REG - BATM Advanced Comm - Full Year Results
12/03/2024 07:15
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RNS Number : 4254G BATM Advanced Communications Ld 12 March 2024
LEI: 213800FLQUB9J289RU66
12 March
2024
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 2023.
Financial Highlights
$m 2023 2022
Revenue 122.8 116.1
Gross profit 39.9 38.0
Gross margin 32.5% 32.7%
Adj. operating profit* 5.0 4.0
Adj. EBITDA* 9.3 8.3
Adj. profit before tax* 4.8 2.8
Net cash from (used in) operating activities 5.0 (2.8)
*Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments. For further detail, see the Financial Review
Strategic & Operational Highlights
· Completion of in-depth internal review of all business operations to
focus the Group on its core business lines within networking, cyber and
diagnostics, whilst introducing organisational improvements
· Sales increased by 11.7% year-on-year when excluding contribution from
COVID-19 products
· Revenue and adjusted EBITDA growth driven by excellent performance of
the Cyber division
Networking
· Edgility edge computing platform:
o Two five-year orders won from NGA 911 LLC ("NGA"), a leading provider of
emergency connectivity services in North America
o Rollout continued to progress with CEMEX and CityFibre
o Proof-of-concepts conducted with a number of potential customers worldwide,
including Tier 1 operators
o Established new partnership to increase sales and marketing reach in EMEA
o Launched new release of Edgility, with significantly upgraded features
· Carrier ethernet solutions:
o Launched new 10GE platform, which is undergoing proof-of-concepts that are
expected to translate to orders in the current year
o Promoting 100G solutions with TM-8104 and TM-8106 network edge platforms to
address demand for high-performance rapidly deployable service demarcation
devices with advanced features and low cost per port
Cyber
o Won multi-year orders totalling $32.4m from government defence department
customer
o Development continued of advanced encryption solutions, including quantum
key distribution integration and to expand the Group's offering into further
markets
Diagnostics
· In line with the new strategy, the Diagnostics division now comprises
all of the Group's diagnostics instrument and reagent activities
· Sales of diagnostic products increased by 20.8% year-on-year when
excluding COVID-19 contribution, driven by expanded customer base and product
portfolio for distributed diagnostic products
· Initiated sales of MDXlab, a new molecular diagnostics instrument,
towards the end of the year, which is receiving strong interest
· Introduced a next-generation sequencing ("NGS") preparation device with
advanced capabilities for DNA and RNA sequencing
· ADOR Diagnostics progressed development of disruptive NATlab molecular
diagnostics platform, with in-hospital pre-clinical trials commencing during
the year, and secured $7.5m investment
Commenting on the results, Moti Nagar, Chief Executive Officer of BATM, said:
"I am proud of what we achieved in 2023. Against a challenging macroeconomic
backdrop, we delivered growth in sales and adjusted EBITDA - including an
outstanding performance in our Cyber business. We launched several innovative
new products in Diagnostics and Networking that have been well-received,
whilst progressing development of potentially game-changing solutions.
Significantly, we undertook an in-depth strategic review that resulted in the
establishment of a new strategy, which we began to implement in the second
half of the year. Our new strategy is focused on accelerating our activities
that build on our established areas of core expertise and which are in
scalable and growing markets. This involves enhancing how we operate as a
business, prioritising resource allocation and potential M&A activity. We
have already taken important steps forward in this process and I am excited
about the progress we will make in 2024. Accordingly, and supported by our
strong balance sheet, we look to the future with confidence and look forward
to reporting on our progress."
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.
Investor & Analyst Presentation
Moti Nagar, CEO, and Ran Noy, CFO, will be holding a webinar for analysts and
investors on 13 March 2024 at 4.30pm GMT. To register to participate or submit
a question in advance, please use the following link:
https://forms.gle/4i8HW63eMGhvSJHj6
(https://url.avanan.click/v2/___https:/forms.gle/4i8HW63eMGhvSJHj6___.YXAxZTpzaG9yZWNhcDphOm86ZmYzMmRiNjc2NzcyZmQyNTQyNjllMThlMjk2NWM2ZjU6NjowMjc1OjZkN2U4ODFiNTcwYzBiOWM0ZDYwNzNiNjMxOTNhNjYyMmNhOWYxMTA0M2ViNjg4NTBkOGEwMTkzYTQ1MjhkZWM6cDpU)
.
