TIDMBVC
RNS Number : 9362Y
BATM Advanced Communications Ld
28 August 2018
28 August 2018
BATM Advanced Communications Limited
("BATM" or the "Group")
Interim results for six months ended 30 June 2018
BATM Advanced Communications Limited (LSE: BVC), a leading
provider of real-time technologies for networking solutions and
medical laboratory systems, announces its interim results for the
six months ended 30 June 2018.
Financial Summary
-- Group revenue increased 16.9% to $58.2m (H1 2017: $49.8m)
-- Gross profit improved to $16.5m (H1 2017: $15.0m)
-- Gross margin of 28.3% (H1 2017: 30.1%)
-- Adjusted operating loss* significantly reduced to $0.6m (H1 2017: $1.4m loss)
-- EBITDA of $0.5m (H1 2017: $0.3m negative EBITDA)
-- Loss per share reduced to 0.35c (H1 2017: 0.66c loss per share)
-- As at 30 June 2018, the Group had cash and financial assets
of $23.3m (31 December 2017: $24.0m)
* See note 4
Operational Summary
Bio-Medical Division (51% of total revenue)
-- Revenue increased by 3% to $29.6m (H1 2017: $28.6m)
-- Blended gross margin was maintained at 25% (H1 2017: 25%)
-- Diagnostics Unit
o Finalised development of the new molecular biology diagnostics
Adaltis product line, which was launched post period with first
orders received
o Over 50 units sold of new model ELISA analyser, Personal LAB,
that was launched in December 2017
o Achieved first sale of new highly-compact metabolism testing
analyser, Metabo, at the end of the period
o Commenced engineering the first units and panel cartridges of
new unique rapid-results sample-to-answer molecular diagnostics
system and reagents, which is being developed through the Ador
joint venture, and several hospitals committed to receive the first
units due in early 2019
-- Eco-Med Unit
o Delivered first mobile agri-waste treatment unit and customer
commenced in-field testing
o Progressed installation of the Group's large solution for
treating agricultural waste at a bovine slaughterhouse, including
work to optimise the process to operate at full capacity 16 hours a
day
o Delivered new ISS 500 system to first US client and further
orders expected to be delivered in H2 2018
-- Distribution Unit
o Invested to expand activities and capabilities of its
laboratories:
-- Commenced providing diagnostic tests at newly-built genetics
laboratory, including pre-natal and cancer diagnostics, and
expanded capabilities at analytical laboratory in Romania
-- Introduced new cancer diagnostics tests in Israel through Zer
Laboratories
o Strong revenue increase from new contract with the largest
blood bank in Moldova for Roche diagnostic instruments and
reagents, which are exclusively distributed by the Group
Networking and Cyber Division (49% of total revenue)
-- Revenue increased by 36.5% to $28.6m (H1 2017: $21.0m)
-- Blended gross margin of 32% (H1 2017: 37%)
-- Networking Unit
o Growth in the division due to increase in sales of ICT
services and solutions:
-- Increase in revenue primarily due to delivery under the
framework agreement awarded last year to provide ICT services and
solutions to an agency of a government defence department
-- Initial sales and growing demand for the TM-8100, a
next-generation, high-density, standalone 100GE services
aggregation platform, that was launched in H2 2017
o Substantial progress in implementing Software-Defined
Networking ("SDN")/Network Function Virtualisation ("NFV")
strategy:
-- Signed a strategic investment and joint development
agreement, worth over $3m, with Arm(R) to develop an NFV
ecosystem
-- Conducted successful NFV proof-of-concept trials ("POCs")
with various tier 1 and 2 customers worldwide, which are expected
to translate to sales in H2 2018
-- Established a partnership with Lanner, a leading global
supplier in network communication platforms, to provide the Group's
NFVTime uCPE software on Lanner's white box appliances as a turnkey
solution for telecom equipment manufacturers and service
providers
-- Cyber Unit
o Awarded approximately $7m by a government defence department,
under two contracts, to supply enhanced cyber communication
technology solutions
Commenting on the results, Dr Zvi Marom, Chief Executive Officer
of BATM, said: "In the first half of 2018 we've seen sustained
momentum in all our areas of activity, which is increasingly
reflected in our numbers with growth in sales and positive EBITDA.
But the real story is found in the underlying operational
achievements of the period.
