Annual-Report-2018.Pdf
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Annual Report 2018 ABOUT AMINO Amino is a global leader in media and entertainment technology solutions and an IPTV pioneer, working with over 250 operators in 100-plus countries. Drawing on more than 20 years’ experience delivering IP/cloud innovation, Amino enables operators to meet the challenges they face as broadcast TV and online video moves to an all-IP future with managed over-the-top (OTT) offerings. We are expert in software, hardware and cloud implementation – able to deploy our own leading-edge technologies and integrate these with third-party and ‘upcycled’ legacy systems. At the forefront of the evolution of TV Everywhere, Amino helps operators to provide the features and functionality modern consumers are looking for in a multiscreen, multi-device entertainment world. Having deployed over 10 million customer premise devices and the software necessary to link the back end to the user interface, we understand the issues operators face. We partner with operators to deliver end-to-end, operator-ready solutions that enable next-generation customer experiences. We ‘upcycle’ existing infrastructure to support more advanced services and integrate seamlessly with new technologies to form a unified ecosystem. The result is a fresh consumer offering based on a consistent user experience across all screens, building brand reputation, stemming churn, growing subscribers and increasing average revenue per user (ARPU). Amino Technologies PLC is listed on the London Stock Exchange AIM (symbol AMO), with headquarters in Cambridge, United Kingdom, and global offices in California, Finland and Hong Kong. For more details, visit www.aminocom.com CONTENTS Financial and operational highlights .............................. 3 Independent auditor’s report to the members ........... 32 Strategic report ................................................................. 4 Consolidated income statement .................................. 40 Our business at a glance ................................................. 4 Consolidated statement of comprehensive income......41 Chairman’s report ............................................................. 7 Consolidated statement of financial position ..................42 Chief Executive Officer’s report ...................................... 8 Consolidated statement of cash flows ......................... 43 Chief Financial Officer’s report ...................................... 10 Consolidated statement of changes in equity ........... 44 Principal risks and uncertainties ..................................... 12 Notes to the consolidated financial statements ......... 45 Board of Directors ........................................................... 14 Company balance sheet .............................................. 79 Chairman’s Governance report ................................... 16 Company statement of changes in equity ................. 80 Remuneration Committee report ................................. 23 Notes to the parent company financial statements .....81 Audit committee report ................................................. 26 Five year US dollar comparative information .............. 85 Directors’ report .............................................................. 28 Glossary ............................................................................ 87 Company information - Registered office: Prospect House, Buckingway Business Park, Anderson Road, Swavesey, Cambridgeshire, CB24 4UQ Amino Technologies plc – Annual Report 2018 2 FINANCIAL HIGHLIGHTS (1) Adjusted operating $M UNLESS OTHERWISE STATED 2018 2017 CHANGE profit, adjusted profit Revenue 88.9 96.1 -7% before tax and adjusted Adjusted gross profit 36.5 42.8 -15% earnings per share are non-GAAP measures and Adjusted EBITDA 16.8 20.4 -18% (1) exclude amortisation of Adjusted profit before tax 11.2 15.2 -26% acquired intangibles, Adjusted operating cash flow 14.1 23.7 -41% other operating income, Adjusted basic earnings per share (us cents)(1) 14.49 20.75 -30% exceptional items and share-based payment Statutory gross profit 38.0 45.2 -16% charges. Statutory profit before tax 8.2 13.3 -38% Statutory operating cash flow 14.3 22.2 -36% (2) The Board believes Statutory basic earnings per share (US cents) 11.25 21.27 -47% market forecasts for adjusted profit before Net cash 20.3 17.4 17% tax to be in the range of £10.9m to £11.5m with a Dividend per share (GBP pence) 7.32 6.66 10% consensus of £11.3m. • 2018 results in line with revised consensus market expectations (2) • Continued strong cash generation and increased year end • Resilient performance in challenging market conditions cash balance of $20.3m • As previously announced, H2 performance impacted by • Debt-free balance sheet