REG - BATM Advanced Comm - Full Year Results
06/03/2023 07:00
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RNS Number : 9242R BATM Advanced Communications Ld 06 March 2023
LEI: 213800FLQUB9J289RU66
6 March
2023
BATM Advanced Communications Limited
("BATM" or the "Group")
Full Year Results
BATM (LSE: BVC; TASE: BVC), a leading provider of real-time technologies for
networking solutions and medical laboratory systems, announces its preliminary
results for the year ended 31 December 2022.
Financial Summary
$m 2022 2021
Results from ongoing operations (adjusted)*
Revenue 116.1 132.8
Revenue on a constant currency basis** 125.6 -
Gross profit 38.4 50.2
Gross margin 33.0% 37.8%
Operating profit 3.7 11.3
EBITDA 8.0 15.7
Reported results
Revenue 116.1 140.0
Gross profit 38.0 51.1
Gross margin 32.7% 36.5%
Operating profit 3.1 24.4
EBITDA 8.0 29.6
Basic earnings per share (cents) 0.06¢ 3.26¢
Cash and short-term investment in deposits and other securities 44.2 67.8
* Adjusted to present the results on an ongoing operations basis by excluding
(1) the contribution to 2021 from NGSoft, a subsidiary that BATM sold in March
2021, and (2) the amortisation of intangible assets for both periods. The term
'ongoing operations' in this announcement is used for comparative purposes
only and is not used in the same context as in accounting standards. For
further information see Note 3 - Other Alternative Measures.
** Revenue from ongoing operations for 2022 based on the currency rates
prevailing in 2021. Revenue during the period was impacted by the
strengthening of the US dollar against the local currencies primarily of
subsidiaries in the Bio-Medical division.
Operational Summary
Networking & Cyber Division (24% of total revenue)
· Revenue from ongoing operations increased by 34.4% to $27.9m (2021:
$20.7m), reflecting strong growth in both the Networking and Cyber units
· Networking Unit
o Edgility edge computing and network function virtualisation ("NFV")
platform:
§ Generated first revenue from Edgility, contributing to the Networking
unit's growth; total backlog for Edgility was $5.2m at year end
§ Awarded multi-year contract from CityFibre, the UK's largest independent
carrier-neutral Full Fibre platform, for Edgility licences plus certain
hardware
§ Established two new partnerships to boost Edgility's sales and marketing
presence through the offering of joint solutions
§ Sustained engagement with several potential customers worldwide
o Network Edge (carrier ethernet and mobile backhaul):
§ Strong increase in revenue despite ongoing impact of supply chain
challenges
§ New orders received primarily from existing customers for BATM's latest
high-capacity solutions
· Cyber Unit
o Substantial growth in revenue from delivering on the high-value contracts
won in the previous year
o Post period, in January 2023, won a $26m multi-year government defence order
for latest high-performance cyber security solution
Bio-Medical Division (76% of total revenue)
· Revenue was $88.3m (2021: $112.0m); on a constant currency basis,
revenue was $97.5m; excluding the contribution to both years from sales of
COVID-19 related products, revenue increased to $79.9m (2021: $74.9m)
· Diagnostics Unit
o Sales increased of molecular diagnostic products not related to COVID-19,
which was offset by market-wide reduction in prices, as well as lower demand,
for COVID-19 products as the global pandemic subsided
o Commercially launched new multi-respiratory diagnostics test
o Progressed development of new diagnostics tests, including in collaboration
with organisations such as Stop TB Partnership and BIOASTER
o Opened new state-of-the-art diagnostics laboratories and facilities in Italy
and Israel to support the activity of ADOR Diagnostics ("ADOR"), which is
developing its proprietary isothermal diagnostic solution
o ADOR received an additional $10m of investment, of which BATM contributed
$4m (giving BATM a shareholding of 37.2%)
· Eco-Med Unit
o Completed delivery of two contracts for BATM's ISS AGRI solution and
significantly advanced two further installations
o Received €3.6m order for ISS-based bio-waste treatment solutions for
medical settings, with delivery commencing in Q4 2022 and due to complete
during 2023
· Distribution Unit
o Delivered greater volume of regular business and increased sales prices,
which, on a constant currency basis, enabled 6.8% revenue growth
Commenting on the results, Moti Nagar, Chief Executive Officer of BATM, said:
"In 2022, there was robust underlying performance across our business as the
effects of the pandemic increasingly subsided and we returned our focus to our
regular activities. In particular, we achieved a key milestone with Edgility
being awarded a contract by a major network provider in the UK, CityFibre. We
believe Edgility will be instrumental in driving our future growth and so we
are greatly encouraged by the increased interest and visibility over sales.
