REG - BATM Advanced Comm - Interim Results
19/08/2024 07:00
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RNS Number : 8405A BATM Advanced Communications Ld 19 August 2024
LEI: 213800FLQUB9J289RU66
19 August
2024
BATM Advanced Communications Limited
("BATM" or the "Group")
Interim Results
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 2024.
Financial Summary
$m H1 2024 H1 2023
Revenue 60.0 60.2
Gross profit 18.7 21.0
Gross margin 31.1% 34.9%
Operating profit 1.5 0.6
EBITDA 4.3 3.1
Adj. operating profit* 2.3 2.2
Adj. EBITDA* 4.7 4.4
· Cash and short-term investments at 30 June 2024 were $32.6m (31
December 2023: $40.8m)
*Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments. For further detail, see the Financial Review
Operational Summary
· Implemented operational improvements to align the business with its new
strategic vision, adopted in the prior year, focusing on core higher margin
activities and to strengthen the sales function
· On track to report results for FY 2024 in line with market expectations
Cyber
Substantial growth in revenue and EBITDA as the Group delivered on its large
backlog of orders, making an increasingly material contribution to Group
performance:
· Landmark strategic partnership agreement signed, post period, with a
significant global technology, engineering and defence group to deliver BATM's
advanced cybersecurity solution to commercial markets
· Received over $2.3m in new orders, including for the development of
advanced encryption technology integrated with quantum key distribution
Networking
· Edgility edge computing platform:
o Signed a three-year agreement to provide Edgility platform and accompanying
hardware to Totalplay, a tier one telecommunications company in Mexico
o Received a further contract from Cemex, a leading global building materials
company, to extend the original five-year licence agreement by two years
including additional professional services
o Post period, Edgility became an Amazon Web Services Qualified Software
Partner solution for AWS IoT Greengrass, an open-source edge runtime and cloud
service
o Continued to undergo successful proof-of-concepts that the Group expects to
convert to contracts in the second half of the year
· Carrier ethernet solutions:
o Continued to be impacted by the global slowdown in the telecommunications
industry
o Signed a contract with Mountain Telephone, a leading telecommunications
provider in Kentucky, USA, to provide BATM's multi-100G solution to upgrade
their network
o Received initial orders for pilot testing of the new 10GE platform
o Development work continued on new products that will expand the Group's
portfolio of mobile backhaul solutions, which it expects to release by the end
of 2024
Diagnostics
Growth driven by the expansion of the customer base for distributed
diagnostics products:
· Commenced generating revenue from new MDXlab molecular diagnostics
instrument
· Selected by the National Research Council of Italy to participate in an
EU-funded programme for the development of an advanced tuberculosis
diagnostics solution
· ADOR Diagnostics successfully completed pre-clinical trials of the
NATlab and is preparing for the next phase of validation at a leading hospital
in Italy
Commenting on the results, Moti Nagar, Chief Executive Officer of BATM, said:
"The first half of 2024 was characterised by the continued implementation of
operational changes in line with our renewed strategy whilst delivering
increased profits. We have made significant progress in aligning our business
with the new strategic vision that we set out last year, which the Board feel
will, and has, added substantial value to our core Networking, Cyber and
Diagnostics divisions. The Board continues to look at ways of creating and
ultimately delivering value to shareholders which, in time, should be
reflected in the valuation ascribed to the Group.
"We are continuing to experience excellent momentum in our Cyber and
Diagnostics divisions, and we are eagerly looking forward to launching our
cyber solution into the commercial markets alongside our major new partner,
which represents a substantial opportunity. In the Networking division, we
expect a much stronger performance in the second half of the year compared
with H1. Consequently, we continue to look to the future with confidence."
Enquiries
BATM Advanced Communications
Moti Nagar, Chief Executive Officer +972 9866 2525
Ran Noy, Chief Financial Officer
Shore Capital
Mark Percy, Anita Ghanekar, James Thomas (Corporate Advisory) +44 20 7408 4050
Gracechurch Group
Harry Chathli, Claire Norbury +44 20 4582 3500
The information communicated in this announcement is inside information for
the purposes of Article 7 of Regulation 596/2014.