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.
Strategic Update
During the year, an in-depth process was undertaken to assess the Group's
business, strategy and markets. Through this exercise, which concluded towards
the end of the first half, BATM renewed its strategic vision as a global
enterprise that intends to maximise its top assets while providing
high-quality solutions in growing markets with innovative technology backed by
strong IP and unique know-how. Accordingly, the Networking, Cyber and
Diagnostics lines of business have been established as the Group's core areas
of activity and prioritised for resource allocation.
Over time, the Group intends to add capability to its core activities through
M&A, and to divest other businesses where the Group can secure attractive
terms. The Group began exploring potential opportunities during the second
half of the year, albeit progress was hindered by the impact of the prevalent
geopolitical circumstances and macroeconomic uncertainty. However, while there
can be no guarantee that any transaction will take place, the Board is
confident that these strategic processes will be accelerated in 2024.
The Group also began implementing certain operational changes to align the
business with the new strategic vision, which has continued in the new
financial year. This includes adopting a reporting structure that is aligned
with the new strategy. The management team is seeking to enhance efficiency
across the Group by leveraging shared resources and fostering collaboration
between businesses that operate in similar markets - with the latter being
particularly applicable for the Group's diagnostics businesses. The Group is
in the process of establishing further Group-wide corporate functions, with
VPs of Business Development and Human Resources being appointed during the
year and a VP of Group Operations joining the Group shortly. In addition, the
Group has commenced the process to expand and enhance the sales teams within
its core activities.
Operational Review
Against a challenging macroeconomic backdrop and the loss of sales relating to
COVID-19 products as the global pandemic subsided, the Group delivered a
strong performance in 2023. The growth in sales was driven by the Cyber
division, which won multi-year orders totalling over $32m. There was an
increase in revenue generated by Edgility, with the Group also winning its
first contract for Edgility to be used for a government application in the US.
In the Diagnostics division, revenue increased when excluding the contribution
from products related to COVID-19, and was in line on an absolute basis. In
addition, the Group continued its development work, including new products
that were launched towards the end of the year in the Diagnostics and
Networking divisions and which are receiving strong interest.
The Group significantly increased cash generated from operating activities
to $5.0m, which is primarily attributable to the Group's core
activities, compared with cash used in operating activities of $2.8m in the
previous year.
Networking Division
$m 2023 2022
Revenue 19.8 22.0
Gross margin* 47.1% 45.9%
EBITDA* 1.7 0.4
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
The Networking division provides high-performance connectivity solutions for
the network edge, including:
· the innovative Edgility open edge software platform that enables the
deployment and life-cycle management of apps, network functions and compute
devices at the edge of the network
· a broad portfolio of carrier grade switching and routing hardware and
software products
The Group delivered a substantial increase in EBITDA in the Networking
division in 2023, despite a reduction in revenue and cost pressures. This
primarily reflects lower operating expenses in 2023 due to measures
implemented to reduce costs.
Revenue was impacted by the global slowdown in the telecommunications industry
as economic uncertainty and an inflationary environment resulted in
organisations pausing or delaying purchasing decisions. Revenue generated by
Edgility continued to increase, however revenue generated from carrier
ethernet products continued to account for the vast majority of the Networking
division revenue and was lower year-on-year. Despite the cost price inflation,
there was an improvement in gross margin in the Networking division, supported
by the greater contribution to revenue from Edgility.
Edgility edge computing platform
The Group received two five-year orders from NGA 911 LLC, a leading provider
of emergency connectivity services in North America, for its Edgility platform
for edge computing. NGA is using Edgility to deliver the call-handling system
for 911 Emergency Services and the 988 National Suicide Prevention &
Mental Health Crisis Lifeline in the US, representing the first time Edgility
is being used for a government application and to support critical public
infrastructure. The Group expects to receive further orders from NGA as they
continue the rollout of Edgility in the current areas of deployment and expand
to NGA's network in additional US States and the Asia-Pacific region.
