31st Jul 2006 07:01
Amino Technologies PLC31 July 2006 FOR IMMEDIATE RELEASE 31 July 2006 AMINO TECHNOLOGIES PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAY 2006 Amino Technologies plc ("Amino"; stock code: AMO), the Cambridge based broadbandnetwork software and systems company, presents its unaudited consolidatedresults for the six-month period ended 31 May 2006. Key points: • Shipments of AmiNET products increased by 95% to 199,000 units. • Since December 2003 over 700,000 AmiNET units have been shipped. • Turnover grew 73% to £13.5m (H1 2005: £7.8m), including £0.5m of licensing revenue. • Gross profit doubled to £5.3m and gross profit margins up to 39.2% (H1 2005: 33.5%). • Profit before tax was £0.1m (H1 2005: loss £0.9m) after exchange losses of £0.4m. • Positive cash flow increased net cash to £16.8m (30 November 2005: £14.5m). • Continued strong increase in customer adoption metrics. • New MPEG-4 hardware and software products have been launched. On outlook, Grant Masom, Chairman commented: "Amino continues to mature as a business, balancing the demands of maintaining astrong technical and market position in a dynamic market with the need tostrengthen operational and financial performance. We continue to be recognisedas a market leader in IPTV and one of the largest centres of excellence in thisexciting arena. "We have a strong platform for continued growth and are confident of Amino'sprospects in the second half of the year and beyond." About Amino Amino Technologies plc (www.aminocom.com) designs and supplies electronicsystems, software and consultancy for IPTV (telco triple-play applications),on-demand video and in-home multimedia distribution delivered through threeoperating divisions. Amino Communications supplies the AmiNETTM series of high performance IPTVset-top boxes and gateways for deployment in the telecommunications, broadcastand hospitality markets. Generally, AmiNET products are supplied with theIntActTM IPTV software stack pre-loaded. IntAct licenses hardware designs andthe IntActTM IPTV software stack for customer premises solutions to OEMsenabling them to supply IPTV set-top boxes and gateways for larger scaledeployments and the hospitality sector. Modelo provides systems consultancyservices. Amino is partnered with world-leading companies in systems integration,middleware, conditional access, semi-conductor, head-end systems and browsertechnologies. Contacts Amino Technologies: 01954-234100Grant Masom, Chairman www.aminocom.comBob Giddy, Chief ExecutiveStuart Darling, Finance Director Bankside: 020-7367-8888Steve Liebmann or Simon Bloomfield CHAIRMAN'S STATEMENT Introduction The marketplace for internet protocol TV ("IPTV") is growing rapidly and isglobal. This growth is neither linear nor entirely predictable and many of thelargest near-term volume opportunities are within the smaller Tier 2 and Tier 3telcos (less than 1 million subscribers) and the hospitality sector. Amino'sconsistent strategy has been to exploit these near-term volume opportunities andalso to position itself to compete effectively for the larger Tier 2 and Tier 1telco business for when these network operators are ready to commit to thesubstantial capital investment that wide-scale IPTV deployments require. Since volume shipments began in December 2003, Amino has established itself as aclear industry benchmark in terms of both performance and price, with theprincipal added value being represented by its IntAct software technologiesincorporated within its AmiNET hardware products. The company has developed aglobal reach with customers and industry partners around the world. To date,approximately 700,000 units have been shipped to over 1,250 customers worldwide,representing a significant share of a market still in the early stages ofdevelopment. The most recent report (Q1 2006) from ABI Research shows that Aminois still the number one supplier within its segment. In order to deliver the strategy, the interests of both shareholders and thecompany are served best by striking a balance between investing for the futureand current profitability. The results for H1 2006 show that Amino is growingstrongly in both shipments and revenue, is breaking even, gross margins areimproving and it has generated cash. The structure to support its world-wide customers is now in place. Thesubstantial investments in new platform development, key software integrationsand the extension of sales and marketing reach have been made, so the focus ison enabling customers to move into volume roll-out and on improving internaloperating and financial