and strong net cash position significant macro-economic headwinds, particularly in OTT support dividend policy TV vendor hardware • Recommended dividend up 10%, in line with our previous • Cost saving programme delivered annualised proforma commitment overhead savings of $4.4m • Seventh consecutive year of dividend increases • Ongoing commitment to maintain dividend at current levels until at least FY20 TRANSFORMATION PROGRAMME SEVENTH CONSECUTIVE YEAR OF TO DRIVE HIGHER QUALITY DIVIDEND INCREASE OF EARNINGS • Acceleration of strategy to focus on software and services and value-add hardware, to support a more resilient business model with improved operating margins and recurring revenue 7.32 • Exit from low margin, commoditised hardware activities 6.66 expected to reduce anticipated revenues by c20%, and 6.05 anticipated adjusted operating profit by 10%, in FY19 5.50 5.00 3.45 • Further management action to deliver cost savings – 3.00 additional $5.0m annualised reduction in cost base 2.00 identified • Intention to accelerate software and services growth through organic growth and a focused M&A strategy FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 • Simplification of product portfolio to deliver more cost- effective products to customers Dividend pence per share • Programme expected to complete by April 2019 OPERATIONAL AND CURRENT TRADING AND OUTLOOK STRATEGIC PROGRESS • Challenging macro-economic headwinds continuing into 2019 • Multi-Layer Ceramic Capacitor (“MLCC”) cost increases are • Strong growth in software and services, up 19% showing early signs of slowing • The Group’s three long-term growth drivers continue • Memory prices expected to decline slowly from Q2 2019 to make progress: IP / Cloud TV Everywhere; Operator Ready Android TV; and Upcycling legacy devices to next • Operators seeing continued pressure from rising content costs generation TV experiences and cord cutting and trimming • Traction for SaaS Engage platform – annual recurring run- • 2019 expectations reduced to reflect exit from low margin, rate revenues up 36% commoditised hardware activities and refocused strategy • Launch of innovative ODM programme to licence AminoOS software Amino Technologies plc – Annual Report 2018 3 STRATEGIC REPORT OUR BUSINESS AT A GLANCE WHAT WE DO Amino delivers smarter, more cost-effective ways of delivering modern TV experiences. Amino is an innovative global provider of modern, scalable media and entertainment technology solutions. With our award-winning IP/cloud video solutions and deep deployment expertise, we are the partner operators trust to design and deliver modern TV experiences that gain them an advantage in meeting the demands of today’s connected consumer. Amino’s world class research and development team enables operators to embrace innovation and do more for less, staking its position as all-inclusive, next-generation service provider. Department 2018 2017 AVERAGE HEADCOUNT BY MAJOR DEPARTMENT Selling, general and administrative 61 68 OF THE GROUP, INCLUDING Research and development 145 159 CONTRACTORS Total 206 227 STRATEGIC MARKETS Today’s savvy subscribers want simplicity, flexibility and control of their entertainment options. They expect an engaging user experience allowing them to easily discover, access and enjoy their content selections. They want to manage their subscriptions and enjoy content on-the-fly. These subscribers understand the benefit of a proven, reliable network and expect a high-quality video experience. Amino understands the challenges operators face today and can advise on the unique combination of software and hardware solutions each requires to support next-generation services that win over consumers and pave the way for recurring revenues and subscriber growth. As a result we are focused on three strategic market areas: IP/ CLOUD TV OPERATOR READY UPCYCLE LEGACY STB EVERYWHERE ANDROID TV TO NEXT GENERATION Comprehensive solutions that Android TV is the fastest growing Providing the process and tools encompasses everything needed pay TV environment globally with to solve a key operator dilemma: for service providers to quickly and rapid operator take-up driving How to create a modern pay TV cost-effectively launch or expand adoption and deployment we service that leverages existing a TV service with all the features help operators fully integrate and infrastructure. expected by viewers today. leverage the features. Amino Technologies plc – Annual Report 2018 4 STRATEGY AND BUSINESS MODEL Our vision is to drive the all-IP/cloud future of media and entertainment. The company strategy is to be the leading technology solutions innovator and trusted partner for operators looking to gain the advantage in delivering modern TV experiences. We work both directly with operators and through distribution channels,