The rollout of Edgility with CEMEX, S.A.B, (NYSE: CX), a global construction
materials company, progressed well during the year, and is on track to
complete in the current year. CEMEX has already deployed more than 1,000 end
points across sites in Europe and Central and South America. The rollout
continued with CityFibre, the UK's largest independent carrier-neutral Full
Fibre platform.
Edgility continued to undergo evaluation and successful proof-of-concepts with
leading network operators (including Tier 1 operators in Europe and Latin
America), multi-service providers, partners and systems integrators worldwide.
The Group continued to generate revenue through its partnerships with
Advantech, a global leader in industrial IoT, and Lanner Electronics, a global
provider of network appliances and edge AI systems, that are providing
Edgility pre-installed on their universal edge network appliances. The Group
established a further route-to-market for Edgility via a new collaboration
with Innovetechs, which specialises in delivering digital transformation
projects for EMEA service providers.
Towards the end of the year, the Group launched a new release of Edgility,
which marks a significant upgrade to the Group's connected, intelligent edge
platform. This new release includes augmented high-availability, a more
intuitive user interface, integrated network functions, strengthened security
and enhanced operational efficiency. Edgility now supports Kubernetes, which
is an open-source container orchestration system for automating software
deployment, scaling and management. In addition, the Group has introduced
several Edgility connected edge as a service packages, including a full
managed service package, to provide customers with the flexibility to choose
the relevant network appliances and mode of operation.
Carrier ethernet solutions
The Group continued to evolve its product portfolio, with a particular focus
on developing an upgraded, cost effective 10GE demarcation device that was
launched towards the end of the year. The Group is conducting a number of
proof-of-concepts with this device, which it expects to translate into orders.
The Group is also developing new products, which it intends to launch during
2024, that will expand its portfolio to support additional use cases.
Cyber Division
$m 2023 2022
Revenue 10.3 5.9
Gross margin* 40.8% 40.6%
EBITDA* 2.4 0.6
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
The Cyber division provides integrated hardware and software solutions for
network encryption, including hardware security modules (HSMs). It is a
strategic provider to large government agency clients, primarily involving the
security of mission critical infrastructure.
During the year, the Cyber division performed strongly, with revenue growing
by 76.6%. The higher revenue combined with a slight improvement in gross
margin and with operating costs remaining broadly stable resulted in a 289.9%
increase in adjusted EBITDA.
The Group secured new cyber orders totalling $32.4m during the year from its
long-standing defence department customer. This included receiving, at the
beginning of the year, a $26m order for its latest high-performance encryption
platform, which the Group began to deliver during the year and is to be
delivered over a maximum of five years. The Group expects to receive further
orders in the current year.
The Cyber division continued to progress its development programme, which
includes integration of its platforms with quantum key distribution (QKD) and
post-quantum encryption algorithms to address cyber risk in the quantum
computing era. It also includes a new encryption offering that will allow BATM
to expand its solutions to new markets, such as other government agency
customers and the commercial markets.
Diagnostics Division
$m 2023 2022
Revenue 33.3 33.5
Gross margin* 31.0% 31.9%
EBITDA* 3.0 3.3
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
The Diagnostics division is mainly engaged in the sale and distribution of in
vitro diagnostics reagents and instruments, including the development and
production of proprietary products. Its proprietary products are focused on
molecular diagnostics by test type and infectious disease by application area.
This represents the implementation of the Group's new strategy by bringing
together its activities involving its proprietary products and distribution of
third party diagnostic products. Through closer collaboration, the Group will
be able to leverage the strengths across the two areas of activity, such as
being able to apply for a larger number of tenders and offer a comprehensive
solution combining proprietary and third party products.
