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AMINO & SRT 27 January 2014


Firstly a quick catch up on AMINO based on the edge of the city here in Cambridge, after the company delivered its preliminary results this morning.

Suffice to say, there were no nasty surprises and as a holder of a few of these, I am happy enough.

A reduction in revenue was already flagged, coming in at £35.9m 14% lower than 2012, but Amino still managed to put in a decent enough performance.

Operating profit rose before exceptional items by 17% to £3.3m against a previous £2.8m, while the net cash position remains extremely strong.

That now stands at £19.5m an increase of 14% from last years £17.5m.

As I have mentioned before, I would perhaps like to see the cash put to some use such as an earnings enhancing acquisition and the House Broker note today also refers to the cash position providing strategic opportunities.


Although we already had the guidance from the last update that 2014 is likely to be similar to last year, there are reasons to believe that growth can pick up again during 2015, as areas such as Latin America continue to expand and offer further upside from higher ended products as opposed to current lower functionality offerings.

It is also positive to hear that the company which now conducts all  of its R&D here in Cambridge is pressing on with the pursuit of new products and applications enhancing the portfolio.

This should include the likes of new home automation solutions for what could present further growth opportunities.

Although it can perhaps be difficult to value Amino and interpret the level of growth ahead, the solid cash position along with a progressive dividend policy should help provide support for the share price.

The shares are up today to 92p giving a market cap of just under £50m, although cash accounts for almost 40% of the market cap.

That said, between seven to ten million is aligned to working capital requirements, so I don’t tend to value the business at a total discount in terms of interpreting the current stated PER.


For now, Brokers are forecasting pre-tax profits for this year of £3.6m which would give EPS of 6.9p implying a forward PER of 13, but given the solid cash position I think it is fair to value it slightly more favourably than that.

The big question for further down the line is how much growth Amino can achieve, as new products come into play and overseas markets the company addresses continue to develop.

The board appears upbeat enough for the future and the commitment to the progressive dividend appears intact too.

Broker FinnCap has raised its target price from £1.20p to £1.33p.




Next up, SOFTWARE RADIO TECHNOLOGY, where the shares have come back down to 22.5p the level, when I originally took a look last year, albeit as a more speculative subject. The company, which is focused on developing and producing Automatic Identification Systems for the Marine Industry, has unfortunately had to warn again, on timing issues relating to orders for products in various markets.

While it isn’t totally unexpected to watchers and as I mentioned before that sales can be lumpy and unpredictable, it nevertheless undermines confidence and no doubt for many, the investment case.

I guess the frustrating thing for holders or watchers here, is that there appears to be the impending demand through various mandates, but the timing and delivery are as protracted as ever. The guidance on revenues today from the board is also probably one of the largest I have seen in a small company for a long time, where at the lower end revenues could be £6m, with £13m at the top. The difference is pretty stark and would translate either into a loss of £1.5m or a pre-tax profit of £2.5m.

No doubt those who believe in the longer term story will be happy to hold and as on previous occasions add at current levels.

Others, may now discard the story completely on the basis that the company is taking on that accident prone look about it.

Clearly, there remains potential with the company if things come together and it can deliver, however it must surely remain as one of the more speculative plays on offer.              


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