07:00 Mon 05 Mar 2018
BATM Advanced Comm - Final Results
("BATM" or the "Group")
Final 2017 Results
Financial Summary
· Group revenue increased 18.5% to
· Gross margin of 30.6% (2016: 31.4%)
· Adjusted operating profit* of
· EBITDA of
· Earnings per share of 0.06¢ (2016: 0.27¢ loss per share)
· As at
* See note 3
Operational Summary
· Milestone year for the Group with Networking and Cyber division capitalising on previous significant investment to achieve the first year-on-year increase in revenue since 2011 and Bio-Medical division continuing to demonstrate strong growth
Bio-Medical Division (54% of total revenue)
· Revenues increased by 11.2% to
· Blended gross margin was maintained at 25% (2016: 25%)
· Diagnostics Unit
o Increased penetration and geographical expansion with existing products, but overall revenue lower compared with prior year due to reduced sales in China, a key market
o Launched a new ELISA instrument, Personal LAB, in
o Progressed the development, through the Ador joint venture, of new unique rapid-results sample-to-answer multiplexed molecular diagnostics system and reagents, which has already been granted several patents in the US
o Increased sales activity to end the period with a higher order book than at the period end of the previous year
· Eco-Med Unit
o Significant progress in Eco-Med unit with revenues increasing by 29.3% over the prior year
o Launched the world's first mobile agri-waste treatment solution and was awarded a contract for
o First large installation of the Group's new solution for treating agricultural waste, that was installed at a poultry processing facility, continued to perform well; and the Group is in the process of providing the second large installation at a bovine slaughterhouse
o Commenced sales of the new ISS 500 with automated reloading system for treating medical waste in hospitals, with the first systems delivered to customers in the Middle East and Europe and first order received from a customer in the US
o Higher order book than at the same point of the prior year
· Distribution Unit
o Increased sales primarily due to strong growth in the distribution of diagnostic kits and services
o
o Commenced operations at the two new diagnostic and analytic laboratories opened in Romania during 2016
Networking and Cyber Division (46% of total revenue)
· Sales growth with revenues increasing by 28.3% to
· Blended gross margin was 36% (2016: 40%)
· Networking Unit
o Growth in the division due to increase in sales of ICT services and solutions:
§ Gained 47 new client accounts, such as
§ A Tier 1 cyber security customer launched new security systems, basing its networking capability on the Group's state-of-the-art 100 Gigabit Ethernet (100GE) card
§ Awarded a framework agreement valued at up to
o Substantial progress in implementing Software-Defined Networking ("SDN")/Network Function Virtualisation ("NFV") strategy:
§ Established partnerships with a number of leading telecoms organisations, including
§ Only worldwide software vendor to provide NFV functionality to Arm architecture and all Intel platforms
§ Successful proof-of-concept trials ("POCs") conducted worldwide
· Cyber Unit
o Received expansion of a contract awarded last year by a government defence department, which is now worth
o Conducted successful POC for cyber monitoring and detection systems for first European government customer and engaged in several other POCs in multiple countries
o Post period end, awarded
Commenting on the results, Dr Zvi Marom, Chief Executive Officer of BATM, said: "This was a turnaround year for BATM as the Networking and Cyber division achieved increased year-on-year revenue for the first time since 2011 on the back of a decade of development, testing and POCs with significant customers and establishing a healthy order book. The Bio-Medical division continued to demonstrate growth in product sales and we made a strong start in providing services while we continued to advance the development of disruptive patented technologies that will soon be introduced to the market.
"In 2017, we achieved the goals that we set for the year: gaining new customers and partners, securing new contracts, expanding into new territories and continuing to establish leading positions in our target markets. The strategies that we have implemented in both our divisions are coming to fruition as new products and technologies have completely replaced legacy products and are gaining traction in areas that we had previously identified as growth markets.
"Looking ahead, we entered 2018 in a stronger position than at the same time of the prior year with a higher order book across our Networking and Cyber and Bio-Medical divisions. We are confident that the growth momentum across both divisions will be maintained during 2018 and we therefore look forward to the future with continued optimism."
