TIDMBVC
RNS Number : 8109P
BATM Advanced Communications Ld
22 February 2021
LEI: 213800FLQUB9J289RU66
22 February 2021
BATM Advanced Communications Limited
("BATM" or the "Group")
Full Year Results 2020
Transformational year with significant financial and operational
delivery
BATM (LSE: BVC; TASE: BVC), a leading provider of real-time
technologies for networking solutions and medical laboratory
systems, announces its preliminary results for the year ended 31
December 2020.
Financial Summary
2020 2019 Change
$m $m
------ ------ --------
Revenue 183.6 123.4 +49%
------ ------ --------
Gross profit 60.7 33.1 +83%
------ ------ --------
Gross margin 33.1% 26.9% +620bps
------ ------ --------
Operating profit 14.2 4.5 +218%
------ ------ --------
Adj.(*) operating profit 15.0 5.3 +183%
------ ------ --------
EBITDA 19.7 9.8 +100%
------ ------ --------
Cash from operations 20.1 8.4 +138%
------ ------ --------
Earnings per share (cents) 2.22c 0.93c +139%
------ ------ --------
Cash and financial assets 53.4 44.8 +19%
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* Adjusted to exclude the amortisation of intangible assets (s
ee note 3 to the financial statements)
Operational Summary
Bio-Medical Division (70% of total revenue)
-- Revenue increased by 100% to $ 128.7 m (2019: $64.4m) driven
by sales of COVID-19 diagnostic kits and critical care
ventilators
-- Gross margin improved by 1270bps to 36.3% (2019: 23.6%) due
to product mix, including the introduction of new molecular
diagnostics tests
-- Diagnostics Unit
o Rapidly launched RT-PCR and serologic test kits for
COVID-19
o Received strong global demand for COVID-19 test kits
(reagents) and diagnostic instruments throughout the year
o Developed a new rapid results multi pathogen testing kit for
diagnosing respiratory viruses
o Signed agreements with several leading European universities
for the co-development of new diagnostics solutions expected to be
launched in 2021
o Additional investment of $10m, of which the Group contributed
$3m, in associate company Ador Diagnostics to expedite the
development of RCA-based technology capable of providing
sample-to-answer diagnostics within 30 minutes
-- Eco-Med Unit
o Delivered EUR29m order from a European government for 1,000
critical care ventilators
o Entered new market with delivery of first ISS-based insect
protein recovery instrument
-- Distribution Unit
o Increased revenue through existing activities and the
distribution of COVID-19 diagnostic reagents
o Commenced performing COVID-19 tests at the Group's lab in
Romania
o Established infrastructure to expand into new geographies
Networking and Cyber Division (30% of total revenue)
-- Revenue was $54.9m (2019: $59.0m), reflecting impact of
COVID-19 on ability to travel to customers' premises and install
equipment
-- Gross margin of 25.5% (2019: 30.5%) due to COVID-19 impact on product mix
-- Networking Unit
o Significant milestones achieved with the Group's NFVTime
operating system for enabling network function virtualisation
("NFV"):
-- Secured first tier 1 customer, PCCW Global, with multi-year
licensing agreement
-- Several successful proofs-of-concept conducted by tier 1
operators in Europe and APAC, including Vodafone
-- Received an order from AdcareIT, an outsourced ICT managed
services provider in Kenya
-- Completed enhancement, post period, to enable NFVTime
deployment via public cloud environments
o Introduced new carrier Ethernet solutions for increasing home
broadband connectivity and quality, which are undergoing
proofs-of-concept worldwide
o Post period, entered into an option agreement to sell the
Group's NG Soft Ltd subsidiary for NIS 105.1m (c. $33m) in cash to
Aztek Technologies (1984) Ltd, a provider of ICT cloud services in
Israel
-- Cyber Unit
o Awarded a $4m cyber security contract from the Group's
long-standing government defence department customer, of which
$3.2m was delivered during the year
Commenting on the results, Dr Zvi Marom, Chief Executive Officer
of BATM, said: "This was an outstanding year for BATM. We delivered
substantial financial growth, which was driven by our Bio-Medical
division that was able to respond rapidly to the outbreak of the
pandemic to develop COVID-19 diagnostic tests and manufacture
critical care ventilators while also continuing its regular
activity. In our Networking and Cyber division, we achieved a key
milestone in securing our first tier 1 customer for NFVTime, which
will soon begin the roll-out of our solution. As a result, we
significantly advanced the execution of our strategy in molecular
diagnostics and NFV - our key future growth markets.