Revenue in the Diagnostics division increased by 20.8% over 2022 when
excluding the contribution to both years from sales related to COVID-19
products, which accounted for an immaterial amount in 2023 and c. $7m in 2022,
and was broadly in line on an absolute basis. In addition, there was growth in
the second half over the first half of the year. The underlying growth was
driven by the expansion of the Group's customer base and product portfolio of
distributed diagnostic products.
The slight reduction in gross margin primarily reflects the contribution to
2022 from COVID-19 products, which carry a higher margin. Operating expenses
were broadly maintained and, accordingly, EBITDA was lower due to the slight
decrease in revenue and gross margin.
The Group continued to progress development and engineering work on new
reagents, kits and instruments. In particular, towards the end of the year,
the Group launched the MDXlab, a new molecular diagnostics instrument based on
the real-time PCR method. MDXlab is a fully integrated sample-to-answer
nucleic acid detection system. Most of today's laboratories will either have
two instruments to undertake the different steps within the PCR process or
they will have a large integrated instrument, which is not suitable for small-
to medium-sized laboratories or point-of-care. MDXlab is designed to overcome
these limitations by offering an integrated, compact, cost-effective solution.
The Group is receiving strong interest in this new instrument and has
commenced generating revenue in the new financial year.
Also towards the end of the year, the Group introduced the EXTRAlab NGS Prep,
which it plans to commercially launch in the current year. This new molecular
diagnostics instrument expands the capabilities of the Group's existing
EXTRAlab with regards to NGS library preparation. NGS is an advanced
technology used for DNA and RNA sequencing and variant/mutation detection,
which is used for personalised precision medicine, that is capable of
sequencing a vast number of genes in a short period of time. Library
preparation, which is the first phase of the NGS process, is often a manual
procedure. The Group's instrument automates this process, with the EXTRAlab
NGS Prep being able to make relevant self-adjustments.
The Group strengthened its distribution operations by identifying new
suppliers and deepening its relationship with its existing partners with a
view to gaining exclusive contracts and advantageous commercial terms. The
Group also conducted a direct sales & marketing campaign to clients that
had been awarded government funding that management expects will translate to
applicable tenders for the Group in 2024 and which it is confident of winning.
As noted above, this would include offering comprehensive solutions comprising
the Group's proprietary products as well as from third parties.
ADOR Diagnostics ("ADOR"), an associate company of the Group that is
developing the disruptive NATlab molecular biology platform, made strong
progress during the year in finalising the development of a new advanced
biological process and upgraded cartridge and instrument designs, and achieved
a key milestone with the commencement of pre-clinical trials of the NATlab at
a hospital. This has generated valuable insights, which the Group is now using
to enhance its biological process and improve the NATlab product. In addition,
ADOR secured an investment of $7.5m, of which the Group is contributing $3.5m,
which will be paid on the completion of milestones. Following this investment,
the Group's shareholding in ADOR will increase to 43.6%.
Secondary Activities
$m 2023 2022
Revenue 59.3 54.8
Gross margin* 27.9% 27.8%
EBITDA* 2.3 4.0
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
The Group's secondary (non-core) activities include its businesses focused on:
· the distribution of pharmaceutical and environmental monitoring
products, and the administering of diagnostic tests
· the production of eco-friendly pathogenic waste treatment solutions
for medical, agricultural and pharmaceutical applications
Revenue generated by the Group's secondary businesses grew by 8.3%
year-on-year, driven by the distribution of pharmaceutical products and test
administration. Gross margin was maintained, however, EBITDA was lower than
the previous year due to an increase in operating expenses primarily as a
result of inflationary cost pressures.
Financial Review
Adjusted* Reported
$m 2023 2022 2023 2022
Revenue 122.8 116.1 122.8 116.1
Gross margin 32.9% 33.0% 32.5% 32.7%
Operating profit 5.0 4.0 1.6 3.1
EBITDA 9.3 8.3 6.8 8.0
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
Total Group revenue for 2023 increased by 5.8% to $122.8m (2022: $116.1m).
