LEI: 213800FLQUB9J289RU66
5 March 2025
BATM
Advanced Communications Limited
("BATM"
or "the Group")
Update on Strategy and
Trading
BATM (LSE: BVC; TASE: BVC), a leading provider of
real-time technologies for networking solutions and medical
laboratory systems, provides an update on trading for the
year ended 31 December 2024 and the Group's ongoing
strategy.
In June 2023, the Group set out a
clear strategy for the business to focus on its core strengths of
cyber security, networks and diagnostics, and to dispose of
non-core assets. While the macroeconomic and
geopolitical conditions have posed significant
challenges to execution, the Group has
implemented substantial operational changes to align the business
with the strategic vision. It continues to explore potential
opportunities to add capability to its core activities through
M&A, and to divest its non-core businesses.
The Board is pleased to report that it has
now made its first disposal of a non-core asset and efforts are
well underway to sell the Group's eco-med business. Furthermore,
the Group's trading in respect of the year ended 31 December 2024
has reinforced the Board's view of the strength of its core
expertise, as previously outlined, and its determination to
accelerate the restructuring and streamlining of the Group as the
business environment normalises.
Divestment and restructuring of
non-core businesses
The Group has entered into an
agreement to sell its entire shareholding in Progenetics Ltd, a
non-core subsidiary. The transaction values Progenetics at NIS 14m
(c. $4m), of which BATM will receive approximately $2m in cash for
its 51% shareholding. Progenetics, which was acquired by the Group
in 2017, forms part of the Group's distribution activities and
administers oncological diagnostic tests in Israel. The proceeds of
the sale are expected to be received during H1
2025.
During the year, the Group acted to ready its
eco-med activities, which are non-core, for sale, with operations streamlined, including halving the workforce,
to significantly reduce costs. The Group continues to seek to sell
this business, but if a sale does not occur in 2025, it will be
closed. Accordingly, the eco-med activities,
which are loss making and a drain on the Group's cash resources,
will be classified as discontinued operations for the purpose of
the Group's financial reporting.
Update on trading for
2024
The Group expects to report revenue
for continuing operations[1] for 2024 of at least $117m (2023: $116.7m) and
adjusted[2] EBITDA for
continuing operations of c. $8m (2023: $9.9m). The
Group delivered an increase in total revenue for 2024 compared with
2023, which was achieved against a backdrop of challenging
macroeconomic and geopolitical conditions. The increase reflects
strong revenue growth in the Cyber and Diagnostics divisions as
well as an increase in the Group's secondary activities, which
offset lower revenues in the Networking division. The reduction in adjusted EBITDA is primarily due to revenue
mix.
The Group continues to have a strong
cash position and expects to report cash and short-term investments
of c. $31.6m as at 31 December 2024 (30 June 2024:
$32.6m).
As set out above, the Board is determined to
focus its efforts and financial resources on the primary markets
where it has proven expertise, significant growth opportunities and
can benefit from economies of scale. To reflect both the actions
above and the clarity of strategy, the Board has undertaken a
critical review of the balance sheet and estimates that it will
report a non-cash impairment in the 2024 results of c. $7m, that
primarily comprises goodwill for acquisitions of companies in the
Group's non-core activities, and c. $15m relating to the
discontinued eco-med operations, resulting
primarily from non-cash impairments.
As a result, net loss for continuing
operations for 2024 is expected to be c. $7m (2023: $1.2m profit)
and net loss for continuing and discontinued operations for 2024 is
expected to be c. $22m. On an adjusted
basis, and excluding these one-time exceptional non-cash items, the
Group's net profit for continuing operations is expected to be c.
$1m.
Core activities operational
summary
Cyber
division
In the Cyber division, revenue
increased year-on-year as the Group fulfilled its
long-term contracts and won new orders for its advanced
network encryption solutions, designed for the post-quantum era,
from its long-standing government defence department customer. The
Group also achieved a major milestone by entering a strategic
partnership with a significant global technology, engineering and
defence group (the "Partner") to globally distribute the Group's
cybersecurity solution to a variety of commercial markets and for
critical national infrastructure. During the year, a
customised version of the Group's advanced encryption
platform was developed, and the Group is on track to deliver
the first units to the Partner in the first half of the current
year.
Networking
division
In the Networking division, towards the end of
the year the Group began to recover from the impact of the global
telecommunications market challenges thanks to the actions it had
taken to position the division for growth. This included a
management reorganisation, expansion of the sales & marketing
team and refocused go-to-market strategy, which resulted in
increased customer engagement and an uptick in orders from the
fourth quarter. While the recovery was later than anticipated,
resulting in revenue for 2024 being lower than the prior year, the
Group is pleased to note that the positive momentum has been
sustained into the current year.
Diagnostics
division
The growth in the Diagnostics division was
driven by the expansion of the Group's customer base for its
distributed diagnostic products. The Group also delivered its first
orders for its new MDXlab molecular diagnostics instrument, which
is designed to overcome the challenges faced by small- to
medium-sized laboratories or point-of-care by offering an
integrated, compact, cost-effective solution.
The Group will provide further
details in its full year results, which are expected to be
announced on 17 March 2025.
Moti Nagar, Chief Executive Officer of BATM,
said:
"In 2024, we made
significant progress in advancing our strategic vision, taking
decisive measures to streamline our non-core businesses as we
prepare them for sale. This strategic realignment has enabled us to
focus our resources on our key activities that will drive our
growth and value creation. Despite facing challenging market
conditions, we achieved several important milestones. Most notably,
we entered a partnership to deliver our cutting-edge encryption
platform to commercial markets, which has long been a key objective
for BATM. In our Networking division, we refocused our management
and strengthened our sales & marketing efforts, which resulted
in us securing several new tier 1 customers and positions the
business for a return to growth. Accordingly, we are already
witnessing the positive effects of the initiatives we undertook in
2024, which, supported by a significant cash position, gives us
every confidence that we will see strong positive momentum
continuing in the current year."
Enquiries
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BATM
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Moti Nagar, Chief Executive
Officer
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+972 9866 2525
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|
Ran Noy, Chief Financial
Officer
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|
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Shore Capital
|
|
|
Mark Percy, Anita Ghanekar, James Thomas
(Corporate Advisory)
|
+44 20 7408 4050
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Gracechurch Group
|
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Harry Chathli, Claire Norbury
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+44 20 4582 3500
|
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.
