AMO.L Regulatory News (AMO)

13 February 2012

AMINO TECHNOLOGIES PLC

FINAL RESULTS

FOR THE YEAR ENDED 30 NOVEMBER 2011

Amino Technologies plc ("Amino" or the "Company"; stock code: AMO), the Cambridge-based leader in digital entertainment solutions for in-home multimedia distribution, announces audited results for the year ended 30 November 2011 which demonstrate strong year-on-year growth in revenue, operating profitability, adjusted margins and cash generation.

Financial Overview

·; Revenue up 18% to £51.8m (2010: £44.0m)

·; Gross profit up 16% to £14.5m (2010: £12.5m)

·; Adjusted* Gross margin 6 percentage points higher at 34.5% (2010: 28.5%)

- Gross margin before adjustments 28.0% (2010: 28.5%)

·; EBITDA increased by £3.8m to £4.4m (2010: £0.6m)

·; Operating profit before goodwill impairment £1.7m (2010: loss of £0.9m)

·; Year-end cash significantly strengthened at £14.1m (2010: £3.6m)

·; Proposed maiden dividend of 2p, reflecting the Board's confidence in the future and strong cash generation

* Adjusted gross profit excludes the first 50,000 OTT order for Telecom Italia at Revenue value of £7.4m (2010: nil) and zero margin (2010: nil) and Provision for legacy stock £0.8m (2010: nil)

Operational Highlights

·; Strong focus on operational management and robust supply chain maintained

- Improved supply chain delivering reduced costs and reduced customer lead times

- More accurate forecasting eliminating the need for spot buying

·; Delivered on our commitment to simplify the Amino product range

- Streamlined technology platform supported by strong industry partnerships

- Clearer, more scalable go-to-market proposition

- Entire product range is now OTT enhanced

·; Continued delivery of these products to customers across multiple markets

- Much improved performance in the United States and ongoing good momentum in Western Europe

- Adapting to structural change in the Russian market

- Latin America represents a growing opportunity

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

"Amino has delivered a good performance in what has undoubtedly been a challenging year for the global technology industry. This year Amino has returned to operating profitability, delivered improvements in margin, generated encouraging revenue growth and significantly strengthened its cash position. All of this has been enabled by a rigorous focus on operational management and by the market's growing acceptance of our stronger, simplified product range.

As we enter the year ahead our core focus remains execution. We will continue to deliver excellent products to customers whilst operating as efficiently and effectively as we can. By doing this, I believe we can continue to deliver further financial improvements this year and over the long term."

For further information please contact:

About Amino Technologies plc

Amino Technologies plc specialises in the development and delivery of IPTV and hybrid/OTT solutions. With over three million devices sold to 850 customers in 85 countries, Amino's award-winning solutions are deployed by major network operators and service providers worldwide. Amino Technologies plc is listed on the London Stock Exchange Alternative Investment Market (AIM: symbol AMO). It is headquartered near Cambridge, in the UK, with offices in the US, China and Sweden. For more information, please visit www.aminocom.com

Chairman's Statement

Delivering on our commitments

Amino has made good progress this year. The Company has delivered growth across all key financial metrics in what has been a challenging year for the technology industry as a whole. This improved financial performance has been driven by progress in two important areas.

The first area is product. Last year the Board made a clear commitment to simplify and strengthen Amino's product range. This involved reducing the complexity of the Company's technology platform; broadening and deepening the industry partnerships that make the delivery of its product possible; and making Amino's entire product set more scalable so that it can meet the needs of more customers, more quickly than before. I am pleased to say that each of these objectives has been achieved and the Company is benefiting in a number of important markets from a growing customer acceptance of this stronger, simplified product range.

The second area is operational performance. Last year the Company focused hard on improving Amino's management of its supply chain. Improvements were necessary to help reduce manufacturing costs, simplify component supply and secure competitive forward pricing. These improvements have taken place, enabling the Company to deliver consistent quality and supply of product in a year where natural disasters in Japan and Thailand have placed enormous pressure on component availability for the entire electronics industry.

The combined result of these efforts is clear in the numbers reported today. Amino has seen encouraging year-on-year growth in revenue in addition to improvements in profitability and margin. The Company's performance in North America is greatly improved and in Western Europe good progress has continued to be made. Also, today, Amino has a significantly improved cash position. I would like to thank every employee across the Amino business, each of whom has worked hard to make the changes that have contributed to this improved financial performance.