Accordingly, while our revenues were negatively impacted by currency and lower
demand for COVID-19 products, we exited the year as a stronger business than
we were prior to the outbreak of the pandemic.
"Looking ahead, the momentum of the second half of the year has been sustained
into 2023 and we expect increased revenue in all our units. Having become the
CEO at the start of this year, I have been visiting and meeting our business
units, reviewing our strategy and building our plans for delivering
sustainable growth. With the solid foundations that we have in place in core
technologies that we believe will be market disrupters, the Board remains
confident in the prospects of the business and is working hard to demonstrate
the substantial value that exists within BATM."
Enquiries:
BATM Advanced Communications
Moti Nagar, Chief Executive Officer +972 9866 2525
Ran Noy, Chief Financial Officer
Shore Capital
Mark Percy, Anita Ghanekar, James Thomas (Corporate Advisory) +44 20 7408 4050
Gracechurch Group
Harry Chathli, Claire Norbury +44 20 4582 3500
The information communicated in this announcement is inside information for
the purposes of Article 7 of Regulation 596/2014.
Forward-looking statements
This document contains forward-looking statements. Those statements reflect
the current opinions, evaluations and estimations of the Group's management,
and are based on the current data regarding the Group's business as is
detailed in this document and in the Group's periodical, interim and immediate
reports. The Group does not undertake any obligation or make any
representation that actual results and events will be in line with those
statements, and stresses that they may differ materially from those
statements, due to changes in the Group's business, market, competition,
demand for the Group's products or services, general economic factors or other
factors that can influence the Group's business and results, due to the risk
factors that are detailed in the Group's Annual Report, and due to information
and factors that are currently unknown to the Group's management and that, if
known, would affect the management's opinions, evaluations or estimations. The
Group will report the actual results and events according to its legal,
accounting and regulatory obligations, and does not undertake any other
obligation to report them or their deviations from the forward-looking
statements, or to update any of the forward-looking statements in this
document or to report that it is not valid anymore.
Operational Review
BATM performed well during the year to 31 December 2022. Revenue increased by
34.4% from ongoing operations in the Networking & Cyber division, which
offset the contribution to the previous year from NGSoft, a subsidiary that
BATM sold in 2021. BATM also gained good traction for its Edgility edge
computing and virtual networking solution, which is now poised for rapid
commercialisation. In the Bio-Medical division, there was a reduction in
revenue, as expected, compared with the exceptional performance in the
previous year due to the pandemic. When excluding the contribution to both
years from sales of products related to COVID-19, the Bio-Medical division
revenue grew by 6.7% - with increased sales more than offsetting the negative
effect of currency fluctuations.
Post year end, on 1 January 2023, Moti Nagar assumed the role of Chief
Executive Officer of BATM, having been Chief Financial Officer since 2015. On
1 February 2023, Ran Noy was appointed Chief Financial Officer of BATM, having
been VP Finance since 2021.
Networking & Cyber Division
Adjusted* Reported
$m 2022 2021 2022 2021
Revenue 27.9 20.7 27.9 28.0
Gross margin 44.7% 45.0% 43.9% 36.9%
Operating (loss)/profit (0.9) (5.6) (1.2) 7.8
* Adjusted to present the results an ongoing operations basis by excluding (1)
the contribution to 2021 from NGSoft, a subsidiary that BATM sold in March
2021, and (2) the amortisation of intangible assets for both periods.
Revenue in the Networking & Cyber division increased by 34.4% on an
ongoing operations basis (excluding the contribution to 2021 from NGSoft),
reflecting robust growth in both the Networking and the Cyber units. As a
result of this strong underlying performance, BATM achieved revenue on a
reported basis in line with the previous year despite the sale of NGSoft.
Gross margin improved in the Networking and Cyber units respectively. On a
blended basis, the division's gross margin for ongoing operations was 44.7%
compared with 45.0%, which reflects the change in the division's revenue mix
based on the relative contribution from the Networking and Cyber unit
respectively. On a reported basis, gross margin increased substantially due to
the lower margin nature of the NGSoft business included in the previous year.
Operating loss from ongoing operations was reduced to $0.9m (2021: $5.6m loss)
thanks to the higher revenue and gross profit as well as the contribution from
the sale of a property as described in the Financial Review below. On a
reported basis, the operating loss was $1.2m compared with an operating profit
of $7.8m for 2021 as a result of the exceptional capital gain of $13.0m from
the sale of NGSoft in the prior year.
Networking
In the Networking unit, revenue on an ongoing operations basis (excluding the
contribution to 2021 from NGSoft) increased by 20.5%. This reflects higher
sales of BATM's network edge solutions and services and a material
contribution to growth from Edgility.
