Amino has announced FY 2018 results in line with our revised estimates. Cash performance remained solid and was accompanied by a 10% YoY increase in DPS. Management has also re-affirmed its intention to maintain the dividend at the current level until FY2020E. With market conditions remaining challenging, Amino has announced a three-pronged transformation program focussing on increased software and services sales, reducing exposure to commodity hardware and delivering annualised $5m operating cost savings. We make revisions to estimates following the announcement which reflect the organisational resizing.
Amino has announced FY 2018 results in line with our revised expectations. The group reported adjusted PBT of £11.2m (-26% YoY), versus our revised estimate of £11.5m. Standalone software sales grew strongly during the year (+19% YoY). However, as signalled in recent announcements, the business continues to face headwinds in device sales (-10% YoY).
Cash performance was solid, with the closing cash balance of $20.3m ahead of our $18.1m estimate and a $2.9m improvement on FY 2017. 10% YoY DPS growth has been confirmed for 2018, and management has re-affirmed its intention to maintain the dividend at the current level until at least FY 2020E.
Faced with challenging market conditions, management has announced a transformation programme to re-focus and re-size the business. The plan has three components 1) Increased software and services sales 2) reducing commodity hardware exposure and 3) implementing an annualised $5m cost saving program.
Following the announcement, we reduce FY 2019E revenue forecasts by 22%, reflecting the organisational re-sizing. In margin terms, our expectation of increased (higher margin) software and service sales offsets reduced expectations for (low margin) hardware. The net result is our FY 2019E adjusted EBIT forecast is reduced by 10%.
In our view, Amino’s results demonstrate a resilient performance against a challenging market backdrop. The business remains profitable and cash generative. Faced with a tough market environment, management is taking decisive action to re-position the business towards higher quality software revenues. We believe this a strategically sensible move and that going forward, growth in software will be a key value driver.