AMO.L Regulatory News (AMO)

AMINO TECHNOLOGIES PLC

FINAL RESULTS

FOR THE YEAR ENDED 30 NOVEMBER 2014

-Strong performance with increased full year profit and return to revenue growth in the second half-

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 2014.

Financial highlights:

- Revenue in line with expectations at £36.2m (2013: £35.9m) with return to growth in the second half

- Gross margin up 1 percentage point to 46.3% (2013: 45.3%)

- EBITDA before exceptional items increased by 11% to £6.7m (2013: £6.0m)

- Profit before exceptional items and tax increased by 23% to £4.2m1 (2013: £3.4m)

- Profit before tax after exceptional items of £4.0m (2013: £4.2m)

- Strong cash generation from operations with period-end net cash up 6% to £20.8m (2013: £19.5m), equivalent to 40.0p per share (2013: 37p per share) after share buyback of £1.4m and dividend of £1.9m paid in the period

- Material increase in the full year dividend to 5.0p, up 45% year on year (2013: 3.45p), with a continuation in the progressive dividend policy for the dividends relating to the two financial periods to November 2016 of growth of no less than 10% per annum

- Positive outlook for the year ahead, with expectation of continued revenue growth as well as further profit growth

Operational highlights:

- Significant expansion of product offering with good traction achieved in key markets

- Strong revenue growth in North America and emerging markets of LATAM and Eastern Europe

- Investment in sales engine and lead generation strengthened

- Continued delivery of efficient supply chain and procurement

1 Stated before exceptional restructuring costs of £0.2m (2013: £0.8m) and an exceptional duties rebate of £nil (2013: £1.7m)

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

"2014 was an important year for Amino where we have turned the corner and moved into a period where we can anticipate top line growth in addition to profit growth. Our discipline on cost control and gross margin enabled the Company to end the year with a record profit and net cash position. The investments we have made into the new product portfolio will contribute to the anticipated full year revenue growth in 2015. In addition to our actions to drive the Group's financial performance, we have materially increased dividends and continue to review acquisition opportunities in the market. We are pleased to say the outlook for 2015 is positive."

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Chairman's statement:

Amino has delivered a strong performance during 2014, with full year profits considerably ahead of the prior year, an improved cash position and a return to revenue growth in the second half of the year.

Furthermore, shareholder value has been enhanced through the continued commitment to a progressive dividend policy and share buybacks in the second half of the year.

Profitability and cash conversion have both been strong with a record net cash position at the year- end. Gross margins have been enhanced and tight cost control maintained. New product and a strong sales performance ensured that the Company returned to revenue growth in the second half.

At the start of the year, the Board set out a clear strategic direction to develop a broader solution-based portfolio to grow the Company's addressable market. I am pleased to report that the Company has achieved its objectives. New products aligned to market demand have been delivered on time and are achieving good traction in key markets driven by an invigorated sales engine. In particular, this new product set has helped both to secure new customer wins and led to increased demand with key accounts.

This positive set of results has been achieved against significant wider industry trends which align closely with the Company's skillset and technology roadmap. The move towards Internet Protocol (IP) as the means of delivering multiscreen services to consumers within the home is re-shaping entertainment service delivery, particularly in the cable TV market. Likewise, the move towards 4K Ultra HD television delivery is accelerating and also creating new opportunities for the Company.

Dividend and Buyback:

In addition to the improved operating performance, three separate share buy-backs undertaken during the period coupled with the progressive dividend policy, underline the Board's commitment to deliver long term shareholder value.

To demonstrate the Board's confidence in the underlying profitability of the business and mindful of our continued strong cash generation and significant cash balances, the Board is pleased to recommend a material increase in the full year dividend of 5.0 pence per share (FY 2013: 3.45p per share), representing a 45% increase year-on-year. During 2012, the Board committed to a progressive dividend policy of no less than 10% per annum. Notwithstanding the significant increase this year, the Board reiterates its commitment to growth of no less than 10% per annum increase up to and including the dividend for the financial period ending November 2016. 