Edgility - Edge Computing and NFV solutions
BATM achieved a significant milestone during the year with the signing of a
multi-year contract with CityFibre, the UK's largest independent
carrier-neutral Full Fibre platform, for the deployment of its Edgility
virtual networking and edge compute solution, which followed an extensive
testing and piloting phase. This is part of CityFibre's programme to replace
its hardware-based customer premise routing equipment with a virtualised
solution based on small-footprint white-box appliances (a multi-purpose
device) operated by Edgility. For this initial order, BATM will receive
recurring licence fees for a five-year period plus certain hardware sales
estimated to be worth a total of $3.5m. BATM expects this order to be followed
by a substantial expansion in deployments as CityFibre rolls out Edgility to
its full network.
BATM also commenced executing, and received its first revenue, on two
contracts for Edgility, which are expected to have an aggregate value of $2.7m
over a five-year period, that were awarded at the end of 2021. This includes
the first enterprise customer for Edgility, CEMEX, S.A.B, (NYSE: CX), which is
a global construction materials company, and e-Qual, a global Managed Services
Provider based in France that operates in 55 countries.
Edgility continued to undergo evaluation with leading network operators,
multi-service providers and systems integrators worldwide, including CityFibre
as noted above. Edgility is fast being recognised internationally as a
breakthrough solution and has won several industry awards. Consequently, the
interest in Edgility has seen a significant increase and BATM is in advanced
discussions with several potential customers having undertaken further
proof-of-concepts in Q4 2022 and in the current year. As at year end, the
total backlog for Edgility was $5.2m.
To expand the sales and marketing reach, and provide further routes to market,
BATM continued to establish strategic partnerships, which primarily involve
Edgility being pre-integrated with, or pre-installed on, the partner's network
appliances (with customers that use the Edgility solution contracting with
BATM directly). During the year, this includes establishing partnerships with:
· Advantech (TWSE: 2395), a global leader in industrial IoT, which is
providing Edgility pre-installed on a variety of its universal edge network
appliances.
· NEXCOM International Co Ltd (TPEX: 8234), a leading supplier of
network appliances, which offers Edgility pre-installed on its 5G-ready device
designed for the small-office-home-office and mid-range enterprise market.
Network Edge solutions and services
Revenue from network edge solutions and services, where BATM provides carrier
ethernet and mobile backhaul platforms, grew significantly driven by sales
price and volume increases, despite the ongoing impact of global electronic
components shortages causing delays to the delivery of some orders. This
growth was primarily based on orders from existing customers for BATM's new
100GE devices, such as the TM-8104 carrier ethernet aggregation solution, as
well as from the fulfilment in 2022 of carrier ethernet sales secured in 2021.
In addition, BATM launched a new multipurpose, ultra-high-capacity demarcation
platform, the TM-8106, and has received initial strong interest.
Cyber
The Cyber unit performed strongly with revenue increasing by 73.1%
year-on-year, primarily reflecting the execution of contracts awarded in 2021
and with a backlog still to be delivered in 2023. This was significantly
increased, post period, with the award in January 2023 of a $26m order from
BATM's long-standing defence department customer to be delivered over a period
of a maximum of five years. BATM continues to expect to receive more orders
from this customer within this period.
The Cyber unit also continued its development efforts. This included advancing
its previous generation of product to increase performance and throughput -
resulting in the $26m order in January 2023 - as well as continuing the
development of a version of its cyber security solution aimed beyond the
defence industry, including for the corporate market, which will significantly
expand the addressable market.
Bio-Medical Division
Adjusted* Reported
$m 2022 2021 2022 2021
Revenue 88.3 112.0 88.3 112.0
Revenue on a constant currency basis** 97.5 - - -
Gross margin 29.4% 36.5% 29.2% 36.4%
Operating profit 4.6 17.0 4.3 16.5
* Adjusted to exclude the amortisation of intangible assets.
** Revenue for 2022 based on the currency rates prevailing in 2021.
Revenue for the Bio-Medical division was $88.3m (2021: $112.0m). On a constant
currency basis, excluding the impact of the strengthening of the US dollar
against local currencies, revenue was $97.5m. Revenue in the division was
negatively impacted by the decline in market demand for COVID-19 products;
excluding the contribution to both years from COVID-19 related products,
revenue increased by 6.7% from $74.9m in 2021 to $79.9m in 2022.
Adjusted gross margin for the division was 29.4% (2021: 36.5%), primarily
reflecting the contribution to revenue in 2021 of the higher-margin COVID-19
products. Excluding COVID-19 related products, gross margin in the Bio-Medical
division increased from 25.4% in 2021 to 27.6% in 2022. The Bio-Medical
division generated an adjusted operating profit of $4.6m for 2022 compared
with $17.0m for the previous year.
