in 2019 comprised:
·; $1.1m acquisition costs in respect of the acquisition of 24i;
·; $1.8m restructuring costs in respect of two rationalisations of the cost base performed in October 2018 and February 2019; and
·; $0.5m payment of escrow funds to employees.
Including these exceptional cash out-flows cash generated from operations was $13.8m (FY 2018: $14.3m).
During the year the Group spent $0.1m (FY 2018: $0.2m) on capital expenditure in respect of tangible fixed assets and capitalised $4.1m of research and development costs and software licenses. The Group paid dividends of $6.9m in the year.
Financial position
The cash balance at 30 November 2019 was $8.6m (30 November 2018: $20.3m). The Group also has a $15m multicurrency revolving credit facility which expires in November 2022, of which $7.2m was drawn at 30 November 2019 (30 November 2018: $nil).
At 30 November 2019 the Group had equity of $82.6m (30 November 2018 restated: $83.6m) and net current liabilities of $2.3m (30 November 2018: net current assets $19.6m). 70% of trade receivables were insured (30 November 2018: 75%) and debtor days were 27 days (30 November 2018: 59 days).
Dividend
The Board has recommended a full year dividend of 7.32 GBP pence per share in line with the prior year. Subject to shareholder approval at the annual general meeting to be held on 2 April 2020, the dividend will be payable on 1 May 2020, to shareholders on the register on 14 April 2020, with a corresponding ex-dividend date of 9 April 2020.
Prior year restatement
As part of management and directors' review of the Group's financial statements during the year under audit, it was identified that the goodwill and intangible assets and related deferred tax liabilities recognised on the acquisition of Booxmedia Oy and Entone Inc in 2015 had been recorded in an incorrect currency. They had been recorded in the functional currency of the parent Company. However, IAS 21 requires them to be treated as assets and liabilities of the foreign operation and expressed in the functional currency of the foreign operation. They have now been recorded in their correct currency and the prior year comparatives have been restated. For the year ended 30 November 2018 the restatement has resulted in an increase in net assets of $10.1m, a decrease in profit for that financial year of $0.4m and a decrease in basic and diluted earnings per share of 0.5c. The impact of this restatement is set out in note 11 below.
Mark Carlisle
Chief Financial Officer
Amino Technologies plc
Consolidated income statement
For the year ended 30 November 2019
| Notes | Year to 30 November 2019$000s | Year to 30 November 2018Restated(see note 11)$000s |
RevenueCost of sales | 34 | 77,232(40,021) | 88,934(50,973) |
Gross profit |
| 37,211 | 37,961 |
Operating expenses Other operating income Operating profit |
4
| (32,877)-4,334 | (32,979) 2,700 7,682 |
Adjusted operating profit Share-based payment chargeExceptional itemsAmortisation of acquired intangible assets |
411 | 10,224 (829)(965)(4,096) | 11,158 (1,378)1,436(3,534) |
Operating profit |
| 4,334 | 7,682 |
Finance expenseFinance income |
| (966)113 | (53)90 |
Net finance (expense)/income | 5 | (853) | 37 |
Profit before tax Tax charge |
| 3,481 (629) | 7,719 70 |
Profit after tax |
| 2,852 | 7,789 |
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Profit for the year from continuing operations attributable to equity holders |
| 2,989 |
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Non-controlling interest |
| (137) | - |
Profit for the year |
| 2,852 | 7,789 |
Earnings per share Basic earnings per 1p ordinary share | 6, 11 | 4.04c | 10.71c |
Diluted earnings per 1p ordinary share | 6, 11 | 3.96c | 10.c |
All amounts relate to continuing activities.
The accompanying notes are an integral part of these condensed consolidated financial statements.
