Amino Technologies boasts robust first-half growth

For the six months ending on 31 May, the company posted revenue growth of 21% to reach £39.9m, thanks to strong sales in North and Latin America, especially in the first of those two regions.

In the former, the company pointed to "good momentum" from small and medium-sized operators and follow-on orders from a major client after it deployed its Enable virtual set-top box software platform.

European sales on the other hand were 48% lower as a change of ownership at a key customer impacted the timing of orders, but Amino expected them to recover over the medium-term.

On an adjusted basis, profits before tax rose from £4.2m to £6.9m thanks to improved operating margins of 17.3%, up from 12.7% in the year-ago period.

Amino attributed that to a 24% increase in gross profits and strong operating cost control following the £2.0m of annualised cost reductions delivered during the previous summer.

The AIM-listed group also reported a very large jump in its net cash position as cash flows from operations more than doubled, rising by 102% to £13.0m or 148% of its adjusted EBITDA.

However, analysts at N+1 Singer warned that surge in cash was expected to reverse in the second half of 2017.

"Net cash moved up to £13.1m after a strong working capital inflow although this is expected to reverse in H2".

For their part, analysts at Canaccord Genuity raised their recommendation on the shares from 'hold' to 'buy', saying "while there may be some disappointment around the software content of the business slipping back into single digits, we expect this to be short-lived."

Those same analysts highlighted how after adjusting for one-offs and non-recurring items that benefited Amino in 2015, then underlying sales were running at 15%, towards the top end of the range of between 10% and 15% they believed the comany was capable of.

The final dividend was raised by 10% to 1.53p, in line with the company's stated progressive dividend policy, for a sixth consecutive year of increased interim payouts.

Keid Todd, its non-executive chairman credited the success of the group to "effective execution" of the company's order book.

Commenting on the outlook, Todd said: "We are delighted to deliver a strong first half performance which has been achieved by effective execution on our order book. Revenue and adjusted profit before tax are in line with our expectations and the closing cash position is ahead of expectations. Our sales pipeline is robust and we are therefore confident that we will deliver full year profits in line with market expectations".