This primarily reflects growth in the Cyber division and the Group's
distribution activities offsetting a reduction in the Networking division. On
an underlying basis, when excluding the contribution to both years of sales
from products related to COVID-19, total Group revenue increased by 11.7%
year-on-year and by 20.8% for the Diagnostics division specifically.
Gross margin was broadly maintained at 32.5% (2022: 32.7%), which reflects
margin being largely stable across the Group's divisions.
Sales and marketing expenses were $19.1m (2022: $17.2m), with the increase
primarily reflecting activities to support the higher revenues and the impact
of cost inflation. General and administrative expenses
were $15.1m (2022: $13.0m). The increase reflects share-based payments,
which are non-cash. R&D expenses were $5.1m (2022: $7.0m), which
reflects cost reduction and recognition of intangible assets. Other operating
income was $1.1m (2022: $2.4m), reflecting non-recurring income in both years.
As a result, total operating expenses were $38.2m (2022: $34.8m).
On an adjusted basis, to exclude the share-based payments expense and
amortisation of intangible assets (see Note 3), operating profit grew by 24.3%
to $5.0m (2022: $4.0m) due to the increased revenue and stable gross
margin. On a reported basis, the revenue and gross profit growth was offset by
the increase in total operating costs resulting in an operating profit
of $1.6m compared with $3.1m for 2022.
As a result of the above, EBITDA (excluding share-based payments) increased
to $9.3m for 2023 compared with $8.3m for 2022.
Net finance expenses were reduced to $0.2m (2022: $1.2m), primarily due to
an increase in finance income resulting from higher interest rates.
Profit before tax on an adjusted basis increased to $4.8m (2022: $2.8m) and
was $1.5m on a reported basis (2022: $1.9m).
The Group recorded a $0.8m tax expense (2022: $0.3m), which reflects the
receipt of a one-time tax credit in the prior year.
On a reported basis, profit after tax before share of loss of a joint venture
and associated companies was $0.6m (2022: $1.6m). After the share of loss
of a joint venture and associated companies, the Group recorded a loss for the
year of $0.2m compared with a profit for 2022 of $0.9m. As a result, there was
a loss per share of 0.04¢ (2022: 0.06¢ earnings per share).
As at 31 December 2023, inventories were $38.2m (31 December 2022: $34.5m).
Trade and other receivables were $31.2m (31 December
2022: $36.5m). Intangible assets and goodwill at 31 December 2023 were
$20.8m (31 December 2022: $18.5m).
Property, plant and equipment and investment property was $16.7m (31 December
2022: $15.9m).
Trade and other payables were $41.7m (31 December 2022: $46.3m).
Cash inflow from operating activities was $5.0m, which was primarily
generated by the Group's core activities, compared with an outflow
of $2.8m in 2022. This significant improvement primarily reflects a strong
emphasis on cost management and collections.
Cash used in investing activities was $6.1m (2022: $16.3m used in), which
primarily reflects investment in fixed and intangible assets and in joint
ventures and associated companies, including ADOR. Cash used in financing
activities was $2.2m (2022: $7.1m used in), which consists of lease payments.
As a result, the net decrease in cash and cash equivalents was $3.3m compared
with a decrease of $26.2m in the prior year, with the improvement primarily
reflecting tax payments in 2022 relating to a business disposal along with
currency impacts and returns to shareholders.
At 31 December 2023, the Group had cash and short-term investments
of $40.8m (31 December 2022: $44.2m).
Outlook
The Group entered 2024 with positive momentum in its core activities, a new
focused strategy designed to deliver sustainable, long-term growth and a
strong balance sheet.
Having begun to implement the new strategy in the second half of 2023, the
Board intends to ramp up the process in the current year. The Group plans to
focus its resources on its core activities, including building a strong global
sales team. In addition, while there is no guarantee any transaction will
occur, the Group intends to explore M&A opportunities to support the
Group's core activities or divestment of secondary businesses. Accordingly,
the Group intends to invest to establish a solid infrastructure that will
provide the foundations for sustainable growth.
With regards to the core activities specifically, the Group has a significant
backlog in the Cyber division to be delivered in the current year and beyond.