"In the Networking and Cyber division, we significantly
progressed the development of our NFV ecosystem, which is designed
to support an entirely virtualised network infrastructure - which
is key for the implementation of 5G technologies and to run
applications such as autonomous vehicles. Most importantly, we
signed a strategic investment and joint development agreement with
Arm that will greatly advance our NFV strategy and is also
testimony to the strength of our offer. In our Cyber unit, we were
awarded contracts worth $7m by government defence departments for
our unique solution that can monitor very large networks, up to the
level of a state.
"In the Bio-Medical division, we saw the benefits of our
investment last year with the roll-out of several new advanced
diagnostic tests and systems and biological waste treatment
systems, which are being very well-received by the market. We made
significant strides in the development of our unique molecular
biology systems - which we believe offers significant upside. It
was also pleasing to see the return of activity in China following
a hiatus last year.
"As a result, we entered the second half of 2018 with a strong
backlog of orders due to be delivered by year-end. In addition, we
expect the momentum of activity across our divisions to increase
throughout the year. Consequently, the Board remains confident of
achieving sustained growth and delivering shareholder value."
Enquiries:
BATM Advanced Communications
Dr Zvi Marom, Chief Executive Officer +972 9866 2525
-----------------
Moti Nagar, Chief Financial Officer
-----------------
Shore Capital
-----------------
Mark Percy, Anita Ghanekar +44 20 7408 4050
-----------------
Luther Pendragon
-----------------
Harry Chathli, Claire Norbury +44 20 7618 9100
-----------------
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Operational Review
The first half of 2018 was transformational for BATM. Growth in
Group revenue was led by the Networking and Cyber division, with a
significant increase in sales of ICT solutions and services as well
as substantial progress being achieved in the execution of its
SDN/NFV strategy - most notably with the signing of a strategic
investment and joint development agreement with Arm. Sales in the
Bio-Medical division increased more modestly, but, importantly, the
division achieved a number of operational milestones with the
launch and initial sales of a number of new systems and advancing
the development of others.
As a result, total Group revenue increased by 16.9% to $58.2m
(H1 2017: $49.8m), of which the Bio-Medical division accounted for
51% with the contribution from the Networking and Cyber division
being 49%. The Group also significantly reduced its operating loss,
which enabled it to generate positive EBITDA compared with a loss
for the same period last year.
Bio-Medical Division
H1 2018 H1 2017 H2 2017 FY 2017
Revenue $29.6m $28.6m $28.8m $57.4m
-------------------- ---------- ---------- ---------- ----------
Blended gross
margin 25% 25% 25% 25%
-------------------- ---------- ---------- ---------- ----------
Adjusted operating
profit (loss) $(1.3m) $(0.3m) $(0.8m) $(1.1m)
-------------------- ---------- ---------- ---------- ----------
Revenue for the Bio-Medical division increased 3% to $29.6m (H1
2017: $28.6m) as strong growth in sales in the Distribution unit
was offset by a reduction elsewhere, partly as a result of timing
of revenue recognition. The increase in adjusted operating loss,
despite the growth in revenue and stable margin, was largely due to
investment in expanding the activities and capabilities of the
Distribution unit.
Distribution
The Distribution unit accounted for 79% of the Bio-Medical
division's revenue in H1 2018 compared with 69% in H1 2017,
reflecting a significant increase in sales of 17.5%. This was due
to strong growth in the distribution of diagnostic kits and
services in Romania and Moldova and the introduction of the Group's
new laboratory and distribution activity in Israel through Zer
Laboratories, which was acquired last year.
A significant contributor to the unit's growth was delivery
under a new contract with the largest blood bank in Moldova for the
supply of Roche instruments and reagents. The Group provides these
products under an exclusive distribution agreement with Roche.
During the period, the Group expanded the activities of the two
new laboratories in Romania that commenced operation in 2017. The
Group introduced new analytical tests at the laboratory in
Timisoara and commenced the provision of diagnostic tests at the
newly-built genetics laboratory in Bucharest through the
acquisition of an Illumina machine to run Non-Invasive Prenatal
Testing (NIPT) tests as well as offering cancer diagnostic
tests.
In Israel, the Group's Zer Laboratories subsidiary introduced a
new diagnostic test for prostate cancer, which has been
well-received in the market. The Group also invested to expand the
local laboratory capabilities with new equipment able to perform
next-generation genetics tests for the Israeli market, with the
initial screening tests with this new technology being performed
post period in August 2018. In addition, the Group is integrating
the NIPT and cancer diagnostics activities in Israel to enhance
operational efficiency.