Investor & Analyst Presentation
Moti Nagar, CEO, and Ran Noy, CFO, will be holding a webinar for analysts and
investors on 20 August 2024 at 10.30am BST. To register to participate or
submit a question in advance, please use the following link:
https://forms.gle/bD5hQeFo4wGy1F6c9
(https://url.avanan.click/v2/___https:/forms.gle/bD5hQeFo4wGy1F6c9___.YXAxZTpzaG9yZWNhcDphOm86NjFhNWNkNTU2M2MxYjhlZGYyN2NkMDc3MWY3NTJkZDE6NjowZWMwOjhhNGRhZTNkMzVkYWFkOWZjNDJkNWEzMmYwZjAzNDJjNTBjYzBmYzY0YjQwZjBlYjU3ZTQzYjEyMjQxODI5NjA6cDpGOk4)
Forward-looking statements
This document contains forward-looking statements. Those statements reflect
the current opinions, evaluations and estimations of the Group's management,
and are based on the current data regarding the Group's business as is
detailed in this document and in the Group's periodical, interim and immediate
reports. The Group does not undertake any obligation or make any
representation that actual results and events will be in line with those
statements, and stresses that they may differ materially from those
statements, due to changes in the Group's business, market, competition,
demand for the Group's products or services, general economic factors or other
factors that can influence the Group's business and results, due to the risk
factors that are detailed in the Group's Annual Report, and due to information
and factors that are currently unknown to the Group's management and that, if
known, would affect the management's opinions, evaluations or estimations. The
Group will report the actual results and events according to its legal,
accounting and regulatory obligations, and does not undertake any other
obligation to report them or their deviations from the forward-looking
statements, or to update any of the forward-looking statements in this
document or to report that it is not valid anymore.
Operational Review
BATM delivered a solid performance in the first half of 2024, against a
macroeconomic backdrop that continued to be challenging. The Cyber division
recorded significant growth as it continued to deliver its substantial backlog
and achieved a major milestone with the signing, post period, of a strategic
partnership agreement to introduce its cybersecurity products to commercial
markets. The Diagnostics division increased revenue through the expansion of
its customer base, while commencing sales of new instruments and progressing
the development of other advanced solutions. While the Networking division
continued to be impacted by the global slowdown in the telecommunications
industry, the Group is encouraged by the strong interest it has been receiving
in Edgility and expects the division's performance in the second half of the
year to be much stronger than in H1 2024.
The Group continued implementing operational changes to align the business
with the new strategic vision that was adopted in the prior year. This
includes establishing further Group-wide corporate functions, with a Chief
Operating Officer being appointed during the period, as well as progressing
with the process to enhance the sales teams within its core activities. The
Group also continued exploring potential opportunities to add capability to
its core activities through M&A, and to divest other businesses where the
Group can secure attractive terms.
Cyber Division
$m H1 2024 H1 2023
Revenue 8.3 1.7
Gross margin* 40.4% 75.6%
EBITDA* 2.6 0.0
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
The Cyber division provides integrated hardware and software solutions for
network encryption, including hardware security modules (HSMs). It is a
strategic provider to large government agency clients, primarily involving the
security of mission critical infrastructure.
The Group achieved a major milestone by entering a strategic partnership, with
the agreement being signed post period, with a significant global technology,
engineering and defence group (the "Partner") to deliver the Group's advanced
cybersecurity solution to a variety of commercial markets and for critical
national infrastructure. The Partner, which generated revenue of
over $10bn in 2023 and serves customers in more than 100 countries, will
distribute a customised version of BATM's advanced encryption
platform globally, with exclusivity in certain territories. The introduction
of BATM's cybersecurity solution to non-governmental customers has long been
an important objective and represents a significant expansion of the total
addressable market, with this collaboration expected to significantly boost
the Group's commercial market entry by providing worldwide distribution
networks and a partner with the resources to engage in considerable sales
& marketing activities.
During the period, the division materially increased its revenue as it
continued to deliver its backlog of orders, resulting in a substantial
increase in revenue for the first half of the year. This impressive growth,
with revenue more than quadrupling compared with the comparative period, was
based on the Group fulfilling its long-term contracts as well as winning new
orders during the period. The change in gross margin reflects revenue mix with
the delivery in H1 2024 of significant contracts for hardware and software
products. This was more than offset by the increased revenue resulting in
substantial growth in adjusted EBITDA.
