CEO Review

We made significant progress this year 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. 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.

Strategy Update

In June 2023, we set out a clear strategy to focus on our core strengths of cybersecurity, networks and diagnostics, and to dispose of non-core assets. While the macroeconomic and geopolitical conditions posed significant challenges to execution during 2024, we implemented substantial operational changes to align the business with this strategic vision. This included establishing further Group-wide corporate functions, including a Chief Operating Officer, a Chief Marketing Officer and Head of Diagnostics division, and enhanced cross-selling activities in the Networking and Cyber Divisions.

Significant changes were also made within our core divisions. As discussed further below, in the Networking division there was a management reorganisation, expansion of the sales & marketing team and the go-to-market strategy was refocused. In the Cyber division, we achieved a major milestone in the execution of our strategy to expand our offering to non-governmental

customers by entering an agreement with a significant partner to globally distribute our advanced cybersecurity solution, which is quantum key distribution (“QKD”) ready, to a variety of commercial markets. In the Diagnostics division, we reorganised management, refocused the sales strategy and expanded our channel partner relationships. We are already beginning to benefit from these actions, which positions us well for 2025.

We continued exploring potential opportunities to add capability to our core activities through M&A, and to divest our non-core businesses. This resulted in our first disposal of a non-core asset with an agreement, post period, to sell our entire shareholding in Progenetics Ltd. Efforts are also well underway to sell the eco-med business, which was readied for sale during the year. We continue to seek to sell this business, but if a sale does not occur in 2025, it will be closed. Accordingly, the eco-med activities have been classified as discontinued operations for the purpose of our financial reporting.

Furthermore, our trading in 2024 has reinforced the Board's view of the strength of our core expertise and our determination to accelerate the restructuring and streamlining of BATM as the business environment normalises.

Cyber Division

Our Cyber division performed exceptionally well in 2023. We secured new orders totalling $32.4m from our long-standing defence department customer. This included receiving a $26m order at the beginning of the year for our latest high-performance encryption platform, which is to be delivered over a maximum of five years. We expect to receive further orders in the current year.

We also continued to progress our development programme, which includes integration of our platforms with quantum key distribution and post-quantum encryption algorithms to address cyber risk in the quantum computing era. It also includes a new encryption offering that will allow us to expand to new markets, such as other government agency customers and the commercial markets.

Cyber Division

There was a significant increase in Cyber division revenue as we delivered on our long-term contracts and won new orders. During the year, we received and delivered new orders totalling over $2.3m from our long-standing government defence department customer, which included a contract for developing a next-generation encryption solution that is QKD ready to address the technological demands of the next computing era.

We achieved a major milestone by entering a strategic partnership with a significant global technology, engineering and defence group (the “Partner”) to deliver our advanced cybersecurity solution, which is QKD ready, to a variety of commercial markets and for critical national infrastructure. The Partner, which generated revenue of over $11bn in 2024 and serves customers in more than 100 countries, will distribute a customised version of our encryption platform globally, with exclusivity in certain territories. During the year, a customised version of the encryption platform was developed, and we are on track to deliver the first units to the Partner in the first half of the current year.

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 the collaboration with the Partner expected to significantly boost our commercial market entry by providing worldwide distribution networks and a partner with the resources to engage in considerable sales & marketing activities. We are also seeking to establish further partnerships as we build this new channel to market.

Diagnostics Division

During the year, we reorganised management and refocused the go-to-market approach for our proprietary products to prioritise reagent sales, which are a higher margin and consumable product. We intend to provide these instruments on a lease basis, or as a lower-margin sale, alongside a reagent agreement to secure long-term, repeatable orders. We are targeting public hospitals, large private clinics and laboratories and large tenders.

Our portfolio of MOLgen MDX syndromic panels for infectious disease was registered with the Italian Ministry of Health, which enabled sales to commence in Italy. This included us winning a €1m tender at a major hospital. We also commenced receiving orders for, and generating revenue from, the MDXlab molecular diagnostics instrument based on the real-time PCR method, which we launched at the end of 2023. Work also continued towards the commercial launch of EXTRAlab NGS Prep, which was distributed to channel partners in Europe towards the end of the year.

ADOR Diagnostics, an associate company of BATM, completed pre-clinical validation of the NATlab process at the Tzafom Medical Center in Israel and commenced pre-clinical validation for the full NATlab product at the Lazzaro Spallanzani National Institute for Infectious Diseases in Italy. Post year end, ADOR was pleased to welcome the Rt. Hon Nadhim Zahawi as Chairman of its Advisory Board, who brings a wealth of experience in business and government. In addition, ADOR was granted a further European patent, bringing the total number of patents granted to four in the EU, three in the US, two in the UK and five internationally, with a further seven patents pending, reflecting the significant intellectual property that ADOR is building.

Non-Core Activities

We made significant progress on executing our strategy to exit our non-core activities. We continued to explore divestment opportunities and took action to ready the eco-med activities (which are now classified as discontinued operations) for sale, with operations streamlined, including halving the workforce, to significantly reduce costs. Post year end, we were pleased to make our first disposal of a non-core asset with BATM entering into an agreement to sell our entire shareholding in Progenetics Ltd for approximately $2m in cash.

Outlook

Trading in the new financial year has begun in-line with our expectations as we increasingly benefit from the strategic actions taken during 2024. In particular, the momentum that was experienced in the Networking division in Q4 2024 has been sustained into the current year, with a strong increase in orders received to date in both the Edgility and carrier ethernet offerings.

The largest contributor to revenue growth in 2025 is expected to be the Networking division as the expansion of the sales team and refocused go-to-market strategy drive increasing sales. We are also encouraged by the improving telecommunications market backdrop, with customers recommencing purchasing as they begin to replenish their inventory levels to support growing demand.

The Diagnostics division is expected to make a significant contribution to revenue growth in 2025 as we execute on the new go-to-market approach and ramp up sales of MDXlab. The Cyber division is also expected to deliver strong growth as we continue to service our long-standing government defence department customer as well as receive initial revenue from the delivery of our encryption solution for commercial markets.

The Board is continuing to actively pursue M&A and disposal opportunities that will enable us to accelerate execution on our growth strategy in our core divisions.

As a result, the Board continues to look to the future with confidence. 

Moti Nagar
Chif Executive Officer

08 April 2025