Amino returns to profitability on strong revenue growth
Amino Technologies plc, the broadband network software and systems specialists, recorded a pre-tax profit of £1.4m for the year ended 30 November 2007 after a £1.6m loss in 2006.
Amino said it had achieved a strong turn-round to profitability by building on its core strengths within the IPTV technology sector. Revenues increased 27% to £32.3m, while gross margins remained stable at 35.1%.
Operating profit turned round by £2.82m to £0.65m compared with an operating loss of £2.18m in 2006.
Amino shares gained 6% in early trading in London. The group is now valued at above £30m.
Chairman Keith Todd said the company was “well placed to continue to grow and to maintain a leadership position in IPTV. The board and executives are working to improve the financial performance of the business, balancing investment with profitable growth as we strive to establish sustained profitability.'
“As I said last year, the Group has a number of core strengths including a very strong position in the tier 2 and tier 3 telco Internet Protocol TV (IPTV) market, global distribution channels, a low cost manufacturing supply chain and a very strong brand. These strengths have stood us in good stead over the past year, enabling the Group to increase revenues, gross margin and deliver the profit improvement.”
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, Amino reduced operating costs by 7% to £10.7m (2006: £11.4m).
Strategy in 2008
The Cambridge-based company said its strategy will be maintained into 2008; it 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 said it 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 looking at other initiatives to accelerate growth in the medium term. It said that while the bulk of revenues are generated by its 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 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 shown 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.
CEO Bob Giddy (pictured) said IPTV is still evolving. The transition to MPEG-4, particularly high definition (HD), has and will continue to be a challenge until all aspects of the related technologies stabilise. This will take time and will be influenced by industry consolidation.
“Amino, by virtue of having demonstrated its competence, organisational stability, financial strength and technology leadership, is well placed to take advantage of the many benefits that this should bring.”
28th January 2008