During the first half of the year, the Group received new cybersecurity
orders totalling over $2.3m from its long-standing government defence
department customer. This includes for developing a next-generation
encryption solution that is quantum key distribution ready to address the
technological demands of the next computing era.
Networking Division
$m H1 2024 H1 2023
Revenue 6.0 11.6
Gross margin* 43.4% 47.3%
EBITDA* (0.9) 1.1
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
The Networking division provides high-performance connectivity solutions for
the network edge, including:
· the innovative Edgility open edge software platform that enables the
deployment and life-cycle management of apps, network functions and compute
devices at the edge of the network; and
· a broad portfolio of carrier grade switching and routing hardware and
software products (carrier ethernet).
Revenue in the Networking division continued to be impacted by the global
slowdown in the telecommunications industry, with economic
uncertainty resulting in organisations pausing or delaying purchasing
decisions. In addition, the first half of the prior year was boosted by
satisfying pent up demand from during the pandemic as well as the upfront
delivery of hardware associated with Edgility contracts. The Group is pleased
to note that it is experiencing an increase in interest in Edgility, with a
number of proof of concepts and trials expected to come to a successful
conclusion in the second half of the year. The Group anticipates receiving new
orders in H2 for its carrier ethernet products as its customers and
distributors commence restocking as the inventory built up during the pandemic
begins to dissipate. As a result, the Group expects to deliver significant
growth in the Networking division in the second half of the year.
The reduction in gross margin during the period reflects the lower level of
revenue against a fixed cost base. Accordingly, the Group expects an
improvement in gross margin in the second half of the year with the
anticipated increase in revenue.
The EBITDA loss reflects the investment the Group is making in Edgility as an
innovative product in a developing market that offers substantial growth
potential. Excluding this activity, the Networking division remains
profitable.
Edgility edge computing platform
During the period, BATM was awarded an additional contract for Edgility from
Cemex, S.A.B. de C.V. (NYSE: CX) ("Cemex"), a leading global building
materials company, following the successful rollout of the solution to Cemex
sites across Europe and Central and South America. This latest contract
extends the original five-year licence agreement entered into in 2021 by a
further two years and includes additional professional services to support the
ongoing deployment. This further contract demonstrates the value of Edgility
to Cemex and also highlights the recurring nature of Edgility revenue.
The Group signed a new three-year agreement to provide Edgility to Totalplay,
a tier one telecommunications company in Mexico. Edgility was selected,
following a test phase, to replace Totalplay's incumbent network
virtualisation solution, primarily due to Edgility's open architecture. Based
on the size of Totalplay's current operations, and as it continues to grow its
network services, there is potential for a significant expansion and extension
in the number and duration of Edgility licences that the Group supplies.
An important new route-to-market was established, post period, with Edgility
becoming an Amazon Web Services ("AWS") Qualified Software Partner solution
for AWS IoT Greengrass, an open-source edge runtime and cloud service that
helps customers build, deploy and manage intelligent device software.
Importantly, Edgility is the only AWS solution that offers edge deployment and
management at scale and, as a result, the Group is well placed to expand its
business into the vast AWS IoT Greengrass customer base.
Edgility continued to undergo evaluation and successful proof-of-concepts with
leading network operators, multi-service providers, partners and systems
integrators worldwide.
Carrier ethernet solutions
The Group is pleased to note that it won a new contract from Mountain
Telephone, a leading telecommunications provider serving communities in
Kentucky for nearly 75 years, to deploy BATM's multi-100G solution to upgrade
its network infrastructure. Initial orders were received for pilot testing of
the Group's upgraded, cost effective 10GE demarcation device that was launched
towards the end of the prior year, and the Group expects to receive
significant orders in the second half of the year. The Group also continued
the development of new products to expand its offering for mobile backhaul,
which it intends to launch by the end of the year.
Diagnostics Division
$m H1 2024 H1 2023
Revenue 17.0 15.8
Gross margin* 27.8% 32.8%
EBITDA* 1.2 1.2
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
The Diagnostics division is mainly engaged in the sale and distribution of in
vitro diagnostics reagents and instruments, including the development and
production of proprietary products. Its proprietary product development is
focused on molecular diagnostics by test type and infectious disease by
application area.