Eco-Med
The Eco-Med unit accounted for 9% of the Bio-Medical division's
revenues in H1 2018 compared with 13%
of revenues in H1 2017. The unit achieved an improvement in
gross margin to 21.8% (H1 2017: 18.6%) as a result of sales of
higher margin agri-waste solution projects.
During the period, the Group delivered its first mobile
agri-waste treatment unit, which was purchased to enable the safe
disposal of mass poultry affected by disease and illness, and the
customer commenced in-field testing with positive initial
results.
The Group progressed the installation of its large solution for
treating agricultural waste at a bovine slaughterhouse, with
delivery expected to be complete within the next two months. The
Group has optimised the process to enable it to operate at full
capacity for 16 hours a day.
The Group delivered its new ISS 500, with automated reloading
system for treating medical waste in hospitals, to its first US
client. This follows the shipment towards the end of last year of
initial systems to customers in the Middle East and Europe. To
date, the Group has received orders for 12 units, with the
remainder expected to be delivered in H2 2018, and BATM continues
to receive significant interest in this new product from
international clients.
Diagnostics
The Diagnostics unit represented 12% of Bio-Medical division
revenues in H1 2018 (H1 2017: 18%). During the period, the Group
invested in re-organising the Diagnostics unit to enable an
automated production process for systems and reagents. This process
is expected to be completed around mid-2019.
By the end of the period, production began to ramp up, which the
Group expects to continue throughout the second half of the year.
In addition, the Group started to, again, receive orders from China
following weakness in that geography in 2017.
During the first half of 2018 the Group sold over 50 units of
its new two-plate ELISA analyser, Personal LAB, that was launched
in December 2017 and which offers several new features compared
with the previous model of the system. Towards the end of the
period, the Group sold the first of its new highly-compact
metabolism testing analyser, the Metabo.
The Group finalised the development of its new molecular biology
diagnostics Adaltis product line, which was launched post period
end. The new product line, which is designed to form part of an
overall diagnostics process in medium to large laboratories, has
been well-received and initial orders have been received for the
reagents that have already been awarded CE certification.
Progress continued with the Group's Ador joint venture with the
Gamida for Life Group, which has now commenced engineering the
first units and panel cartridges. The solution, which is aimed at
hospitals and smaller laboratories, is unique in its ability to
produce immediate sample-to-answer diagnostics of infectious
diseases, and has already been granted several patents in the US
with more under submission. The Group has already received
commitments from several hospitals to receive the first units and
panels, which are expected to be shipped in 2019. The Group
continues to believe that the opportunity for Ador is
substantial.
Networking and Cyber Division
H1 2018 H1 2017 H2 2017 FY 2017
Revenue $28.6m $21.0m $28.4m $49.4m
-------------------- -------- ---------- -------- --------
Blended gross
margin 32% 37% 36% 36%
-------------------- -------- ---------- -------- --------
Adjusted operating
profit (loss) $1.9m $(0.4m) $1.3m $0.9m
-------------------- -------- ---------- -------- --------
Revenue increased by $7.6m to $28.6m (H1 2017: $21.0m), which
was largely due to growth in the ICT services and solutions
businesses. The Group achieved significant improvement in adjusted
operating profit for the Networking and Cyber division of $1.9m in
H1 2018 (H1 2017: loss of $0.4m). Gross profit margin for the
division was 32% (H1 2017: 37%), with the reduction due to the
contribution to revenue from a large government contract that
carried a lower gross margin.
ICT solutions and services
The key driver of the increase in revenue in the Networking and
Cyber division was delivery under the framework agreement awarded
last year, as announced on 4 September 2017, to provide ICT
services and solutions to an agency of a government defence
department. To date, the Group has received orders totalling $15.6m
under this five-year agreement.
During the period, the Group commenced initial sales of its new
aggregation platform, T-Metro 8100 - a next-generation,
high-density, standalone 100GE services aggregation platform that
was released in H2 2017. The Group gained 12 new customers in North
America and continues to receive increasing demand for this new
product.
SDN/NFV solutions
The Group made significant progress in advancing its SDN/NFV
offer and achieved a key milestone by entering into a strategic
investment and joint development agreement, valued at over $3m,
with Arm, the industry's leading supplier of semiconductor IP.