Subject to shareholder approval at the annual general meeting to be held on 2 April 2015, the dividend will be payable on 24 April 2015, to shareholders on the register at 7 April 2015 with a corresponding ex-dividend date of 2 April 2015.

Outlook:

Amino made strong progress in 2014 in broadening its product portfolio. As previously stated, the Board expects this new enhanced portfolio, which will widen the Company's addressable market, to build on the trends seen in the second half of 2014 and contribute to revenue growth for the year ending November 2015. In addition, the Board continues to evaluate options to broaden its position in the wider IP market place. The Board is pleased to say that the outlook for 2015 is positive.

Chief executive's review:

Current customers and markets:

Amino's markets are evolving rapidly as the way entertainment is consumed re-shapes operator strategies. Operator demand for simple, reliable IPTV devices remains consistently strong, particularly in emerging markets. Increasingly, however, operators are looking for higher performance devices that can blend traditional IPTV with OTT content delivered over the open Internet. In addition, there is growing demand for new kinds of "connected home" platforms - where a single device delivers a range of content to multiple screens around the home alongside simple home management capability. In the longer term, operators are now clarifying their service delivery roadmaps to ensure they are positioned to provide 4K Ultra HD services.

Against this market backdrop, Amino's market proposition has evolved rapidly during the year to meet these opportunities and the Company has benefited from a focussed approach to targeting customers and a wider range of products. The enhanced portfolio now ranges from competitively priced low specification devices for emerging markets through to the enhanced A150 mainstream product, to the high performance Live Advanced Media Platform. We also offer our customers a number of value-added features and products, underpinned by professional services offerings including customer support and training.

In North America, the Company achieved strong growth in revenues. The launch of the Live Advanced Media Platform was well received with contracts secured with ITC and C-Spire - one of the new generation of "quad play" operators that has transitioned from a mobile services provider into a fibre-based delivery model encompassing broadband, telephony and entertainment services.

This encouraging trend was echoed in the Middle East and Africa region where leading national operator Turkcell deployed the platform as part of its multi-service broadband, mobile and entertainment offering.

The Company continues to receive solid demand for its lower specification product offering in Latin America and Eastern Europe. New contracts were secured in the Argentinian market where de-regulation is opening up new opportunities for locally-focussed operators to deploy IPTV services and a new contract was secured with ALBTelecom, the leading Albanian operator. Encouragingly, the new A150 device has been accepted by a long-established operator in the LATAM region as a replacement for their existing Amino product. In the Caribbean, the Company secured a contract with LIME, part of the Cable and Wireless group, for the provision of devices for service rollout across a number of territories.

Western Europe was a challenging market for both Amino and the wider industry in 2014, with a combination of economic uncertainty and market saturation in certain territories curtailing growth opportunities during the year. However, a key customer in the Netherlands re-entered the market towards the end of the year placing new orders for the recently launched A150 device. In addition, another operator in the Netherlands is now deploying Amino's new Timeshift pause live TV solution, the Group's flash USB drive that enables users to pause and rewind live TV, to its customer base.

Broadening Amino's addressable market

The Company has taken significant steps during the year to develop new products to address a wider range of customers.

The Company's broader product portfolio has been well received with strong customer interest and orders for new features and value added products during the second half of the year. The integration of YouTube, achieved just after the year-end, and the addition of the Company's new "app store" into the new product set, underlines the Company's commitment to continued product enhancement and value.

A new service layer based around home monitoring and control was also launched towards the end of the year. Called "Home Reach", the solution offers a range of "peace of mind" services using cameras, door and movement sensors to enable users to monitor their homes via their smartphones. Customer interest has been high with a number of early-stage trials are underway.