Revenue in the Diagnostics division increased by 8%, with growth driven by the
expansion of the Group's customer base for its distributed diagnostic
products. The reduction in gross margin was due to the contribution to revenue
from instruments that carry lower margin, but from which the Group expects to
benefit going forwards through the sale of associated reagents that are higher
margin. This was offset by the higher revenue and a reduction in operating
expenses resulting in adj. EBITDA remaining in line with the first half of the
prior year.
During the period, the Group commenced receiving orders for, and generating
revenue from, its MDXlab molecular diagnostics instrument based on the
real-time PCR method, which it launched at the end of 2023. Most of today's
mid-size laboratories will either have two instruments to undertake the
different steps within the PCR process or they will have a large integrated
instrument, which is not suitable for small- to medium-sized laboratories or
point-of-care. MDXlab is designed to overcome these limitations by offering an
integrated, compact, cost-effective solution.
Work continued towards the commercial launch of EXTRAlab NGS Prep, which it
expects to take place by the end of the current year. EXTRAlab NGS Prep is a
new molecular diagnostics instrument that expands the capabilities of the
Group's existing EXTRAlab with regards to NGS library preparation. NGS is an
advanced technology used for DNA and RNA sequencing and variant/mutation
detection, which is used for personalised precision medicine, that is capable
of sequencing a vast number of genes in a short period of time. Library
preparation, which is the first phase of the NGS process, is often a manual
procedure. The Group's instrument automates this process, with the EXTRAlab
NGS Prep being able to make relevant self-adjustments.
The Group was selected by the National Research Council of Italy to
participate, alongside one of the Council's research institutes, in an
EU-funded programme for the development of an advanced tuberculosis
diagnostics solution. The Group received a grant of €0.5m towards the
initial 18 months of the programme with the potential for additional funding
to be awarded thereafter for the next stage. The Group's participation in the
scheme is demonstrative of the steps it is taking to drive long-term
sustainable growth through investing in constant innovation to maintain the
Diagnostics division's technological edge.
ADOR Diagnostics ("ADOR"), an associate company of the Group that is
developing the disruptive NATlab molecular biology platform, successfully
completed pre-clinical trials of the NATlab at a hospital. This has generated
valuable insights, which ADOR used to enhance its biological process and
improve the NATlab product. ADOR is now preparing to continue the clinical
validation of NATlab at the Lazzaro Spallanzani National Institute for
Infectious Diseases, an infectious disease hospital in Rome, Italy.
Secondary Activities
$m H1 2024 H1 2023
Revenue 28.8 31.0
Gross margin* 28.5% 30.0%
EBITDA* 1.9 2.1
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
The Group's secondary (non-core) activities include its businesses focused on:
· the distribution of pharmaceutical and environmental monitoring
products, and the administering of diagnostic tests; and
· the production of eco-friendly pathogenic waste treatment solutions
for medical, agricultural and pharmaceutical applications.
There was significant growth in the Group's distribution and test
administration activities. However, this was offset by lower sales of the
Group's eco-med solutions, which had a corresponding impact on gross margin
and EBITDA for Secondary Activities. The Group continues to explore
opportunities to divest its non-core businesses, where the Group can secure
attractive terms. This will enable the Group to allocate its available
resources to its core businesses, and accelerate their growth.
Financial Review
Adjusted* Reported
$m H1 2024 H1 2023 H1 2024 H1 2023
Revenue 60.0 60.2 60.0 60.2
Gross margin 31.4% 35.3% 31.1% 34.9%
Operating profit 2.3 2.2 1.5 0.6
EBITDA 4.7 4.4 4.3 3.1
* Adjusted to exclude amortisation of intangible assets and non-cash
share-based payments
Total Group revenue for the first half of 2024 was $60.0m (H1 2023: $60.2m).
This reflects growth in the Cyber and Diagnostics divisions being offset by
reductions in the Networking division and Secondary Activities.
Gross margin was 31.1% (H1 2023: 34.9%), as outlined above.