Diagnostics
Revenue in the Diagnostics unit accounted for 12.8% of the Bio-Medical
division compared with 28.2% in 2021. There was an increase in revenue from
BATM's range of molecular diagnostic products that are not related to
COVID-19, which were sold to customers in Europe and the Middle East. However,
this increase was more than offset by lower demand, as well as a market-wide
reduction in prices, for COVID-19 products as the global pandemic subsided,
alongside a negative impact of the strengthening of the US dollar against
local currencies.
This year BATM continued with its programme to enhance its diagnostic
operations. At its Adaltis subsidiary, this included steps to optimise the
production process. BATM opened a new state-of-the-art laboratory in Israel,
which is focused on research & development, and new product assembly rooms
in Rome, Italy, to support the activity of BATM's ADOR associate company,
which is developing the NATlab molecular biology solution.
BATM also continued to progress its development work. This includes its new
molecular diagnostics test for multiple respiratory pathogens receiving CE
certification and being commercially launched towards the end of the year.
BATM is continuing to develop new kits, such as for sepsis, as well as
collaborating on projects such as to develop a new test for the diagnosis of
tuberculosis as part of its work with the Stop TB partnership.
ADOR established the development of its novel isothermal rolling circle
amplification ("RCA") method for multiplex pathogens detection. In parallel,
work continued on incorporating it into the NATlab system. The respiratory
panel is planned to be the first commercial application of this technology.
In addition, ADOR has initiated a new test for the diagnosis of sexually
transmitted infections in cooperation with BIOASTER, the French Microbiology
Technology Research Institute.
During the year, BATM and its partners invested an additional $10m into ADOR,
of which the Group contributed $4m (giving BATM a shareholding of 37.2%). The
additional investment contributed to the opening of the new laboratory and
will be used to prepare ADOR for the pre-production stage, register additional
patents (mainly in the US), progress development of more disease panels and
certifications and increase the cooperation with international bodies,
including the World Health Organisation.
Eco-Med
The Eco-Med unit accounted for 7.6% of the Bio-Medical division's revenues in
2022 compared with 7.7% in 2021.
There was good progress in deliveries of BATM's solution, the ISS AGRI, for
the treatment of pathogenic waste in agricultural and pharmaceutical settings.
This was primarily under contracts that had previously been secured, but where
completion had been delayed due to pandemic-related restrictions. BATM
completed the delivery of two of its ISS AGRI contracts and advanced the
delivery of two further contracts. The delivery of the latter two contracts
was impacted by supply chain disruption - with one of the solutions now
undergoing final engineering ahead of completion and the solution under the
other contract is soon to be installed.
BATM also received a €3.6m order for its ISS-based bio-waste treatment
solutions for medical settings, with delivery commencing in Q4 2022 and due to
complete in 2023. The order was from a new customer, a hospital, and BATM
expects to receive a follow-on order in due course.
Distribution
Revenue in the Distribution unit accounted for approximately 79.7% of the
Bio-Medical division's revenue (2021: 64.1%). On a reported basis, revenue was
broadly in line with the previous year due to the negative currency impacts,
however underlying sales, excluding currency impact, increased by 6.8%. This
underlying growth was based on a greater volume of regular business as well as
an increase in sales prices and was achieved despite a decline in COVID-19
related sales. Excluding the contribution to both years of sales of COVID-19
related products, revenue in the Distribution unit increased by 10.3%, with
greater sales more than offsetting the currency impact. Towards the end of the
year, BATM gained control of one of its associated companies.
Financial Review
Adjusted* Reported
$m 2022 2021 2022 2021
Revenue 116.1 132.8 116.1 140.0
Revenue on a constant currency basis** 125.6 132.8 - -
Gross margin 33.0% 37.8% 32.7% 36.5%
Operating profit 3.7 11.3 3.1 24.4
* Adjusted to present the results an ongoing operations basis by excluding (1)
the contribution to 2021 from NGSoft, a subsidiary that BATM sold in March
2021, and (2) the amortisation of intangible assets for both periods.
** Revenue from ongoing operations for 2022 based on the currency rates
prevailing in 2021.
Total Group revenue for the year was $116.1m (2021: $132.8m for ongoing
operations, which excludes the contribution from NGSoft, a subsidiary that
BATM sold in March 2021), with growth in the Networking & Cyber division
being offset by a reduction in the Bio-Medical division, primarily reflecting
lower sales of COVID-19 products as well as the impact of the strengthening of
the US dollar. On a constant currency basis, revenue for the year was $125.6m.