"Looking ahead, we entered 2021 with sustained momentum in the
Bio-Medical division as we continue to receive strong demand for
our COVID-19 test kits and instruments. We are also scheduled to
launch various new, very advanced diagnostic testing kits this
year. In the Networking and Cyber division, we expect sales of
NFVTime to make a good contribution to the full year revenue of
this division. This will enable us to achieve further improvement
in our gross margin, reflecting the strengthened foundations of the
Group. As a result, the Board of BATM looks 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) +44 20 7408 4050
-----------------
Henry Willcocks (Corporate Broking)
-----------------
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 GMT. To register to participate, please
contact Claire Norbury at Luther Pendragon at
clairenorbury@luther.co.uk
Group Strategy
BATM brings world-leading expertise and IP to deliver
innovative, robust, reliable and cost-effective solutions to
complex challenges in mission-critical applications in the Group's
focus sectors of bio-medicine and telecom networking. The Group
serves a diverse range of customers globally, including large
enterprises and governments. BATM delivers value creation from
novel idea, to scale-up and mass-market success, and seeks to
maximise the long-term value of its businesses through organic and
inorganic strategies. A focus on molecular diagnostics and telecom
networking reflects both the growth opportunities within those
markets and BATM's ability to innovate and disrupt. The challenges
that 2020 has brought have, in the Board's opinion, strengthened
and accelerated the requirement for the Group's key solutions.
Operational Review
The year to 31 December 2020 was transformational for BATM, with
substantial growth delivered by the Bio-Medical division and
significant operational milestones achieved in the Networking and
Cyber division. As a result of the investment the Group had 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 to the COVID-19 pandemic. This includes the development
of COVID-19 antigen and antibody diagnostic tests, which received
strong demand throughout the year, 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 as a
result of the restrictions on travel imposed by lockdowns, the
Group made significant progress with its NFVTime solution - which
the Group expects to become a key growth engine - including
securing its first tier 1 customer, PCCW Global.
Bio-Medical Division
FY 2020 FY 2019
Revenue $128.7m $64.4m
-------- --------
Gross margin 36.3% 23.6%
-------- --------
Adj.* operating profit $19.4m $0.1m
-------- --------
* Adjusted to exclude the amortisation of intangible assets (s
ee note 3 to the financial statements)
Revenue for the Bio-Medical division increased by 100% to
$128.7m (2019: $64.4m), reflecting significant growth in all units.
Gross margin improved substantially to 36.3% (2019: 23.6%) due to
the high-margin nature of the new molecular biology and COVID-19
products in the Diagnostics and Eco-Med units. As a result of the
substantially higher revenue and gross margin, the Bio-Medical
division generated an adjusted operating profit of $19.4m for 2020
compared with $0.1m in 2019.
Diagnostics
The Diagnostics unit performed exceptionally well during 2020,
with revenue growth of 318% and accounting for 18% of Bio-Medical
division revenue (2019: 9%). As a result of the investment that the
Group has made in advancing the Bio-Medical division in recent
years and transitioning to molecular diagnostics, it is now able to
rapidly provide solutions for any new pathogen that appears. The
Group also responded with speed and efficiency 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 test kits for COVID-19, which received strong
demand throughout the year. In addition, sales of the Group's
diagnostic instruments (readers) increased, and were frequently
ordered alongside the COVID-19 test kit reagents. This momentum
continued throughout the year with the Diagnostics unit entering
2021 with a substantially higher order book than at the same point
of the prior year. To cater to the increased demand, the Group
expanded the production capacity of its Adaltis facility in Rome,
Italy.