Under this agreement, the Group will develop a full ecosystem of
Virtual Network Function (VNF) services that are optimised to run
on Arm's architecture and to be used by Arm partners. The Group
expects to recognise initial revenue under this agreement in the
second half of 2018.
Post period, the Group achieved the first milestone under its
agreement with Arm by entering into a non-exclusive partnership
with FatPipe Networks ("FatPipe"), a leading provider of
Software-Defined Wide-Area Networks (SD-WAN) and hybrid WANs, to
provide a hardware/software agnostic solution offering real-time
SD-WAN VNF services. This represents the first solution to be
delivered under the Group's agreement with Arm.
The Group is the only worldwide software vendor to provide NFV
functionality to Arm architecture and all Intel platforms. Its open
and agile service delivery platform can meet the growing demand
from telecoms operators and managed service providers for solutions
that offer increased performance, flexibility and cost savings on
their networks, regardless of their hardware or what they may
choose to use. During the period, the Group conducted successful
NFV proof-of-concept trials with various tier 1 and 2 customers
worldwide, which it expects to translate to sales in H2 2018.
During the period, the Group also established a partnership with
Lanner Electronics, Inc., a leading global supplier in network
communication platforms, to provide the Group's NFVTime uCPE
software on Lanner's white box appliances as turnkey solutions for
telecom equipment manufacturers and service providers. This further
expands the NFVTime ecosystem.
Cyber
BATM continued to grow its cyber security business. The Group
was awarded a significant contract to supply a cyber communication
technology solution to a government defence department, which is
worth approximately $4m in 2018. This contract followed a
successful deployment of the division's solution previously. The
Group has commenced the delivery of this contract, which is due to
complete by year-end.
The Group also received a contract extension from this
government, worth approximately $3m over 18 months, to expand the
capability of a previously-delivered cyber communication technology
solution by adding more features. The Group has commenced executing
on this contract with completion expected during the second half of
2019. This is the fifth contract for a cyber communication
technology solution that the Group has received from a national
government. The Group anticipates receiving further follow-on
orders after the completion of this contract.
Financial Review
Total Group revenue for the first half of 2018 increased by
16.9% to $58.2m (H1 2017: $49.8m) reflecting growth in both
divisions: 3% increase in revenue in the Bio-Medical division,
which contributed 51% of total sales, and 36.5% increase in the
Networking and Cyber division, which contributed 49% of total
sales. As mentioned above, the increase in revenue in the
Networking and Cyber division was primarily due to growth in the
Group's existing ICT services and solutions businesses as well as
the Cyber unit. The Bio-Medical division growth was due to an
increase in sales in the Distribution unit, which more than offset
lower sales in the Diagnostics and Eco-Med units.
The blended gross profit margin for the first half was 28.3% (H1
2017: 30.1%). This decrease is mostly due to a reduction in the
gross margin of the Networking and Cyber division as a result of
the contribution to revenue from a large government contract that
carries a lower margin.
Sales and marketing expenses were $7.8m (H1 2017: $7.2m),
representing 13.4% of revenues compared with 14.5% in H1 2017. The
increase is mainly due to the increase in sales.
General and administrative expenses were $5.7m (H1 2017: $5.2m)
representing 9.7% of revenues compared with 10.5% in H1 2017. The
increase is mainly due to an expansion in activity in the
Networking and Cyber division and in the Distribution unit of the
Bio-Medical division in Romania.
Research and development investment decreased to $3.8m (H1 2017:
$4.0m), primarily as a result of a higher contribution from the
Israeli Chief Scientist in terms of R&D grant funding.
Adjusted operating loss was significantly reduced to $0.6m (H1
2017: $1.4m loss), primarily due to the increased revenue.
EBITDA improved to positive $0.5m compared with negative EBITDA
in H1 2017 of $0.3m.
Net finance expense was $0.05m (H1 2017: $0.2m). The decrease is
mainly due to gains from financial instruments on foreign currency
exchange transactions.
Net loss after tax attributable to equity holders of the parent
was reduced to $1.4m (H1 2017: $2.6m loss), resulting in a basic
loss per share of 0.35c (H1 2017: 0.66c loss).
The Group's balance sheet remains strong with effective
liquidity of $23.3m at 30 June 2018 compared with $24.0m at 31
December 2017 and $22.4m at 30 June 2017. Period-end cash is
comprised as follows: cash and deposits up to three months'
duration of $17.4m and short-term cash deposits up to one year and
held for trading bonds of $5.9m.
