TIDMBVC
RNS Number : 3905J
BATM Advanced Communications Ld
23 August 2021
LEI: 213800FLQUB9J289RU66
23 August 2021
BATM Advanced Communications Limited
("BATM" or the "Group")
Interim results for six months ended 30 June 2021
Demand for high margin diagnostic products to drive
better-than-expected growth for FY 2021 - EBITDA to be
significantly ahead of market expectations
BATM (LSE: BVC; TASE: 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 2021.
Financial Summary
H1 2021 H1 2020* Change
$m $m
-------- --------- ----------
Revenue(**) 71.4 77.4 (7.7%)
-------- --------- ----------
Gross profit 25.7 23.0 +11.7%
-------- --------- ----------
Gross margin 36.0% 29.7% +630bps
-------- --------- ----------
Operating profit 20.0 2.4 +733.3%
-------- --------- ----------
Adj.(***) operating
profit 20.5 2.8 +640. 1 %
-------- --------- ----------
EBITDA 22.7 5.3 +325.3%
-------- --------- ----------
Earnings per share
(cents) 2.72c 0.36c +655.6%
-------- --------- ----------
Cash and financial
assets 64.9 44.3 +46.6%
-------- --------- ----------
* H1 2020 includes a six-month contribution from NGSoft compared
with three months in H1 2021 following the Group's sale of the
subsidiary in March 2021
** Excluding the contribution from NGSoft for both periods,
revenue in H1 2021 was 8.1% higher than H1 2020
*** Adjusted to exclude the amortisation of intangible assets
(see note 3)
Operational Summary
Bio-Medical Division (77.1% of total revenue (H1 2020:
64.6%))
-- Revenue increased by 10.2% to $55.1m (H1 2020: $ 50.0 m),
driven by sales of COVID-19 diagnostic kits, more than offsetting
the contribution to H1 2020 revenues from the exceptional critical
care ventilators contract
o Revenue increased by 36.4% when excluding the contribution to
the prior period from the ventilator contract
-- Gross margin improved by 570bps to 37.6% (H1 2020: 31.9%),
due to product mix, including the increased contribution from new
molecular diagnostics tests
-- Diagnostics Unit
o Significant sales growth driven by strong global demand for
COVID-19 test kits (reagents) and diagnostic instruments throughout
the first half of the year
o Expanded COVID-19 diagnostics portfolio with launch of new
solutions that enhance speed, accuracy and ease of use of the
Group's offering: a test that uses self-collected saliva samples
and the RAPiDgen(R) SARS-CoV-2 Ag test
o New molecular diagnostics kit that tests for multiple
respiratory pathogens simultaneously has received CE certification
and is being prepared for sale in winter 2021
o Iso-thermal method, being developed by the Group for the rapid
and comprehensive diagnosis of tuberculosis, received the backing
of the Stop TB Partnership, an international alliance
-- Eco-Med Unit
o Delivery resumed on contracts for the installation of the
Group's ISS-based pathogenic waste treatment solution, with
significant progress made in projects with Ceva Animal Health in
Hungary and an agri-food conglomerate in Taiwan
-- Distribution Unit
o Increased revenue driven by the distribution of several
molecular tests and of COVID-19 diagnostic reagents and
equipment
Networking and Cyber Division (22.9% of total revenue (H1 2020:
35.4%))
-- Revenue was $16.4m (H1 2020: $ 27.4 m), reflecting the sale
of the Group's non-core NG Soft Ltd ("NGSoft") subsidiary in March
2021
-- Revenue from ongoing operations (excluding the contribution
of NGSoft in both periods) was $9.1m (H1 2020: $9.4m)
-- Gross margin improved by 480bps to 30.6% (H1 2020: 25.8%),
primarily reflecting the reduced contribution to revenue from
NGSoft
-- Recorded a capital gain of $13.0m from the sale of NGSoft
-- Networking Unit
o Edge Computing and network function virtualisation
("NFV"):
-- Launched, post period, Edgility brand of products and
services for NFV and Edge Computing based on the Group's NFV
operating system, Edgility OS (formerly NFVTime)
-- Successful proof-of-concepts conducted with several potential
customers and partners worldwide, which the Group expects will
translate to orders in H2 2021
-- Established two new partnerships in EMEA to boost Edgility
sales and market presence through the offering of joint
solutions
-- Expanded addressable market with enhancement of Edgility OS
to enable compatibility with, and received certification of use
for, public cloud environments
o Carrier Ethernet:
-- Increase in carrier ethernet revenue as normal business
practices began to resume
-- Selected by tier 1 telecommunications operator in APAC to
provide demarcation units for connecting business and enterprise
customers - becoming the preferred supplier
-- Cyber Unit
o Awarded a $4.1m cyber security contract from the Group's
long-standing government defence department customer , of which
more than half is expected to be delivered in the current year
o Post period, received a $10m multi-year contract from the same
customer for the delivery of an advanced cyber security solution
containing elements of NFV protection
Commenting on the results, Dr Zvi Marom, Chief Executive Officer
of BATM, said: "This is an excellent set of results for BATM,
driven by significant demand for our high-margin diagnostic
solutions, especially for COVID-19, as well as the value creation
through the sale of a non-core subsidiary. Equally, on an
underlying basis from ongoing operations, we achieved over 8%
growth in revenue and almost 30% if also excluding our exceptional
ventilator contract delivered last year. We continued to innovate
and launch new products in diagnostics and networking that address
the complex challenges faced by the world today. At the same time,
our teams are advancing the development of disruptive technologies
across our portfolio that have received important recognition as
well as several patents and which will support our future
growth.