efficiency. Although operating costs have increased by98% and headcount has grown by 60% over the past 18 months, the increasedmaturity of the business means that for the future, growth in shipments andrevenue should exceed the growth in the cost base to the benefit ofprofitability in the second half, for the full year and beyond. Results and finance Shipments in the first half year to 31 May 2006 increased by 95% to 199,000units (2005: 102,000). Changes in sales mix and a weakening of the US$/£exchange rate in April and May meant that revenues grew by 73% to £13.48million, including £0.5m of licensing revenue. (2005: £7.78 million). However,gross margins improved to 39.2% in H1 2006, up from 33.4% in H1 2005 and 34.8%for FY 2005; gross profit more than doubled to £5.28 million. The profit beforetax was £74,000 (H1 2005: loss of £882,000). The profit before tax was reducedby £371,000 as a result of adverse exchange rates. Progress was made in improving working capital over the period with the resultthat net cash balances increased by £2.3 million to stand at £16.8 million at 31May 2006 (30 November 2005: £14.5 million). Markets and operations The health of Amino's business and its future prospects are best measured by itskey business metrics which show the progression as customers move through thevarious stages of adoption from field trials to volume roll-out in animplementation cycle of up to three years. These metrics have continued to growstrongly: Number of 20 Jun 04 30 Nov 04 31 May 05 30 Nov 05 31 May 06customers Large volumeroll-out (over10,000 units) 3 5 11 15 18 Small volumeroll-out (over1,000 units) 16 19 35 43 67 Field trials (100- 999 units) 30 44 98 140 158 Laboratory trials(10 - 99 units) 24 94 163 217 267 Total 73 162 307 415 510 In the period under review, sales have been strongest in North America andEurope. Amino holds a very strong position with Tier 3 operators currentlydeploying MPEG2 systems. In previous statements, we have reported stronginterest in emerging markets in the Far East, South America and Eastern Europe.These remain important areas of opportunity, but there are significantcommercial barriers to successful profitable engagement. We continue to beactive in these markets - particularly through our IntAct software licensingbusiness - but it is difficult to predict the timing of major revenues. As noted in the AGM statement, we continue to have positive discussions with anumber of Tier 1 and Tier 2 telcos and systems integrators. However, deploymentsthrough large Western Tier 1 operators are hampered by a variety of systemintegration issues outside of Amino's control, notably the difficulties inscaling up systems to cope with millions, rather than thousands, of subscribers.Amino has chosen to focus its energies on exploiting the market opportunitiesthat currently exist; we remain cautious about the near-term prospects for majorTier 1 revenues. Revenues continue to be dominated by existing MPEG-2 based products. However, weanticipate a significant increase in shipments of MPEG-4 products over the next12 months, beginning towards the latter part of the current financial year. Inanticipation of this, during the first half we launched a full range of MPEG4enabled platforms, which we believe continue to maintain Amino's price/performance leadership. The AmiNET124, our MPEG-4/H.264 SD (standard definition)platform recently won the NAB 2006 Award for Innovation in Media. The recentlylaunched AmiNET130, our MPEG-4/H.264 HD (high definition) product is expected tohave strong appeal to Tier 1 and Tier 2 telco's and within the hospitalitysector. A significant part of the increased level of investment over the past 18months has been directed at securing Amino's long-term future as the industrymoves towards MPEG-4; we are confident that these products will show asignificant return on that investment over the next few years. Our IntAct business has licensed our MPEG-4 software technologies to a set-topbox ("STB") manufacturer and other discussions are ongoing. We have alsocompleted further ports of the IntAct software stack to new generations of STBprocessors, including a recently announced collaboration with Texas Instruments.While these developments will not produce significant immediate revenues, webelieve that they are vital to sustaining Amino's leading position in IPTVtechnology development over the next few years. Board We are pleased to announce today the strengthening of Amino's Board by theappointment of David Gammon as a non-executive Director with effect from 1August 2006. David has more