The customers for the Group's COVID-19 solutions were primarily
public health authorities in Europe and South East Asia. The Group
also received an order from a major new customer that is a
significant global private laboratory group, headquartered in
Italy. The customer provides COVID-19 testing throughout Europe,
primarily for large businesses such as airports. The Group expects
to receive further orders from this customer.
COVID-19 diagnostic tests
In 2020, the Group launched both RT-PCR (reverse transcription
polymerase chain reaction) antigen tests and serologic antibody
tests for COVID-19, which are produced at its Adaltis facility in
Rome.
The Group's antigen molecular (RT-PCR) test kit, which detects
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.
The Group expanded the gene discovery capability of this test to
five (4+1), compared with a market standard of three, during the
second half of the year and, importantly, included 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.
In partnership with Tor Vergata University of Rome, the Group
continually tests its kits against any mutation that is perceived
to be clinically material. The Group has confirmed that its kits
are accurately able to detect all known variants of COVID-19.
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. The Group subsequently advanced
this test to be able to measure the quantity of antibodies in the
blood rather than just identifying their presence or absence
(qualitative test). This was 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
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. This test 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%.
New molecular diagnostics tests
During the second half of the year, the Group also developed a
new molecular PCR diagnostics test that is able to test for
multiple respiratory pathogens at the same time. In less than an
hour, it 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. This test is
in the final stages of CE certification. The Group expects to
commence production and sales of this kit in the coming months.
In addition, the Group entered into agreements with several
leading universities in Europe for the co-development of diagnostic
solutions, which are expected to be launched in 2021. These new
molecular biology tests will be for the diagnosis of infectious
diseases, which are a key focus area for the Group's diagnostics
activities.
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 year, Ador
developed an innovative technology using the rolling circle
amplification ("RCA") method. This 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. Ador is in the advanced stages of incorporating the RCA
technology into the NATlab system, which it expects to be ready for
in-hospital trials in H1 2021. To expedite the development of the
new RCA-based system, the Group and its partners in Ador invested
an additional $10m, of which BATM contributed $3m. Following this
investment, Ador has an enterprise value of $54.5m and the Group's
shareholding is 37%.
Eco-Med
The Eco-Med unit achieved significant growth, with revenue
increasing by 509% and accounting for 31% of the Bio-Medical
division's revenue (2019: 10%). This was as a result of the
delivery of a EUR29m contract from a European government for 1,000
critical care ventilators to support that country's public health
response to COVID-19. The ventilators were manufactured by the
Group's Celitron subsidiary in Hungary, which has been producing
equipment for medical environments globally for over 10 years.
As a result of the pandemic and the restrictions on travel, the
Eco-Med unit focused its efforts on the delivery of the ventilator
project in 2020. As lockdown measures are lifted, the Group is
resuming work on the installation of its pathogenic waste treatment
solutions based on its Integrated Steriliser and Shredder ("ISS")
technology. The Group expects to complete the delivery of its
solution to its food manufacturing customers, under its existing
contracts, in the Philippines and Taiwan this year. The Group also
expects to complete the delivery of a contract, awarded in 2020,
from Ceva Animal Health, a leading developer of animal health
products, to expand and enhance the ISS-based solution installed at
its facility in Hungary.
Towards the end of the year, the Group completed the delivery of
the first of its ne w ISS-based instrument that recovers
high-quality protein and oils from insects such as worms and flies.
The customer, which is headquartered in Belgium, recycles insect
nutrients into valuable products for the feedstock industry. It
intends to use the Group's solution to produce insect protein
powder that can be a substitute for fishmeal and oils used in
aquaculture feed. This marks the entry into a new market segment
for the Group and is an area that the Group believes offers great
potential as a sustainable source of protein.
Distribution
Revenue in the Distribution unit increased by 26% in 2020 over
the prior year and accounted for approximately 51% of the
Bio-Medical division's revenue (2019: 81%).
The increased revenue was due to growth in its existing
distribution activities as well as through the provision of
third-party reagents for COVD-19 tests, both PCR and serologic, to
public health authorities in Eastern Europe. In the second half of
the year, the Group's lab in Romania also commenced performing
COVID-19 tests for private sector customers. In addition, the Group
established infrastructure to expand its distribution activities
into Hungary, which is expected to commence this year.