"Looking ahead, we entered the second half with a strong order
book and receiving sustained demand for our diagnostic solutions.
We also continue to expect to generate revenue this year from the
roll-out of Edgility OS by PCCW Global. As a result, we anticipate
achieving better-than-expected revenue for the full year and EBITDA
to be substantially ahead of market expectations with growth of
over 40% year-on-year. Consequently, and supported by a robust
balance sheet, the Board of BATM continues to look to the future
with great confidence.
"I want to thank our Board of Directors and our teams for their
dedication over this period and doing an excellent job despite the
challenges of the pandemic. We are all very enthusiastic to keep
striding forward and I believe that we will achieve truly great
results."
Enquiries:
BATM Advanced Communications
Dr Zvi Marom, Chief Executive Officer +972 9866 2525
-----------------
Moti Nagar, Chief Financial Officer
-----------------
Shore Capital
-----------------
Mark Percy, Anita Ghanekar, James Thomas
(Corporate Advisory)
Henry Willcocks (Corporate Broking) +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.
Investor & Analyst Presentation
Dr Zvi Marom, Chief Executive Officer, and Moti Nagar, Chief
Financial Officer, will be holding a webinar for analysts and
investors today at 2.00pm BST. To register to participate, please
contact Tanweer Siddique at Luther Pendragon at
tanweersiddique@luther.co.uk .
Operational Review
The six months to 30 June 2021 was another period of strong
operational and strategic delivery for BATM. The Bio-Medical
division achieved substantial growth as demand for the COVID-19
diagnostic solutions that it developed last year was sustained
while it continued to expand its portfolio with the launch of
further tests offering significant advantages in speed and
ease-of-use. In the Networking and Cyber division, the Group's NFV
solution, Edgility OS, which the Board expects will be a key driver
of future growth, has successfully completed proof-of-concepts with
potential clients, and the Group established strategic partnerships
to support the roll-out. In addition, BATM continued to execute on
its value creation strategies with the sale of its non-core NGSoft
subsidiary, which generated a capital gain of $13.0m. The Group is
also pleased to note that there was a resumption of normal of
business practices in several of its markets that had experienced a
slowdown due to the impact of the COVID-19 pandemic and associated
restrictions on travel.
Bio-Medical Division
H1 2021 H1 2020 H2 2020 FY 2020
Revenue $55.1m $50.0m $ 78.7 m $ 128.7 m
----------------- -------- -------- --------- ----------
Gross margin 37.6% 31.9 % 39.1% 36.3%
----------------- -------- -------- --------- ----------
Adj.* operating
profit $9.4m $4.2m $15.2m $19.4m
----------------- -------- -------- --------- ----------
* Adjusted to exclude the amortisation of intangible assets (see
note 3)
Revenue for the Bio-Medical division increased by 10.2% to
$55.1m (H1 2020: $50.0m) due to growth in the Diagnostics and
Distribution units. On an adjusted basis, excluding the
contribution from the delivery of an exceptional contract for the
provision of critical care ventilators by the Eco-Med unit, the
Bio-Medical division revenue in H1 2021 was 36.4% higher than H1
2020 and slightly higher than H2 2020. Gross margin for the
division increased significantly to 37.6% (H1 2020: 31.9%),
primarily reflecting improvement in the Diagnostics unit's growth
in sales and the high-margin nature of molecular biology and
COVID-19 products. The Bio-Medical division generated an adjusted
operating profit of $9.4m for H1 2021 compared with $4.2m in H1
2020, an increase of 122.9%.