Amino Technologies plc
Consolidated statement of comprehensive income
For the year ended 30 November 2019
| Year to 30 November 2019 $000s | Year to 30 November 2018 Restated(see note 11)$000s |
Profit for the financial year | 2,852 | 7,789 |
Items that may be reclassified subsequently to profit or loss: Net foreign exchange loss arising on consolidation |
(445) |
(665) |
Other comprehensive expense | (445) | (665) |
Total comprehensive income for the year | 2,407 | 7,124 |
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|
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Non-controlling interest | 168 | - |
Total comprehensive income for the financial year attributable to equity holders | 2,575 | 7,124 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Amino Technologies plc
Consolidated statement of financial position as at 30 November 2019
Assets | Notes | As at 30 November 2019$000s | As at 30 November 2018Restated(see note 11)$000s | As at 30 November 2017Restated(see note 11)$000s |
Non-current assets Property, plant and equipmentIntangible assetsDeferred tax assetsTrade and other receivables | 10,117 | 39591,919637430 | 53465,024716402 | 79369,554751408 |
|
| 93,381 | 66,676 | 71,506 |
Current assets InventoriesTrade and other receivablesCorporation tax receivableCash and cash equivalents | 77 | 2,39916,48388,612 | 3,63320,290-20,310 | 4,28515,01222117,386 |
|
| 27,502 | 44,233 | 36,904 |
Total assets |
| 120,883 | 110,909 | 108,410 |
Capital and reserves attributable to equity holders of the Company Called-up share capitalShare premiumCapital redemption reserveForeign exchange reserveMerger reserveOther reserveRetained earnings |
| 1,36735,90712(3,461)30,122(1,750)19,790 | 1,32732,30012(3,047)30,122-22,880 | 1,32732,30012(2,382)30,122-20,282 |
Equity attributable to owners of the parent |
| 81,987 | 83,594 | 81,661 |
Non-controlling interest |
| 598 | - | - |
Total equity |
| 82,585 | 83,594 | 81,661 |
Liabilities Current liabilitiesTrade and other payablesCorporation tax payableLoans and borrowings | 88 |
21,8006847,314 |
24,226393- |
22,49926- |
|
| 29,798 | 24,619 | 22,525 |
Non-current liabilities Trade and other payablesProvisionsDeferred tax liabilities | 8 | 2,7851,2984,417 | -1,3181,378 | -2,0562,168 |
|
| 8,500 | 2,696 | 4,224 |
Total liabilities |
| 38,298 | 27,315 | 26,749 |
Total equity and liabilities |
| 120,883 | 110,909 | 108,410 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Amino Technologies plc
Consolidated statement of cash flows
For the year ended 30 November 2019
| Notes | Year to 30 November 2019$000s | Year to 30 November 2018$000s |
Cash flows from operating activities Cash generated from operationsCorporation tax paid |
9 |
13,815(1,023) |
14,310(73) |
Net cash generated from operating activities |
| 12,792 | 14,237 |
Cash flows from investing activities Purchases of intangible assetsPurchases of property, plant and equipment Interest receivedAcquisition of subsidiaries |
| (4,150)(69)113(18,916) | (4,589)(177)37- |
Net cash used in investing activities |
| (23,022) | (4,729) |
Cash flows from financing activities Proceeds from exercise of employee share optionsDividends paidInterest paidRepayment of borrowingsNew bank loans raised |
|
-(6,889)(187)(1,583) 7,236 |
225(6,794)--- |
Net cash used in financing activities |
| (1,423) | (6,569) |
Net (decrease)/increase in cash and cash equivalentsCash and cash equivalents at beginning of yearEffects of exchange rate fluctuations on cash held |
| (11,653)20,310(45) | 2,93917,386(15) |
Cash and cash equivalents at end of year |
| 8,612 | 20,310 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Amino Technologies plc
Consolidated statement of changes in equity
For the year ended 30 November 2019
| Share capital $000s | Share premium $000s | Merger reserve $000s | Putoption reserve$000s | Foreign exchange reserve$000s | Capital redemptionreserve$000s | Profitand loss$000s | Total attributable to ownersof parent$000s | Non-controlling interest$000s | Total Equity$000s |
Shareholders' equity at 30 November 2017 (previously reported) | 1,327 | 32,300 | 30,122 | - | (11,826) | 12 | 21,158 | 73,093 | - | 73,093 |
Prior year adjustments (see note 11) | - | - | - | - | 9,444 | - | (876) | 8,568 | - | 8,568 |
Shareholders' equity at 30 November 2017 (restated) | 1,327 | 32,300 | 30,122 | - | (2,382) | 12 | 20,282 | 81,661 | - | 81,661 |