Networking and Cyber Division
FY 2020 FY 2019
Revenue $54.9m $59.0m
-------- --------
Gross margin 25.5% 30.5%
-------- --------
Adj.* operating profit/(loss) $(4.5)m $5.2m
-------- --------
* Adjusted to exclude the amortisation of intangible assets (s
ee note 3 to the financial statements)
Revenue in the Networking and Cyber division was slightly lower
in 2020 than the previous year due to COVID-19 lockdown measures,
which continued throughout the year, causing restrictions on
travelling to the premises of customers and suppliers. As a result
of a shift in sales mix towards lower margin products mainly in
ICT, combined with the continued investment in new solutions,
notably NFVTime, the Networking and Cyber division recorded an
operating loss. The adjusted operating profit for the prior year
also included an exceptional gain of $3.4m from the sale of the
Group's rights in IBC Holdings, a joint venture to construct a
fibre optic broadband network in Israel that was acquired by
Cellcom Israel Ltd.
NFV solutions
The Group made significant progress with its NFVTime operating
system, developed by its Telco Systems subsidiary, 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 their enterprise
customers as well as reducing the costs, time and carbon footprint
involved with physical networks.
The Group achieved a key milestone in securing its first tier 1
customer, PCCW Global, for NFVTime with a three-year licensing
agreement. PCCW Global selected NFVTime to enrich its managed
SD-WAN service offering, which it provides to its multinational
enterprise customers as well as to operators that it services on a
wholesale basis. The Group will receive a licence fee for a minimum
of three years for each deployment of NFVTime. The Group expects
PCCW Global will be making NFVTime available to its customers
during Q1 2021.
The Group conducted several successful proofs-of-concept of
NFVTime with tier 1 operators in Europe during the year. In
particular, 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 comparable platforms. The Group continues
to work closely with Arm and Vodafone for the next step in the
process, which the Group expects will be field trials.
The Group is receiving significant interest in NFVTime from
prospective customers and the pipeline of potential orders
continues to expand. NFVTime is currently undergoing evaluation
with several leading network operators and multi-service providers
worldwide. A number of these evaluations are at an advanced stage
and the Group is confident that they will translate to orders in
due course.
Also during the year, the Group received an order for NFVTime
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.
Post period, the Group completed the enhancement of NFVTime 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 is
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.
ICT and Carrier Ethernet solutions and services
As noted, some of the Group's activities in the Networking unit
were impacted by the COVID-19 lockdown measures and, consequently,
there was a reduction in revenue generated from the installation
and servicing of equipment. However, the Group expects sales of its
carrier Ethernet solutions and services to return to growth as
restrictions on travel are lifted.
The Group continued its development efforts during the year.
This includes introducing new solutions to its T-Marc R3305 series
of multiservice business routers to enable customers to increase
home broadband connectivity and quality. This is designed to meet
the increased demand for products to support productivity for
people working and learning at home. The T-Marc R3305 platform is
undergoing proofs-of-concept worldwide and is in field trials with
a tier 2 operator in Europe.
The Group also received increasing interest in its ultra-high
capacity service aggregation and cloud gateway platform, the
T-Metro 8104, which it launched in Q4 2019. During the year, the
Group completed the deployment of hundreds of units for
multi-service providers across North America that want to increase
their network capacity to keep up with the ever-growing demand from
their customers for more bandwidth.
Cyber
Towards the start of the year, the Group was awarded a $4m
contract from its long-standing government defence department
customer. This further order, the majority of which was delivered
during 2020, was 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.
Overall, revenue in the Group's cyber security business was
lower in 2020 than in 2019 as a result of COVID-19 restrictions as
well as the diversion of government budgets in response to the
pandemic. However, the Group expects increased activity in this
area in 2021 as public authorities begin to return to postponed
projects.
NGSoft option agreement
Post period, as announced on 12 January 2021, BATM entered into
an option agreement to sell its NG Soft Ltd ("NGSoft") subsidiary
for a total cash consideration of NIS 105.1m (c. $33m), of which
the Group would receive NIS 93.7m (c. $29m) , 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 do not include any of the
Group's NFV or cyber solutions. Accordingly, the Board believes
that it would be in the best interests of BATM and of all
shareholders to generate value from the sale of NGSoft and invest
the proceeds to accelerate the Group's core activities.