In addition, the Group is focused on the development of its new encryption
product that will enable the Cyber division to penetrate new markets. The
Group is receiving strong interest in its new diagnostic instruments, MDXlab
and EXTRAlab NGS Prep, which it expects to make a material contribution to
growth in the Diagnostic division alongside a sustained increase in sales of
distributed diagnostic products. In the Networking division, the Group expects
growth to be driven by the actions that it is taking to enhance its sales
function and other operational infrastructure.
As a result, the Board remains confident in the Group's prospects and looks
forward to reporting on its progress.
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Year ended
31 December
2023 2022
US$'000 US$'000
Unaudited Audited
Revenues 122,830 116,123
Cost of revenues 82,940 78,165
Gross profit 39,890 37,958
Operating expenses
Sales and marketing expenses 19,130 17,209
General and administrative expenses 15,126 13,018
Research and development expenses 5,081 7,025
Other operating income (1,096) (2,428)
Total operating expenses 38,242 34,824
Operating profit 1,648 3,134
Finance income 1,329 772
Finance expenses (1,516) (2,011)
Profit before tax 1,461 1,895
Income tax expenses (839) (339)
Profit for the year before share of loss of a joint venture
and associated companies
622 1,556
Share of loss of a joint venture and associated companies (822) (686)
Profit (loss) for the year (200) 870
Attributable to:
Owners of the Company (193) 244
Non-controlling interests (7) 626
Profit (loss) for the year (200) 870
Earnings (loss) per share (in cents):
Basic & Diluted (0.04) 0.06
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
2023 2022
US$'000 US$'000
Unaudited Audited
Profit (loss) for the period (200) 870
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating foreign operations 3,112 (5,810)
3,112 (5,810)
Items that will not be reclassified subsequently
to profit or loss:
Re-measurement of defined benefit obligation 5 65
5 65
Total other comprehensive income (loss) for the period 3,117 (5,745)
Total comprehensive income (loss) for the period 2,917 (4,875)
Attributable to:
Owners of the Company 2,759 (5,727)
Non-controlling interests 158 852
2,917 (4,875)
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
2023 2022
US$'000 US$'000
Unaudited Audited
Current assets
Cash and cash equivalents 32,339 35,156
Trade and other receivables 31,219 36,495
Short-term investment in deposits and other securities 8,425 9,011
Inventories 38,227 34,461
110,210 115,123
Non-current assets
Property, plant and equipment 16,051 15,309
Investment property 612 620
Right of-use assets 4,351 5,461
Goodwill 12,763 12,583
Other intangible assets 8,019 5,948
Investment in joint venture and associate 17,894 15,555
Investments carried at fair value 1,220 1,220
Deferred tax assets 3,507 3,362
64,417 60,058
Total assets 174,627 175,181
Current liabilities
Short-term bank credit 3,276 2,235
Trade and other 41,662 46,256
payables
Current maturities of lease liabilities 1,830 1,984
Tax liabilities 359 818
47,127 51,293
Non-current liabilities
Long-term bank credit 1,328 2,000
Long-term liabilities 3,449 3,472
Long-term lease liabilities 2,650 3,758
Deferred tax liabilities 39 120
Retirement benefit obligation 598 537
8,064 9,887
Total liabilities 55,191 61,180
Equity
Share capital 1,320 1,320
Share premium account 428,656 426,138
Reserves (29,865) (32,812)
Accumulated deficit (279,767) (279,579)
Equity attributable to the:
Owners of the Company 120,344 115,067
Non-controlling interests (908) (1,066)
Total equity 119,436 114,001
Total equity and liabilities 174,627 175,181
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year ended 31 December 2023 (Unaudited)
Share premium account Attributable to owners of the Company Non-controlling interests