Excluding the contribution to both years of COVID-19 related sales, the
revenue for ongoing operations increased by 12.7% to $107.8m (2021: $95.6m),
more than offsetting the negative currency impact.
Gross margin for the year was 33.0% compared with 37.8% for ongoing operations
for the previous year. This reflects the contribution to FY 2021 revenue of
the high-margin COVID-19 products. Excluding the contribution of COVID-19
related products to both years, BATM's gross margin for ongoing operations
improved to 32.0% (2021: 29.7%) as increased sales prices offset the negative
impact of currencies and inflation.
Sales and marketing expenses were $17.2m (2021: $18.1m for ongoing operations;
$18.3m on a reported basis to include NGSoft), representing 14.8% of revenue
compared with 13.7% for ongoing operations in 2021. The decrease in expenses
reflects the costs associated with COVID-19 product sales in 2021, with the
reduction being partly offset by price inflation.
General and administrative expenses were $13.0m (2021: $11.9m for ongoing
operations; $12.2m on a reported basis), representing 11.2% of revenue (2021:
9.0% for ongoing operations). R&D expenses were $7.0m (2021: $8.6m for
ongoing operations; $8.7m on a reported basis).
Other operating income was $2.4m, which was from the disposal of one of BATM's
properties in the US - generating a profit for BATM of $2.1m. This compares
with other operating income in the previous year of $12.6m, which was mainly
attributed to the profit from the sale of NGSoft.
Adjusted operating profit was $3.7m (2021: $11.3m), with the reduction
primarily due to the lower revenue from COVID-19 products. On a reported
basis, operating profit (which includes amortisation and, for 2021, the
contribution from NGSoft) was $3.1m compared with $24.4m for 2021, with the
prior year including a capital gain of $13.0m from the sale of NGSoft.
As a result of the above, EBITDA for 2022 was $8.0m compared with $15.7m for
2021 for ongoing operations and $29.6m on a reported basis.
Net finance expense was $1.2m (2021: $0.6m net finance income). The higher
financial expenses were mainly due to the impact on balance sheet positions of
the strengthening of the US dollar compared with 2021.
BATM recorded a $0.3m tax expense (2021: $9.3m tax expense). The tax decrease
is a result of an approximately $1m non-cash tax incentive and lower profit
before tax while 2021 included a non-recurring tax expense related to the
NGSoft transaction.
Net profit after tax attributable to equity holders of the parent was $0.2m
(2021: $14.3m) resulting in basic earnings per share of 0.06¢ (2021: 3.26¢).
As at 31 December 2022, inventory was $34.5m (31 December 2021: $31.0m). Trade
and other receivables were $36.5m (31 December 2021: $34.9m).
Intangible assets and goodwill at 31 December 2022 were $18.5m (31 December
2021: $16.0m).
Property, plant and equipment and investment property was $15.9m (31 December
2021: $19.8m), with the reduction primarily due to the disposal of one of
BATM's properties.
The balance of trade and other payables was $46.3m (31 December 2021: $47.5m).
Cash used in operations (before interest and tax payments) was $1.1m compared
with cash from operations of $8.7m in 2021 due to the higher profit in the
prior year because of COVID-19 related sales.
At 31 December 2022, BATM had cash and cash equivalents and short-term
investment in deposits and other securities of $44.2m (31 December 2021:
$67.8m). Short-term investment in deposits and other securities represent cash
deposits of more than three months' duration, held for trading bonds and
marketable securities. The change in cash and cash equivalents and short-term
investment in deposits and other securities compared with the prior year
primarily reflects dividend payment of $4.3m; buy-back payments of $1.3m; an
additional investment in ADOR of $4m; tax payments relating to the NGSoft
transaction; and the impact of the weakening of the currencies in which BATM's
subsidiaries operate compared with the US dollar.
Capital Allocation
BATM's primary use of capital is investment in research and development and
its go-to-market strategy, capital expenditure and for working capital. The
Board also considers returns to shareholders to be an important element of its
strategy to deliver shareholder value as demonstrated during the year by
distributing a dividend totalling $4.3m (declared in December 2021) and
executing a buyback of 4,495,000 ordinary shares for a total of $1.3m.
Outlook
BATM entered 2023 with strong momentum across the business and a solid backlog
to be delivered during the year. Accordingly, BATM expects to report strong
growth for 2023, reflecting a double-digit percentage increase in revenue in
all units.