Profit for the year (see note 10)Other comprehensive expense (see note 10) | - - | -- | -- | -- | -(665) | -- | 7,789- | 7,789(665) | -- | 7,789(665) |
Total comprehensive income for the year attributable to equity holders | - | - | - | - | (665) | - | 7,789 | 7,124 | - | 7,124 |
Share based payment chargeExercise of employee share optionsDividends paid | --- | --- | --- | --- | --- | --- | 1,378225(6,794) | 1,378225(6,794) | --- | 1,378225(6,794) |
Total transactions with owners | - | - | - | - | - | - | (5,191) | (5,191) | - | (5,191) |
Total movement in shareholders' equity | - | - | - | - | (665) | - | 2,598 | 1,933 | - | 1,933 |
Shareholders' equity at 30November 2018 (restated) | 1,327 | 32,300 | 30,122 | - | (3,047) | 12 | 22,880 | 83,594 | - | 83,594 |
Profit for the yearOther comprehensive expense | - - | -- | -- | -- | -(414) | -- | 2,989- | 2,989(414) | (137)(31) | 2,852(445) |
Total comprehensive income for the year attributable to equity holders | - | - | - | - | (414) | - | 2,989 | 2,575 | (168) | 2,407 |
Share based payment chargeIssue of share capitalDividends paidAcquisition of 24iReorganisation of 24iPut option in relation to 24i | -40---- | -3,607---- | ------ | -----(1,750) | ------ | ------ | 829-(6,889)--(19)- | 8293,647(6,889)-(19)(1,750) | ---766-- | 8293,647(6,889)766(19)(1,750) |
Total transactions with owners | 40 | 3,607 | - | (1,750) | - | - | (6,079) | (4,182) | 766 | (3,416) |
Total movement in shareholders' equity | 40 | 3,607 | - | (1,750) | (414) | - | (3,090) | (1,607) | 598 | (1,009) |
Shareholders' equity at 30 November 2019 | 1,367 | 35,907 | 30,122 | (1,750) | (3,461) | 12 | 19,790 | 81,987 | 598 | 82,585 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Amino Technologies plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2019
1 Basis of preparation
The financial information set out in this document does not constitute the Group's statutory accounts for the years ended 30 November 2018 or 2019. Statutory accounts for the years ended 30 November 2018 and 30 November 2019, which were approved by the Directors on 26 February 2020, have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for each of 2018 and 2019 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 30 November 2018 have been filed with the Registrar of Companies. The statutory accounts for the year ended 30 November 2019 will be delivered to the Registrar in due course, and will be available from the Company's registered office at Botanic House, 100 Hills Road, Cambridge, England, CB2 1PH and from the Company's website http://investor.aminocom.com/
The accounting policies adopted in these results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the financial statements for the year ended 30 November 2018, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 December 2018. New standards impacting the Group that have been adopted in the annual financial statements for the year ended 30 November 2019 are IFRS 15 Revenue from contracts with customers (replacing IAS 18) and IFRS 9 Financial Instruments. IFRS 15 can change revenue recognition accounting policies i.e. performance obligations, timing, principal-agent, control of goods, variable consideration. However, there was no material impact on the current or previous financial year on the Group's accounting treatment from policies adopted under IAS 18.
In addition, the Group has considered the effects of the changes to IFRS 9 and elected to adopt the initial application date of 1 December 2018 and there was no material impact on the current financial year on the Group's accounting adoption of IFRS 9.
All other principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 30 November 2018. New enforced standards, amendments and interpretations to existing standards, which have been adopted by the Group have not been listed, since they have no material impact on the financial statements.
2 Going Concern
The Directors have at the time of approving the statutory financial statements, an expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Directors have plans and forecasts that show the Group will be able to continue as a going concern for at least a period of twelve months from the date of balance sheet approval. Cashflows are projected to be at a sufficient level to allow the group to meet its obligations. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.