As at 30 June 2018, inventory was $22.9m (31 December 2017:
$23.2m; 30 June 2017: $20.8m). Trade and other receivables were
$36.3m (31 December 2017: $46.9m; 30 June 2017: $33.6m), with the
decrease from the year end mostly due to the decrease in trade
receivables from the selling of the building at the end of 2017.
The increase compared with H1 2017 is mostly due to higher trade
receivables in the Networking and Cyber division due to strong
sales towards the end of the period.
Intangible assets and goodwill at 30 June 2018 was $23.4m (31
December 2017 $22.9m; 30 June 2017: $22.8m).
Property, plant and equipment and investment property was $16.7m
(31 December 2017: $16.7m; 30 June 2017: $20.3m).
The balance of trade and other payables and tax liabilities was
$33.7m (31 December 2017: $39.8m; 30 June 2017: $31.9m). The
decrease is mostly due to a decrease in trade payables in the
Networking and Cyber division as well as a decrease in government
taxes due to tax on the capital gain and VAT from the selling of
the Group's building.
Cash outflow from operations was $0.8m for H1 2018, compared
with an outflow of $0.4m for the prior period, due to the increase
in working capital in the period.
Post period, as announced on 8 August 2018, the Group and its
consortium partners signed an agreement with Cellcom Israel Ltd to
sell their stake in the project established for the construction of
a new fibre optic network in Israel alongside the Israel Electric
Corporation ("IBC"). BATM will receive NIS12m (c. $3.2m) for its
7.5% interest in IBC. The agreement is subject to the receipt of
regulatory approval, which is expected to occur by the end of the
first half of 2019. The Group will receive the proceeds from the
sale upon the closing of the transaction.
Outlook
The Group entered the second half of 2018 with a higher order
book compared with the equivalent period last year, providing it
with the platform to deliver the expected growth. Both divisions
are receiving increasing demand for their newly-launched products
and solutions as well as significant interest in those soon-to-be
launched that are undergoing development.
In particular, in the Bio-Medical division, the Group
anticipates increased revenue in the second half of the year in the
Eco-Med unit from the delivery of the new ISS 500 and its
agri-waste treatment solutions. There is growing momentum in orders
in the Diagnostics unit, primarily due to recovery in China and an
increase in newer markets such as the US. The Distribution unit is
also expected to continue to deliver steady growth.
In the Networking and Cyber division, the Group is excited about
the strong momentum being experienced across its business units in
multiple geographies. The Group anticipates receiving initial
revenue under its agreement with Arm in the second half of 2018 and
expects to sign up new customers in the Cyber unit.
As a result, the Group is confident of achieving year-on-year
growth for full year 2018, in line with market expectations. The
Group also looks forward to receiving the proceeds from the sale of
its stake in IBC upon the closing of the transaction, as noted
above. Consequently, the Board remains confident in the outlook for
the Group and in delivering shareholder value.
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED INCOME STATEMENTS
Six months ended 30
June
2 0 1 8 2 0 1 7
US$ in thousands
Unaudited Unaudited
Revenue 58,200 49,825
Cost of revenue 41,702 34,846
Gross profit 16,498 14,979
---------------- -----------------
Operating expenses
Sales and marketing expenses 7,810 7,210
General and administrative expenses 5,662 5,240
Research and development expenses 3,835 3,966
Other operating expenses 450 622
Total operating expenses 17,757 17,038
---------------- -----------------
Operating loss (1,259) (2,059)
Finance income 468 293
Finance expenses (516) (494)
Loss before tax (1,307) (2,260)
Income tax (expenses) (433) (75)
Loss for the period before share of a loss
of a joint venture
and associated companies (1,740) (2,335)
Share of a loss of joint venture and associated __ __(172) __ __(597)
companies
Loss for the period (1,912) (2,932)
Attributable to:
Owners of the Company (1,431) (2,645)
Non-controlling interests (481) (287)
Loss for the period (1,912) (2,932)
Profit (loss) per share (In cents):
From continuing
and discontinued operations Basic and Diluted (0.35) (0.66)
From continuing operations Basic and Diluted (0.35) (0.66)
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Six months ended 30
June
2 0 1 8 2 0 17
US$ in thousands
Unaudited Unaudited
Loss for the period (1,912) (2,932)
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating foreign
operations (1,655) 3,193
Total Comprehensive income (loss) of the Period (3,567) 261
Attributable to:
Owners of the Company (3,258) 1,133
Non-controlling interests (309) (872)
(3,567) 261
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 30 June 31 December
2 0 1 8 2 0 1 7 2 0 1 7