Diagnostics
The Diagnostics unit performed exceptionally well during H1
2021, with revenue increasing by 200.2% and accounting for 32.3% of
Bio-Medical division revenue (H1 2020: 11.9%). This growth was
driven by sustained demand for the Group's diagnostic tests for
COVID-19 as well as sales of its diagnostic instruments (readers)
that were frequently ordered alongside the reagents. The momentum
continued throughout this year with the Diagnostics unit entering
the second half 2021 with a substantially higher order book than at
the same point in 2020. To cater for the increased demand, the
Group further expanded the production capacity of its Adaltis
facility in Rome, Italy.
COVID-19 diagnostic tests
As noted above, the Group received significant demand for its
COVID-19 solutions during the first half of 2021, with customers
primarily being public health authorities in Europe, the Middle
East and South East Asia. The Group also continued to expand its
portfolio of COVID-19 tests with the launch of a saliva-based PCR
test and rapid lateral flow test. Together with the COVID-19 tests
launched last year, the Group now has a comprehensive range of
tests catering for the requirements of different customers or
users, and offering advantages compared with many competing
solutions in terms of speed, accuracy and ease of use.
The Group launched, and commenced supplying, a test that uses
self-collected saliva samples to diagnose COVID-19 using the RT-PCR
technique. The test involves the individual spitting into a
collector tube rather than deep swabbing via the nose
(nasopharyngeal swab) or back of the throat (oropharyngeal swab).
It is based on the Group's antigen RT-PCR kit that has five (4+1)
gene discovery capability, which enables detection even with a very
low viral load and has 100% accuracy for specificity and
sensitivity. The saliva test can be administered without the need
for trained healthcare workers in full body personal protective
equipment, offering advantages in terms of speed and ease of sample
collection - particularly for vulnerable groups such as children -
as well as lab processing and being more cost effective than the
RT-PCR process for standard swab-based tests. The Group is
producing the test at its Adaltis facility.
The Group also launched the RAPiDgen(R) SARS-CoV-2 Ag test, a
rapid lateral flow test that offers a much simpler sample
preparation process and gives results in 8-15 minutes. The test has
undergone validation testing by hospitals in Israel and Europe
where it has demonstrated sensitivity in excess of 95%. It was
developed by the Group's Adaltis subsidiary and Gamidor Diagnostics
("Gamidor"). The RAPiDgen test is being marketed under the Adaltis
brand and produced at Gamidor's facility in Israel, with initial
deliveries being to public health authorities.
Progress in other disease areas
The Group's new molecular PCR diagnostics test that is able to
test for multiple respiratory pathogens at the same time has
completed the CE certification and validation stage and the Group
is preparing for it to be sold in winter 2021. In under an hour,
this test can identify the specific cause (pathogen) of a
respiratory illness, enabling the correct treatment or action to be
rapidly implemented. It can detect all prominent respiratory
viruses as well as the bacteria that cause the serious pulmonary
illnesses that are believed to be a secondary infection of
COVID-19, such as pneumonia and Legionnaires' disease.
During the period, the Group received the backing of the Stop TB
Partnership, an international alliance comprising governmental and
non-governmental organisations, for a new method that the Group has
developed (in cooperation with a leading university in Italy) for
the rapid and comprehensive diagnosis of tuberculosis. The solution
combines a one-step PCR test, developed by the Group's Adaltis
subsidiary, with testing on the NATlab instrument using the new
isothermal RCA process developed by the Group's Ador Diagnostics
associate company. This process, which tests the same sample in
both phases, is expected to produce results in approximately two
hours, compared with several days for the current commonly used
methods. The testing and validation of the solution will take place
at the University of Heidelberg and be fully funded under a
programme of the Stop TB Partnership.
Ador Diagnostics
Ador Diagnostics ("Ador"), the Group's associate company, is
developing the NATlab molecular biology solution that provides
rapid sample-to-answer diagnosis of bacterial, viral or fungal
infections using DNA or RNA sampling. During the period, Ador
progressed work to incorporate into the NATlab system the
innovative technology that it developed last year that uses the
rolling circle amplification ("RCA") method. This enhancement will
enable the NATlab system to provide test results in a significantly
shorter timeframe - within 30 minutes - and with greater accuracy
than Ador previously envisaged.
Eco-Med
The Eco-Med unit accounted for 7.3% of the Bio-Medical
division's revenues in H1 2021 compared with 26.5% in H1 2020,
reflecting the exceptional contribution to the revenue of the prior
period from the Group's contract for the provision of critical care
ventilators . On an adjusted basis excluding the contribution from
the ventilator contract, revenue in the Eco-Med division was 8.9%
higher in H1 2021 over H1 2020.
