Amino has recently released a cautious trading statement. Both revenue and cost synergies from the recent Entone and Booxmedia acquisitions are ahead of plan, with integration going well. However, a second-half revenue shortfall in the traditional Amino business will impact FY15 financial performance. In light of the announcement, and the recent Entone acquisition, we introduce new forecasts, and note the company’s re-iterated commitment to a progressive dividend policy.
Booxmedia and Entone integrating well: Acquired in May and July 2015 respectively, Amino has confirmed that integration of the respective businesses is on-track. Cost and revenue synergies are ahead of plan, with teams and product lines being successfully assimilated into the existing business.
Second-half turbulence in the traditional business: Amino has revealed that unsatisfactory sales execution has impacted H2 revenue performance. Part of this was due to specific customer consolidations, and also delays in orders where certain customers are considering the transition to UHD/4k services. Amino is taking targeted action to improve and re-focus sales efforts. However, the result is reset guidance – with FY15 adjusted PBT now expected to be in line with FY14 (£4.2m), below market expectations (we estimate c£5.6m).
Revised forecasts introduced: Following the announcement and the recent Entone acquisition, we introduce new forecasts. These are summarised below and detailed overleaf.
Progressive dividend policy re-iterated, cash position unchanged: Amino has re-confirmed its commitment to a progressive dividend policy. Our expectations are for 10% annual growth in DPS for both FY15 and FY16. The company also expects the closing FY15 net cash position to be in line with market expectations (c£3m).
The commentary on merger integration and dividend policy is arguably positive news flow. However, investor attention has focussed on the H2 revenue performance and the share price has suffered. The company is taking remedial action to address the sales execution issues, and we await further updates with the trading statement on 3 December 2015.