TIDMBVC
RNS Number : 2538W
BATM Advanced Communications Ld
17 August 2020
LEI: 213800FLQUB9J289RU66
17 August 2020
BATM Advanced Communications Limited
("BATM" or the "Group")
Interim results for six months ended 30 June 2020
Strong growth for H1 2020 enabling resumption of dividend for FY
2020
Full year results now anticipated 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, is delighted to announce its interim results for the six
months ended 30 June 2020.
Financial Summary
H1 2020 H1 2019 Change
$m $m
-------- -------- --------
Revenue 77.4 56.2 +37.7%
-------- -------- --------
Gross profit 23.0 15.3 +50.0%
-------- -------- --------
Gross margin 29.7% 27.3% +240bps
-------- -------- --------
Operating profit 2.4 1.2 +102.8%
-------- -------- --------
Adj.(*) operating profit 2.8 1.6 +73.7%
-------- -------- --------
EBITDA(*) 5.3 3.9 +36.2%
-------- -------- --------
Cash from/(used in)
operations 4.4 (2.0) +317.5%
-------- -------- --------
Earnings per share
(cents) 0.36c 0.14c +157.1%
-------- -------- --------
Cash and financial
assets 44.3 16.9 +161.6%
-------- -------- --------
* S ee note 4 - Alternative Performance Measures
Operational Summary
Bio-Medical Division (65% of total revenue)
-- Revenue increased significantly by 65.5% to $50.0m (H1 2019: $30.2m)
-- Gross margin improved by 860bps to 31.9% (H1 2019: 23.3%)
-- Diagnostics Unit
o L aunched two diagnostics kits for COVID-19 to strong demand:
an antigen molecular (RTPCR) test kit and an ELISA lab serological
(antibody) test kit
o Partnered with Novamed to develop rapid COVID-19 and flu
diagnostics tests kits for home-use, which is expected to be ready
for sale in Q4 2020
o Post period, enhanced both COVID-19 tests and launched a new
rapid results test to identify a specific respiratory virus or
bacteria including in pre-symptomatic patients:
-- COVID-19 serologic test upgraded to measure the quantity of
antibodies in the blood
-- COVID-19 antigen test upgraded to detect spike (S) protein to
enable diagnosis in people with low viral loads, increasing testing
accuracy
-- Eco-Med Unit
o Received c. $31m order from a European government for the
delivery of 1,000 critical care ventilators in response to
COVID-19
o Received a contract extension from Ceva Animal Health to
expand the Group's biological waste solution- for enhancing the
vaccination production process that the Group delivered in 2019
-- Distribution Unit
o Achieved revenue growth through the distribution of COVID-19
diagnostic reagents to public health authorities primarily in
Europe
o Post period, the Group's lab in Romania commenced performing
COVID-19 tests for private sector customers
Networking and Cyber Division (35% of total revenue)
-- Revenue increased by 5.3% to $27.4m (H1 2019: $26.0m)
-- Gross margin of 25.8% (H1 2019: 31.9%), reflecting shift in product mix
-- Networking Unit
o Increasing momentum with the Group's Network Function
Virtualisation ("NFV") solution, the NFVTime operating system:
-- Several successful Arm-based NFVTime proof-of-concepts
conducted by tier 1 operators in Europe and APAC - including
Vodafone, a leading international network and mobile operator
-- Received order for an Arm-based NFVTime deployment from
AdcareIT, an outsourced ICT managed service provider in Kenya, to
enable it to provide SD-WAN and Firewall services to its
customers
-- NFVTime is undergoing evaluation with several leading network
operators and multi-service providers worldwide, which are at an
advanced stage
o In response to the COVID-19 pandemic, the Group introduced new
solutions to its T-Marc R3305 series to increase home broadband
connectivity and quality, which are undergoing proof-of-concepts
worldwide
o Completed deployments of the T-Metro 8104, the Group's
ultra-high capacity service aggregation platform and cloud gateway
that was introduced in 2019, for numerous multiple service
providers across North America
-- Cyber Unit
o Revenue in H1 2020 increased by 27.4% over H1 2019
o Awarded a $4m cyber security contract from the Group's
long-standing government defence department customer, of which
$1.9m was delivered during H1 2020
Outlook
-- Entered H2 2020 with a substantially higher backlog than at the same point in the prior year
-- Bio-Medical division and Networking and Cyber division both
expected to report revenue growth for full year 2020
-- Total Group revenue is anticipated to increase by 32% for
full year 2020 over 2019, ahead of market expectations that were
updated in June, and EBITDA is expected to increase by 48%,
significantly ahead of the updated market expectations
-- The strong cash position at 30 June 2020 combined with the
cash generation expected for H2 2020 gives the Board the confidence
to reinstate its dividend policy for full year 2020
Commenting on the results, Dr Zvi Marom, Chief Executive Officer
of BATM, said: "I am pleased to report an outstanding set of
results as we delivered increased sales in all of our business
units along with strong cash generation. This reflects a great
performance in the first half, in particular by our Bio-Medical
division, which was able to respond rapidly to the pandemic and
provide solutions including COVID-19 antigen and antibody
diagnostic tests and the manufacture of critical care ventilators.