During the period, the Group resumed work on the installation of
its pathogenic waste treatment solutions based on its Integrated
Steriliser and Shredder ("ISS") technology under contracts that had
been paused during 2020 owing to government lockdowns and
restrictions on travel. In particular, the Group made significant
progress with the delivery of its contract to expand and enhance
the ISS-based solution installed at the Hungarian facility of Ceva
Animal Health, a leading developer of animal health products, which
it expects to complete by the end of the year. The Group also made
good progress with the installation of its ISS-based solution for
its agri-food conglomerate customer in Taiwan. The timing of
completion of the delivery of this contract, as well as that with
the Group's major food manufacturing customer in the Philippines,
is subject to the ongoing government restrictions in these
countries due to COVID-19.
Distribution
Revenue in the Distribution unit increased by 8.2 % in H1 2021
over the same period of the prior year and accounted for
approximately 60.4 % of the Bio-Medical division's revenue (H1
2020: 61.6%). The growth was driven by the distribution of several
molecular biology tests and, in particular, reflects the ongoing
demand for COVID-19 reagents and diagnostic equipment.
Networking and Cyber Division
H1 2021 H1 2020 H2 2020 FY 2020
Revenue $16.4m $27.4m $27.5m $54.9m
----------------- -------- -------- -------- --------
Gross margin 30.6% 25.8% 25.1% 25.5%
----------------- -------- -------- -------- --------
Adj.* operating
profit/(loss) $11. 1m $(1.4)m $(3.1)m $(4.5)m
----------------- -------- -------- -------- --------
* Adjusted to exclude the amortisation of intangible assets (see
note 3)
Revenue in H1 2021 was $16.4m compared with $27.4m in H1 2020
reflecting the sale of the Group's NGSoft subsidiary in March 2021.
Revenue from ongoing operations (excluding the contribution from
NGSoft in both periods) was broadly flat at $9.1m compared with
$9.4m for the first half of the prior year with the slight
difference due to lower sales in the Cyber unit.
Gross margin increased due to the lower contribution to revenue
from NGSoft, which was a lower margin business. There was a
significant adjusted operating profit for H1 2021 as a result of
the capital gain of $13.0m from the sale of NGSoft . On an ongoing
basis, excluding the contribution from NGSoft to the results of
both periods, the Group recorded an adjusted operating loss that
was reduced to $2.7m (H1 2020 operating loss: $3.3m).
Edge Computing and NFV solutions
The Group's Telco Systems subsidiary launched Edgility post
period, which is its new brand of networking products and services
based on the Group's NFV operating system, Edgility OS (formerly
NFVTime). Edgility OS enables telecoms operators and service
providers to deploy their own virtualised software-based networks.
Virtual networks can be a key element in allowing operators to
leverage the benefits of 5G through Edge computing and provide
additional differentiated services to their enterprise customers as
well as reducing the costs, time and carbon footprint involved with
physical networks. 'Edgility' also reflects the Group's focus on
Edge compute whereby data processing takes place at the network
edge, nearer to the end device, to improve response times and save
bandwidth. In addition, Edge compute is fundamental in enabling
Internet of Things ("IoT") technologies.
Edgility OS continued to undergo evaluation with leading network
operators and multi-service providers worldwide, with successful
proof-of-concepts being conducted with several potential customers
and partners. The Group expects a number of these to translate to
orders in H2 2021 and during the period it resulted in the e
stablishment of two new partnerships in EMEA to boost Edgility
sales and market presence through offering of joint solutions. This
includes albis-elcon, a German-based supplier of networking
products and services primarily to tier 1 telecommunications
operators in Europe and Latin America, which has integrated the
Group's virtualisation technology into its recently launched uSphir
solution. The Group's technology will also be offered by Stem
Connect, which services enterprise and telecommunication customers
in the UK, France and South Africa.
During the six months to 30 June 2021, the Group completed the
enhancement of Edgility OS to enable compatibility with, and
receiving certification of use for, public cloud environments, such
as Amazon Web Services and Microsoft Azure. This expands the
addressable market for the product to customers that operate
cloud-based networks, which are typically enterprise customers or
larger operators with a multinational footprint, as well as those
that lack the internal resource to run the software in their
datacentre.
In addition, post period, the Group released its first dedicated
package under the Edgility product suite, which is a Fast SD-WAN
& Firewall offering (in partnership with Clavister) that
provides secure network connectivity for the small office and home
office ("SOHO") market. With the recent global trends of increased
remote working, the Group believes there is a significant
opportunity for the provision of connectivity solutions utilising
Edge compute for the underserved SOHO market.