that 20 years experience advising technologycompanies and working within financial markets and private equity. Outlook Amino continues to grow rapidly and is widely regarded as a market leader in itschosen section of the IPTV market. Whilst this growth poses challenges, itcreates many opportunities which Amino is well placed to exploit. The companyhas successfully balanced the need for investment in worldwide sales andsupport, new systems and new products, with the need to achieve profitability.The Board is confident about the outlook for the remainder of this year andbeyond. Grant Masom 31 July 2006Chairman Consolidated profit and loss accountFor the six months ended 31 May 2006 Notes Six months Six months Year to 30 ended 31 May ended 31 May November 2005 2006 Unaudited 2005 Unaudited Audited £ £ £Turnover 3 13,480,815 7,784,383 23,460,756Cost of sales (8,196,634) (5,179,457) (15,292,251) __________ __________ __________Gross profit 5,284,181 2,604,926 8,168,505Selling,general andadministrativeexpenses (3,830,547) (2,420,514) (5,699,309)Research anddevelopmentexpenses (1,656,120) (1,151,616) (2,808,771) __________ __________ __________Groupoperating loss (202,486) (967,204) (339,575)Interestreceivable andsimilar income 282,743 95,448 418,782Interestpayable andsimilarcharges (5,864) (10,129) (15,293) __________ __________ __________Groupprofit/(loss)on ordinaryactivitiesbeforetaxation 74,393 (881,885) 63,914Tax onprofit/(loss)on ordinaryactivities 29,571 721,000 - __________ __________ __________Groupprofit/(loss)on ordinaryactivitiesafter taxationbeingprofit/(loss)for thefinancialperiod 103,964 (160,885) 63,914 __________ __________ __________ Basicearnings/(loss) per 1pordinary share 4 0.19p (0.33)p 0.1p Dilutedearnings/(loss) per 1pordinaryshares 4 0.18p (0.33)p 0.1p Statement of group total recognised gains and losses for the six months ended 31May 2006 Notes Six months Six months Year to 30 ended 31 May ended 31 May November 2005 2006 Unaudited 2005 Unaudited Audited £ £ £Profit/(loss)for thefinancialperiod 103,964 (160,885) 63,914Exchangetranslationdifference onconsolidation 9 (35,911) 89,911 (22,383) __________ __________ __________Totalrecognisedgains andlosses for theperiod 68,053 (70,974) 41,531 __________ __________ __________ Consolidated balance sheetAs at 31 May 2006 Notes As at As at As at 31 May 31 May 30 November 2006 2005 2005 Unaudited Unaudited Audited £ £ £Fixed assetsIntangible assets 5 1,105,359 206,967 295,297Tangible assets 1,330,166 984,733 1,023,610 _________ _________ _________ 2,435,525 1,191,700 1,318,907 _________ _________ _________Current assetsStocks 2,653,022 2,210,216 1,460,756Debtors: amounts fallingdue after one year 195,406 161,563 190,898Debtors: amounts fallingdue within one year 9,951,348 8,624,120 12,846,599Short-term investments 470,000 430,000 430,000Cash at bank and in hand 16,308,118 17,088,485 14,038,271 _________ _________ _________ 29,577,894 28,514,384 28,966,524Creditors: Amounts fallingdue within one year 6 (3,176,303) (1,590,936) (1,964,581) _________ _________ _________Net current assets 26,401,591 26,923,448 27,001,943 Total assets less currentliabilities 28,837,116 28,115,148 28,320,850Creditors: Amounts fallingdue after more than one year (48,498) (93,088) (71,285) _________ _________ _________Net assets 28,788,618 28,022,060 28,249,565 _________ _________ _________ Capital and reservesCalled-up share capital 7 582,630 582,630 582,630Shares to be issued 5 471,000 - -Share premium account 21,807,240 21,807,240 21,807,240Merger reserve 16,388,755 16,388,755 16,388,755Profit and loss account (10,461,007) (10,756,565) (10,529,060) _________ _________ _________Equity shareholders' funds 8 28,788,618 28,022,060 28,249,565 _________ _________ _________ Consolidated cash flow statementFor the six months ended 31 May 2006 Notes Six months Six months Year to ended 31 May ended 31 May 30 November 2006 2005 2005 Unaudited Unaudited Audited £ £ £Net cashoutflow from operatingactivities 9 3,166,675 (4,087,680) (7,154,539) Returns on investmentsand servicing of financeInterest received 282,743 58,380 418,782Interest paid (5,864) (10,129) (15,293) __________ __________ __________Net cash inflow fromreturns on investments 276,879 48,251 403,489 __________ __________ __________Taxation 48,171 - - __________ __________ __________Capital expenditure andfinancial investmentPurchase of tangible fixed assets (448,537) (283,863) (479,085)Purchase of intangiblefixed assets (82,319) (64,417) (216,689) __________ __________ __________Net cash outflow forcapital expenditureand financial