Amino Technologies - Interim (end-May) Results

• Turnover grew by 13% to £13.6m over the preceding six months (H2 2006: £12.0m; H1 2006: £13.5m).
• Gross profit grew by 22% to £4.84m over the preceding six months (H2 2006: £3.97m; H1 2006: £5.28m) and gross margins improved by 2.6 percentage points to 35.7% (H2 2006: 33.1%; H1 2006: 39.2%).
• Loss before tax reduced to £0.39m in the period from £1.63m in H2 2006 (H1 2006: break-even), despite a 7.7% weakening in the US dollar since 30 November 2006. On a constant currency basis, the results would have been approximately break-even.
• Positive cash flow increased net funds to £14.6m (30 November 2006: £14.0m; 31 May 2006: £16.8m).
• Shipments of AmiNET products increased compared to H2 2006 by 11.5% to 240,000 units.
• A total of 1,150,000 AmiNet set-top boxes have shipped since deliveries started in December 2003.
• New MPEG-4 HD set-top boxes were shipped in the period.

Amino Technologies plc (‘Amino’; stock code: AMO), the Cambridge based broadband network software and systems company, presents its unaudited consolidated results for the six-month period ended 31 May 2007.

At £13.56m, turnover grew 13.4% over H2 2006 and was slightly ahead of H1 2006, reversing the decline seen during the second half of last year. The loss before tax of £0.39m was significantly reduced from the loss of £1.64m in H2 2006. When adjusted for the 11.3% reduction in the value of the US$, profitability for the period was broadly unchanged from break-even in H1 2006.

Unit shipments increased by 11.5% to 240,000 compared to the previous six-month period and were higher than the 200,000 for H1 2006; a total of 1,150,000 set-top boxes have been delivered since shipments began in December 2003. MPEG-2 products continued to represent the core (81%) of shipments although the first volume shipments were made of the new MPEG-4 HD (high definition) products. Licensing revenue from the Group’s Asian channel strategy was in line with plan at £0.52m.

Gross margin increased 2.6 percentage points in the period to 35.7% over H2 2006. This has been achieved through the continued effective management of our component and manufacturing costs which have more than offset the limited price pressure we have seen. Further benefits of the cost reduction program should be seen in the second half. Gross margins in H1 2006 (39.2%) were higher than in the current period due to a combination of change in channel mix (direct vs. distribution), market mix (hospitality vs. telco) and volume price breaks within key accounts.

Operating costs were £0.39m lower than H2 2006 and £0.07m lower than H1 2006, reflecting tight cost control and focused activity on key accounts and software eco-systems. This was despite continued investment in the new MPEG-4 HD product range (representing approximately 40% of research and development activity during the period), the emerging market for Internet TV and continued long-term business development within the tier 1 telco market.

Strategy and competitive market position

Although the overall IPTV market continues to grow strongly, much of the growth is within tier 2/3 telcos deploying established technologies. It is evident that many market surveys in recent months have not read market development as accurately as may be wished; as a result, we are taking a cautious view on the latest growth predictions for MPEG-4 demand. We believe this over-estimation has been due to the delays the industry has seen in the adoption by customers of the total eco-system integration. It is also clear that MPEG-4 HD shipments will be constrained to those network operators that already have sufficient network capacity or until they have installed it.

While there are more potential competitors addressing the MPEG-4 market opportunity, the recent announcement of the Surewest MPEG-4 HD deployment was confirmation of Amino’s ability to benefit from the MPEG-4 HD market opportunity. Amino already has an extensive and expanding product range, knowledge and experience of integrating the component parts of the total IPTV eco-system and a substantial global customer base. In addition, our established low cost manufacturing base has enabled us to prove our ability to drive costs down to compensate for recent pricing pressure. As a result of all these factors, Amino is well placed to grow whether the market growth is driven by continued deployment of MPEG-2 products or the MPEG-4 SD/HD market place takes off.

The Board is excited by the opportunity of the emerging Internet TV market which should enable the Group to leverage its existing products and expertise in a consumer-centric market with a different distribution channel which will require further investment by the Group in the consumer proposition which could have a positive impact in FY2008 and beyond.

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