3 Geographical external customer revenue analysis
Geographical external customer revenue analysis | Year to30 November 2019 $000s | Year to30 November 2018 $000s |
North America | 33,778 | 49,613 |
Latin America | 10,433 | 9,039 |
Netherlands Rest of EMEA | 16,706 14,179 | 11,509 17,356 |
EMEA | 30,885 | 28,865 |
Rest of the World | 2,136 | 1,417 |
| 77,232 | 88,934 |
For this disclosure revenue is determined by the location of the customer.
Amino Technologies plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2019
4 Exceptional items
Exceptional items within cost of sales and operating costs comprise the following charges/(credits):
| Year to30 November 2019 $000s | Year to30 November 2018 $000s |
Credit relating to royalty costs recognised in prior years and subsequently renegotiated | (1,480) | (1,490) |
Subtotal cost of salesExpensed contingent post-acquisition remuneration inrespect of the acquisition of 24i Unit Media BVRedundancy and associated costsAborted acquisition costsAcquisition costs | (1,480)597723-1,125 | (1,490)-2,372382- |
Subtotal operating expenses | 2,445 | 2,754 |
Other operating income | - | (2,700) |
Total exceptional items | 965 | (1,436) |
Other operating income is comprised of proceeds of a claim settled against former Entone, Inc. shareholders in respect of previously unrecorded liabilities identified post the acquisition of Entone, Inc.
5 Net finance (expense)/income
| Year to30 November 2019 $000s | Year to30 November 2018 $000s |
Interest payable and similar costs Interest receivable and similar income Net foreign exchange losses | (614) 113 (352) | (24) 90 (29) |
| (853) | 37 |
Interest payable and receivable relates to the Group's bank balances, loss on debt modification during the year and extended credit terms offered to one customer, in accordance with IFRS 15 Revenue from contracts with customers.
Interest payable and similar costs comprises:
·; Loss on debt modification during the year of $330,000 (2018: $nil);
·; Loan interest payable of $176,000 (2018: $nil);
·; Unwinding of discount of the put option regarding the non-controlling interest of the 24i Group of $98,000 (2018: $nil); and
·; Bank and other interest payable of $10,000 (2018: $24,000).
Amino Technologies plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2019
6 Earnings per share
| Year to30 November 2019 $000 | Year to30 November 2018 Restated$000 |
Profit attributable to ordinary shareholders | 2,989 | 7,789 |
Exceptional items Share-based payment charges Amortisation of acquired intangible assets | 965 829 4,096 | (1,436) 1,378 3,534 |
Tax effect thereon | (734) | (734) |
Profit attributable to ordinary shareholders excluding exceptional items, share-based payments and amortisation of acquired intangibles and associated taxation | 8,145 | 10,531 |
Weighted average number of shares (Basic) | 74,050,058 | 72,700,215 |
Dilutive share options outstanding | 1,336,325 | 129,420 |
Weighted average number of shares (Diluted) | 75,386,383 | 72,829,635 |
Basic earnings per share | 4.04c | 10.71c |
Diluted earnings per share | 3.96c | 10.70c |
Adjusted basic earnings per share | 11.00c | 14.49c |
Adjusted diluted earnings per share | 10.80c | 14.46c |
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 2,039,647 (2018: 2,039,647) of its own shares in treasury and these are excluded from the weighted average above. The basic weighted average number of shares also excludes 242 (2018: 22,586) being the weighted average shares held by the EBT in the year.
The number of dilutive share options above represents the share options where the exercise price is less than the market price if the Company's ordinary shares. Amortisation of acquired intangible assets and the tax effect thereon for the year to 30 November 2018 have been restated, see note 11 for details.
Amino Technologies plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2019
7 Trade and other receivables
| As at30 November 2019 $000s | As at30 November 2018 $000s |
Current assets: Trade receivablesLess: provision against trade receivables |
15,414(1,317) |
18,907(108) |
Trade receivables (net)Contract assets | 14,0971,250 | 18,799328 |
Total financial assets other than cash and cash equivalents classified as amortised cost | 15,347 | 19,127 |
Other receivablesPrepayments | 638498 | 368795 |
Sub-total | 16,483 | 20,290 |
Corporation tax receivable | 8 | - |
| 16,491 | 20,290 |
Non-current assets: Other receivables |
430 |
402 |
Other receivables due in more than one year comprise rent deposits. The carrying value of trade and other receivables classified at amortised cost approximates fair value. The Group does not hold any collateral as security.