US$ in thousands
Unaudited Unaudited Audited
Current assets
Cash and cash
equivalents 17,375 13,168 18,182
Trade and other
receivables 36,250 33,627 46,916
Financial assets 5,891 9,237 5,782
Inventories 22,855 20,804 23,238
----------------------------- ------------------------------ --------------------------
82,371 76,836 94,118
----------------------------- ------------------------------ --------------------------
Non-current assets
Property, plant and
equipment 14,664 16,447 14,720
Investment property 2,062 3,846 1,951
Goodwill 16,531 16,928 16,817
Other intangible assets 6,866 5,862 6,127
Investment and loans to
Joint
venture and associate 1,419 1,082 953
Financial Assets carried
at fair
value 1,060 576 576
Deferred tax asset 2,469 3,683 2,909
----------------------------- ------------------------------ --------------------------
45,071 48,424 44,053
----------------------------- ------------------------------ --------------------------
Total assets 127,442 125,260 138,171
============================= ============================== ==========================
Current liabilities
Short-term bank credit 2,651 3,126 5,324
Trade and other payables 33,578 31,767 37,607
Tax liabilities 122 181 2,232
36,351 35,074 45,163
Non-current liabilities
Long-term bank credit 3,737 3,047 910
Long-term liabilities 4,134 4,455 5,261
Deferred tax liabilities 241 880 336
Retirement benefit
obligation 709 599 682
8,821 8,981 7,189
Total liabilities 45,172 44,055 52,352
Equity
Share capital 1,216 1,216 1,216
Share premium account 407,706 407,598 407,688
Foreign currency
translation
reserve
and other reserves (17,384) (17,292) (15,557)
Accumulated deficit (305,002) (306,455) (303,571)
----------------------------- ------------------------------ --------------------------
Equity attributable to
equity
holders of the:
Owners of the Company 86,536 85,067 89,776
Non-controlling interest (4,266) (3,862) (3,957)
============================= ============================== ==========================
Total equity 82,270 81,205 85,819
============================= ============================== ==========================
Total equity and
liabilities 127,442 125,260 138,171
============================= ============================== ==========================
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Six months ended 30 June 2018
Share Attributable Non-Controlling
Share Premium Translation Other Accumulated to owners Interests Total
Capital Account reserve Reserve Deficit of the equity
Parent
US$ in thousands
As at 1
January
2018 1,216 407,688 (15,045) (512) (303,571) 89,776 (3,957) 85,819
Recognition
of
share-based
payments 18 18 18
Loss for
the period (1,431) (1,431) (481) (1,912)
Comprehensive
income (loss)
for the
period (1,827) - (1,827) 172 (1,655)
Total
comprehensive
income (loss)
for the
period (1,827) (1,431) (3,258) (309) (3,567)
As at 30
June 2018
(unaudited) 1,216 407,706 (16,872) (512) (305,002) 86,536 (4,266) 82,270
Six months ended 30 June 2017
Share Attributable Non-Controlling
Share Premium Translation Other Accumulated to owners Interests Total
Capital Account reserve Reserve Deficit of the equity
Parent
US$ in thousands
As at 1
January
2017 1,216 407,544 (20,558) (512) (303,810) 83,880 (2,990) 80,890
Recognition
of
share-based
payments 54 54 54
Loss for
the period (2,645) (2,645) (287) (2,932)
Comprehensive
income (loss)
for the
period 3,778 - 3,778 (585) 3,193
Total
comprehensive
income (loss)
for the
period 3,778 (2,645) 1,133 (872) 261
As at 30
June 2017
(unaudited) 1,216 407,598 (16,780) (512) (306,455) 85,067 (3,862) 81,205
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 30 June
2 0 1 8 2 0 1 7
US$ in thousands
Unaudited Unaudited
Net cash used in operating activities
(Appendix A) (1,302) (919)
Investing activities
Interest received 96 88
Proceeds on disposal of property, plant
and equipment 6,499 45
Tax paid on disposal of property, plant (1,913) -
and equipment
Proceeds on disposal of deposits 2,171 1,152
Proceeds on disposal of financial assets
carried
at fair value through profit and loss 260 3,000
Purchases of property, plant and equipment (1,368) (2,174)
Increase of other intangible assets (959) (663)
Purchases of financial assets carried
at fair value
through profit and loss (140) (2,452)
Purchases of deposits (2,426) (5,351)
Increase in financial assets carried (321) -
at fair value
Investment in joint venture (638) (834)
Acquisition of subsidiaries (Appendix
B) (633) (1,361)
Net cash from (used in) investing activities 628 (8,550)
Financing activities
Bank loan repayment (4,938) (4,816)
Bank loan received 5,019 5,138
Net cash from financing activities 81 322
Decrease in cash and cash equivalents (593) (9,147)
Cash and cash equivalents at the beginning
of the period 18,182 22,015
Effects of exchange rate changes on
the balance
of cash held in foreign currencies (214) 300
Cash and cash equivalents at the end
of the period 17,375 13,168
BATM ADVANCED COMMUNICATIONS LTD.