Our Networking and Cyber division had a strong first quarter and,
together with a return towards normal business from the middle of
the second quarter, it too generated revenues higher than in H1
2019. This resulted in the Group delivering 38% growth in revenues
and over 100% growth in operating profit compared with H1 2019.
"Looking ahead, we entered the second half of the year with an
increased backlog and with sustained demand for our COVID-19
solutions. We continue to achieve important operational milestones
that significantly advance the execution on our strategy in NFV and
molecular diagnostics - our key future growth markets. The strong
cash position at period end combined with the cash generation
expected for full year 2020 gives the Board the confidence to
reinstate its dividend policy. Additionally, this strong balance
sheet will support our ramp up in activities that will ensure our
growth for years to come as well as enable us to pursue potential
acquisition opportunities to accelerate growth in our key strategic
areas. As a result, the Board continues to look to the future with
great confidence."
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 Elliot Fradd at Luther Pendragon at
elliotfradd@luther.co.uk.
Operational Review
The first half of 2020 was a milestone period for BATM with
revenue growth in all of its business units. As a result of the
substantial investment the Group has made in recent years to build
a best-in-class diagnostics platform, BATM's Bio-Medical division
was able to respond rapidly to provide solutions when it was first
alerted to the potential outbreak of COVID-19. This includes the
development of COVID-19 antigen and antibody diagnostic tests and
the manufacture of critical care ventilators in the Eco-Med unit.
In the Networking and Cyber division, while there was a slowdown in
some of its activities at the beginning of Q2 2020 as a result of
the restrictions on travel imposed by lockdowns, the
diversification of the division's revenue base enabled overall
growth due to sales of its cyber and ICT solutions. In addition,
the Group continued to make progress with its NFV solution - which
the Group expects to become a key growth engine - c onducting
several successful proof-of-concepts with tier 1 operators in
Europe and APAC, including Vodafone.
Bio-Medical Division
H1 2020 H1 2019 H2 2019 FY 2019
Revenue $50.0m $30.2m $34.2m $64.4m
-------------------- -------- -------- ---------- --------
Gross margin 31.9% 23.3% 23.8% 23.6%
-------------------- -------- -------- ---------- --------
Adjusted operating
profit/(loss) $4.2m $1.3m $(1.2)m $0.1m
-------------------- -------- -------- ---------- --------
Revenue for the Bio-Medical division increased by 65.5% to
$50.0m (H1 2019: $30.2m) due to growth in all units. Gross margin
for the division increased significantly to 31.9% (H1 2019: 23.3%),
primarily reflecting improvement in the Diagnostics and the Eco-Med
units based on the growth in sales and the high-margin nature of
molecular biology and the COVID-19 products. The Bio-Medical
division generated an adjusted operating profit of $4.2m for H1
2020 compared with a profit of $1.3m in H1 2019, an increase of
232.7%. Excluding a $3.2m capital gain in 2019 from the part
realisation of its associate company Ador, the year-on-year
increase in adjusted operating profit would be 322.9%.
Diagnostics
The Diagnostics unit performed exceptionally well during the
first half of 2020. As a result of the significant investment that
the Group has made in advancing the Bio-Medical division in recent
years, it is now able to quickly provide solutions for any new
pathogen that appears. The Group also responded rapidly to prepare
its Bio-Medical division when it was first alerted to the potential
COVID-19 outbreak. Consequently, the Group was able to quickly
launch diagnostic kits for COVID-19, with sales to public health
authority customers in Europe and South America. The Group also
received increased demand for its instruments (readers) as well as
the test kits (reagents). This resulted in revenue growth of
approximately 162.5%, with the Diagnostics unit accounting for
approximately 11.9% of Bio-Medical division revenues in H1 2020 (H1
2019: 7.6%).
