BATM Advanced Communications Limited (LON:BVC), a provider of real-time technology for networking and lab systems, entered the second half of the year with a strong order backlog.
The company, which returned to profit last year, notched up underlying earnings (EBITDA) of US$500,000 versus a loss the year before of US$300,000.
READ: BATM enters joint venture with ARM Holdings
The adjusted operating loss more than halved to US$0.6mln from US$1.4mln on revenue that rose 16.9% to US$58.2mln from US$49.8mln.
At the end of June, the group had cash and financial assets of US$23.3mln, down US$24mln.
The bio-medical division, which accounts for just over half of group revenue, saw revenue rise by 3% to US$29.6mln from US$28.6mln, while the networking and cyber division saw revenue surge 36.5% to US$28.6mln from US$21.0mln.
The sharp increase in the revenues of the networking and cyber division was primarily due to the delivery of products relating to a contract won last year with an agency of a government defence department.
READ: BATM secures follow-on cyber-security contract for government defence department
"In the first half of 2018 we've seen sustained momentum in all our areas of activity, which is increasingly reflected in our numbers with growth in sales and positive EBITDA, but the real story is found in the underlying operational achievements of the period,” said Dr Zvi Marom, the chief executive officer of BATM.
"In the Networking and Cyber division, we significantly progressed the development of our NFV [network function virtualisation] ecosystem, which is designed to support an entirely virtualised network infrastructure - which is key for the implementation of 5G technologies and to run applications such as autonomous vehicles. Most importantly, we signed a strategic investment and joint development agreement with Arm that will greatly advance our NFV strategy and is also testimony to the strength of our offer. In our Cyber unit, we were awarded contracts worth US$7mln by government defence departments for our unique solution that can monitor very large networks, up to the level of a state,” he added.
"In the Bio-Medical division, we saw the benefits of our investment last year with the roll-out of several new advanced diagnostic tests and systems and biological waste treatment systems, which are being very well-received by the market. We made significant strides in the development of our unique molecular biology systems - which we believe offers significant upside. It was also pleasing to see the return of activity in China following a hiatus last year,” Dr Marom said.
The group entered the second half of 2018 with a strong backlog of orders due to be delivered by year-end. In addition, the board expects the momentum of activity across its divisions to increase throughout the year as a result of which it is confident of achieving sustained growth.
Shore Capital hikes FY estimate
House broker Shore Capital responded to the interims by tweaking its full-year revenue forecast.
“With a stronger revenue performance than our trend expectation for H1, we are increasing our FY estimate by US$2mln to US$114mln, but retaining EBITDA, PBT and EPS estimates for the moment, reflecting the continuing operational investment focus of management,” Shore said.
“The second half promises further strong development; we look for the emergence of positive operational leverage, returning BATM to profitability and good free cash generation over our forecast horizon. BATM, in our view, continues to transition its technology platforms to next-generation infrastructures across group activities; underlying operational strength is yet to show in financial results, but we note underlying momentum,” the broker added.
Shore said the group is exposed to a number of “growth themes” across medical equipment, testing & diagnostics and virtual network management (5G infrastructures), network software and cyber skills & technologies within networks.
BATM’s intellectual property (IP) covers all of the above fields and increasingly, the company is finding ways to make money out of its IP.
Shares in BATM were down 0.1p at 41p in mid-morning trade.