APPICES TO CONSOLIDATED STATEMENT OF CASH FLOWS
APPIX A
RECONCILIATION OF OPERATING LOSS FOR THE PERIOD TO NET CASH
USED IN OPERATING ACTIVITIES
Six months ended 30
June
2 0 1 8 2 0 1 7
US$ in thousands
Unaudited Unaudited
Operating loss from continuing operations (1,259) (2,059)
Adjustments for:
Amortisation of intangible assets 638 644
Depreciation of property, plant and equipment
and investment property 1,093 1,112
Capital gain of property, plant and equipment (18) (32)
Revaluation of investment (165) -
Stock options granted to employees 18 54
Increase in retirement benefit obligation 53 123
Increase (decrease) in provisions (14) 2
Operating cash flow before movements in working
capital 346 (156)
Decrease (increase) in inventory 401 (258)
Decrease (increase) in receivables 4,001 (5,143)
Increase (decrease) in payables (4,813) 3,442
Effects of exchange rate changes on the balance
sheet (782) 1,720
Cash used in operations (847) (395)
Income taxes paid (217) (268)
Income taxes received - 1
Interest paid (238) (257)
Net cash used in operating activities (1,302) (919)
APPIX B
ACQUISITION OF SUBSIDIARY - Zer Laboratories
2017
US$ in thousands
Unaudited
Net assets acquired
Property, plant and equipment 78
Net working capital 109
Retirement benefit obligation (107)
80
Deferred tax (126)
Other intangible assets 586
Onerous contracts (169)
Goodwill 898
Total consideration 1,269
Satisfied by:
Cash 804
Consideration recorded as a contingent liability 465
1,269
Net cash outflow arising on acquisition
Cash consideration 804
Cash and cash equivalents acquired -
804
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of preparation
The interim consolidated financial statements of the Company
have been prepared in conformity with International Accounting
Standard No. 34 "interim financial reporting" (hereafter "IAS
34").
In preparing these interim consolidated financial statements,
the Group implemented accounting policies, presentation principles
and calculation methods identical to those implemented in
preparation of its consolidated financial statements as of 31
December 2017 and for the period ended on that date. The condensed
interim financial statements should be read in conjunction with the
annual financial statements for the year ended 31 December 2017,
which have been prepared in accordance with IFRSs.
Note 2 - Application of new International Financial Reporting
Standards (IFRSs)
The Group has applied IFRS 9 and IFRS 15 for the first time in
the current year but there is no significant impact.
IFRS 9 Financial Instruments
Key requirements of IFRS 9:
-- All recognised financial assets that are within the scope of
IFRS 9 are required to be subsequently measured at amortised cost
or fair value. Specifically, debt investments that are held within
a business model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely
payments of principal and interest on the principal outstanding are
generally measured at amortised cost at the end of subsequent
accounting periods. Debt instruments that are held within a
business model whose objective is achieved both by collecting
contractual cash flows and selling financial assets, and that have
contractual terms that give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal
amount outstanding, are generally measured at FVTOCI. All other
debt investments and equity investments are measured at their fair
value at the end of subsequent accounting periods. In addition,
under IFRS 9, entities may make an irrevocable election to present
subsequent changes in the fair value of an equity investment (that
is not held for trading nor contingent consideration recognised by
an acquirer in a business combination to which IFRS 3 applies) in
other comprehensive income, with only dividend income generally
recognised in profit or loss.