Carrier Ethernet solutions and services
There was a slight increase in revenue from carrier ethernet
solutions and services as the Group began to experience a return to
normal business practices in the EMEA region following the slowdown
as a result of COVID-19. In addition, the Group was s elected as
the preferred supplier by a tier 1 telecommunications operator in
APAC to provide demarcation units for connecting its business and
enterprise customers, which contributed to revenue during the
period and with a larger order to be delivered in the second
half.
The Group also continued its product enhancements, introducing
Layer 3 VPN (L3VPN) capability to all of its network edge
solutions. This broadens the applicability of the Group's solutions
and makes them more attractive to clients by enabling
telecommunications operators and managed service providers using
the Group's products to offer greater flexibility to their
customers with both Layer 2 VPN and L3VPN available.
Cyber
Overall, revenue in the Group's cyber security business was
slightly lower in H1 2021 than in H1 2020 as a result of the prior
slowdown in orders due to the diversion of government budgets in
response to the COVID-19 pandemic. However, towards the end of the
first half and post period, the Group's activity in this area has
increased as public authorities begin to return to postponed
projects.
Towards the end of June 2021, the Group was awarded a $4.1m
contract from its long-standing government defence department
customer. This further order, of which more than half is scheduled
to be delivered this year, was for the provision of additional
hardware and software as part of its network cyber security
solution. In addition, post period, the customer awarded the Group
a $10m contract for an advanced cyber security solution that
includes a unique cyber defence capability for large volume high
speed network traffic combined with elements of virtualisation
protection developed under the Group's NFV offering. The Group
expects to complete delivery of this contract in 2023.
The Group also continued its development efforts during the
period. In particular, it is in the process of integrating its
cyber solutions into its NFV product and developing a version aimed
beyond the defence industry, which will expand the addressable
market.
Sale of NGSoft
As announced on 19 March 2021, during the period BATM sold its
NGSoft subsidiary 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. Its development
activities did not include any of the Group's NFV or cyber
solutions. Accordingly, the Board believes that the best interests
of BATM and all shareholders were served as a result of the
disposal, generating a $13.0m capital gain from the sale of NGSoft,
allowing BATM to invest the proceeds to accelerate the Group's core
activities.
Financial Review
Total Group revenue for the first half of 2021 was $71.4m (H1
2020: $77.4m), which reflects H1 2021 including three months
contribution from the Group's NGSoft subsidiary compared with six
months contribution to H1 2020 as a result of the sale of NGSoft in
March 2021. Excluding the contribution from NGSoft to revenue in
both periods, H1 2021 grew by 8.1% over H1 2020. This was driven by
significant growth in the Bio-Medical division and revenue from
ongoing operations (excluding NGSoft) in the Networking and Cyber
division being broadly flat year-on-year, as described above.
The gross margin for the first half improved to 36.0% (H1 2020:
29.7%), reflecting a substantial increase in the gross margin in
both of the divisions. The Bio-medical division gross margin
increased to 37.6% (H1 2020: 31.9%) as a result of the high-margin
nature of the new molecular biology diagnostic kits and COVID-19
products. For the Networking and Cyber division, the margin
increased to 30.6% (H1 2020 25.8%) reflecting a shift in product
mix - in particular, the reduced relatively lower margin
contribution from ICT services as a result of the sale of
NGSoft.
Sales and marketing expenses were $9.2m (H1 2020: $10.2m),
representing 12.9% of revenue compared with 13.1% in H1 2020.
General and administrative expenses were $5.7m (H1 2020: $6.2m),
representing 8.0% of revenue in both periods, with the reduction
due to the period including three months of expenses from NGSoft
rather than six months in H1 2020.
R&D expenses were $3.7m (H1 2020: $3.9m), primarily due to a
reduction in liabilities to the Israeli government's Chief
Scientist Officer related to an R&D repayment loan funding
scheme (for further detail, see note 3 to the financial statements
in the Annual Report 2020).
Adjusted operating profit increased by 640.1% to $20.5m compared
with $2.8m in H1 2020. This growth reflects the significantly
higher revenue and gross profit generated by the Diagnostics unit.
It also includes a capital gain of $13.0m from the sale of
NGSoft.
As a result of the increase in adjusted operating profit, EBITDA
grew by 325.3% to $22.7m (H1 2020: $5.3m).
Net finance expense was reduced to $0.2m (H1 2020: $0.5m) due to
a lower impact from foreign exchange rate fluctuations compared
with H1 2020.
Tax expenses were $7.5m (H1 2020: income tax $0.4m). The
increase is mainly as a result of a tax provision related to the
sale of NGSoft and tax expenses due to the increase in profit of
the Bio-Medical division.