Enquiries:
|
|
Dr Zvi Marom, Chief Executive Officer |
+972 9866 2525 |
Moti Nagar, Chief Financial Officer |
|
|
|
|
|
Mark Percy, Anita Ghanekar |
+44 20 7408 4050 |
|
|
Luther Pendragon |
|
Harry Chathli, Claire Norbury |
+44 20 7618 9100 |
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
Operational Review
This was a turnaround year for BATM as the Networking and Cyber division achieved increased year-on-year revenue for the first time since 2011 and the Bio-Medical division continued to demonstrate strong growth. The strategy that the Group had implemented in the Bio-Medical division to establish the Eco-Med unit also began to come to fruition with its newly-launched solutions gaining significant traction during the period and an accrual of a substantial order book for delivery in 2018.
Both divisions gained new customers, secured new contracts and expanded into new territories. New products and technologies have replaced legacy products, and the Group advanced its sales and marketing strategies in targeting new areas that the Group had identified as growth markets.
As a result, total Group revenue increased by 18.5% to
Bio-Medical Division
|
H1 2017 |
H2 2017 |
FY 2017 |
FY 2016 |
Revenues |
|
|
|
|
Gross margin |
25% |
25% |
25% |
25% |
Adjusted operating loss |
|
|
|
|
The Bio-Medical division achieved significant revenue growth in the Eco-Med and Distribution units, which offset the lower revenues in the Diagnostics unit. However, as a result of the latter, adjusted operating loss for the division was greater than the prior year.
Distribution
The Distribution unit accounted for 74% of the Bio-Medical division's revenues in 2017 compared with 68% of revenues in 2016, reflecting an increase in sales of 21.3%. This was due to strong growth in the distribution of diagnostic kits and services.
At the beginning of the year, the Group acquired the entire issued share capital of
Also during the year, operations commenced at the two new diagnostic and analytic laboratories that the Group opened in Romania in 2016.
Eco-Med
The Eco-Med unit accounted for 13% of the Bio-Medical division's revenues in 2017 compared with 11% of revenues in 2016, reflecting an increase in revenues of 29.3%. This growth is primarily due to sales of the Group's new, larger solutions, based on its unique patented Integrated Shredder and Steriliser ("ISS") technology, developed for treating biological waste in the biopharma and agri-business sectors. The unit is also leveraging its ISS technology to apply to other industries where the solutions have a higher value and greater market potential.
The unit achieved a significant improvement in gross margin to 23.2% (2016: 12.7%) as a result of sales of higher margin agri-waste solutions.
During the year, the Group launched the world's first mobile agri-waste treatment solution and was awarded a contract of
The first large installation of the Group's new solution for treating agricultural waste, which was installed in 2016 at a processing facility of a major poultry farming company, continued to perform very successfully. The Group is also in the process of providing a second unit at a bovine slaughterhouse facility for the largest and leading food group in Israel, which follows the successful installation and operation of an initial unit in 2016.
The Group commenced sales of the new ISS 500 that has been adapted for the disposal of medical waste in hospitals. The product is receiving a lot of interest from hospitals because of its automated reloading system, which reduces human exposure to medical waste. During the period, the first systems were delivered to customers in the Middle East and Europe and the first orders for the new solution were received from the US.