COVID-19 diagnostic tests
The Group launched two COVID-19 tests - an RTPCR antigen test
and a serologic antibody test - and it entered a partnership to
develop a test for at-home use, which is expected to be complete by
Q4 2020. Both existing kits are being produced at the Group's
Adaltis facility in Rome.
The Group's antigen molecular (RTPCR) test kit to detect if
someone currently has the COVID-19 virus, underwent clinical
verification and evaluation by leading universities and hospitals
in February and received certification at the end of March 2020.
Post period, the Group expanded the gene discovery capability of
this test to five (compared with a market standard of three) and,
importantly, to include the spike (S) gene. The S gene is the
protein that the virus uses to invade human cells. It is present in
a person's blood even if they have a very low viral load of
COVID-19 (which might otherwise go undetected). As a result, by
being able to detect the S gene, this test can provide more
accurate results, reducing the risk of false positives and false
negatives. This test can run on Adaltis instruments as well as any
standard PCR instrument.
The Group launched its ELISA serological test in May 2020, which
diagnoses if a patient has had COVID-19 by detecting antibodies
against it present in their blood. Post period, in response to
growing medical research suggesting that the volumes of antibodies
in the blood of someone who has recovered from COVID-19 is low and
declines, the Group advanced its serologic test to be able to
measure the quantity of antibodies in the blood rather than just
identifying their presence or absence (qualitative test). The
upgraded test measures both IgM antibodies, which are produced a
few days after infection and remain in the blood for a short
period, and IgG antibodies, which are longer-term (produced a few
days after infection and remain in the blood for a few months)
antibodies. It has the same levels of sensitivity and specificity
as those of the market-leading brands, with sensitivity of 100.0%
and specificity of 99.8%. This kit will run on Adaltis instruments
as well as on any standard ELISA instrument.
Also during the period, the Group entered into a collaboration
with Novamed Ltd, an Israeli life sciences company operating in the
in-vitro rapid diagnostics market, for the joint development and
marketing of a rapid testing kit for home use for diagnosing
COVID-19. The new kit allows people to test a sputum sample at home
and receive results within a few minutes. The development is
progressing on track and the Group expects it to be available for
sale in the fourth quarter of this year, first in Israel and then
globally.
New molecular diagnostics test
Post period, the Group launched a new molecular diagnostics kit
that is able to test for multiple respiratory pathogens at the same
time that has now received CE certification. In less than an hour,
it can identify the particular 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. The ability to rapidly
identify the specific cause of a disease is particularly important
for the coming winter where seasonal colds and flu could appear
alongside COVID-19 and patients would present with similar
symptoms. The Group expects to commence production and sales of
this kit at its Adaltis facility later this year.
Ador
During the period, the Group continued to make good progress in
achieving the milestones under the conditional investment agreement
entered into in 2019 for advancing the commercialisation of the
Group's associate company, Ador. Ador is developing the NATlab
molecular biology solution that provides rapid sample-to-answer
diagnosis of bacterial, viral or fungal infections in under one
hour using DNA sampling. Ador has a current enterprise value of
$44.5m and BATM has an ownership interest of 38.2%. The second
instalment of $15.5m is expected to be funded by the end of 2020
when Ador will have a value that will be a 33.3% premium to the
post-initial investment enterprise value, and BATM will have an
ownership interest of 30.2%.
Eco-Med
The Eco-Med unit achieved significant growth, with revenue
increasing by 273.7%, based on revenue beginning to be recognised
under its contract for the provision of critical care ventilators
(with the majority to be delivered in the second half of the year).
The Eco-Med unit accounted for 26.5% of the Bio-Medical division's
revenues in H1 2020 compared with 11.7% in H1 2019.
As noted, during the period the Group received a EUR29m (c.
$31m) order for the delivery of 1,000 critical care mechanical
ventilators to a European government. The ventilator, which is
high-performance and suitable for infants through to adults, is
aimed at Intensive Care Unit environments for patients suffering
from COVID-19. It is being manufactured by the Group's Celitron
subsidiary in Hungary, which has been producing equipment for
medical environments globally for over 10 years. Production
commenced during the period and full delivery is expected to
complete this year.