The Group's option is exercisable up to and including 1 March
2021, which, in accordance with the terms of the option agreement,
can be extended by the Group to 17 May 2021 under certain
predefined circumstances. The Group will update the market in due
course.
Financial Review
H1 2020 H2 2020 FY 2020 FY 2019
--------
Revenue $77.4m $106.2m $183.6m $123.4m
-------- -------- -------- --------
Gross margin 29.7% 35.6% 33.1% 26.9%
-------- -------- -------- --------
Adj.* operating
profit $2.8m $12.2m $15.0m $5.3m
-------- -------- -------- --------
* Adjusted to exclude the amortisation of intangible assets (s
ee note 3 to the financial statements)
Total Group revenue for 2020 increased by 49% to $183.6m (2019:
$123.4m). This reflects significant growth in the Bio-Medical
division, which accounted for 70% of total revenue (2019: 52%) and
30% was contributed by the Networking and Cyber division (2019:
48%). The second half of the year was particularly strong, with
revenue in H2 2020 being 37% higher than H1 2020.
The gross margin for the year improved to 33.1% (2019: 26.9%).
This is due to a substantial increase in the gross margin for the
Bio-medical division to 36.3% (2019: 23.6%), and the significantly
increased contribution to total revenue from the division, as a
result of the high-margin nature of the new molecular biology
diagnostic kits and COVID-19 products. This more than offset the
lower gross margin in the Networking and Cyber division.
Sales and marketing expenses were $20.2m (2019: $16.3m),
representing 11% of revenue compared with 13% in 2019. The increase
in sales and marketing expenses is attributable to the Group's
COVID-19 related products in the Diagnostics and Eco-Med units of
the Group's Bio-Medical division. There was also an increase in
sales activity in the Distribution unit, which reflects its ongoing
business development (and only partially related to COVID-19
solutions).
General and administrative expenses were $15.9m (2019: $11.8m),
representing 9% of revenue compared with 10% in 2019, reflecting
the greater size and activity of the Group.
R&D expenses were higher in 2020 than the previous year at
$10.3m (2019: $6.8m), which reflects investments in the Group's
molecular biology and COVID-19 products as well as investment in
its NFV technology.
Adjusted operating profit increased by 183% to $15.0 m compared
with $5.3 m in 2019 . This growth reflects the significantly higher
revenue and gross profit. It also includes a capital gain of $0.6m
from the part realisation of the Group's ownership of Ador. The
adjusted operating profit for 2019 includes (under other operating
income) a capital gain of $3.2m from the part realisation of the
Group's ownership of Ador and $3. 4m from the sale of the Group's
rights in IBC Holdings.
EBITDA grew by 100% to $19.7m (2019: $9.8m), reflecting the
increased operating profit.
Net finance expense was $0.9m (2019: $0.3m income), which is
primarily due to the adverse effect of foreign exchange rate
fluctuations (primarily in the Euro, Moldovan Leu and Hungarian
Forint), compared with a positive impact in 2019. Currency
fluctuations had an immaterial impact on revenue and operating
profit.
Net profit after tax attributable to equity holders of the
parent increased to $9.8m (2019: $3.9m) resulting in a significant
increase in basic earnings per share to 2.22c (2019: 0.93c).
As at 31 December 2020, inventory was $33.9m (31 December 2019:
$22.7m). The increase is primarily due to the expansion of
production of diagnostic products to satisfy orders to be delivered
in 2021. Trade and other receivables decreased slightly to $41.5m
(31 December 2019: $42.8m).
Intangible assets and goodwill at 31 December 2020 were $ 23.7 m
(31 December 2019: $23.7m).
Property, plant and equipment and investment property was $18.0m
(31 December 2019: $16.1m). The increase is mostly due to
investments in the Diagnostics unit to expand production
capacity.