In particular, in the Networking & Cyber division, BATM expects the main
contributor to growth to be from sales of Edgility - including new customers
and expansion with existing customers. In the Cyber unit, BATM is on track for
strong growth based on delivery of its backlog of orders received prior to
2023 and the commencement of delivery of the $26m order awarded in January of
this year. As noted, BATM also expects to receive further orders in its Cyber
unit during the year. In addition, the strong revenue growth in the Networking
& Cyber division is expected to enable the division to generate an
operating profit for full year 2023.
In the Bio-Medical division, BATM expects significant growth of sales of its
diagnostic products in 2023. BATM is not including in its forecasts the $25m
tender, as noted in its trading update announcement of 8 December 2022, for
COVID-19 testing kits from a potential customer in Southeast Asia. However,
the strong growth anticipated of BATM's diagnostic products not related to
COVID-19 is expected to deliver a year-on-year increase in the Diagnostic
unit's revenue. BATM continues to expect increased revenue in the Distribution
and Eco-Med units.
Since becoming CEO on 1 January 2023, Moti Nagar has commenced a detailed
process of assessing BATM's strategy and preparing a plan to accelerate BATM's
sustainable growth. BATM will update the market on the outcome of this
undertaking in due course.
BATM has established solid foundations in core technologies that it believes
will be market disrupters. The Group is profitable with a very strong balance
sheet comprising both cash and short-term investment in deposits and other
securities of $44.2m as at year end as well as property and valuable IP. In
addition, BATM's total current backlog is significantly higher than at the
same point last year. Accordingly, the Board of BATM remains confident in the
prospects for the business and continues to explore all options to deliver
shareholder value.
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Year ended
31 December
2022 2021
US$ in thousands
Unaudited Audited
Revenues 116,123 140,038
Cost of revenues 78,165 88,977
Gross profit 37,958 51,061
--------- ---------
Operating expenses
Sales and marketing expenses 17,209 18,290
General and administrative expenses 13,018 12,243
Research and development expenses 7,025 8,713
Other operating income (2,428) (12,563)
Total operating expenses 34,824 26,683
--------- ---------
Operating profit 3,134 24,378
Finance income 772 1,466
Finance expenses (2,011) (911)
Profit before tax 1,895 24,933
Income tax expenses (339) (9,337)
Profit for the year before share of loss of a joint venture
and associated companies
1,556 15,596
Share of loss of a joint venture and associated companies (686) (839)
Profit for the year 870 14,757
Attributable to:
Owners of the Company 244 14,340
Non-controlling interests 626 417
Profit for the year 870 14,757
Earnings per share (in cents):
Basic 0.06 3.26
Diluted 0.06 3.23
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
2022 2021
Unaudited Audited
US$ in thousands
Profit for the year 870 14,757
Items that may be reclassified subsequently
to profit or loss:
Disposal of a foreign operation - (522)
Exchange differences on translating foreign operations (5,810) (4,880)
(5,810)
(5,402)
Items that will not be reclassified subsequently
to profit or loss:
Re-measurement of defined benefit obligation 65 162
65 162
Total other comprehensive loss for the year (5,745) (5,240)
Total comprehensive income (loss) for the year (4,875) 9,517
Attributable to:
(5,727)
Owners of the Company 8,976
Non-controlling interests 852 541
(4,875) 9,517
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
2022 2021
US$ in thousands
Unaudited Audited
Current assets
Cash and cash equivalents 35,156 65,331
Trade and other receivables 36,495 34,932
Short-term investment in deposits and other securities 9,011 2,432
Inventories 34,461 30,951
115,123 133,646
Non-current assets
Property, plant and equipment 15,309 18,107
Investment property 620 1,739
Right of-use assets 5,461 6,570
Goodwill 12,583 11,385
Other intangible assets 5,948 4,648
Investment in joint venture and associate 15,555 12,667
Investments carried at fair value 1,220 1,027
Deferred tax assets 3,362 3,375
60,058 59,518
Total assets 175,181 193,164
Current liabilities
Short-term bank credit 2,235 1,634
Trade and other 46,256 47,519
payables
Current maturities of lease liabilities 1,984 2,186
Tax liabilities 818 6,548
51,293 57,887
Non-current liabilities
Long-term bank credit 2,000 1,356
Long-term liabilities 3,472 3,888
Long-term lease liabilities 3,758 5,108
Deferred tax liabilities 120 170
Retirement benefit obligation 537 621
9,887 11,143
Total liabilities 61,180 69,030
Equity
Share capital 1,320 1,320
Share premium account 426,138 425,840
Reserves (32,812) (19,849)
Accumulated deficit (279,579) (279,888)
Equity attributable to the:
Owners of the Company 115,067 127,423
Non-controlling interests (1,066) (3,289)
Total equity 114,001 124,134