The Group continued to progress the delivery of its contracts
for its agri-waste treatment solution for the safe, onsite
treatment of biohazardous agricultural waste. The installation of
the solution for a company that is part of a major food
manufacturing group in the Philippines is nearing completion, which
represents the Group's first international installation of the
agri-waste treatment solution.
In addition, the Group received an extension contract for its
biological waste solution developed for the biopharmaceutical
industry from Ceva Animal Health, a leading developer of animal
health products. Under this extension, the solution that the Group
installed in 2019 will be expanded to have additional functionality
and will connect automatically to a new robotics system at the
facility. This is the third project that the Group has undertaken
at this facility, which is located in Hungary, reflecting the value
that customer places in this solution. Delivery is expected to
complete during Q1 2021.
Distribution
Revenue in the Distribution unit increased by 26.4% in H1 2020
over the same period of the prior year and accounted for
approximately 61.6% of the Bio-Medical division's revenue (H1 2019:
80.7%).
The increased revenue was based on the provision of reagents for
COVD-19 tests, both PCR and serologic, to public health authorities
in Eastern Europe. This compensated for the lower level of activity
at the Group's Zer Laboratories subsidiary, where there was a
reduction in demand for pre-natal diagnostic tests as a result of
the COVID-19 outbreak.
Post period, the Group's lab in Romania commenced performing
COVID-19 tests for private sector customers, which the Group
expects to increase. The Group also intends to start performing
COVID-19 tests at its Zer Laboratories subsidiary in the second
half of the year.
Networking and Cyber Division
H1 2020 H1 2019 H2 2019 FY 2019
Revenue $27.4m $26.0m $33.0m $59.0m
-------------------- ---------- -------- -------- --------
Gross margin 25.8% 31.9% 29.3% 30.5%
-------------------- ---------- -------- -------- --------
Adjusted operating
profit/(loss) $(1.4)m $0.3m $4.9m $5.2m
-------------------- ---------- -------- -------- --------
Revenue in H1 2020 grew by 5.3% compared with H1 2019 reflecting
increased sales of ICT and cyber solutions and lower sales of
networking equipment as a result of delays caused by COVID-19
lockdowns. As a result of this shift in sales mix towards lower
margin products (mainly in ICT), the Networking and Cyber division
recorded an operating loss. The adjusted operating profit for H2
2019 includes an exceptional gain of $3.4m from the sale of the
Group's rights in IBC.
NFV solutions
The Group continued to make good progress with its NFVTime
operating system that enables network carriers 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 theirs enterprise customers as well as reducing the
costs, time and carbon footprint involved with physical
networks.
During the period, the Group conducted several successful
proof-of-concepts of NFVTime with tier 1 operators in Europe and
APAC. In particular, as announced post period, Vodafone, a leading
global network operator headquartered in the UK, completed a
proof-of-concept of the Arm-based uCPE that is run on the NFVTime
operating system. The solution, which was tested for both
small/medium business and enterprise use-cases, performed highly
successfully in the deployment and management of virtual and cloud
network functions and was able to handle high traffic requirements
- performing to levels not seen by other platforms. The Group
continues to work closely with Arm and Vodafone for the next step
in the process.
Another key development during the period was the receipt of an
order for an Arm-based NFVTime deployment from AdcareIT, an
outsourced ICT managed service provider in Kenya. AdcareIT intends
to use NFVTime together with Clavister solutions (deployed as
virtual network functions) to provide SD-WAN and Firewall services
to its customers. Clavister is a leader in high-performance virtual
cybersecurity solutions and it became part of the Group's NFVTime
Arm-based ecosystem through a strategic partnership in 2019.
In addition, NFVTime is undergoing evaluation with several
leading network operators and multi-service providers worldwide.
These evaluations are at an advanced stage.
ICT and Carrier Ethernet solutions and services
As previously noted, some of the Group's activities in the
Networking unit were impacted by the COVID-19 outbreak due to
lockdown measures causing restrictions on travelling to the
premises of customers and suppliers. Consequently, there was a
reduction in revenue generated from the installation and servicing
of equipment, but this was compensated by increased revenue in
sales of ICT solutions, in particular for mobile and web
development, as well as cyber. In addition, since late May 2020
this unit has seen a return towards near-normal trading as some
customers who had temporarily postponed certain projects have
commenced discussions and as lockdown measures are increasingly
lifted.