8 Trade and other payables
| As at30 November 2019 $000s | As at30 November 2018 $000s |
Current liabilities Trade payablesOther payablesAccrualsDeferred considerationDeferred post-acquisition remuneration |
9,9591259,116154395 |
14,165-9,332-- |
Total current financial liabilities, excluding loans and borrowings, measured at amortised cost Social security and other taxesContract liabilities | 19,749 7281,323 | 23,497 500229 |
Sub-total trade and other payables Tax payable | 21,800 684 | 24,226 393 |
| 22,484 | 24,619 |
Non- current liabilities Other payablesDeferred contingent considerationDeferred considerationDeferred post-acquisition remuneration24i Founders Put option |
565291541981,848 |
----- |
| 2,785 | - |
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
Amino Technologies plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2019
9 Cash generated from operations
| Year to30 November 2019 $000s | Year to30 November 2018 $000s |
Profit for the yearTax expense/(credit)Net finance costs/(income)Amortisation chargeDepreciation chargeLoss on disposal of property, plant and equipmentShare based payment chargeExchange differencesDecrease in inventoriesDecrease/(increase) in trade and other receivablesDecrease in provisions(Decrease)/increase in trade and other payables | 2,8526298538,38428155829(247)1,2345,524(20)(6,559) | 7,789(70)(37)8,69643071,378(253)652(5,278)(738)1,734 |
Cash generated from operations | 13,815 | 14,310 |
Adjusted operating cash flow before exceptional cash outflows was $17.2m (2018: $14.1m).
| Year to30 November 2019 $000s | Year to30 November 2018 $000s |
Adjusted operating cashflowRedundancy and associated costsAcquisition costsAborted acquisition costsProceeds of a claim settled against former Entone, Inc. shareholders in respect of previously unrecorded liabilities identified post the acquisition of Entone, Inc.(Payment)/receipt of Escrow funds payable to current and former employees of the GroupRoyalty settlements | 17,179(1,753)(1,125)--(486)- | 14,115(1,268)-(382)2,700486(1,341) |
Cash generated from operations | 13,815 | 14,310 |
Amino Technologies plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2019
10 Intangible assets
| GoodwillRestated $000s | Customer relationshipsRestated $000s | Trade namesRestated $000s | Intellectual Property $000s | Software licences $000s | Development costs $000s | Acquired platformsRestated $000s | TotalRestated $000s |
Cost At 30 November 2017 as reportedPrior year restatement (see note 11) |
42,9847,042 |
8,5341,367 |
1,417239 |
390- |
2,220- |
28,124- |
8,1171,464 |
91,78610,112 |
At 30 November 2017 restated | 50,026 | 9,901 | 1,656 | 390 | 2,220 | 28,124 | 9,581 | 101,898 |
AdditionsDisposalsForeign exchange adjustment | --(304) | --(26) | --(13) | --- | 84(637)(99) | 4,505-(1,261) | --(137) | 4,589(637)(1,840) |
At 30 November 2018AdditionsAcquisition of subsidiaryDisposalsForeign exchange adjustment | 49,722-16,675-(343) | 9,875-10,262-(249) | 1,643-845-(28) | 390---- | 1,56815-(5)13 | 31,3684,135--- | 9,444-4,050-(197) | 104,0104,15031,832(5)(804) |
At 30 November 2019 | 66,054 | 19,888 | 2,460 | 390 | 1,591 | 35,503 | 13,297 | 139,183 |
Amortisation At 30 November 2017 as reportedPrior year restatement (see note 11) |
-- |
2,571419 |
663112 |
390- |
2,062- |
21,578- |
3,850699 |
31,1141,230 |
At 30 November 2017 restated | - | 2,990 | 775 | 390 | 2,062 | 21,578 | 4,549 | 32,344 |
Charge for the yearEliminated on disposalsForeign exchange adjustment | --- | 1,286-(18) | 331-(9) | --- | 90(637)(95) | 5,073-(1,199) | 1,916-(96) | 8,696(637)(1,417) |
At 30 November 2018Charge for the yearEliminated on disposalsForeign exchange adjustment | ---- | 4,2581,580-(48) | 1,097363-(11) | 390--- | 1,42083(5)13 | 25,4524,206-- | 6,3692,153-(56) | 38,9868,385(5)(102) |
At 30 November 2019 | - | 5,790 | 1,449 | 390 | 1,511 | 29,658 | 8,466 | 47,264 |
Net book amount At 30 November 2019 | 66,054 |
14,098 |
1,011 |
