Amino Technologies

Internet television (IPTV) provider Amino endured a disappointing first half, but its shares could represent a good buy for recovery as the second half has started strongly.

The Cambridge-based management team, led by CEO Andrew Burke and CFO Stuart Darling, are now upbeat and extremely confident that recent new business wins are a strong indication that spending is returning to the recently depressed sector. The first half was blighted by a ‘challenging' performance in the Americas, with customer de-stocking causing a 12% drop in revenues to £12.8m and higher costs dissolving previous profits into a £3.6m pre-tax loss.

The industry had been concerned that the consumer might give up pay-TV during the credit crunch but Amino’s customers, ‘Tier 2’ and ‘Tier 3’ telecoms operators, happily found people were still choosing paid-for services. ‘The recent barren period is freeing up,’ says Burke. ‘In the second half we’ve had good wins in North and Latin America and we’ve signed licenses in Asia Pacific.’

Having reduced the sales department headcount and stripped out other costs, Burke and Darling have taken annual costs down to £13m a year, from a peak of £19m post last year’s acquisitions of Tilgin and AssetHouse, and hence expect good things for the rest of the year. ‘We expect volumes to go up significantly and, with margins holding up, we expect a substantial improvement in profitability,’ explains Darling.

The consensus forecast in the City is for breakeven this year, with the 5.75p of earnings predicted for 2010 putting Amino's shares on a materially lower rating than its immediate peers. Net assets of £27m, including net cash of £8.9m, are only just higher than the company’s current market value, adding incentive for value hunters, although the appeal of the shares is still speculative at the moment.