Diagnostics
The Diagnostics unit represented 13% of Bio-Medical division revenues in 2017 compared with 20% during 2016 reflecting a decrease in revenues to
The Group continued to develop its new products for the diagnostics market. In December, the Group launched a new ELISA instrument, called Personal LAB, with several orders received to date. Progress also continued to be made by the Group's joint venture company, Ador, established in
In
Networking and Cyber Division
|
H1 2017 |
H2 2017 |
FY 2017 |
FY 2016 |
Revenues |
|
|
|
|
Gross margin |
37% |
36% |
36% |
40% |
Adjusted operating profit (loss) |
|
|
|
|
This was a milestone year for the Networking and Cyber division as the significant level of investment in prior years has driven a return to growth. Revenue increased by
ICT solutions and services
During the year, ICT services and solutions gained 47 new client accounts in North America, including blue-chip companies such as Google,
Also during the year, NGSoft, a high-end software development and design business and subsidiary within the Networking and Cyber division, was awarded a framework agreement, valued at up to
SDN/NFV solutions
The Group made significant progress in advancing its SDN/NFV offer. It established partnerships with a number of leading telecoms organisations, with the respective partners offering joint solutions for network virtualisation. The partnerships include leading providers of central processing unit technology, white box hardware and across a range of virtual network functions. This included a collaboration with NXP Semiconductors (NASDAQ: NXPI) and
The Group's open and agile service delivery platform can meet the growing demand from telecoms operators and managed service providers for solutions that offer increased performance, flexibility and cost savings on their networks, regardless of their hardware or what they may choose to use. During the year, the Group conducted several successful POCs worldwide, which it expects to translate into significant orders during 2018.
Cyber
BATM also continued to grow its cyber security business. The Group received an expansion to a contract that was originally awarded in 2016 for the supply of an ICT solution combined with several cyber elements to a government defence department, which increased in value to
Post period end, the Group was awarded a significant contract to supply a cyber communication technology solution to a government defence department, which is worth approximately
Financial Review
The blended gross profit margin for the year was 30.6% (2016: 31.4%). This decrease is mostly due to a reduction in the gross margin of the Networking and Cyber division as a result of the contribution to revenue from a large government contract that carried a lower margin.
Sales and marketing expenses were
General and administrative expenses were
R&D investment in 2017 was
Adjusted operating profit increased significantly to
EBITDA increased 175% to
As a result, the Group achieved earnings per share of 0.06¢ (2016: 0.27¢ loss per share), which is the first time that the Group has reported positive earnings per share since 2012.
The Group's balance sheet remains strong with effective liquidity of $24.0m at
Inventory was
Intangible assets and goodwill were
Property, plant and equipment and investment property decreased to
The balance of trade and other payables was
Cash inflow from operating activities was
Outlook
The Group entered 2018 in a stronger position than at the same point in the prior year with a higher order book in all of its units, particularly in the Networking and Cyber division and the Eco-Med unit. Both divisions are receiving increasing demand for their newly-launched products and solutions, with the Networking and Cyber division having conducted multiple POCs for its SDN/NFV and cyber solutions that it expects to translate to significant orders in 2018.
The Diagnostics unit of the Bio-Medical division is making significant advancements in the development and introduction of its new molecular-diagnostics instruments, which it expects to launch in 2018. It is also experiencing a return to growth in sales for its existing analytics equipment and reagents as a result of geographic expansion of its sales and marketing efforts. In addition, the Group expects to be able to leverage the
As a result, the Group expects to report year-on-year revenue growth for full year 2018, and the Board remains highly confident in the outlook for the Group and delivering shareholder value.