Sales and marketing expenses were $9.5m (H1 2023: $9.5m); general and
administrative expenses were $7.0m (H1 2023: $7.7m); and R&D expenses
were $2.6m (H1 2023: $3.3m). This includes a reduction in share-based payments
(a non-cash expense) to $0.4m (H1 2023: $1.3m), which is largely recognised in
the lower general and administrative expenses. The Group recognised other
operating income of $2.0m (H1 2023: $0.1m) primarily due to a revaluation of a
liability. As a result, total operating expenses were reduced to $17.1m (H1
2023: $20.4m).
As a result of the above, operating profit increased significantly to $1.5m
(H1 2023: $0.6m).
EBITDA increased to $4.3m for H1 2024 compared with $3.1m for the first half
of the prior year.
Net finance expenses were $0.7m compared with an income of $0.1m for H1
2023, which primarily reflects the impact of foreign exchange rates.
Profit before tax increased slightly to $0.8m (H1 2023: $0.7m).
The Group recorded a tax expense of $0.6m (H1 2023: $0.2m).
Profit for the period was $0.06m (H1 2023: $0.06m) and earnings per share were
0.00¢ (H1 2023: 0.02¢).
Net cash used in operating activities was $5.3m compared with an inflow of
$0.5m in H1 2023. This primarily reflects an increase in receivables based on
the timing of revenue collection and the effects of exchange rate changes on
the balance sheet.
At 30 June 2024, the Group had cash and short-term investments of $32.6m (31
December 2023: $40.8m; 30 June 2023: $41.9m).
Outlook
BATM remains on track to deliver strong growth for FY 2024, in line with
market expectations. In the Networking division, the Group expects performance
in the second half to be much stronger than the first, with new orders
expected for its carrier ethernet and Edgility solutions. The Cyber division
continues to perform well as it delivers its large backlog as well as new
orders. In the Diagnostics division, further growth is being driven by the
continued expansion of the customer base.
Looking further ahead, the Group is eagerly anticipating the launch of its
cyber solution into commercial markets, which represents a substantial
increase in the addressable market. The Board is also continuing to actively
pursue M&A and disposal opportunities that will enable the Group to
accelerate execution on its growth strategy in its core divisions. As a
result, the Board continues to look to the future with confidence.
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Six months ended
30 June
2024 2023
US$'000 US$'000
Unaudited Unaudited
Revenues 60,040 60,170
Cost of revenues 41,388 39,168
Gross profit 18,652 21,002
Operating expenses
Sales and marketing expenses 9,453 9,483
General and administrative expenses 7,030 7,743
Research and development expenses 2,663 3,252
Other operating income (2,008) (92)
Total operating expenses 17,138 20,386
Operating profit 1,514 616
Finance income (115) (788)
Finance expenses 841 678
Profit before tax 788 726
Income tax expenses 568 219
Profit for the period before share of loss of a joint venture
and associated companies
220 507
Share of loss of a joint venture and associated companies (160) (447)
Profit for the period 60 60
Attributable to:
Owners of the Company 2 71
Non-controlling interests 58 (11)
Profit for the period 60 60
Earnings per share (in cents):
Basic & Diluted 0.00 0.02
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
Six months ended 30 June
2024 2023
US$'000 US$'000
Unaudited Unaudited
Profit for the period 60 60
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating foreign operations (3,119) 775
(3,119) 775
Total other comprehensive (loss) income for the period (3,119) 775
Total comprehensive (loss) income for the period (3,059) 835
Attributable to:
Owners of the Company (3,043) 746
Non-controlling interests (16) 89
(3,059) 835
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 30 June 31 December
2024 2023 2023
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Current assets
Cash and cash equivalents 27,176 33,716 32,339
Trade and other receivables 37,212 34,204 31,219
Short-term investment in deposits and other securities 5,417 8,175 8,425
Inventories 35,134 37,484 38,227
104,939 113,579 110,210
Non-current assets
Property, plant and equipment 14,592 15,621 16,051
Investment property 579 616 612
Right-of-use assets 5,587 5,003 4,351
Goodwill 12,690 12,572 12,763
Other intangible assets 8,814 6,713 8,019
Investment in joint venture and associate 17,640 15,846 17,894
Investments carried at fair value 1,220 1,220 1,220
Deferred tax assets 3,478 3,380 3,507
64,600 60,971 64,417
Total assets 169,539 174,550 174,627
Current liabilities