The balance of trade and other payables was $53.6m (31 December
2019: $44.5m). The increase is primarily due to provisions for
suppliers for the Group's ventilator project that are due to be
paid in Q1 2021 as well as for supplies to support the ongoing
demand for the Group's diagnostic solutions.
Cash generated from operations increased to $20.1m (2019: $8.4m)
and cash from operating activities, which includes tax and interest
payments, was $18.5m for 2020 compared with $7.2m for the prior
year. The growth is mainly due to the increased profit for the year
and an improvement in working capital.
The Group's balance sheet was strengthened with effective
liquidity of $53.4m at 31 December 2020 compared with $ 44.3m at 30
June 2020 and $44.8m at 31 December 2019. This is comprised of cash
and cash equivalents of $50.6m (30 June 2020: $40.0m; 31 December
2019: $40.6m) and financial assets of $2.8m (30 June 2020: $4.3m;
31 December 2019: $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 profit
and improvement in working capital.
Dividend
The Board of BATM has resolved to recommend the distribution of
a dividend for full year 2020 following the publication of the
Group's audited annual report and accounts, in accordance with
Israeli law. The Group will provide further details in due
course.
Outlook
The Group entered 2021 receiving increasing demand for the
solutions in its key target areas in both of its divisions.
The momentum in the Bio-Medical division has been sustained as
it continues to receive strong demand for its molecular diagnostic
test kits and instruments. In the Diagnostics unit, the order book
is significantly higher than at the equivalent period last year
and, in the current year, management expects the Bio-Medical
Division to remain the largest contributor to Group revenues.
In the Networking and Cyber division, the Group expects sales of
NFVTime to make a material contribution to the full year revenue of
this division resulting from the scheduled roll-out of the solution
by PCCW Global and the anticipated adoption by other operators. In
addition, due to the advanced technology of its carrier Ethernet
and cyber security solutions, the Group is confident that sales in
these product areas will return to growth once lockdown
restrictions are lifted and normal business practices resume.
As noted above, in January 2021, BATM entered into an option
agreement to sell its NGSoft Ltd subsidiary and the Group intends
to make an announcement on this shortly. If the Group exercises its
option, the Board expects to use the proceeds from the disposal to
strengthen its innovation engine organically and through
acquisition to enable the Group to accelerate its core activities -
in particular, in NFV and molecular diagnostics. As previously
noted, the Board believes these areas offer transformational growth
opportunities in the short- to medium-term.
For 2021, the Group expects revenue growth from continuing
operations, excluding the impact of the large ventilator contract
received in 2020. Also, the Board expects to achieve further
improvement in its gross margin for 2021 resulting from the
anticipated increased contribution to Group revenue from its
molecular diagnostics and NFV solutions. This reflects the
strengthened foundations of the Group, which the Board of BATM
believes positions the Group for sustainable growth in
profitability.
As a result, the Board of BATM looks to the future with great
confidence and will update the market on its progress.
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Year ended 31 December
2020 2019
US$ in thousands
Revenues 183,566 123,396
Cost of revenues 122,856 90,251
Gross profit 60,710 33,145
--------- ---------
Operating expenses
Sales and marketing expenses 20,197 16,307
General and administrative expenses 15,884 11,753
Research and development expenses 10,258 6,772
Other operating expenses (income) 138 (6,169)
Total operating expenses 46,477 28,663
--------- ---------
Operating profit 14,233 4,482
Finance income 820 1,612
Finance expenses (1,754) (1,316)
Profit before tax 13,299 4,778
Income tax expenses (1,043) (475)
Profit for the year before share of loss of a
joint venture
and associated companies 12,256 4,303
Share of loss of a joint venture and associated
companies (774) (1,033)
Profit for the year 11,482 3,270
Attributable to:
Owners of the Company 9,793 3,917
Non-controlling interests 1,689 (647)
Profit for the year 11,482 3,270
Profit per share (in cents):
Basic 2.22 0.93
Diluted 2.21 0.92
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
2020 2019
US$ in thousands
Profit for the year 11,482 3,270
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating foreign operations 3,148 398