Total equity and liabilities 175,181 193,164
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year ended 31 December 2022 (Unaudited)
Share Premium Account Attributable to Owners of the Company Non-Controlling Interests
Share Capital Translation Reserve Other Accumulated Total
Reserve Deficit Equity
US$ in thousands
Balance as at 1 January 2022 1,320 425,840 (19,337) (512) (279,888) 127,423 (3,289) 124,134
Profit for the year - - - - 244 244 626 870
Other comprehensive income (loss)
Re-measurement of defined benefit obligation - - - - 65 65 - 65
Exchange differences on translating foreign operations - - (6,036) - - (6,036) 226 (5,810)
Other comprehensive income (loss) for the year - - (6,036) - 65 (5,971) 226 (5,745)
Total comprehensive income (loss) for the year - - (6,036) - 309 (5,727) 852 (4,875)
Dividend paid to non-controlling interest - - - - - - (681) (681)
Share buy-back - - - (1,325) - (1,325) - (1,325)
Recognition of share-based payments
- 298 - - - 298 - 298
Transaction with non- controlling interests - - (666) (4,936) - (5,602) 2,052 (3,550)
Balance as at 31 December 2022 1,320 426,138 (26,039) (6,773) (279,579) 115,067 (1,066) 114,001
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year ended 31 December 2021 (Audited)
Share Premium Account Attributable to Owners of the Company Non-Controlling Interests
Share Capital Translation Reserve Other Accumulated Total
Reserve Deficit Equity
US$ in thousands
Balance as at 1 January 2021 1,320 425,686 (13,811) (512) (290,090) 122,593 (3,830) 118,763
Profit for the year - - - - 14,340 14,340 417 14,757
Disposal of a foreign operation - - (522) - - (522) - (522)
Re-measurement of defined benefit obligation - - - - 162 162 - 162
Exchange differences on translating foreign operations - - (5,004) - - (5,004) 124 (4,880)
Total comprehensive income for the year - - (5,526) - 14,502 8,976 541 9,517
Exercise of share-based options by employees (*) 58 - - - 58 - 58
Recognition of share-based payments
- 96 - - - 96 - 96
Dividends - - - - (4,300) (4,300) - (4,300)
Balance as at 31 December 2021 1,320 425,840 (19,337) (512) (279,888) 127,423 (3,289) 124,134
(*) Less than 1K USD
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOW
Year ended 31 December
2022 2021
Unaudited Audited
US$ in thousands
Net cash from (used in) operating activities (Appendix A) (2,784) 5,592
Investing activities
Purchases of property, plant and equipment (2,414) (2,889)
Increase of other intangible assets (2,054) (400)
Investment in joint venture and associated companies (4,386) (727)
Proceeds on disposal of property, plant and equipment 4,514 18
Investment in a subsidiary (550) -
Proceeds from sale of a subsidiary (Appendix C) - 18,662
Tax payment related to disposal of a subsidiary (4,953) -
Proceeds on disposal of deposits and securities 4,941 717
Purchases of deposits and financial assets (11,733) (315)
Other (Appendix B) 293 3
Net cash from (used in) investing activities (16,342) 15,069
Financing activities
Lease payment (2,192) (2,174)
Bank loan repayment (11,017) (13,252)
Bank loan received 12,465 10,431
Dividend paid (4,300) -
Dividend paid to NCI (681) -
Share buy-back (1,325) -
Proceed on exercise of share-based payments - ___58
Net cash used in financing activities (7,050) (4,937)
Net increase (decrease) in cash and cash equivalents (26,176) 15,724
Cash and cash equivalents at the beginning of the year 65,331 50,575
Effects of exchange rate changes on the balance
of cash held in foreign currencies
(3,999) (968)
Cash and cash equivalents at the end of the year 35,156 65,331
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOW
APPENDIX A
RECONCILIATION OF OPERATING PROFIT FOR THE YEAR TO NET CASH FROM (USED IN)
OPERATING ACTIVITIES
Year ended 31 December
2022 2021
Unaudited Audited
$'000 $'000
Operating profit from operations 3,134 24,378
Adjustments for:
Amortisation of intangible assets 557 716
Depreciation of property, plant and equipment and investment property 4,334 4,548
Capital gain of property, plant and equipment (2,021) (229)
Profit from sale of a subsidiary - (13,035)
Gain from revaluation of investment carried at fair value (192) -
Gain from business combination achieved in stages over an associated company (404) -
Share based payments 298 96
Increase (decrease) in retirement benefit obligation 23 (10)
Increase (decrease) in 105 (1,803)
provisions
Operating cash flow before movements in working capital 5,834 14,661
Decrease (increase) in inventory (3,258) 3,031
Increase in receivables (803) (2,052)
Decrease in payables (1,291) (5,352)
Effects of exchange rate changes on the balance sheet (1,556) (1,616)
Cash from (used in) operations (1,074) 8,672
Income taxes (985) (2,383)
paid
Interest paid (725) (697)
Net cash from (used in) operating activities (2,784) 5,592
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOW
APPENDIX B
BUSINESS COMBINATION ACHIEVED IN STAGES OVER AN ASSOCIATED COMPANY
Towards the end of the year, the Group gained control of one of its associated
companies for an immaterial amount.