Net profit after tax attributable to equity holders of the
parent increased to $12.0m (H1 2020: $1.6m) resulting in a
significant increase in basic earnings per share to 2.72c (H1 2020:
0.36c).
As at 30 June 2021, inventory decreased slightly from the
position at year end to $33.8m (31 December 2020: $33.9m; 30 June
2020: $26.2m). Trade and other receivables were $38.9m (31 December
2020: $41.5m; 30 June 2020: $47.2m), with the decrease mainly due
to the disposal of NGSoft, which offset an increase in trade
receivables in the Networking and Cyber division and Bio-Medical
division based on the timing of revenue collection.
Intangible assets and goodwill at 30 June 2021 were $ 17.6 m (31
December 2020: $23.7m; 30 June 2020: $23.6m). The decrease is due
to the sale of NGSoft.
Property, plant and equipment and investment property was $16.2m
(31 December 2020: $18.0m; 30 June 2020: $15.5m). The decrease is
primarily due to the disposal of property, plant and equipment
related to sale of NGSoft subsidiary and to depreciation.
The balance of trade and other payables was $43.6m (31 December
2020: $53.6m; 30 June 2020: $51.8m). The decrease is due to a
payment to suppliers for the Group's ventilator project that was
undertaken in 2020 and to the disposal of trade and other payables
related to NGSoft.
Cash used in operations was $2.3m (H1 2020: $4.4m cash
generation), which is primarily due to the payment to suppliers
related to the Group's ventilator project.
The Group's balance sheet was strengthened with cash and cash
equivalents and financial assets of $64.9m at 30 June 2021 compared
with $ 53.4m at 31 December 2020 and $44.3m at 30 June 2020. This
is comprised of cash and cash equivalents of $62.2m (31 December
2020: $50.6m; 30 June 2020: $40.0m) and financial assets of $2.7m
(31 December 2020: $2.8m; 30 June 2020: $4.3m). Financial assets
represent cash deposits of more than three months' duration, held
for trading bonds and marketable securities. The change in
financial assets compared with the prior periods reflects timing of
deposit disposals. The increase in cash and cash equivalents
relates to the higher Group profit and the proceeds from the sale
of NGSoft.
Outlook
The Group entered the second half of the year with a strong
order book and it expects to achieve significant full year revenue
growth from ongoing operations (excluding the contribution from
NGSoft and the exceptional ventilator contract that was delivered
last year).
Specifically, the Group continues to receive significant
sustained demand for its new COVID-19 diagnostic tests and those
launched last year. With testing expected to remain a key component
of pandemic management measures globally and providing a tool to
assist in the re-opening of economies, the Group anticipates the
Diagnostics unit will achieve substantial year-on-year growth.
The Group continues to expect to generate revenue this year from
the roll-out of Edgility OS by PCCW Global. BATM also anticipates
receiving orders for Edgility OS in the second half following the
successful completion of proof-of-concepts undertaken during the
period.
With the lifting of lockdown restrictions and normal business
practices beginning to resume, sales of the Group's carrier
ethernet and cyber products have continued to gain momentum, as
demonstrated by the award of the $10m cyber security contract post
period. In addition, in the Eco-Med unit, the Group expects to
complete the deliver y of its contract for the ISS-based solution
in Hungary by year end.
As a result, the Group expects revenue for full year 2021 to be
approximately 5% ahead of market expectations. With the greater
than expected ongoing demand for the Group's COVID-19 diagnostic
solutions, which are higher margin products, combined with the
capital gain from the sale of NGSoft recognised during H1 2021, the
Group anticipates full year EBITDA to be more than 20% ahead of
market expectations, reflecting growth in EBITDA of over 40%
year-on-year.
Consequently, and supported by a robust balance sheet, the Board
of BATM continues to look to the future with great confidence.