Changes to our team

During the year, the Company's Chief Executive Officer Andrew Burke left Amino to pursue other interests. Amino's Chief Operating Officer, Donald McGarva was immediately appointed as the CEO having demonstrated his skills in implementing the supply chain improvements that contributed to the Company's progress this year and having considered the leadership qualities Don demonstrated at DHL. On behalf of the Board I would like to thank Andrew once again for his efforts and his commitment to Amino's development. My Board colleagues and I look forward to working with Donald as he uses his operational and leadership strengths to lead the business through the next phase of profitable growth.

Dividend

After careful consideration, the Board is recommending a proposed maiden dividend of 2p, reflecting the Board's confidence in the future and its strong cash generation. If approved at the Company's AGM, the final dividend will be paid on 4th May 2012 to shareholders on the register on 10th April 2012 with a corresponding ex dividend date of 4th April 2012. Going forward the Board intends to maintain a progressive dividend policy.

Looking ahead

Amino enters 2012 in a stronger financial position. Focused, consistent execution has brought the Company to this position and this will remain the leadership team's focus in the year ahead. The team will continue to drive forward Amino's stronger, simpler product range and ensure that the Company continues to operate as efficiently and effectively as it can. By adhering to this plan, supported by our healthy order book of 102k units the Company enters a new year in a good position. I believe that Amino can continue to deliver further financial improvements this year and over the longer term.

Keith Todd, CBE

Non-Executive Chairman

Chief Executive's Statement

This is my first results statement as Amino Chief Executive. I am pleased to report on a good year for the Company in which financial growth and operational strength have gone hand in hand.

Building on our three core strengths

Three core strengths have underpinned the progress Amino has made this year; its customers and markets, its product, and its improved operational performance. Much has been done to reinforce these strengths this year and each one provides opportunities for further growth in the year ahead:

Customers and Markets

The markets in which Amino operates are dynamic and Amino has aligned itself closely to changing customer and technical demands. PayTV operators (IPTV, cable and satellite) are now enhancing their current offerings with OTT-delivered online services, building incremental revenue streams and customer loyalty. The strong synergy between IPTV and OTT, and Amino's deep expertise and reputation for quality in IPTV, means that the Company is well positioned to address this growing market opportunity, selling solutions to both its traditional IPTV customers, cable and satellite operators, and to new OTT-only players. Forecasted growth for the IPTV market is encouraging - with the IPTV market forecast to grow by more than 50% over the next five years according to Ovum (2012).

Specific geographies have their own differing requirements and Amino has worked hard this year to develop effective strategies for each of them.

The most pleasing progress this year has come from North America. Here Amino has continued to build on the strong platform it has in the region securing new customers thanks to its new range of enhanced products. Close working relationships with ecosystem and channel partners have proved decisive here in enabling the Company to gain market share. Progress has also been made in Western Europe, where it secured an important contract during the year to provide IPTV set-top boxes to Vodafone Netherlands.

During the year, Telecom Italia successfully launched the Cubovision set-top device which is based on Amino's OTT technology platform. The Company secured a number of follow-on orders and continues to provide technical support for the continuing deployment.

Regulatory change in Latin America presents a fresh opportunity for network operators and service providers to deploy both IPTV and OTT services. Amino is working closely with partners in targeting emerging markets in this region to become the supplier of choice for operators as they roll out their services.

Amino's product quality and reliability - and overall highly competitive total cost of ownership - has been critical in securing a strong sales pipeline. However, regions like Latin America - and increasingly Eastern Europe and the Russian market - require a new approach, particularly to product functionality and pricing. The Company has quickly responded by introducing a competitively priced and specified device to address these larger scale opportunities without compromising the Company's strong brand.

Product

Amino continues to build on its market leadership for products that can deliver a wide range of services - adding new OTT capabilities to its IPTV product range and continuing to innovate around the Intel®-powered Freedom media centre portfolio. After the year end, at the major Consumer Electronics Show in January 2012, Amino further cemented its leading position in OTT innovation with the launch of the world's first media gateway to be driven by the latest Intel chipset.