Year ended 31 December 2022
$'000
Unaudited
Net assets acquired
Current assets 523
Cash 29
Property, plant and equipment 22
Current Liabilities (514)
60
Goodwill 1,429
Total consideration 1,489
Satisfied by:
Disposal of investment in associated 775
Liability of acquisition 714
1,489
Net cash inflow arising on business combination:
Cash and cash equivalents acquired 29
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOW
APPENDIX C
DISPOSAL OF SUBSIDIARY - NGSoft
On 19 March 2021, the Group entered into a sale agreement to dispose of NG
Soft Ltd. ("NGSoft (to Aztek Technologies (1984) Ltd., a provider of ICT cloud
services in Israel and a portfolio company of SKY Fund. NGSoft is a software
and digital services company that provides creative digital and technology
solutions.
Year ended 31 December 2021
$'000
Audited
Net assets disposed
Property, plant and equipment 1,144
Right of use 3,667
Other intangible assets 968
Net working capital 73
Lease liability (3,764)
Current tax liability (584)
Deferred tax liability (540)
Goodwill 5,185
Net assets disposed of 6,149
Disposal of a foreign operation (522)
Gain on disposal 13,035
Total consideration 18,662
Net cash inflow arising on disposal:
Consideration received in cash and cash equivalents, net 20,903
Cash and cash equivalents disposed (2,241)
18,662
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General
The final results, together with the relevant notes, for the year ended 31
December 2022 and the comparative 2021 information will be presented in the
full Annual Report in accordance with International Financial Reporting
Standards ("IFRS").
Note 2 - Earnings per share
Earnings per share is based on the weighted average number of shares in issue
for the period of 440,167,097 (2021: 440,437,960) including 4,495,000 ordinary
shares held in treasury. The number used for the calculation of the diluted
earnings per share for the period (which includes the effect of dilutive stock
option plans) is 442,357,116 shares (2021: 444,267,674).
Note 3 - Other alternative measures
1. Income statement adjustments - including (1) the contribution to
2021 from NGSoft, a subsidiary that the Group sold in March 2021, and (2)
adjustments related to the amortisation of intangible assets.
Year ended 31 December 2022 (Unaudited( Reported results Amortisation of intangible assets Adjusted results (ongoing operations)
US$ thousands
Gross profit 37,958 (414) 38,372
Gross margin (%) 32.7% - 33.0%
Other operating expenses (income) (2,428) 143 (2,571)
Operating profit 3,134 (557) 3,691
Year ended 31 December 2021 (Unaudited( Reported results Adjustments to exclude NGSoft Amortisation of intangible assets Adjusted results (ongoing operations)
US$ thousands
Revenues 140,038 7,262 - 132,776
Gross profit 51,061 1,235 (414) 50,240
Gross margin (%) 36.5% 17.0% - 37.8%
Sales and marketing expenses 18,290 144 - 18,146
General and administrative expenses 12,243 358 - 11,885
Research and development expenses 8,713 - 106 8,607
Other operating expenses (income) (12,563) (12,994) 154 277
Operating profit 24,378 13,727 (674) 11,325
EBITDA 29,642 13,956 - 15,686
2. EBITDA measurement
Reported Adjusted
Year ended 31 December Year ended 31 December
US$ in thousands 2022 2021 2022 2021
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating profit 3,134 24,378 3,691 11,325
Amortisation of Intangible assets 557 716 - -
Depreciation 4,334 4,458 4,334 4,361
EBITDA 8,025 29,642 8,025 15,686
Note 4 - Segments
Business Segment
Year ended 31 December 2022 (Unaudited)
Networking and Cyber Bio-Medical Total
$'000 $'000 $'000
Revenues 27,864 88,259 116,123
Operating profit/(loss) (1,152) 4,286 3,134
Net finance expenses (1,239)
Profit before tax 1,895
Year ended 31 December 2021 (Audited)
Networking and Cyber Bio-Medical Total
$'000 $'000 $'000
Revenues 27,992 112,046 140,038
Operating profit 7,844 16,534 24,378
Net finance income 555
Profit before tax 24,933
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