investment (530,856) (348,280) (695,774) __________ __________ __________Acquisitionsnet of cash acquired (617,702) - - __________ __________ __________Net cashinflow/(outflow) before use of liquidresources and financing 2,343,167 (4,387,709) (7,446,824) __________ __________ __________ Management of liquidresourcesIncrease in short-termdeposits with banks (40,000) - - __________ __________ __________FinancingIssue of ordinary sharecapital - 15,843,100 15,840,250Expenses of share issuededucted from share premium - (534,637) (534,637)Cash received from exerciseof share options - 106,479 224,329(Decrease)/increase in otherborrowings (33,320) (18,619) (38,455)Increase/(decrease) in bankborrowings - 80,119 (6,144) __________ __________ __________Net cash inflow fromfinancing - 15,476,442 15,485,343 __________ __________ __________Increase/(decrease) in netcash 2,269,847 11,088,733 8,038,519 __________ __________ __________ Reconciliation of netcash flow to movement innet fundsOpening net funds 14,468,271 6,423,608 6,423,608Increase in net cash 2,269,847 11,088,733 8,038,519Increase in deposits 40,000 - -(Increase)/decrease inborrowings - (80,119) 6,144 __________ __________ __________Closing net funds 16,778,118 17,432,222 14,468,271 __________ __________ __________ Notes to the interim financial statementsSix months ended 31 May 2006 1 Basis of preparation The consolidated financial statements of Amino Technologies plc have beenpresented under merger accounting rules. This means that the financialstatements of Amino Technologies plc and those of its wholly owned subsidiary,Amino Holdings Limited have been aggregated and presented as if the twocompanies have always been together. The figures for the six-month periods ended 31 May 2006 and 31 May 2005 have notbeen audited. The figures for the year ended 30 November 2005 have beenextracted from but do not constitute the consolidated financial statements ofAmino Technologies plc for that year. Those financial statements have beendelivered to the Registrar of Companies and included an auditors' report, whichwas unqualified and did not contain a statement under Section 237 Companies Act1985. 2 Accounting policies These interim financial statements for the six months ended 31 May 2006, whichhave been prepared in accordance with the accounting policies set out in theconsolidated financial statements of Amino Technologies plc for the year ended30 November 2005, do not constitute statutory accounts for the purpose ofsection 240 of the Companies Act 1985. 3 Turnover Turnover is wholly attributable to the Group's principal activities ofdeveloping enabling technologies and providing price competitive, flexible andrapidly deployable designs to manufacturers and vendors of set top boxes, homegateways and other communications devices. The analysis of turnover bydestination is set out below. Six months Six months Year to ended ended 30 31 May 2006 31 May 2005 November 2005 Unaudited Unaudited Audited £ £ £United Kingdom and Europe 6,455,789 3,706,678 9,903,108North America 6,704,958 2,750,687 10,988,350Asia Pacific and Africa 320,068 1,327,018 2,569,298 __________ __________ __________ 13,480,815 7,784,383 23,460,756 __________ __________ __________ 4 Earnings/(loss) per share Six months Six months Year to ended ended 30 31 May 2006 31 May 2005 November 2005 Unaudited Unaudited Audited £ £ £ Earnings/(loss) attributableto shareholders 103,964 (160,885) 63,914 _________ _________ _________ Weightedaverage numberof shares(Basic) 55,796,444 48,471,852 52,126,170 _________ _________ _________ Weightedaverage numberof shares(Diluted) 57,415,012 - 54,482,187 _________ _________ _________ The calculation of basic earnings/(loss) per share is based on profit/(loss)after taxation and the weighted average number of ordinary shares of 1p each inissue during the period. For diluted earnings per share, the weighted averagenumber of ordinary shares in issue is adjusted to assume conversion of alldilutive potential ordinary shares. The group has only one category of dilutivepotential ordinary share options: those share options where the exercise priceis less than the average market price of the company's ordinary shares duringthe period. There is no dilutive effect in respect of the six months to 31 May2005 since the Group made a loss. 5 Acquisition On 21 January 2006, the Company purchased 100% of the issued share capital of SJConsulting Limited for a total consideration of approximately £1.3m. The Companyoperates in the UK providing network software and systems solutions. The goodwill arising on the acquisition of SJ Consulting Limited is beingamortised on a straight line basis over 6 years. The directors estimate that thebook values underlying the business acquired approximate to the fair value ofthe underlying assets. Book value and fair value £SJ Consulting Limited acquisitionTangible fixed assets 14,532Debtors 221,065Cash 216,449Creditors (738) _________Net assets acquired 451,308Goodwill 853,843 _________Consideration 1,305,151Consideration satisfied by:Shares to be issued (300,000 ordinary shares of 1p each) 471,000Cash 834,151 _________ 1,305,151 _________ The shares to be issued are dependent upon continued service of the keyemployees. 