14,630 3,668
Items that will not be reclassified subsequently
to profit or loss:
Losses on property revaluation (508) -
Re-measurement of defined benefit obligation 16 (44)
(492) (44)
Total comprehensive income for the year 14,138 3,624
Attributable to:
Owners of the Company 13,560 3,664
Non-controlling interests 578 (40)
14,138 3,624
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
2020 2019
US$ in thousands
Current assets
Cash and cash equivalents 50,575 40,584
Trade and other receivables 41,467 42,784
Financial assets 2,803 4,254
Inventories 33,893 22,672
128,738 110,294
Non-current assets
Property, plant and equipment 16,109 14,203
Investment property 1,878 1,899
Right of-use assets 9,607 9,945
Goodwill 16,838 16,804
Other intangible assets 6,879 6,941
Investment in joint venture and associate 13,271 9,497
Investments carried at fair value 1,027 1,013
Deferred tax assets 5,759 3,234
71,368 63,536
Total assets 200,106 173,830
Current liabilities
Short-term bank credit 5,365 5,915
Trade and other payables 53,618 44,459
Current maturities of lease liabilities 2,244 2,070
Tax liabilities 3,046 313
64,273 52,757
Non-current liabilities
Long-term bank credit 675 762
Long-term liabilities 6,416 6,215
Long-term lease liabilities 8,440 8,339
Deferred tax liabilities 711 626
Retirement benefit obligation 828 715
17,070 16,657
Total liabilities 81,343 69,414
Equity
Share capital 1,320 1,320
Share premium account 425,686 425,477
Reserves (14,323) (18,582)
Accumulated deficit (290,090) (299,391)
Equity attributable to the:
Owners of the Company 122,593 108,824
Non-controlling interests (3,830) (4,408)
Total equity 118,763 104,416
Total equity and liabilities 200,106 173,830
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year ended 31 December 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
Balance as
at 1 January
2020 1,320 425,477 (18,070) (512) (299,391) 108,824 (4,408) 104,416
Profit for
the year - - - - 9,793 9,793 1,689 11,482
Re-measurement
of defined
benefit
obligation - - - - 16 16 - 16
Losses on
property
revaluation - - - - (508) (508) - (508)
Exchange
differences
on translating
foreign
operations - - 4,259 - - 4,259 (1,111) 3,148
Total
comprehensive
income for
the year - - 4,259 - 9,301 13,560 578 14,138
Exercise of
share based
options by
employees - 51 - - - 51 - 51
Recognition
of share-based
payments - 158 - - - 158 - 158
Balance as
at 31 December
2020 1,320 425,686 (13,811) (512) (290,090) 122,593 (3,830) 118,763
Year ended 31 December 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
Balance as
at 1 January
2019 1,217 407,796 (17,861) (512) (303,264) 87,376 (4,368) 83,008
Profit (loss)
for the year - - - - 3,917 3,917 (647) 3,270
Re-measurement
of defined
benefit
obligation - - - - (44) (44) - (44)
Exchange
differences
on translating
foreign
operations - - (209) - - (209) 607 398
Total
comprehensive
income (loss)
for the year - - (209) - 3,873 3,664 (40) 3,624
Issue of share
capital 93 16,981 - - - 17,074 - 17,074
Exercise of
share based
options by
employees 10 595 - - - 605 - 605
Recognition
of share-based
payments - 105 - - - 105 - 105
Balance as
at 31 December
2019 1,320 425,477 (18,070) (512) (299,391) 108,824 (4,408) 104,416
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOW
Year ended 31 December
2020 2019
US$ in thousands
Net cash from operating activities (Appendix
A) 18,459 7,166
Investing activities
Interest received 101 205
Proceeds on disposal of property, plant and
equipment 39 113
Tax paid on disposal of property, plant and
equipment - (19)
Proceeds on disposal of deposits 3,122 3,234
Proceeds on disposal of financial assets
carried at fair value 761 -
through profit and loss
Proceeds on sale of investment - 3,430
Purchases of property, plant and equipment (3,386) (686)
Increase of other intangible assets (328) (1,523)
Purchases of financial assets carried at
fair value through profit and loss (2,009) (760)
Purchases of deposits (314) (3,112)
Investment in joint venture (3,000) (1,952)
Investment in associated companies (467) (575)
Acquisition of subsidiaries (Appendix B) - (937)
Net cash used in investing activities (5,481) (2,582)
Financing activities
Lease payment (2,428) (2,361)
Bank loan repayment (13,852) (9,922)
Bank loan received 12,980 10,086
Proceed on issue of share capital, net - 17,074
Proceed on exercise of shares ___ 51 605
Net cash from (used in) financing activities (3,249) 15,482
Net increase in cash and cash equivalents 9,729 20,066
Cash and cash equivalents at the beginning
of the year 40,584 20,811
Effects of exchange rate changes on the balance
of cash held in foreign currencies 262 (293)
Cash and cash equivalents at the end of the
year 50,575 40,584
BATM ADVANCED COMMUNICATIONS LTD.