The Group continued to innovate during this period. This
includes introducing new solutions to its T-Marc R3305 series to
increase home broadband connectivity and quality, enabling
uninterrupted work online, with features such as being able to
prioritise devices and applications, traffic backup and
load-balancing between broadband and LTE. The Group developed these
solutions, which are undergoing proof-of-concepts worldwide, in
response to the COVID-19 pandemic and the increased demand for
products to support productivity for people working and learning at
home.
The Group also completed numerous deployments of its ultra-high
capacity service aggregation and cloud gateway platform, the
T-Metro 8104, for multiple service providers across North America.
Following its launch in 2019, the Group has received good initial
interest in this solution from service providers that want to
increase their network capacity to keep up with the ever-growing
demand from their customers for more bandwidth.
Cyber
In the Group's cyber security business, revenue increased by
27.4% over the first half of 2019. During the period, the Group was
awarded a $4m contract from its long-standing government defence
department customer. This further order, which was partially
delivered in the first half and is expected to complete in the
second half of 2020, is for the provision of additional hardware
and software cyber security products as the customer rolls out the
Group's solution to encompass further employees. Following this
latest order, the total contracted revenue awarded to the Group to
date by this customer for this cyber solution is over $18m.
Financial Review
Total Group revenue for the first half of 2020 increased by
37.7% to $77.4m (H1 2019: $56.2m), with 65% being generated by the
Bio-Medical division (H1 2019: 54%) and 35% by the Networking and
Cyber division (H1 2019: 46%). The significant growth was due to a
substantial increase in Bio-Medical division revenue, primarily in
the Eco-Med and Diagnostics units.
On a constant currency basis, revenue for H1 2020 would have
been slightly higher at $78.1m, but operating profit would have
been unchanged. Currency fluctuations also resulted in a net
finance expense as described below.
The gross profit margin for the first half was 29.7% (H1 2019:
27.3%). This is due to the improvement in gross margin of the
Bio-Medical division from 23.3% in H1 2019 to 31.9% in H1 2020,
which offset the lower margin in the Networking and Cyber division
as a result of a shift in product mix due to COVID-19.
Sales and marketing expenses were $10.2m (H1 2019: $8.2m),
representing 13.1% of revenue compared with 14.6% in H1 2019. The
increase is due to activities to support the Group's COVID-19
products.
General and administrative expenses were $6.2m (H1 2019: $5.6m),
representing 8.0% of revenue compared with 10.0% in H1 2019. The
increase in expenses reflects the growth and development of the
business and associated corporate costs.
Investment in R&D was higher at $3.9m (H1 2019: $3.3m),
primarily due to investments in the Diagnostics unit for the
development of its COVID-19 tests.
The Group achieved a strong increase in operating profit, which
doubled to $2.4m (H1 2019: $1.2m). In addition, the comparative
figure for 2019 includes a capital gain of $3.2m from the part
realisation of the Group's ownership of Ador.
The Group achieved an increase in EBITDA of 36.2% to $5.3m (H1
2019: $3.9m).
Net finance expense was $0.5m (H1 2019: $0.0m). The in crease is
mainly due to the adverse effect of foreign exchange rate
fluctuations (mainly GBP) and a reduction in interest income on
deposits due to reduction in interest rates.
Net profit after tax attributable to equity holders of the
parent increased to $1.6m (H1 2019: $0.6m) resulting in a 157.1%
increase in basic earnings per share to 0.36c (H1 2019: 0.14c).
As at 30 June 2020, inventory was $26.2m (31 December 2019:
$22.7m; 30 June 2019: $23.9m). The increase is due to the expansion
of production of COVID-19 diagnostic products and equipping the
Networking and Cyber division for delivering the new $4m cyber
contract to its government defence department customer. Trade and
other receivables increased to $47.2m (31 December 2019: $42.8m; 30
June 2019: $36.4m), with the increase due to a VAT advanced payment
under the Group's contract for the provision of ventilators.
Intangible assets and goodwill at 30 June 2020 was $ 23.6 m (31
December 2019: $23.7m; 30 June 2019: $23.1m), with the slight
increase compared with the same period of the prior year due to a
small acquisition of a software business during the second half of
2019 .
Property, plant and equipment and investment property was $15.5m
(31 December 2019: $16.1m; 30 June 2019: $16.9m). The decrease is
primarily due to depreciation.
The balance of trade and other payables was $51.8m (31 December
2019: $44.5m; 30 June 2019: $32.8m). The in crease is due to an
advance payment under the Group's contract for the provision of
ventilators.