Short-term bank credit 5,041 5,625 3,276
Trade and other payables 36,035 43,284 41,662
Current maturities of lease liabilities 2,027 1,904 1,830
Tax liabilities 100 318 359
43,203 51,131 47,127
Non-current liabilities
Long-term bank credit - - 1,328
Long-term liabilities 5,365 3,411 3,449
Long-term lease liabilities 3,631 3,247 2,650
Deferred tax liabilities 31 85 39
Retirement benefit obligation 617 556 598
9,644 7,299 8,064
Total liabilities 52,847 58,430 55,191
Equity
Share capital 1,320 1,320 1,320
Share premium account 429,089 427,422 428,656
Reserves (32,910) (32,137) (29,865)
Accumulated deficit (279,883) (279,508) (279,767)
Equity attributable to the:
Owners of the Company 117,616 117,097 120,344
Non-controlling interests (924) (977) (908)
Total equity 116,692 116,120 119,436
Total equity and liabilities 169,539 174,550 174,627
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the six months ended 30 June 2024
Share premium account Attributable to owners of the Company Non-controlling interests
Share capital Translation reserve Other Accumulated
Total
Reserve
deficit
equity
US$'000
Balance as at 1 January 2024 1,320 428,656 (23,092) (6,773) (279,767) 120,344 (908) 119,436
Profit for the period - - - - 2 2 58 60
Exchange differences on translating foreign operations
- - (3,045) - - (3,045) (74) (3,119)
Total comprehensive income (loss) for the period - - (3,045) - 2 (3,043) (16) (3,059)
Dividend to non-controlling interests holding put option - - - - (118) (118) (118)
Recognition of share-based payments - 433 - - - 433 - 433
1,320 429,089 (26,137) (6,773) (279,883) 117,616 (924) 116,692
Balance as at 30 June 2024
(unaudited)
For the six months ended 30 June 2023
Share premium account Attributable to owners of the Company Non-controlling interests
Share capital Translation reserve Other Accumulated
Total
Reserve
deficit
equity
US$'000
Balance as at 1 January 2023 1,320 426,138 (26,039) (6,773) (279,579) 115,067 (1,066) 114,001
Profit (loss) for the period - - - - 71 71 (11) 60
Exchange differences on translating foreign operations - - 675 - - 675 100 775
Total comprehensive income for the period - - 675 - 71 746 89 835
Recognition of share-based payments - 1,284 - - - 1,284 - 1,284
1,320 427,422 (25,364) (6,773) (279,508) 115,097 (977) 116,120
Balance as at 30 June 2023
(unaudited)
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOW
Six months ended 30 June
2024 2023
US$'000 US$'000
Unaudited Unaudited
Net cash (used in) from operating activities (Appendix A) (5,279) 505
Investing activities
Purchases of property, plant and equipment (521) (1,110)
Increase of other intangible assets (1,151) (1,000)
Investment in joint venture and associated companies (540) (171)
Deposit in escrow - (686)
Proceeds on disposal of property, plant and equipment 557 83
Proceeds on disposal of deposits and securities 2,968 1,182
Net cash from (used in) investing activities 1,313 (1,702)
Financing activities
Lease payment (1,076) (1,195)
Bank loan repayment (1,801) -
Bank loan received 2,364 1,160
Dividend paid to non-controlling interests holding put option (118) -
Net cash used in financing activities (631) (35)
Net decrease in cash and cash equivalents (4,597) (1,232)
Cash and cash equivalents at the beginning of the period 32,339 35,156
Effects of exchange rate changes on the balance
of cash held in foreign currencies
(566) (208)
Cash and cash equivalents at the end of the period 27,176 33,716
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOW
APPENDIX A
RECONCILIATION OF OPERATING PROFIT FOR THE PERIOD TO NET CASH FROM (USED IN)
OPERATING ACTIVITIES
Six months ended 30 June
2024 2023
US$'000 US$'000
Unaudited Unaudited
Operating profit from operations 1,514 616
Adjustments for:
Amortisation of intangible assets 340 329
Depreciation of property, plant and equipment and investment property 2,429 2,161
Capital gain of property, plant and equipment (230) (29)
Share-based payments 433 1,284
Operating cash flow before movements in working capital 4,486 4,362
Decrease (increase) in inventory 3,129 (3,023)
Decrease (increase) in receivables (5,901) 2,318
Decrease in payables (4,596) (3,293)
Effects of exchange rate changes on the balance sheet (1,668) 441
Cash from (used in) operations (4,550) 805
Income taxes (779) (485)
paid
Interest received, net 50 185
Net cash from (used in) operating activities (5,279) 505
BATM ADVANCED COMMUNICATIONS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of preparation
These interim consolidated financial statements of the Group have been
prepared in conformity with International Accounting Standard No. 34 "interim
financial reporting".