Share capital Translation reserve Other Accumulated
Total
reserve
deficit
equity
US$'000
Balance as at 1 January 2023 1,320 426,138 (26,039) (6,773) (279,579) 115,067 (1,066) 114,001
Loss for the period - - - - (193) (193) (7) (200)
Re-measurement of defined benefit obligation
- - - - 5 5 - 5
Exchange differences on translating foreign operations
- - 2,947 - - 2,947 165 3,112
Total comprehensive income (loss) for the year - - 2,947 - (188) 2,759 158 2,917
Recognition of share-based payments - 2,518 - - - 2,518 - 2,518
1,320 428,656 (23,092) (279,767) 120,344 (908) 119,436
Balance as at 31 December 2023 (6,773)
(unaudited)
Year ended 31 December 2022 (Audited)
Share premium account Attributable to owners of the Company Non-controlling interests
Share capital Translation reserve Other Accumulated
Total
reserve
deficit
equity
US$'000
Balance as at 1 January 2022 1,320 425,840 (19,337) (279,888) 127,423 (3,289) 124,134
(512)
Profit for the period - - - - 244 244 626 870
Re-measurement of defined benefit obligation
- - - - 65 65 - 65
Exchange differences on translating foreign operations
- - (6,036) - - (6,036) 226 (5,810)
Total comprehensive income (loss) for the year - - (6,036) - 309 (5,727) 852 (4,875)
Dividend paid to non-controlling interest - - - - - - (681) (681)
Share buy-back - - - (1,325) - (1,325) - (1,325)
Transaction with non-controlling interests - - (666) (4,936) - (5,602) 2,052 (3,550)
Recognition of share-based payments - 298 - - - 298 - 298
Balance as at 31 December 2022 1,320 426,138 (26,039) (6,773) (279,579) 115,067 (1,066) 114,001
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOW
Year ended 31 December
2023 2022
Unaudited Audited
US$'000 US$'000
Net cash from (used in) operating activities (Appendix A) 5,009 (2,784)
Investing activities
Purchases of property, plant and equipment (2,404) (2,414)
Increase of other intangible assets (2,782) (2,054)
Investment in joint venture and associated companies (2,060) (4,386)
Purchases of deposits and financial assets (1,879) (11,733)
Proceeds on disposal of property, plant and equipment 228 4,514
Proceeds on disposal of deposits and securities 2,777 4,941
Investment in a subsidiary - (550)
Tax payment related to disposal of a subsidiary - (4,953)
Other (Appendix B) - 293
Net cash used in investing activities (6,120) (16,342)
Financing activities
Lease payment (2,162) (2,192)
Bank loan repayment (7,498) (11,017)
Bank loan received 7,500 12,465
Dividend paid - (4,300)
Dividend paid to NCI - (681)
Share buy-back - (1,325)
Net cash used in financing activities (2,160) (7,050)
Net decrease in cash and cash equivalents (3,271) (26,176)
Cash and cash equivalents at the beginning of the year 35,156 65,331
Effects of exchange rate changes on the balance
of cash held in foreign currencies
454 (3,999)
Cash and cash equivalents at the end of the year 32,339 35,156
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
2023 2022
Unaudited Audited
$'000 $'000
Operating profit from operations 1,648 3,134
Adjustments for:
Amortisation of intangible assets 795 557
Depreciation of property, plant and equipment and investment property 4,381 4,334
Capital gain of property, plant and equipment (19) (2,021)
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 2,518 298
Increase in retirement benefit obligation 24 23
Operating cash flow before movements in working capital 9,347 5,729
Increase in inventory (3,998) (3,258)
Decrease (Increase) in receivables 4,606 (803)
Decrease in payables (5,644) (1,186)
Effects of exchange rate changes on the balance sheet 1,454 (1,556)
Cash from (used in) operations 5,765 (1,074)
Income taxes (694) (985)
paid
Interest paid (62) (725)
Net cash from (used in) operating activities 5,009 (2,784)
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.