APPICES TO CONSOLIDATED STATEMENT OF CASH FLOW
APPIX A
RECONCILIATION OF OPERATING PROFIT FOR THE YEAR TO NET CASH FROM
OPERATING ACTIVITIES
Year ended 31 December
2020 2019
US$ in thousands
Operating profit from operations
Adjustments for: 14,233 4,482
Amortisation of intangible assets 718 794
Depreciation of property, plant and equipment and
investment property 4,757 4,561
Capital loss of property, plant and equipment 31 31
Gain on sale of investment - (3,380)
Capital gain on reduce of holdings in associated
company (602) (3,161)
Stock options granted to employees 158 105
Increase in retirement benefit obligation 96 121
Increase in provisions 2,114 298
Operating cash flow before movements in working
capital 21,505 3,851
Decrease (increase) in inventory (11,198) 1,387
Decrease (increase) in receivables 916 (7,896)
Increase in payables 7,111 11,361
Effects of exchange rate changes on the balance
sheet 1,7 29 (264)
Cash from operations 20,063 8,439
Income taxes paid (637) (410)
Income taxes received 3 10
Interest paid (970) (873)
Net cash from operating activities 18,459 7,166
APPENDIX B
ACQUISITION OF SUBSIDIARY - Remedium
Year ended 31 December
2019
US$ in thousands
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)
Gain from bargain purchase (248)
Total consideration 304
Satisfied by:
Cash 304
Consideration recorded as a 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 of 2019 also includes the final payment of $0.6m for
Green Lab Hungary Engineering Ltd, which was acquired in 2016.
BATM ADVANCED COMMUNICATIONS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General
The final results for the year ended 31 December 2020 and the
comparative 2019 information will be presented in the full Annual
Report in accordance with International Financial Reporting
Standards ("IFRS").
Note 2 - Profit per share
Profit per share is based on the weighted average number of
shares in issue for the period of 440,291,783 (2019: 421,141,507).
The number used for the calculation of the diluted profit per share
for the period (which includes the effect of dilutive stock option
plans) is 444,055,231 shares (2019: 425,096,611).
Note 3 - Other alternative measures
Year ended 31 December
2020 2019
US$ in thousands
Operating profit 14,233 4,482
Amortisation of Intangible assets 718 794
Adjusted operating profit 14,951 5,276
Depreciation 2,341 2,101
Depreciation of right-of-use assets 2,416 2,460
EBITDA 19,708 9,837
Note 4 - Segments
Business Segment
Year ended 31 December 2020
Networking Bio-Medical Unallocated Total
and Cyber $'000 $'000 $'000
$'000
Revenues 54,884 128,682 - 183,566
Adjusted operating profit
(loss) (*) (4,479) 19,430 - 14,951
Reconciliation - other operating
expenses (*) (718)
Operating profit 14,233
Net finance expenses (934)
Profit before tax 13,299
Year ended 31 December 2019
Networking Bio-Medical Unallocated Total
and Cyber $'000 $'000 $'000
$'000
Revenues 58,960 64,436 - 123,396
Adjusted operating profit
(*) 5,144 132 - 5,276
Reconciliation - other operating
expenses (*) (794)
Operating profit 4,482
Net finance income 296
Profit before tax 4,778
(*) See note 3
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