Cash inflow from operations was $4.4m for H1 2020 compared with
$2.0m outflow for the prior period, which is mainly due to the
increase in operating profit and in trade payables.
The Group's balance sheet remained strong with effective
liquidity of $ 44.3m at 30 June 2020 compared with $44.8m at 31
December 2019 and $16.9m at 30 June 2019. Period-end cash comprised
cash and deposits up to three months' duration of $40.0m and
short-term cash deposits up to one year and held for trading bonds
of $4.3m.
Dividend
The Board of BATM has resolved to reinstate its dividend policy
commencing from full year 2020. The Board is committed to pursuing
a progressive dividend policy, with the aim of increasing the value
of ordinary dividends distributed to shareholders in line with the
Group's underlying growth in earnings, while taking into account
capital requirements, cash flows and movements in currency. The
Board will review the appropriate level of total annual dividend
each year at the time of the full year results.
Outlook
The Group entered the second half of 2020 with a substantially
higher backlog than at the same point in the prior year following a
particularly strong first half performance in the Bio-Medical
division. The Networking and Cyber division, while experiencing
some slowdown at the beginning of Q2 2020, returned towards normal
trading from the end of May 2020 and was able to achieve an
increase in revenue for the first half. With both divisions making
a positive start to the second half, the Group anticipates the
Bio-Medical division as well as the Networking and Cyber division
to report growth for full year 2020 and total Group revenue to be
ahead of market expectations with an increase of 32% over 2019 and
EBITDA is expected to be significantly ahead of market expectations
with an increase of 48% over 2019.
The COVID-19 pandemic has shifted the attention of public health
authorities globally onto the importance of medical diagnostics,
with a focus on rapid diagnosis to enable the correct course of
action to be taken without delay. This accelerates a trend that,
for several years, BATM has been developing solutions to address.
The Bio-Medical division continues to innovate in molecular
diagnostics and invest in the development of unique solutions -
some of which are expected to be commercially released in H2 2020
in anticipation of a second wave of several respiratory pathogens,
particularly flu and coronavirus. These development efforts will
benefit the Group in the second half of the year and beyond.
Additionally, it is expected that the sale of antigen and antibody
COVID-19 testing kits will continue throughout 2020 and into next
year, with sales to public health authorities in Europe, South
America as well as Asia. The Group is also continuing to deliver on
its contract to provide critical care ventilators.
The Networking and Cyber division, since late May 2020, has seen
a return towards normal trading as some customers who had
temporarily postponed certain projects have commenced discussions
and as lockdowns are increasingly lifted. While it is still early
days, this gives confidence to the management team that the full
year impact of the pandemic on the Networking and Cyber division
will be minimal. The Group's recent proof-of-concept with Vodafone
of its NFVTime operating system integrated with Arm technology is
also a key validation of the Group's NFV offer. This solution,
which can support network carriers in leveraging the benefits
offered by 5G, is expected to be a significant contributor to
revenue in the coming years as proof-of-concepts progress with tier
1 network operators.
The strong cash position at period end combined with the cash
generation expected for full year 2020 gives the Board the
confidence to reinstate its dividend policy. This strong balance
sheet will also support the Group's ramp up in activities as well
as enable it to pursue potential acquisition opportunities to
accelerate growth in its key strategic areas. Additionally, the
Board keeps under consideration the optimum structure for the Group
and how best to create shareholder value from the IP within the
business and its various constituent parts. As a result, the Board
continues to look to the future with great confidence.