2022
Audited
$'000
Net assets acquired
Current assets 523
Cash 29
Property, plant and equipment 22
Current liabilities (514)
60
Goodwill 1,429
Total consideration 1,489
Satisfied by:
Disposal of investment in associated company 775
Liability of acquisition 714
1,489
Net cash inflow arising on business combination
Cash and cash equivalents acquired 29
BATM ADVANCED COMMUNICATIONS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General
This preliminary results announcement should be read in conjunction with the
audited annual financial statements for the year ended 31 December 2022, which
have been prepared in accordance with International Financial Reporting
Standards ("IFRS"). The final results for the year ended 31 December 2023,
which will be prepared in accordance with IFRS, will be presented in the full
annual report and accounts.
Note 2 - Earnings per share
Earnings per share is based on the weighted average number of shares in issue
for the period of 440,546,454 (2022: 440,167,097) including 4,495,000 ordinary
shares held in treasury. The number used for the calculation of the diluted
earnings per share for the period (which includes the effect of dilutive stock
option plans) is 441,313,447 shares (2022: 442,357,116).
Note 3 - Other alternative measures
Year ended 31 December 2023 (Unaudited( Reported results Adjustments* Adjusted results
US$ thousands
Gross profit 39,890 568 40,457
Gross margin (%) 32.5% - 32.9%
Operating profit 1,648 3,313 4,961
EBITDA 6,824 2,518 9,342
Year ended 31 December 2022 (Unaudited( Reported results Adjustments* Adjusted results
US$ thousands
Gross profit 37,958 414 38,372
Gross margin (%) 32.7% - 33.0%
Operating profit 3,134 855 3,989
EBITDA 8,025 298 8,323
(*) Adjusted to exclude amortisation of intangible assets and share-based
payments.
EBITDA measurement
Year ended 31 December
2023 2022
(Unaudited) (Audited)
US$ thousands
Operating profit 1,648 3,134
Amortisation of Intangible assets 795 557
Share-based payments 2,518 298
Depreciation 4,381 4,334
Adj. EBITDA 9,342 8,323
Note 4 - Segments
Business Segments
Operational segments are identified on the basis of internal reports about the
Group's components that are reviewed by the main operational decision maker of
the Group ("CODM"), the CEO of the Company, for the purpose of allocating
resources and evaluating the performance of the operational segments.
Information reported to the CODM for the purpose of resource allocation and
assessment of segment performance focuses on the types of goods or services
delivered or provided.
During the year, following an in-depth process, the Group renewed its
strategic vision. Accordingly, the CODM now receives reports based on the new
strategy, which identifies the Group's core areas of activity, and which are
prioritised for resource allocation, and secondary (non-core) activities.
The principal products and services of each of these segments are as follows:
Networking - marketing, research and development of data communication
products, which includes high-performance connectivity solutions for the
network edge, including the innovative Edgility open edge software platform
that enables the deployment and life-cycle management of apps, network
functions and compute devices at the edge of the network, and a broad
portfolio of carrier grade switching and routing hardware and software
products. Cyber - provision of integrated hardware and software solutions for
network encryption, including hardware security modules (HSMs). Diagnostics -
mainly engaged in sales and distribution of in vitro diagnostics reagents and
instruments, including the development and production of proprietary products.
Its proprietary products are focused on molecular diagnostics by test type and
infectious disease by application area. Secondary - mainly the distribution of
pharmaceutical and environmental monitoring products and diagnostic tests, and
the production of eco-friendly pathogenic waste treatment solutions for
medical, agricultural and pharmaceutical applications.
The results for the year ended 31 December 2022 have been re-presented in
accordance with the new segmentation listed above.
Year ended 31 December 2023 (Unaudited)
Networking Cyber Diagnostics $'000 Secondary $'000 Total
$'000 $'000 $'000
Revenues 19,800 10,346 33,342 59,342 122,830
Operating profit/(loss) (224) 1,496 334 42 1,648
Net finance expenses (187)
Profit before tax 1,461
Year ended 31 December 2022 (Audited)
Networking Cyber Diagnostics $'000 Secondary $'000 Total
$'000 $'000 $'000
Revenues 22,006 5,858 33,473 54,786 116,123
Operating profit/(loss) (899) 366 1,587 2,080 3,134
Net finance expenses (1,239)
Profit before tax 1,895
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