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Amino Technologies (LSE:AMO) is proving that focus is one of the keys to achieving corporate goals. After announcing its trading update for the year ending 30 November, Amino’s share price rose nearly 15% from 57.00 pence to 65.25 pence by mid-afternoon.
The word “focus” appears no less than four times in the brief report.
The first time “focus” is mentioned it is cited as the reason that the company will be delivering a profit for the year in line with market expectations. Specifically, the announcement said, “the Board’s ongoing focus on operational performance and continued success in delivering gross margin improvements.”
The second time “focus” is mentioned it is in the context of the Amino’s overall strategic approach. The report emphasized that the continued “focus on executing only high margin, cash generative business” has been and will continue to be, a cornerstone of the company’s business.
The third time “focus” is mentioned it emphasizes its recognition of the importance of R&D as a foundational element in the company’s current and future success. The company announced that it would bring all of its R&D into its Cambridge headquarter to generate both productivity and efficiency which will result in cost savings as well. On the financial statement R&D shows up as an expense. Bean-counters can sometimes fail to see anything beyond a balance sheet. Therefore, when instituting cost cutting measures, in reducing expenses, they cut funding for R&D. That is the first step in a recipe for disaster, especially for technology companies like Amino. Focusing on meaningful R&D provides the basis for the development of new products and product improvements that create new sales opportunities and organic growth.
The final time “focus” is mentioned it is directly from the lips of Non-Executive Chairman, Keith Todd, as he was summarizing the company’s standing, saying, “Amino’s focus on profitable growth has delivered good results.” As well it should.
Because of the company’s emphasis on focus in the important areas of R&D, high margin products, and a cash generating business, the future looks bright for Amino. I have watched companies with technology and manufacturing capabilities develop and manufacture items simply to keep throwing new products in front of customers. I have seen tens of thousands of dollars spent on developing a product that will have extremely limited cash generating capability. It is a path that leads to the precipice of failure.
Focus has also positioned Amino to announce its maiden dividend “with an expectation to provide both an interim and full year dividend moving forward.” The Board said that it “expects this dividend to grow by no less than 15 per cent per annum for each of the next two years.”
Focus, when directed at and kept on proper objectives, will produce these kinds of results over and over again. You would be surprised (or maybe not) at the number of companies that lack proper focus. Good things happen when a company stays focused. Bad things happen when it does not.
Amino expects that revenues will be slightly below expectations, which means that the profit results are clearly a factor of the focus of the company as described in the report.