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 2023 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 2023,
which have been prepared in accordance with International Financial Reporting
Standards.
Note 2 - Earnings per share
Earnings per share is based on the weighted average number of shares in issue
for the period of 436,189,134 (H1 2023: 436,039,124). The number used for the
calculation of the diluted earnings per share for the period (which includes
the effect of dilutive stock option plans) is 437,030,375 shares (H1 2023:
436,758,643).
Note 3 - Other alternative measures
Six months ended 30 June 2024 (Unaudited( Reported results Adjustments* Adjusted results
US$ thousands
Gross profit 18,652 (216) 18,868
Gross margin (%) 31.1% - 31.4%
Operating profit 1,514 (773) 2,287
EBITDA 4,283 (433) 4,716
Six months 30 June 2023 (Unaudited( Reported results Adjustments* Adjusted results
US$ thousands
Gross profit 21,002 (261) 21,263
Gross margin (%) 34.9% - 35.3%
Operating profit 616 (1,613) 2,229
EBITDA 3,106 (1,284) 4,390
(*) Adjusted to exclude amortisation of intangible assets and share-based
payments.
EBITDA measurement
Six months ended 30 June
2024 2023
(Unaudited) (Unaudited)
US$ thousands
Operating profit 1,514 616
Amortisation of Intangible assets 340 329
Share-based payments 433 1,284
Depreciation 2,429 2,161
Adj. EBITDA 4,716 4,390
Note 4 - Segments
Business Segments
Operational segments are identified on the basis of internal reports about the
Group's components that are reviewed by the main operational decision maker of
the Group ("CODM"), the CEO of the Company, for the purpose of allocating
resources and evaluating the performance of the operational segments.
Information reported to the CODM for the purpose of resource allocation and
assessment of segment performance focuses on the types of goods or services
delivered or provided.
The principal products and services of each of these segments are as follows:
Networking - marketing, research and development of data communication
products, which includes high-performance connectivity solutions for the
network edge, including the innovative Edgility open edge software platform
that enables the deployment and life-cycle management of apps, network
functions and compute devices at the edge of the network, and a broad
portfolio of carrier grade switching and routing hardware and software
products. Cyber - provision of integrated hardware and software solutions for
network encryption, including hardware security modules (HSMs). Diagnostics -
mainly engaged in sales and distribution of in vitro diagnostics reagents and
instruments, including the development and production of proprietary products.
Its proprietary products are focused on molecular diagnostics by test type and
infectious disease by application area. Secondary - mainly the distribution of
pharmaceutical and environmental monitoring products and diagnostic tests, and
the production of eco-friendly pathogenic waste treatment solutions for
medical, agricultural and pharmaceutical applications.
The results for the six months ended 30 June 2023 have been re-presented in
accordance with the new segmentation listed above.
Six months ended 30 June 2024 (Unaudited)
Networking Cyber Diagnostics $'000 Secondary $'000 Total
$'000 $'000 $'000
Revenues 5,964 8,291 17,026 28,759 60,040
Operating profit/(loss) (1,582) 2,373 90 633 1,514
Net finance expenses 726
Profit before tax 788
Six months ended 30 June 2023 (Unaudited)
Networking Cyber Diagnostics $'000 Secondary $'000 Total
$'000 $'000 $'000
Revenues 11,606 1,681 15,835 31,048 60,170
Operating profit/(loss) 136 (414) 6 888 616
Net finance income (110)
Profit before tax 726
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