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED INCOME STATEMENTS
|
Year ended 31 December |
|
|
2 0 1 7 |
2 0 1 6 |
|
US$ in thousands |
|
|
|
|
Revenues |
107,137 |
90,404 |
|
|
|
Cost of revenues |
74,402 |
62,048 |
|
|
|
Gross profit |
32,735 |
28,356 |
|
--------- |
--------- |
Operating expenses |
|
|
|
|
|
Sales and marketing expenses |
14,987 |
14,307 |
|
|
|
General and administrative expenses |
10,297 |
9,584 |
|
|
|
Research and development expenses |
7,752 |
7,620 |
|
|
|
Other operating income |
(4,526) |
(2,853) |
|
|
|
Total operating expenses |
28,510 |
28,658 |
|
--------- |
---------- |
Operating profit (loss) |
4,225 |
(302) |
|
|
|
Finance income |
331 |
291 |
|
|
|
Finance expenses |
(742) |
(650) |
|
|
|
Profit (loss) before tax |
3,814 |
(661) |
|
|
|
Income tax expenses |
(2,364) |
(774) |
|
|
|
Profit (loss) for the year before share of loss of a joint venture |
1,450 |
(1,435) |
|
|
|
Share of loss of a joint venture and associated companies |
(1,574) |
(810) |
|
|
|
Loss for the year |
( 124) |
(2,245) |
|
|
|
Attributable to: |
|
|
Owners of the Company |
233 |
(1,070) |
Non-controlling interests |
(357) |
(1,175) |
|
|
|
Loss for the year |
(124) |
(2,245) |
Profit (loss) per share (in cents): |
|
|
Basic and Diluted |
0.06 |
(0.27) |
|
|
|
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
Year ended 31 December |
|
|
2 0 1 7 |
2 0 1 6 |
|
US$ in thousands |
|
Loss for the year |
(124) |
(2,245) |
Items that may be reclassified subsequently to profit or loss : |
|
|
|
|
|
Exchange differences on translating foreign operations |
4,903 |
(362) |
|
4,779 |
(362) |
Items that will not be reclassified subsequently to profit or loss : |
|
|
Re-measurement of defined benefit obligation |
6 |
211 |
|
|
|
Total Comprehensive income (loss) for the year |
4,785 |
(2,396) |
Attributable to: |
|
|
Owners of the Company |
5,752 |
(1,364) |
Non-controlling interests |
(967) |
(1,032) |
|
4,785 |
(2,396) |
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
31 December |
|
|
2 0 1 7 |
2 0 1 6 |
|
US$ in thousands |
|
Current assets |
|
|
Cash and cash equivalents |
18,182 |
22,015 |
Trade and other receivables |
46,916 |
28,124 |
Financial assets |
5,782 |
5,593 |
Inventories |
23,238 |
20,479 |
|
94,118 |
76,211 |
Non-current assets |
|
|
Property, plant and equipment |
14,720 |
14,078 |
Investment property |
1,951 |
3,669 |
Goodwill |
16,817 |
15,011 |
Other intangible assets |
6,127 |
5,604 |
Investment in joint venture and associate |
953 |
854 |
Available for sale investments carried at fair value |
576 |
614 |
Deferred tax assets |
2,909 |
3,570 |
|
44,053 |
43,400 |
|
|
|
Total assets |
138,171 |
119,611 |
Current liabilities |
|
|
Short-term bank credit |
5,324 |
4,407 |
Trade and other payables |
37,607 |
26,999 |
Tax liabilities |
2,232 |
101 |
|
45,163 |
-----------31,507 |
Non-current liabilities |
|
|
Long-term bank credit |
910 |
1,104 |
Long-term liabilities |
5,261 |
4,722 |
Deferred tax liabilities |
336 |
912 |
Retirement benefit obligation |
682 |
---476 |
|
7,189 |
7,214 |
|
|
|
Total liabilities |
52,352 |
38,721 |
Equity |
|
|
Share capital |
1,216 |
1,216 |
Share premium account |
407,688 |
407,544 |
Reserves |
(15,557) |
(21,070) |
Accumulated deficit |
(303,571) |
(303,810) |
Equity attributable to equity holders of the: |
|
|
Owners of the Company |
89,776 |
83,880 |
Non-controlling interest |
(3,957) |
(2,990) |
Total equity |
85,819 |
80,890 |
Total equity and liabilities |
138,171 |
119,611 |
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year ended 31 December 2017
|
|