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED INCOME STATEMENTS
Six months ended 30
June
2 0 2 0 2019
US$ in thousands
Unaudited Unaudited
Revenue 77,410 56,222
Cost of revenue 54,407 40,882
Gross profit 23,003 15,340
--------------- ---------------
Operating expenses
Sales and marketing expenses 10,155 8,225
General and administrative expenses 6,222 5,648
Research and development expenses 3,893 3,270
Other operating expenses/(income) 330 (2,988)
Total operating expenses 20,600 14,155
--------------- ---------------
Operating profit 2,403 1,185
Finance income 529 680
Finance expenses (1,005) (682)
Profit before tax 1,927 1 ,183
Income tax (expenses) 398 (414)
Profit for the period before share of a loss
of a joint venture
and associated companies 2,325 769
Share of a loss of joint venture and associated _ _ (359) _ _ (601)
companies
Profit for the period 1,966 168
Attributable to:
Owners of the Company 1,585 575
Non-controlling interests 381 (407)
Profit for the period 1,966 168
Profit per share (in cents):
From continuing
and discontinued operations (Basic and Diluted) 0.36 0.14
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
Six months ended 30
June
2 0 2 0 2 0 1 9
US$ in thousands
Unaudited Unaudited
Profit for the period 1,966 168
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating foreign
operations (1,046) (500)
Total comprehensive profit/(loss) for the
period 920 (332)
Attributable to:
Owners of the Company 831 142
Non-controlling interests 89 (474)
920 (332)
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 30 June 31 December
2 0 2 0 2 0 1 9 2 0 1 9
US$ in thousands
Unaudited Unaudited Audited
Current assets
Cash and cash equivalents 39,990 13,274 40,584
Trade and other receivables 47,166 36,410 42,784
Financial assets 4,285 3,648 4,254
Inventories 26,169 23,906 22,672
----------------------------- -----------------------------
117,610 77,238 110,294
----------------------------- -----------------------------
Non-current assets
Property, plant and equipment 13,627 14,895 14,203
Investment property 1,841 1,956 1,899
Right-of-use assets 10,298 10,719 9,945
Goodwill 16,748 16,577 16,804
Other intangible assets 6,845 6,545 6,941
Investment in joint venture
and
associates 9,505 9,396 9,497
Investments carried at fair
value 1,078 1,061 1,013
Deferred tax assets 4,295 2,649 3,234
----------------------------- -----------------------------
64,237 63,798 63,536
----------------------------- -----------------------------
Total assets 181,847 141,036 173,830
============================= ============================= ======================
Current liabilities
Short-term bank credit 4,627 4,711 5,915
Trade and other payables 51,789 32,771 44,459
Current maturities of lease
liabilities 2,196 2,368 2,070
Liabilities for current tax 832 309 313
59,444 40,159 52,757
Non-current liabilities
Long-term bank credit 723 1,695 762
Long-term liabilities 6,256 5,788 6,215
Long-term lease liabilities 8,629 8,885 8,339
Deferred tax liabilities 635 509 626
Retirement benefit obligation 758 624 715
17,001 17,501 16,657
Total liabilities 76,445 57,660 69,414
Equity
Share capital 1,320 1,218 1,320
Share premium account 425,543 407,952 425,477
Reserves (19,336) (18,806) (18,582)
Accumulated deficit (297,806) (302,689) (299,391)
----------------------------- -----------------------------
Equity attributable to the:
Owners of the Company 109,721 87,675 108,824
Non-controlling interest (4,319) (4,299) (4,408)
============================= =============================
Total equity 105,402 83,376 104,416
============================= =============================
Total equity and liabilities 181,847 141,036 173,830
============================= =============================
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
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
US$ in thousands
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/(loss)
for the
period - - (754) - 1,585 831 89 920
Recognition
of
share-based
payments - 66 - - - 66 - 66
As at 30 June
2020
(unaudited) 1,320 425,543 (18,824) (512) (297,806) 109,721 (4,319) 105,402
Six months ended 30 June 2019
Share Attributable Non-controlling
Share premium Translation Other Accumulated to owners interests Total
capital account reserve reserve deficit of the equity
Company
US$ in thousands
As at 1 January
2019 1,217 407,796 (17,861) (512) (303,264) 87,376 (4,368) 83,008
Profit/(loss)
for the period - - - - 575 575 (407) 168
Exchange
differences
of translating
foreign
operations - - (433) - (433) (67) (500)
Total
comprehensive
income/(loss)
for the period - - (433) - 575 142 (474) ( 332)
Purchase of
non-controlling
interest - - - - - - 543 543
Exercise of
share-based
options by
employees 1 97 - - - 98 - 98
Recognition
of share-based
payments - 59 - - - 59 - 59
As at 30 June
2019
(unaudited) 1,218 407,952 (18,294) (512) (302,689) 87,675 (4,299) 83,376
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 30 June