- |
80 |
5,845 |
4,831 |
91,919 |
At 30 November 2018 | 49,722 | 5,617 | 546 | - | 148 | 5,916 | 3,075 | 65,024 |
At 30 November 2017 | 50,026 | 6,911 | 881 | - | 158 | 6,546 | 5,032 | 69,554 |
Amino Technologies plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2019
11 Prior year restatement
In 2015, goodwill, acquired intangible assets and associated deferred tax liabilities recognised in respect of the acquisitions of Booxmedia Oy and Entone Inc. in were recorded in the consolidated financial statements in GBP, the functional currency of the parent company. When the Group presentation currency changed to USD for the year ended 30 November 2018, these GBP values were translated to USD. However, IAS 21 requires these assets and liabilities to be treated as assets and liabilities of the foreign operation and expressed in the currency of the foreign operation. For Booxmedia Oy this should have been, Euro and for Entone, Inc this should have been USD.
Consequently, the prior year comparatives have been restated as if the goodwill, acquired intangible assets and associated deferred tax liabilities recognised on the acquisition of Booxmedia Oy had been recorded in Euro and those recognised on the acquisition of Entone Inc had been recorded in USD. The following tables summarise the impact of the prior period restatement.
Impact on earnings per share and profit for the financial year in the consolidated income statement
For the year ended 30 November 2018 | Profit for the year from continuing operations $000s | Basic earnings per share US cents | Diluted earnings per share US cents |
As previously reported | 8,179 | 11.25 | 11.23 |
Increase in amortisation of acquired intangible assets | (521) | (0.72) | (0.72) |
Additional deferred tax credit | 131 | 0.18 | 0.18 |
As restated | 7,789 | 10.71 | 10.69 |
Impact on net foreign exchange losses arising on consolidation in the consolidated statement of comprehensive income:
|
| Year to30 November 2018 $000s |
Net foreign exchange loss arising on consolidation (as previously reported) |
| (2,594) |
Foreign exchange adjustment |
| 1,929 |
Net foreign exchange loss arising on consolidation (restated) |
| (665) |
Amino Technologies plc
Notes to the condensed consolidated financial statements
For the year ended 30 November 2019
11 Prior year restatement (continued)
Impact on the consolidated statement of financial position:
| As at30 November 2018 $000s | As at30 November 2017 $000s |
Intangible assets (as previously reported) | 54,734 | 60,672 |
Foreign exchange adjustmentAmortisation charge | 12,372(2,082) | 10,112(1,230) |
Intangible assets (restated) | 65,024 | 69,554 |
|
|
|
Deferred tax liabilities (as previously reported) | 1,195 | 1,854 |
Foreign exchange adjustment and corresponding adjustment of deferred tax credit | 183 | 314 |
Deferred tax liabilities (restated) | 1,378 | 2,168 |
|
|
|
Total equity (as previously reported) | 73,487 | 73,093 |
Impact of the adjustments set out above | 10,107 | 8,568 |
Total equity (restated) | 83,594 | 81,661 |
12 Cautionary Statement
This document contains certain forward-looking statements relating to Amino Technologies plc (the "Company"). The Company considers any statements that are not historical facts as "forward-looking statements". They relate to events and trends that are subject to risk and uncertainty that may cause actual results and the financial performance of the Company to differ materially from those contained in any forward-looking statement. These statements are made by the Directors in good faith based on information available to them and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
13 AGM / Annual Report
Pursuant to AIM Rule 20, the Annual Report and Accounts for the financial year ended 30 November 2019 ("Annual Report") is available to view on the Group's website: investor.aminocom.com and will be posted to shareholders shortly. Amino will hold its AGM on 2 April 2020.