New opportunities in the pay-TV industry are also emerging that align very closely with Amino's expertise. The wider pay-TV industry transition to Internet Protocol (IP) as the means of delivering multiscreen and "connected home" services presents new opportunities to address adjacent markets. Operators in the wider pay-TV market, including satellite and cable, are now beginning to add IP-based services to their offerings and in the longer term, analysts see the entire industry moving to IP for service delivery.

Likewise, the industry is moving towards new 4K Ultra HD TV services, although it is expected that mass market take-up will only be achieved by 2018. New highly efficient video compression technology has been developed to enable the delivery of these services over IP networks. However, HEVC (High efficiency video coding) also offers immediate benefits to existing pay TV operators in the delivery of high definition (HD) services at much slower network speeds than previously experienced. New products to address this opportunity are planned for 2015.

Operational performance:

During the year the Company's sales engine has been re-shaped following the appointment of a new VP of Global Sales and additional industry-proven specialists to the team. The team's renewed energy and sharp focus on customer and partner engagement is now feeding through with evidence of an upturn in tender activity through the second half of the year and stronger lead generation than in previous periods.

Continued improvement in the innovation cycle - driven by consolidation of all research and development into the Cambridge headquarters - is evidenced by the pace with which new products and solutions are now being brought to market.

Further consolidation has taken place in the operational side of the business. The Company's China office closed at the end of the year with functions now being performed in the UK by the Group's experienced development team. This underlines the strong operational expertise within the business and excellent supplier management relationships developed over the past decade.

Our priority:

In 2014, Amino has demonstrated its ability to innovate and deliver devices and solutions that are closely aligned with customer needs. This remains the priority for the year ahead with a further broadening and deepening of the portfolio to address both current and adjacent markets. The move across the pay-tv industry to IP-based service delivery - and wider connected home trends - presents fresh opportunities for the Company to exploit its leading position in enabling IP-based entertainment service delivery.

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 £36.2m - slightly ahead of the previous year (2013: £35.9m). The Company returned to growth in the second half of the year, with sales of £19.8m (2013: £15.7m).

North America remained a very strong market for the Company with sales increasing by 14% to £17.5m (2013: £15.3m).

As noted previously, Western Europe remained challenging for the industry as a whole and this particularly impacted Dutch sales as anticipated where sales totalled £5.5m, £1.5m lower than 2013 (2013: £7.0m).

Demand for the lower cost, lower functionality product remained strong in the emerging markets that it was designed for - Eastern Europe and Latin America. Within these regions, revenue in Serbia increased by 27% to £3.6m (2013: £2.8m) whilst Chile remained an important market, delivering revenue of £2.4m (2013: £2.3m).

Within the Rest of the World, revenue declined by £1.1m to £7.2m (2013: £8.3m). Good traction for lower cost, lower functionality product was achieved in Eastern Europe and LATAM regions with new customers, particularly in Albania and Argentina. However, this revenue increase was offset by industry challenging conditions in Western Europe.

Margins remained strong at 46.3%, an increase of 1 percentage point over last year (2013: 45.3%) which is driven from the continued focus on securing higher margin business and delivering continual operational improvements. This margin growth, coupled with the small increase in revenue, contributed to an increase of £0.6m in gross profit to £16.8m (2013: £16.2m).

Pre-exceptional operating expenses before amortisation and depreciation have decreased by £0.2m to £10.1m (2013: £10.2m). This was due to strong cost control, particularly within selling, general and administrative expenses, partially offset by a reduction in the capitalisation of Research and Development costs.

Significant investment in Research and Development continued to be made with total spend, including capitalised amounts, during the year of £7.0m (2013: £6.5m). During the year, the company introduced an enhanced product portfolio including the Live Advanced Media Platform and mainstream A150 IPTV device. In addition, the Company continued to develop its technology roadmap to align with market trends around the connected home. In 2014, the Live Advanced Media Platform and the A150, which are part of the new product portfolio, were launched which led to more resource being involved in the enhancement and support of products and therefore a reduction in capitalisation of £0.6m to £2.3m (2013: £2.9m).