2 0 2 0 2 0 1 9
US$ in thousands
Unaudited Unaudited
Net cash from/(used in) operating activities
(Appendix A) 3,917 (2,564)
Investing activities
Interest received 80 69
Proceeds on disposal of property, plant
and equipment 34 17
Proceeds from disposal of deposits 1,665 154
Proceeds from disposal of financial
assets carried 450 -
at fair value through profit and loss
Purchases of property, plant and equipment (707) (416)
Purchase of other intangible assets (298) (656)
Purchases of financial assets carried
at fair value (2,009) -
through profit and loss
Investment in deposits (157) (155)
Net cash outflow on acquisition of business (103) -
combinations
Investment in joint venture, associated
companies and other (244) (2,168)
Acquisition of subsidiaries (Appendix
B) - (937)
Net cash used in investing activities (1,289) (4,092)
Financing activities
Lease payment (1,259) (1,185)
Bank loan repayment (5,251) (3,219)
Bank loan received 3,943 3,224
Proceeds on exercise of shares - 98
Net cash used in financing activities (2,567) (1,082)
Increase/(decrease) in cash and cash
equivalents 61 (7,738)
Cash and cash equivalents at the beginning
of the period 40,584 20,811
Effects of exchange rate changes on
the balance
of cash held in foreign currencies (655) 201
Cash and cash equivalents at the end
of the period 39,990 13,274
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
2 0 2 0 2 0 1 9
US$ in thousands
Unaudited Unaudited
Operating profit from continuing operations 2,403 1,185
Adjustments for:
Amortisation of intangible assets 361 406
Depreciation of property, plant and equipment
and investment property 2,569 2,326
Capital loss/(gain) of property, plant and equipment (7) 76
Capital gain from part realisation of associate - (3,161)
Other gain - (134)
Stock options granted to employees 66 59
Increase in retirement benefit obligation 46 40
Increase/(decrease) in provisions (23) 157
Operating cash flow before movements in working
capital 5,415 954
Decrease/(increase) in inventory (3,464) 100
Increase in receivables (4,609) (1,652)
Increase/(decrease) in payables 7,498 (939)
Effects of exchange rate changes on the balance
sheet (442) (485)
Cash from/( used in) operations 4,398 (2,022)
Income taxes paid (251) (214)
Income taxes received 40 -
Interest paid (270) (328)
Net cash from/(used in) operating activities 3,917 (2,564)
APPENDIX B
ACQUISITION OF SUBSIDIARY - Remedium
2019
US$ in thousands
Unaudited
Net assets acquired
Property, plant and equipment 1,257
Net working capital 607
Short-term bank credit (134)
Long-term liabilities (635)
1,095
Non-controlling interest (543)
Goodwill (248)
Total consideration 304
Satisfied by:
Cash 304
Consideration recorded as a contingent liability -
304
Net cash outflow arising on acquisition
Cash consideration 316
Cash and cash equivalents acquired (12)
304
Acquisition of subsidiaries in the Consolidated Statement of
Cash Flows in 2019 also includes the final payment for the
acquisition of Green Lab Hungary Engineering Ltd.
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 2019 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 2019,
which have been prepared in accordance with IFRSs.
Note 2 - Application of new International Financial Reporting
Standards (IFRSs)
The Group has applied amendment to IFRS 3, Definition of a
Business, and amendment to IAS 1 and IAS 8, Definition of Material,
for the first time in the year 2020, but do not have an impact on
the interim consolidated financial statements of the Group.
Note 3 - Profit per share
Profit/(loss) per share is based on the weighted average number
of shares in issue for the period of 440,279,074 (H1 2019:
403,761,511). 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 443,200,168 shares (H1 2019:
408,581,998).
Note 4 - Alternative performance measures
Six months ended 30
June
2 0 2 0 2 0 1 9
$'000 $'000
Unaudited Unaudited
Operating profit 2,403 1,185
Amortisation of intangible assets 361 406
Adjusted operating profit 2,764 1,591
Depreciation 2,569 2,326
EBITDA 5,333 3,917
Note 5 - Segments
Business Segment
Six months ended 30 June 2020
Networking Bio-Medical Unallocated Total
and Cyber $'000 $'000 $'000
$'000
Revenues 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
Six months ended 30 June 2019
Networking Bio-Medical Unallocated Total
and Cyber $'000 $'000 $'000
$'000
Revenue 26,040 30,182 - 56,222
Adjusted operating
profit (*) 323 1,268 - 1,591
Reconciliation -
other operating
expenses (*) (406)
Operating profit 1,185
Net finance expense (2)
Profit before tax 1,183
(*) See note 4
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 2 0 2 0 1 9
$'000 $'000
Unaudited Unaudited
Telecommunication products 7,362 7,104
Software services 20,107 18,936
Distribution of medical products 30,773 24,347
Diagnostic products 5,925 2,291
Eco-Med products 13,243 3,544
77,410 56,222
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 SFFESMESSEIA
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