Share Premium Account |
Translation reserve |
Other Reserve |
Accumulated Deficit |
Attributable to owners of the Parent |
Non-Controlling Interests |
Total equity |
|
US$ in thousands |
|||||||
Balance as at |
1,216 |
407,544 |
(20,558) |
(512) |
(303,810) |
83,880 |
(2,990) |
80,890 |
Loss for the year |
|
|
|
|
233 |
233 |
(357) |
(124) |
Re-measurement of defined benefit obligation |
- |
- |
- |
- |
6 |
6 |
- |
6 |
Exchange differences on translating foreign operations |
- |
- |
5,513 |
- |
- |
5,513 |
(610) |
4,903 |
Total comprehensive income for the year |
- |
- |
5,513 |
- |
239 |
5,752 |
(967) |
4,785 |
Exercise of share based options by employees |
- |
35 |
- |
- |
- |
35 |
- |
35 |
Recognition of share-based payments |
- |
109 |
- |
- |
- |
109 |
- |
109 |
Balance as at 31 December 2017 |
1,216 |
407,688 |
(15,045) |
(512) |
(303,571) |
89,776 |
(3,957) |
85,819 |
Year ended 31 December 2016
|
|
Share Premium Account |
Translation reserve |
Other Reserve |
Accumulated Deficit |
Attributable to owners of the Parent |
Non-Controlling Interests |
Total equity |
|
US$ in thousands |
|||||||
Balance as at |
1,216 |
407,436 |
(20,053) |
(335) |
(306,314) |
81,950 |
(1,458) |
80,492 |
Loss for the year |
- |
- |
- |
- |
(1,070) |
(1,070) |
(1,175) |
(2,245) |
Re-measurement of defined benefit obligation |
- |
- |
- |
- |
211 |
211 |
- |
211 |
Exchange differences on translating foreign operations |
- |
- |
(505) |
- |
- |
(505) |
143 |
(362) |
Total comprehensive loss for the year |
- |
- |
(505) |
- |
(859) |
(1,364) |
(1,032) |
(2,396) |
Recognition of share-based payments |
- |
108 |
- |
- |
- |
108 |
- |
108 |
Disposal of partial interest in subsidiary |
- |
- |
- |
(177) |
3,363 |
3,186 |
(500) |
2,686 |
Balance as at |
1,216 |
407,544 |
(20,558) |
(512) |
(303,810) |
83,880 |
(2,990) |
80,890 |
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
|
Year ended 31 December |
|
|
2 0 1 7 |
2 0 1 6 |
|
US$ in thousands |
|
|
|
|
Net cash from operating activities (Appendix A) |
56 |
915 |
Investing activities |
|
|
Interest received |
132 |
95 |
Proceeds on disposal of property, plant and equipment |
3,229 |
9,126 |
Tax paid on disposal of property, plant and equipment |
- |
(674) |
Proceeds on disposal of deposits |
4,503 |
1,801 |
Proceeds on disposal of financial assets carried at fair value |
3,260 |
525 |
Proceeds on disposal of held to maturity investment |
- |
3,229 |
Loans granted |
(322) |
- |
Purchases of property, plant and equipment |
(3,260) |
(3,748) |
Increase of other intangible assets |
(996) |
(2,272) |
Purchases of financial assets carried at fair value through profit and loss |
(2,452) |
(3,095) |
Investment in deposits |
(5,503) |
(1,302) |
Investment in joint venture |
(1,339) |
- |
Investment in associated company |
(343) |
- |
Acquisition of subsidiaries (Appendix B) |
(1,378) |
(1,864) |
Net cash from (used in) investing activities |
(4,469) |
1,821 |
Financing activities |
|
|
Increase in short-term bank credit |
28 |
- |
Bank loan repayment |
(5,257) |
(4,810) |
Bank loan received |
5,327 |
4,211 |
Proceeds on disposal of partial interest in a subsidiary |
- |
2,928 |
Proceed on exercise of shares |
35 |
- |
Net cash from financing activities |
133 |
2,329 |
Increase (decrease) in cash and cash equivalents |
(4,280) |
5,065 |
Cash and cash equivalents at the beginning of the year |
22,015 |
17,042 |
Effects of exchange rate changes on the balance |
447 |
(92) |
Cash and cash equivalents at the end of the year |
18,182 |
22,015 |
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS
APPENDIX A