6 Creditors: Amounts falling due within one year As at As at As at 31 May 31 May 30 November 2006 2005 2005 Unaudited Unaudited Audited £ £ £Bank loans and overdrafts - 86,263 -Other loans 32,090 40,656 42,623Trade creditors 2,317,515 537,682 1,100,453Taxation and social security 225,804 215,932 166,029Corporation tax 18,600 48,171 48,171VAT - 36,025 -Accruals and deferred income 582,294 626,207 607,305 _________ _________ _________ 3,176,303 1,590,936 1,964,581 _________ _________ _________ 7 Called-up share capital Ordinary shares of 1p each As at As at Year to 31 May 31 May 30 November 2006 2005 2005 Unaudited Unaudited Audited £ £ £AuthorisedNominal value 1,000,000 1,000,000 1,000,000 _________ _________ _________ Number 100,000,000 100,000,000 100,000,000 _________ _________ _________ Allotted, called-up and fully-paidNominal value 582,630 582,630 582,630 _________ _________ _________ Number 58,263,052 58,263,052 58,263,052 _________ _________ _________ In respect of the acquisition of SJ Consulting Limited the company has thecontingent obligation to issue 300,000 ordinary shares of 1p each. 8 Reconciliation of movements in shareholders' funds Six months Six months Year to ended ended 30 November 31 May 2006 31 May 2005 2005 Unaudited Unaudited Audited £ £ £Openingshareholders' funds 28,249,565 12,678,092 12,678,092Profit/(loss)for the period 103,964 (160,885) 63,914Exchange differences onconsolidation (35,911) 89,911 (22,383)Issue of ordinary sharecapital - capital - 72,250 72,250Shares to be issued 471,000 - -Issue of ordinary sharecapital - share premium - 15,770,850 15,768,000Issue of ordinary share capital to - - -Employee Benefit TrustExpenses of share issue - (534,637) (534,637)Exercise of employee shareoptions - 106,479 224,329 _________ _________ _________ 28,788,618 28,022,060 28,249,565 _________ _________ _________ 9 Reconciliation of operating loss/ to net cash outflow from operatingactivities Six months Six months Year to ended ended 30 November 31 May 2006 31 May 2005 2005 Unaudited Unaudited Audited £ £ £Operating loss (202,485) (967,204) (339,575)Depreciationand amortisationcharge (includingloss on disposals) 282,613 177,223 397,510Increase in stocks (1,192,266) (848,877) (99,417)Decrease/(increase) in debtors 3,111,808 (1,738,491) (6,748,373)Increase)/(decrease) in creditors 1,202,916 (800,242) (342,301)Exchangedifferences onconsolidation (35,911) 89,911 (22,383) _________ _________ _________Net cashinflow/(outflow) from continuingoperating activities 3,166,675 (4,087,680) (7,154,539) _________ _________ _________ Independent review report to Amino Technologies plc Introduction We have been instructed by the company to review the financial information whichcomprises the consolidated profit and loss account, consolidated balance sheet,consolidated cash flow statement, statement of Group total recognised gains andlosses and the related notes. We have read the other information contained inthe interim report and considered whether it contains any apparent misstatementsor material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report and the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do not expressan audit opinion on the financial information. This report, including theconclusion, has been prepared for and only for the company and for no otherpurpose. We do not, in producing this report, accept or assume responsibilityfor any other purpose or to any other person to whom this report is shown orinto whose hands it may come save where expressly agreed by our prior consent inwriting. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 May 2006. PricewaterhouseCoopers LLPChartered AccountantsCambridge28 July 2006 Notes: (a) The maintenance and integrity of the Amino Technologies plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the website. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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