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED INCOME STATEMENTS
Six months ended 30
June
2021 2020
$'000 $'000
Unaudited Unaudited
Revenues 71,448 77,410
Cost of revenues 45,754 54,407
Gross profit 25,694 23,003
--------------- ---------------
Operating expenses
Sales and marketing expenses 9,215 10,155
General and administrative expenses 5,721 6,222
Research and development expenses 3,652 3,893
Other operating expenses (income) (12,917) 330
Total operating expenses 5,671 20,600
--------------- ---------------
Operating profit 20,023 2,403
Finance income 305 529
Finance expenses (479) (1,005)
Profit before tax 19,849 1 ,927
Income tax (expenses) (7,462) 398
Profit for the period before share of loss
of a joint venture
and associated companies 12,387 2,325
Share of loss of a joint venture and associated _ _ (401) _ _ (359)
companies
Profit for the period 11,986 1,966
Attributable to:
Owners of the Company 11,979 1,585
Non-controlling interests 7 381
Profit for the period 11,986 1,966
Profit per share (in cents):
Basic 2.72 0.36
Diluted 2.70 0.36
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
Six months ended 30
June
2 0 2 1 2 0 2 0
$'000 $'000
Unaudited Unaudited
Profit for the period 11,986 1,966
Items that may be reclassified subsequently
to profit or loss:
Disposal of a foreign operation (522) -
Exchange differences on translating foreign
operations (2,195) (1,046)
Total comprehensive income for the period 9,269 920
Attributable to:
Owners of the Company 9,190 831
Non-controlling interests 79 89
9,269 920
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 30 June 31 December
2 0 2 1 2 0 2 0 2 0 2 0
$'000 $'000 $'000
Unaudited Unaudited Audited
Current assets
Cash and cash
equivalents 62,151 39,990 50,575
Trade and other
receivables 38,902 47,166 41,467
Financial assets 2,742 4,285 2,803
Inventories 33,757 26,169 33,893
------------------------------ ------------------------------
137,552 117,610 128,738
------------------------------ ------------------------------
Non-current assets
Property, plant and
equipment 14,379 13,627 16,109
Investment property 1,797 1,841 1,878
Right-of-use assets 6,310 10,298 9,607
Goodwill 11,407 16,748 16,838
Other intangible
assets 6,219 6,845 6,879
Investment in joint
venture and
associate 13,138 9,505 13,271
Investments carried
at fair value 1,027 1,078 1,027
Deferred tax assets 4,107 4,295 5,759
------------------------------ ------------------------------
58,384 64,237 71,368
------------------------------ ------------------------------
Total assets 195,936 181,847 200,106
============================== ============================== =============================
Current liabilities
Short-term bank
credit 4,968 4,627 5,365
Trade and other
payables 43, 64 1 51,789 53,618
Current maturities
of lease
liabilities 1,727 2,196 2,244
Tax liabilities 6,449 832 3,046
56,785 59,444 64,273
Non-current liabilities
Long-term bank
credit 325 723 675
Long-term
liabilities 4,583 6,256 6,416
Long-term lease
liabilities 5,287 8,629 8,440
Deferred tax
liabilities 140 635 711
Retirement benefit
obligation 753 758 828
11,088 17,001 17,070
Total liabilities 67,873 76,445 81,343
Equity
Share capital 1,320 1,320 1,320
Share premium
account 425,717 425,543 425,686
Reserves (17,112) (19,336) (14,323)
Accumulated deficit (278,111) (297,806) (290,090)
------------------------------ ------------------------------
Equity attributable to
the:
Owners of the
Company 131,814 109,721 122,593
Non-controlling
interest (3,751) (4,319) (3,830)
============================== ==============================
Total equity 128,063 105,402 118,763
============================== ==============================
Total equity and
liabilities 195,936 181,847 200,106
============================== ==============================
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Six months ended 30 June 2021
Share Attributable Non-controlling
Share premium Translation Other Accumulated to owners interests Total
capital account reserve reserve deficit of the equity
Company
$'000
Balance as
at 1 January
2021 1,320 425,686 (13,811) (512) (290,090) 122,593 (3,830) 118,763
Profit for
the period - - - - 11,979 11,979 7 11,986
Disposal of
a foreign
operation - - (522) - - (522) - (522)
Exchange
differences
on
translating
foreign
operations - - (2,267) - - (2,267) 72 (2,195)
Total
comprehensive
income for
the period - - (2,789) - 11,979 9,190 79 9,269
Recognition
of
share-based
payments - 31 - - - 31 - 31
Balance as
at 30 June
2021
(unaudited) 1,320 425,717 (16,600) (512) (278,111) 131,814 (3,751) 128,063
Six months ended 30 June 2020
Share Attributable Non-controlling
Share premium Translation Other Accumulated to owners interests Total
capital account reserve reserve deficit of the equity
Company
$'000
Balance as
at 1 January
2020 1,320 425,477 (18,070) (512) (299,391) 108,824 (4,408) 104,416
Profit for
the period - - - - 1,585 1,585 381 1,966
Exchange
differences
of
translating
foreign
operations - - (754) - - (754) (292) (1,046)
Total
comprehensive
income for
the period - - (754) - 1,585 831 89 920
Recognition
of
share-based
payments - 66 - - - 66 - 66
Balance as
at 30 June
2020
(unaudited) 1,320 425,543 (18,824) (512) (297,806) 109,721 (4,319) 105,402
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 30 June
2 0 2 1 2 0 2 0
$'000 $'000
Unaudited Unaudited
Net cash from (used in) operating activities
(Appendix A) (4,364) 3,917
Investing activities
Interest received 13 80
Proceeds on disposal of property, plant
and equipment 52 34
Proceeds on disposal of deposits 157 1,665
Proceeds on disposal of financial assets
carried
at fair value through profit and loss 100 450
Purchases of property, plant and equipment (607) (707)
Increase of other intangible assets (400) (298)
Purchases of financial assets carried
at fair value
through profit and loss - (2,009)
Purchases of deposits (157) (157)
Net cash outflow on acquisition of business
combinations (309) (103)
Investment in joint venture, associated
companies and other (160) (244)
Proceeds from sale of subsidiary (Appendix 18,662 -
B)
Net cash from (used in) investing activities 17,351 (1,289)
Financing activities
Lease payment (1,147) (1,259)
Bank loan repayment (6,774) (5,251)
Bank loan received 6,573 3,943
Net cash used in financing activities (1,348) (2,567)
Net increase in cash and cash equivalents 11,639 61
Cash and cash equivalents at the beginning
of the period 50,575 40,584
Effects of exchange rate changes on
the balance
of cash held in foreign currencies (63) (655)
Cash and cash equivalents at the end
of the period 62,151 39,990
BATM ADVANCED COMMUNICATIONS LTD.