RECONCILIATION OF OPERATING PROFIT (LOSS) FOR THE YEAR TO NET CASH FROM OPERATING ACTIVITIES
|
Year ended 31 December |
|
|
2 0 1 7 |
2 0 1 6 |
|
US$ in thousands |
|
Operating profit (loss) from operations Adjustments for: |
4,225 |
(302) |
Amortization of intangible assets |
1,349 |
1,157 |
Depreciation of property, plant and equipment and investment property |
2,132 |
1,965 |
Capital gain of property, plant and equipment and other |
(5,455) |
(3,929) |
Stock option granted to employees |
109 |
108 |
Increase (decrease) in retirement benefit obligation |
59 |
(232) |
Decrease in provisions |
(15) |
(20) |
Operating cash flow before movements in working capital |
2,404 |
(1,253) |
Decrease (increase) in inventory |
(2,629) |
2,348 |
Decrease (increase) in receivables |
(11,234) |
2,795 |
Increase (decrease) in payables |
10,552 |
(2,035) |
Effects of exchange rate changes on the balance sheet |
1,934 |
(419) |
Cash from operations |
1,027 |
1,436 |
Income taxes paid |
(512) |
(153) |
Income taxes received |
1 |
4 |
Interest paid |
(460) |
(372) |
Net cash from operating activities |
56 |
915 |
APPENDIX B
ACQUISITION OF SUBSIDIARIES
|
Year ended 31 December |
|
|
2017 |
2016 |
|
US$ in thousands |
|
Net assets acquired |
|
|
Property, plant and equipment |
78 |
239 |
Net working capital |
109 |
(270) |
Cash |
- |
49 |
Retirement benefit obligation |
(107) |
- |
|
80 |
18 |
Deferred tax |
(126) |
- |
Goodwill |
898 |
3,526 |
Other Intangible assets |
586 |
269 |
Onerous contracts |
(169) |
- |
Total consideration |
1,269 |
3,813 |
Satisfied by: |
|
|
Cash |
804 |
1,913 |
Consideration recorded as a contingent liability |
465 |
- |
Consideration recorded as a liability |
- |
1,900 |
|
1,269 |
3,813 |
Net cash outflow arising on acquisition |
|
|
Cash consideration |
804 |
1,913 |
Cash and cash equivalents acquired |
- |
(49) |
|
804 |
1,864 |
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General
The preliminary results for the year ended 31 December 2017 and the comparative 2016 information will be presented in the full Annual Report in accordance with International Financial Reporting Standards ("IFRS").
Note 2 - Profit (loss) per share
Profit (loss) per share is based on the weighted average number of shares in issue for the year of 403,173,012 (2016: 403,150,820). The number used for the calculation of the diluted profit per share for the year (which includes the effect of dilutive stock option plans) is 404,633,217 shares (2016: 403,150,820).
Note 3 - Other alternative measures
|
Year ended 31 December |
|
|
2 0 1 7 |
2 0 1 6 |
|
US$ in thousands |
|
Operating profit (loss) |
4,225 |
(302) |
Amortisation of Intangible assets |
1,349 |
1,157 |
Other alternative Operating profit |
5,574 |
855 |
Note 4 - Segments
Year ended 31 December 2017
|
Networking and Cyber $'000 |
Bio-Medical $'000 |
Unallocated $'000 |
Total $'000 |
Revenues |
49,366 |
57,393 |
378 |
107,137 |
Adjusted Operating profit (loss) (*) |
867 |
(1,068) |
5,775 |
5,574 |
Reconciliation-Other operating expenses (*) |
|
|
|
(1,349) |
Operating profit |
|
|
|
4,225 |
Net Finance expense |
|
|
|
(411) |
Profit before tax |
|
|
|
3,814 |
Year ended 31 December 2016
|
Networking and Cyber $'000 |
Bio-Medical $'000 |
Unallocated $'000 |
Total $'000 |
Revenues |
38,458 |
51,575 |
371 |
90,404 |
Adjusted Operating profit (loss)(*) |
(2,173) |
(314) |
3,342 |
855 |
Reconciliation-Other operating expenses (*) |
|
|
|
(1,157) |
Operating loss |
|
|
|
(302) |
Net Finance expense |
|
|
|
(359) |
Loss before tax |
|
|
|
(661) |
(*) See note 3
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