REG - BATM Advanced Comm - Update on Strategy and Trading

Batm Advanced CommunicationsAnnouncement

05/03/2025 07:00

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RNS Number : 3635Z  BATM Advanced Communications Ld  05 March 2025

LEI: 213800FLQUB9J289RU66

5 March 2025

 

BATM Advanced Communications Limited

("BATM" or "the Group")

 

Update on Strategy and Trading

 

BATM (LSE: BVC; TASE: BVC), a leading provider of real-time technologies for
networking solutions and medical laboratory systems, provides an update on
trading for the year ended 31 December 2024 and the Group's ongoing strategy.

 

In June 2023, the Group set out a clear strategy for the business to focus on
its core strengths of cyber security, networks and diagnostics, and to dispose
of non-core assets. While the macroeconomic and geopolitical conditions have
posed significant challenges to execution, the Group has implemented
substantial operational changes to align the business with the strategic
vision. It continues to explore potential opportunities to add capability to
its core activities through M&A, and to divest its non-core businesses.
The Board is pleased to report that it has now made its first disposal of a
non-core asset and efforts are well underway to sell the Group's eco-med
business. Furthermore, the Group's trading in respect of the year ended 31
December 2024 has reinforced the Board's view of the strength of its core
expertise, as previously outlined, and its determination to accelerate the
restructuring and streamlining of the Group as the business environment
normalises.

 

Divestment and restructuring of non-core businesses

 

The Group has entered into an agreement to sell its entire shareholding in
Progenetics Ltd, a non-core subsidiary. The transaction values Progenetics at
NIS 14m (c. $4m), of which BATM will receive approximately $2m in cash for its
51% shareholding. Progenetics, which was acquired by the Group in 2017, forms
part of the Group's distribution activities and administers oncological
diagnostic tests in Israel. The proceeds of the sale are expected to be
received during H1 2025.

 

During the year, the Group acted to ready its eco-med activities, which are
non-core, for sale, with operations streamlined, including halving the
workforce, to significantly reduce costs. The Group continues to seek to sell
this business, but if a sale does not occur in 2025, it will be closed.
Accordingly, the eco-med activities, which are loss making and a drain on the
Group's cash resources, will be classified as discontinued operations for the
purpose of the Group's financial reporting.

 

Update on trading for 2024

 

The Group expects to report revenue for continuing operations 1  (#_ftn1) for
2024 of at least $117m (2023: $116.7m) and adjusted 2  (#_ftn2) EBITDA for
continuing operations of c. $8m (2023: $9.9m). The Group delivered an increase
in total revenue for 2024 compared with 2023, which was achieved against a
backdrop of challenging macroeconomic and geopolitical conditions. The
increase reflects strong revenue growth in the Cyber and Diagnostics divisions
as well as an increase in the Group's secondary activities, which offset lower
revenues in the Networking division. The reduction in adjusted EBITDA is
primarily due to revenue mix.

 

The Group continues to have a strong cash position and expects to report cash
and short-term investments of c. $31.6m as at 31 December 2024 (30 June 2024:
$32.6m).

 

As set out above, the Board is determined to focus its efforts and financial
resources on the primary markets where it has proven expertise, significant
growth opportunities and can benefit from economies of scale. To reflect both
the actions above and the clarity of strategy, the Board has undertaken a
critical review of the balance sheet and estimates that it will report a
non-cash impairment in the 2024 results of c. $7m, that primarily comprises
goodwill for acquisitions of companies in the Group's non-core activities, and
c. $15m relating to the discontinued eco-med operations, resulting primarily
from non-cash impairments.

 

As a result, net loss for continuing operations for 2024 is expected to be c.
$7m (2023: $1.2m profit) and net loss for continuing and discontinued
operations for 2024 is expected to be c. $22m. On an adjusted basis, and
excluding these one-time exceptional non-cash items, the Group's net profit
for continuing operations is expected to be c. $1m.

 

Core activities operational summary

 

Cyber division

 

In the Cyber division, revenue increased year-on-year as the Group fulfilled
its long-term contracts and won new orders for its advanced network
encryption solutions, designed for the post-quantum era, from its
long-standing government defence department customer. The Group also achieved
a major milestone by entering a strategic partnership with a significant
global technology, engineering and defence group (the "Partner") to globally
distribute the Group's cybersecurity solution to a variety of commercial
markets and for critical national infrastructure. During the year, a
customised version of the Group's advanced encryption platform was
developed, and the Group is on track to deliver the first units to the Partner
in the first half of the current year.

 

Networking division

 

In the Networking division, towards the end of the year the Group began to
recover from the impact of the global telecommunications market challenges
thanks to the actions it had taken to position the division for growth. This
included a management reorganisation, expansion of the sales & marketing
team and refocused go-to-market strategy, which resulted in increased customer
engagement and an uptick in orders from the fourth quarter. While the recovery
was later than anticipated, resulting in revenue for 2024 being lower than the
prior year, the Group is pleased to note that the positive momentum has been
sustained into the current year.

 

Diagnostics division

 

The growth in the Diagnostics division was driven by the expansion of the
Group's customer base for its distributed diagnostic products. The Group also
delivered its first orders for its new MDXlab molecular diagnostics
instrument, which is designed to overcome the challenges faced by small- to
medium-sized laboratories or point-of-care by offering an integrated, compact,
cost-effective solution.

The Group will provide further details in its full year results, which are
expected to be announced on 17 March 2025.

 

Moti Nagar, Chief Executive Officer of BATM, said:

 

"In 2024, we made significant progress in advancing our strategic vision,
taking decisive measures to streamline our non-core businesses as we prepare
them for sale. This strategic realignment has enabled us to focus our
resources on our key activities that will drive our growth and value creation.
Despite facing challenging market conditions, we achieved several important
milestones. Most notably, we entered a partnership to deliver our cutting-edge
encryption platform to commercial markets, which has long been a key objective
for BATM. In our Networking division, we refocused our management and
strengthened our sales & marketing efforts, which resulted in us securing
several new tier 1 customers and positions the business for a return to
growth. Accordingly, we are already witnessing the positive effects of the
initiatives we undertook in 2024, which, supported by a significant cash
position, gives us every confidence that we will see strong positive momentum
continuing in the current year."

 

 

Enquiries

 

 BATM
 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

 

 

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.

 1  (#_ftnref1) The Group's operations in 2024 and 2023 adjusted to exclude
the contribution from the eco-med activities, which have been classified as
discontinued operations

 2  (#_ftnref2) Adjusted to exclude amortisation of intangible assets,
non-cash share-based payments and one-time impairments

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