Operational performance

The benefits of operational improvements begun in the first half of the year have continued to feed through the business in the second half. The strong team put in place during 2010 has made significant progress in reducing complexity in terms of the components used in the manufacturing process with resulting bill of material cost savings and production efficiencies feeding through to margin enhancements. Improved forecasting with suppliers has effectively eliminated component "spot buying," further reducing Amino's lead times and enhancing its ability to bring products to market quickly.

This sharp focus on supply chain management has also benefitted the Company through what has been a turbulent year for the electronics component industry. The twin effects of the Japanese earthquake and Thailand flooding later in the year severely disrupted availability of a number of critical components required across a broad range of electrical goods. The strong relationships forged with suppliers have mitigated these challenging industry-wide conditions with supply secured throughout the year.

There remains a specific medium-term challenge for the supply of Hard Disk Drives (HDDs) which are a key component for the Company's PVR device range which accounts for approximately a third of forecasted FY 2012 sales. However, since the trading update at the close of the year, further supplies have been secured at a competitive though higher than usual price point. This will enable the Company to maintain supply throughout the first half of 2012.

Our priority

As our Chairman has made clear, the priority for Amino in the next twelve months remains the same: execution. The Company's strategy is the right one for the business. The task for the team is to make sure that it builds upon the progress made this year in improving operations, delivery and offering to generate further profitable growth in the months and years ahead

Donald McGarva

Chief Executive Officer

Chief Financial Officer's report

Results for the year

Revenue is 18% higher at £51.8m, despite shipments being 3% lower than 2010 at 601K, and the continued focus on margin improvement and cost control have led to an increase in EBITDA of £3.8m to £4.4m (2010: £0.6m). Revenue reflected the initial 50k and £7.4m revenue order from Telecom Italia at nil margin. In addition:

·; Structural changes in the Russian telecoms market led to a sales stagnation, impacting revenue by £5.4m.

·; Within the Rest of the World, revenue reduced by £5.9m, largely due to competitive price pressure within Eastern European markets. This challenge was identified during the second half of 2011 and Amino has responded by developing a competitively priced and specified product for large scale opportunities which will be launched in Q2 2012.

·; The doubling of USA revenue to £14.9m. Existing customers have transitioned easily to the new product range and new accounts have been won in competitive tenders.

·; Italian sales were strong, driven by three subsequent orders from Telecom Italia which contributed an additional £5.6m revenue

Gross profit increased by £2.0m to £14.5m, (2010 £12.5m), with Gross margin at 28.0% (2010: 28.5%).

After adjusting for the first order to Telecom Italia and £0.8m provision on legacy stock of which £0.4m was incurred in the first half, gross margins increased by 6.0 percentage points to 34.5% (2010: 28.5%). This margin improvement culminates from a combination of:

·; Increased migration to new IPTV product which provides better economies of scale, flexibility and more focused operational performance

·; Focus on supply chain including simplifying product design, focus on product cost reduction, eliminating or reducing manual processes which has led to a reduction in unit costs hence impacting the overall margin

·; Increased North American business at higher than average margins

·; Lower Eastern European business which contributes lower than average margins

It is expected that margins will continue to come under pressure as Amino scales its business coupled with the launch of the new product for high volume, price sensitive markets. However, continued focus on operational improvements and supply chain management will help to mitigate some of this pressure.

Tight cost control continued during the year and the group managed to contain operating costs to £10.2m similar to last year (2010: £10.2m excluding exceptional costs).

·; Sales, General and Administrative expenses increased by £0.8m to £6.1m (2010: £5.3m excluding exceptional costs) largely reflecting increased investment in Operational headcount and product marketing costs.

·; Research & Development costs reduced by £0.8m to £4.0m (2010: £4.8m) largely reflecting set up costs for the Telecom Italia contract in 2010. The Group has continued to invest heavily in its product portfolio with capitalised costs totalling £2.6m in the year (2010: £2.5m)

·; Year end headcount was 118 (2010: 126) and the average number of employees during the year totalled 120 (2010: 125)

Amortisation has increased by £1.3m reflecting amortisation on both new IPTV and OTT products which were launched during the year.