APPICES TO CONSOLIDATED STATEMENT OF CASH FLOWS
APPIX A
RECONCILIATION OF OPERATING PROFIT FOR THE PERIOD TO NET CASH
FROM (USED IN) OPERATING ACTIVITIES
Six months ended 30
June
2021 2020
$'000 $'000
Unaudited Unaudited
Operating profit from operations 20,023 2,403
Adjustments for:
Amortisation of intangible assets 433 361
Depreciation of property, plant and equipment
and investment property 2,226 2,569
Capital gain of property, plant and equipment (22) (7)
Profit from sale of a subsidiary (13,035) -
Stock options granted to employees 31 66
Increase (decrease) in retirement benefit obligation (52) 46
Decrease in provisions (2) (23)
Operating cash flow before movements in working
capital 9,602 5,415
Decrease (increase) in inventory 136 (3,464)
Increase in receivables (5,009) (4,609)
Increase (decrease) in payables (4,725) 7,498
Effects of exchange rate changes on the balance
sheet (2,259) (442)
Cash from ( used in) operations (2,255) 4,398
Income taxes paid (1,660) (251)
Income taxes received - 40
Interest paid (449) (270)
Net cash from (used in) operating activities (4,364) 3,917
APPENDIX B
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 (the "Buyer"). NGSoft is a software and digital
services company that provides creative digital and technology
solutions.
Disposal of subsidiary - N GSoft
Six months ended
30 June
2021
$'000
Unaudited
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 - Basis of preparation
The interim consolidated financial statements of the Group 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 2020 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 2020,
which have been prepared in accordance with IFRSs.
Note 2 - Profit per share
Profit per share is based on the weighted average number of
shares in issue for the period of 440,434,124 (H1 2020:
440,279,074). 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 444,285,836 shares (H1 2020:
443,200,168).
Note 3 - Other alternative measures
Six months ended 30
June
2021 2020
$'000 $'000
Unaudited Unaudited
Operating profit 20,023 2,403
Amortisation of intangible assets 433 361
Adjusted operating profit 20,456 2,764
Depreciation 2,226 2,569
EBITDA 22,682 5,333
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Segments
Business Segment
Six months ended 30 June 2021
Networking Bio-Medical Unallocated Total
and Cyber
$'000 $'000 $'000 $'000
Revenues 16,377 55,071 - 71,448
Adjusted operating
profit (*) 11,050 9,406 - 20,456
Reconciliation -
other operating expenses
(*) (433)
Operating profit 20,023
Net finance expense (174)
Profit before tax 19,849
Six months ended 30 June 2020
Networking Bio-Medical Unallocated Total
and Cyber
$'000 $'000 $'000 $'000
Revenue 27,428 49,952 30 77,410
Adjusted operating
profit/(loss) (*) (1,458) 4,219 3 2,764
Reconciliation -
other operating
expenses (*) (361)
Operating profit 2,403
Net finance expense (476)
Profit before tax 1,927
(*) See note 3
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - 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
2021 2020
$'000 $'000
Unaudited Unaudited
Telecommunication products 6,670 7,362
Software services 9,707 20,107
Distribution of medical products 33,289 30,773
Diagnostic products 17,786 5,925
Eco-Med products 3,996 13,243
71,448 77,410
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