Amino has issued a trading update for the six months ending May 2016. Overall, management believe trading was in line with market expectations, with a strong performance from Latin America, solid traction in North America and good momentum in Europe. Amino reported record order intake during the period and a solid £3.1m closing net cash position. Lastly, a 10% increase in the dividend is a further statement of confidence in the outlook.
Trading in line: Management communicated that the business traded in line with market expectations during H1 2016. The Latin American business performed strongly, with contract wins from both new and existing customers for IPTV deployments. North America is seeing good traction from both Cable and IPTV customers, evidenced by the Cincinatti Bell contract together with a number of new customer wins in the region during the period. The recent Vodafone renewal announcement and DELTA cloud TV deployment demonstrate the momentum in the European business.
Record order intake: Although no quantum was provided, Amino reported a record order intake during the first half of FY16 and an “encouraging” backlog to take into the second half, following an impressive sales performance in the key regions.
Strong cash position: Net cash at May 31 of £3.1m represents a £1m improvement on the FY15A figure. Note the £3.1m includes record outflows of £3.0m for dividend payments and £1.2m of acquisition-related cash flows.
10% Dividend growth: Amino announced a 10% increase in DPS to 1.391p. This is consistent with the group’s progressive dividend policy of a minimum 10% growth until the year ending November 2016.
Overall, this is a positive update in our view. The solid performance from key geographies assures on the H1 16 outcome and the record order backlog gives confidence in the outlook for the second half. The recent (2015) Entone and Booxmedia acquisitions have been successfully integrated and the May 2016 appointment of Mark Carlisle as group CFO removes a key management uncertainty. The Amino dividend growth story remains intact, and a 6% yield appears highly attractive.