Exceptional items total £2.3m (2010: £1.8m):

·; During the year, as part of the operational review and simplification of the product base, Mood products were transferred to end of life status. As a result the executive and Board have reviewed the carrying value of the investments made in Tilgin [the Group's Swedish operation] and have decided that, whilst the Swedish development team is an integral part of Amino's new and enlarged product development team, the end life status of the Mood products has resulted in a one off impairment charge of £2.3m. Tilgin Goodwill is now fully impaired and there is no further acquired goodwill on the Company's balance sheet. 

·; In 2010, the Group's first OTT product was developed. A loss of £1.7m was incurred on this product through the need to spot buy components to meet manufacturing deadlines and other costs required to meet contractual obligations. The contract was delivered in 2011, however was treated as an onerous contract and as such the loss was provided for in 2010.

Corporation tax receivable of £0.4m (2010: £0.5m) largely reflects research and development tax credits.

Balance sheet

Total equity was £20.6m at the year-end (2010: £21.8m) which is equivalent to 38.2p per share (2010: 38.7p) of which £14.1m (2010: £3.6m) or 26.2p per share (2010: 6.4p per share) is represented by net cash balances.

Net current assets are £14.6m (2010: £13.5m), the principal components of which are net cash balances of £14.1m (2010: £3.6m), trade and other receivables of £10.4m (2010: £12.5m), stock of £4.0m (2010: £12.0m) and trade and other payables of £14.0m (2010: £14.6m).

·; 71% of trade receivables at 30 November 2011 are insured (2010: 47%). Trade receivables over 60 days at 30 November 2011 but not provided for amounted to £0.3m (2010: £1.2m) demonstrating the Group's strong debtor management.

·; The reduction in stock levels at the year-end was largely due to the sale of the inventory required to fulfil the first order for Telecom Italia together with a provision of £0.8m for legacy stock.

·; The reduction in trade receivables and trade and other payables is largely due to strong working capital management together with a particularly high volume of sales in the last month of the prior year.

Net cash at £14.1m (2010: £3.6m) reflects strong working capital management including the conversion of 2010 year-end stock into cash. At the balance sheet date, the Group had forward foreign exchange contracts to convert €2m into GBP at average exchange rates of €1.1385 (2010: £11.1m at average conversion rates of $1.58 and €1.19). £3.2m (2010: £2.6m) of net current assets is denominated in US dollars and £1.6m of assets (2010: £2.4m) in Euro.

At 30 November 2011, the Group has approximately £36m of unrecognised tax losses available to carry forward to set against future taxable profits. In addition, losses of £2.7m are recognised by the deferred tax asset of £0.7m. At the current taxation rates, the unrecognised deferred tax asset is £9.0m.

Equity

The issued share capital of the Group is 57.9m (2010: 57.9m) ordinary shares, of which 5.1% were held by the Employee Benefits Trust and 4.9% held in treasury by the company following the purchase of 2.8m shares during the year at a value of £1.2m. The number of subsisting options at the year-end, granted primarily to current and former employees, was 3.2m (2010: 6.4m) at an average exercise price of 47p per share (2010: 51p).

Consolidated Income Statement

For The Year Ended 30 November 2011

All amounts relate to continuing activities

.

Consolidated Statement of Comprehensive Income

For The Year Ended 30 November 2011

Consolidated Balance sheet

As At 30 November 2011

Consolidated Statement Of Cash Flows

For The Year Ended 30 November 2011

Consolidated Statement Of Changes In Shareholders' Equity

For The Year Ended 30 November 2011

1 Basis of preparation

The preliminary announcement for the year ended 30 November 2011 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 in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 30 November 2011 or the year ended 30 November 2010 but is derived from those accounts.

2 Geographical external customer revenue analysis

3 Loss per share

The calculation of basic earnings per share is based on loss after taxation and the weighted average of ordinary shares of 1p each in issue during the period. During the year the Company repurchased 2,844,852 of its own shares. These are held in treasury and excluded from the weighted average above. The basic weighted average number of shares also excludes 2,925,091 shares held by the EBT.

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. There is no dilutive effect on unadjusted loss per share in respect of the year ended 30 November 2011 as the Group was loss making.

The profit attributable to ordinary shareholders excluding exceptional items is derived by adding back the exceptional items of £2,279,251 (2010: £1,777,660) disclosed on the face of the income statement.

4 Trade and other receivables

5 Trade and other payables

 6 Cash generated from operations

Ends