Amino Technologies Results For The Year Ended 30 November 2007

Monday, January 28th, 2008 
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  • Amino has achieved a strong turn-round to profitability, building on the Group’s core strengths within the IPTV technology sector.
  • The financial results for the period were:
    • Revenues increased 27% to £32.3m (2006: £25.4m);
    • Gross margins remained solid at 35.1% (2006: 36.3%);
    • Operating profit turned round by £2.82m to £0.65m (2006: operating loss of £2.18m); and
    • Profit before tax was £1.4m (2006: loss before tax £1.6m as restated) reflecting strong growth and reduced costs.
  • Balance sheet remains strong and net cash increased by £3.1m to £17.0m (2006: £13.9m).
  • Shipments of AmiNET products for the period increased 45% to 598,000 (2006: 413,000);
  • Since the year end, board has been strengthened with the appointment of Peter Murphy as a non-executive director.

Amino Technologies plc (‘Amino’ or ‘the Group’; stock code: AMO), the Cambridge based broadband network software and systems Group, announces its audited final results for the year ended 30 November 2007.

Revenue for the year increased 27% to £32.3m (2006: £25.4m) and the revenue from the top 20 accounts, which account for over 92% of the revenues, was up 34% to £30.0m (2006: £22.4m). The bulk of revenues in the year were based on sales of established MPEG-2 products with the newer MPEG-4 products beginning to contribute to sales in the latter part of the year. At the same time as increasing both revenue and gross profit, the Group reduced its operating cost base during the year by 7% to £10.7m (2006: £11.4m). The Group generated a profit before tax of £1.4m (2006: loss of £1.6m).

Strategy and competitive market position

Our core strategy is proving successful and will be maintained into 2008; Amino will continue to exploit the emerging IPTV market, especially within the tier 2 and 3 telco’s which are deploying IPTV first and to progressively address the total market including tier 1 participants through direct selling and partnerships. While breaking into the tier 1 telco remains an objective, Amino has a successful, growing business within the tier 2 and tier 3 marketplace. In fact as the broadband market continues to develop, the power of the tier 1 telco’s to ‘control’ access to the consumer is reducing. This will lead to additional opportunities for Amino in the so called tier 2/3 market are these emerging telco’s develop their IPTV strategies.

The board is evaluating additional strategic initiatives that are complementary to the core strategy to further accelerate the growth of the business in the medium term that will exploit the knowledge and assets that Amino has created and invested in over the past few years in delivering over 1.5 million set-top boxes (‘STBs’) to over 1,800 customers. While the bulk of annual revenues are generated by our top 20 customers, the large number of other customers represent the ‘seed corn’ for future revenues as well as giving Amino access to the wider market.

The market today continues the transition from MPEG-2 to MPEG-4 technologies which offer greater data compression and reduced requirement for internet bandwidth. Amino’s market will be underpinned by the continuing demand for MPEG-2 products and supplemented by the emerging MPEG-4 market opportunity for both standard definition (SD) and high definition (HD) products. The full development of the MPEG-4 HD market is dependent on sufficient network capacity becoming available. As evidenced in the US, networks ideally need to be able to deliver multiple HD streams as consumers generally have more than one TV in the home. Amino is well placed to exploit this market as the MPEG-4 HD growth accelerates. Today, Amino continues to grow successfully through the delivery of MPEG-2 and MPEG-4 SD products.

Amino’s partnerships have progressed across Asia during the year – not just as direct revenue opportunities but also as additional sources for manufacturing product.

Achievements

Whilst the Group has been focused and dedicated to bringing a range of MPEG-4HD products to the market, we were delighted to have achieved –

  • February: Deployment of Switzerland’s first Fibre To The Home (FTTH) solution with Sierre Energie;
  • October: MPEG-4 H.264 certification (the first MPEG-4 HD set-top box to meet the Premium Conformance standards);
  • October: First deployment of a combined MPEG-4HD Satellite and IPTV service in North America with NDS and SES Americom; and
  • November: Membership of Open IPTV Forum by their invitation.

In addition to the achievements within our core expertise, Amino has continued to innovate in its markets and applications; for example:

  • Launched:
    • May: In partnership with Orb Networks, delivery of personal and broadband media to a TV screen;
    • August: Truly interactive application with Accedo Broadband in North America;
    • October: First ever Wireless IPTV deployment (Chile); and
    • December: First IPTV deployment in Central America.

Strategy, environment and direction

We intend to continue to expand and build upon our strong sales channels in the Americas, Western and Eastern Europe, India and China. These channels have enabled Amino to become a market leader.

Together with committed partners such as WNC Wistron, we are targeting the tier 1 telco’s with our new MPEG-4 products. WNC has the proven capacity, infrastructure, reach and experience to satisfy the service criteria that is common to most tier 1 telco’s. However, many tier 1 telcos are slow to commit whilst they seek to close the gap between the broadband bandwidth required for IPTV and the capacity of their existing networks.

The market has developed so far with IPTV solutions built from individual product components (including: head end, middleware, conditional access, browser and set-top box), each selected from one of a number of suppliers. When integrated, these products form the complete solution; we refer to this as the ‘eco-system’. While these ad-hoc technology and business relationships (eco-systems) have been chosen by many tier 2 and tier 3 telcos, the larger tier 1 telco’s usually look for a complete solution. Amino is planning to use its considerable integration skills, business relationships and market knowledge to offer a fully packaged solution when desired. This will lower a customer’s cost of ownership whilst increasing Amino’s added value and strengthening its competitive position.

During 2007 we introduced a product for Internet TV. Whilst we have not yet enjoyed any significant revenues from this product, we have benefited from demonstrating our vision and innovation. Internet TV is becoming known as ‘Over the Top TV’. It supplements IPTV (the ‘walled garden’) and is forecast widely to become increasingly popular. It allows the consumer to enjoy the classic television experience and mix the conventional scheduled, sports and movie programmes with personalised video blogs. Amino is able to provide the ‘gate’ that opens up the ‘walled garden’ without breaching security or prejudicing viewing quality. As with IPTV, we are well placed to exploit this opportunity together with the early adopters of ‘Over the Top TV’.

Risk reduction

We have now achieved the critical mass that gives us greater control over our supply chain. We now have three suppliers (contract or licensed manufacturers) for our products and are no longer dependent upon any one supplier for any given product. In addition to lowering the risk, this has enabled us to maintain the competitiveness of our supply chain.

Additionally, more chip suppliers have entered the MPEG-4 arena. Whilst there isn’t a simple plug-in replacement for these complex devices, we are able to secure a functionally equivalent product that reduces further our exposure to any one supplier.