Year-end headcount was 107 (2013: 100) and the average number of employees during the year totalled 100 (2013: 103) as a result of additional resource in the software and hardware teams to maintain the focus on research and development.

EBITDA before exceptional items at £6.7m was 11% higher than the prior year (2013: £6.0m).

Amortisation and depreciation totalled £2.6m, in line with the level of amortisation in the prior year (2013: £2.7m).

Profit before exceptional items and tax totalled £4.2m - a £0.8m improvement on the prior year (2013: £3.4m).

During the year, an exceptional charge of £0.2m was incurred, relating to the closure of the Chinese office. No further costs are anticipated in 2015 in respect of this office closure.

Balance sheet

Total equity was £25.8m at the year-end (2013: £24.9m) which is equivalent to 50p per share (2013: 47p) of which £20.8m (2013: £19.5m), or 40.0p per share (2013: 37.0p per share), is represented by net cash balances.

Net current assets at the year-end were £20.9m (2013: £19.9m), the principal components of which were net cash balances of £20.8m (2013: £19.5m), trade and other receivables of £6.9m (2013: £5.2m), stock of £2.3m (2013: £2.5m) and trade and other payables of £9.0m (2013: £7.4m). 

- 96% of trade receivables at 30 November 2014 were insured (2013: 84%)

- The increase in trade and other payables at the year-end was largely due to higher 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 £20.8m at year end (2013: £19.5m). This £1.3m improvement was despite total cash outflows of £1.4m on share buybacks and £1.9m in respect of dividend payments made in the period (2013: £2.1m).

The Company has recently received a favourable ruling with respect to duties' rebate at a tax tribunal (against which HMRC may appeal) which would realise a cash receipt of circa £700,000 during the current financial year.

Equity

The issued share capital of the Group is 57.9m (2013: 57.9m) ordinary shares of 1 pence each, of which 1.8m (2013: 1.9m) are held by the Employee Benefits Trust and, following the buyback of a further 1.4m shares during the year, 4.2m (2013: 2.8m) are held in treasury by the Company, leaving 51.8m (2013: 53.2m) shares held external to the Group.

The Board is pleased to recommend a full year dividend of 5.0 pence per share, a 45% increase year-on-year. In line with previous guidance, the Board expects the dividend for the year to November 2016 to grow by no less than 10% per annum.

Subject to shareholder approval at the Company's AGM on 2 April 2015, the final dividend of 3.85p will be payable on 24 April 2015 to shareholders on the register on 7 April 2015. The ex-dividend date is 2 April 2015.

Julia Hubbard

Chief Financial Officer

Consolidated Income StatementFor The Year Ended 30 November 2014

All amounts relate to continuing activities.

Consolidated Statement of Comprehensive Income

For The Year Ended 30 November 2014

Consolidated Balance sheet

As At 30 November 2014

Consolidated Statement of Cash Flows

For The Year Ended 30 November 2014

Consolidated Statement of Changes in Shareholders' Equity

For The Year Ended 30 November 2014

1 Basis of preparation

The preliminary announcement for the year ended 30 November 2014 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 30 January 2015, is derived from the full Group accounts for the year ended 30 November 2014 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 2014, 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 £151,696 during the year (2013 - £841,282). These costs largely relate to the closure of the Group's Chinese office which was announced in September 2014. In 2013, 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, further to the decision to focus all research and development in Cambridge.

During the prior 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.

The Company has recently received a further favourable ruling with respect to a further duties' rebate at a tax tribunal (against which HMRC may appeal) which would realise a cash receipt of circa £700,000 during the year to 30 November 2015.

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 period. The Company holds 4,219,857 (2013 - 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 1,896,516 (2013 - 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 £151,696 (2013 - £841,282) and subtracting the exceptional duties rebate of £nil (2013 - £1,650,000) disclosed on the face of the income statement

5 Trade and other receivables

Other receivables comprise rent deposits.

6 Trade and other payables

7 Cash generated from operations

Ends