-- In relation to the impairment of financial assets, IFRS 9
requires an expected credit loss model, as opposed to an incurred
credit loss model under IAS 39. The expected credit loss model
requires an entity to account for expected credit losses and
changes in those expected credit losses at each reporting date to
reflect changes in credit risk since initial recognition. In other
words, it is no longer necessary for a credit event to have
occurred before credit losses are recognised.
-- The new general hedge accounting requirements retain the
three types of hedge accounting mechanisms currently available in
IAS 39. Under IFRS 9, greater flexibility has been introduced to
the types of transactions eligible for hedge accounting,
specifically broadening the types of instruments that qualify for
hedging instruments and the types of risk components of
non-financial items that are eligible for hedge accounting. In
addition, the effectiveness test has been overhauled and replaced
with the principle of an 'economic relationship'. Retrospective
assessment of hedge effectiveness is also no longer required.
Enhanced disclosure requirements about an entity's risk management
activities have also been introduced.
IFRS 15 Revenue from Contracts with Customers
The core principle of IFRS 15 is that an entity should recognise
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. Specifically, the Standard introduces a 5-step approach
to revenue recognition:
-- Step 1: Identify the contract(s) with a customer
-- Step 2: Identify the performance obligations in the contract
-- Step 3: Determine the transaction price
-- Step 4: Allocate the transaction price to the performance obligations in the contract
-- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under IFRS 15, an entity recognises revenue when (or as) a
performance obligation is satisfied, i.e. when 'control' of the
goods or services underlying the particular performance obligation
is transferred to the customer.
Far more prescriptive guidance has been added in IFRS 15 to deal
with specific scenarios. Furthermore, extensive disclosures are
required by IFRS 15.
Note 3 - Profit/(loss) per share
Profit/(loss) per share is based on the weighted average number
of shares in issue for the period of 403,300,820 (H1 2017:
403,150,820). The number used for the calculation of the diluted
profit per share for the period (which includes the effect of
dilutive stock option plans) is 403,300,820 shares (H1 2017:
403,150,820).
Note 4 - Alternative performance measures
Six months ended 30
June
2 0 1 8 2 0 1 7
Unaudited Unaudited
Operating loss (1,259) (2,059)
Amortisation of intangible assets 638 644
Adjusted operating loss (621) (1,415)
Note 5 - Segments
Business Segment
Six months ended 30 June 2018
Networking Bio-Medical Unallocated Total
and Cyber
US$ in thousands
Revenue 28,645 29,549 6 58,200
Segment profit/(loss) 1,867 (1,349) (1,139) (621)
Reconciliation -
other operating
expenses (638)
Net finance cost (48)
Loss before tax (1,307)
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Segments (cont.)
Six months ended 30 June 2017
Networking Bio-Medical Unallocated Total
and Cyber
US$ in thousands
Revenue 20,987 28,643 195 49,825
Segment profit/(loss) (369) (296) (772) (1,437)
Reconciliation -
other operating
expenses (622)
Net finance cost (201)
Loss before tax (2,260)
Note 6 - Revenue from major products and services
The following is an analysis of the Group's revenue from
operations from its major products and services according to IFRS
15:
Six months ended 30
June
2 0 1 8 2 0 1 7
Unaudited Unaudited
Telecommunication products 12,861 11,096
Software services 15,791 10,086
Distribution of medical products 23,226 19,771
Clinical chemistry diagnostic products 3,538 5,105
Sterilisation products 2,784 3,767
58,200 49,825
Note 7 - Financial instruments
The amortised cost of the financial instruments of the Group is
not considered to be materially different from the fair value.
When first applying IFRS 9 effective from 1 January 2018, it
allows an entity to revoke its previous designation of a financial
asset as measured at fair value through profit or loss under the
guidance of IAS 39. Such revocation shall be made based on the
facts and circumstances that exist at the date of initial
application. That classification shall be applied
retrospectively.
For Government grants liability, the Company chose to revoke the
previous designation of fair value through profit and loss. Under
the implementation of IFRS 9, the Government grants liability is
classified and measured at amortised cost. The reclassification was
applied retrospectively and did not materially changed the
liability balance.
Note 8 - Post balance sheet events
The Group and its consortium partners signed an agreement with
Cellcom Israel Ltd to sell IBC holdings. BATM will receive NIS12m
(c. $3.2m) for its 7.5% interest in IBC. The Agreement is subject
to the receipt of regulatory approval, which is expected to occur
by the end of the first half of 2019. The Group will receive the
proceeds from the sale upon the closing of the transaction.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LFFIVTEIDFIT
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