CEO Review

I am proud of what we achieved in 2023. Against a challenging macroeconomic backdrop, we delivered growth in sales and adjusted EBITDA – including an outstanding performance in our Cyber business. We launched several innovative new products in Diagnostics and Networking that have been well-received, whilst progressing development of potentially game-changing solutions. 

Significantly, we undertook an in-depth strategic review during the year, supported by a leading global consulting firm, that resulted in the establishment of a new strategy, which we began to implement in the second half of the year. Our new strategy is focused on accelerating our activities that build on our established areas of core expertise and which are in scalable and growing markets. This involves enhancing how we operate as a business, prioritising resource allocation and potential M&A activity. As we have outlined in our ‘Strategy’ section on page 7, we have already taken important steps forward in this process and I am excited about the progress we will make in 2024.

The performance of each of our divisions was as follows:

Networking Division

We were delighted to receive two five-year orders for our Edgility edge computing platform from NGA 911 LLC, which provides emergency connectivity services in North America and is using Edgility to deliver the call-handling system for 911 Emergency Services and the 988 National Suicide Prevention & Mental Health Crisis Lifeline in the US. This is the first time Edgility is being used for a government application and to support critical public infrastructure. We expect to receive further orders from NGA for their network in additional US States and the Asia-Pacific region. Edgility also continued to undergo evaluation and successful proof-of-concepts with leading network operators, multi-service providers, partners and systems integrators worldwide.

The rollout of Edgility with CEMEX, S.A.B, (NYSE: CX) progressed well during the year, and is on track to complete in the current year. CEMEX, which is a global construction materials company, has already deployed more than 1,000 end points across sites in Europe and Central and South America. The rollout also continued with CityFibre, the UK’s largest independent carrier-neutral Full Fibre platform.

We continued to generate revenue through our partnerships with Advantech and Lanner Electronics, who provide Edgility pre-installed on their universal edge network appliances, and we established a further route-to-market via a new collaboration with Innovetechs, which specialises in delivering digital transformation projects for EMEA service providers.

Towards the end of the year, we launched a new release of Edgility that represents a significant upgrade. It includes augmented high-availability, a more intuitive user interface, integrated network functions, strengthened security, enhanced operational efficiency and it now supports Kubernetes. We also introduced several Edgility connected edge as a service packages, including a full managed service package, to provide customers with the flexibility to choose the relevant network appliances and mode of operation.

Turning to our carrier ethernet business, we continued to evolve our product portfolio, with a particular focus on developing an upgraded, cost effective 10GE demarcation device, which was launched towards the end of the year. We are conducting a number of proof-of-concepts, which we expect to translate into orders. We are also developing new products, for launch in 2024, that will expand our portfolio to support additional use cases.

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.

Diagnostics Division

A key development with our Diagnostics division was its reorganisation to bring together our activities involving our proprietary products with the distribution of third-party diagnostic products, in line with our new strategy. Through closer collaboration, we will be able to leverage the strengths across the two areas of activity, such as being able to apply for a larger number of tenders and offer a comprehensive solution combining proprietary and third-party products.

Looking at our operations, we continued to progress development and engineering work on new reagents, kits and instruments. In particular, towards the end of the year, we launched MDXlab, which is a new molecular diagnostics instrument based on the real-time PCR method. Most of today’s 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. We are receiving strong interest in this new instrument, and have already commenced generating revenue.

Towards the end of the year, we introduced the EXTRAlab NGS Prep, which we plan to commercially launch in the current year. This new molecular diagnostics instrument expands the capabilities of our existing EXTRAlab with regards to next-generation sequencing (“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. Our instrument automates this process, with the EXTRAlab NGS Prep also being able to make relevant self-adjustments.

We strengthened our distribution operations by identifying new suppliers and deepening our relationship with our existing partners with a view to gaining exclusive contracts and advantageous commercial terms. We also conducted a direct sales & marketing campaign to clients that had been awarded government funding that we expect will translate to applicable tenders for us in 2024, and which we are confident of winning.

Our ADOR Diagnostics (“ADOR”) associate company that is developing the disruptive NATlab molecular biology platform made strong progress during the year in finalising the development of a new advanced biological process and upgraded cartridge and instrument designs, and achieved a key milestone with the commencement of pre-clinical trials of the NATlab at a hospital. This has generated valuable insights, which we are now using to enhance the biological process and improve the NATlab product. In addition, ADOR secured an investment of $7.5m (to be paid on the completion of milestones), of which BATM is contributing $3.5m. Following the investment, our shareholding in ADOR will increase to 43.6%.

Secondary Activities

Revenue generated by our secondary businesses grew year-on-year, which reflects increased sales related to the distribution of pharmaceutical products and test administration.

Outlook

We entered 2024 with positive momentum in our core activities, a new focused strategy designed to deliver sustainable, long-term growth and a strong balance sheet.

Having begun to implement the new strategy in the second half of 2023, we intend to ramp up the process in the current year. We plan to focus our resources on our core activities, including building a strong global sales team.
In addition, while there is no guarantee any transaction will occur, we intend to explore M&A opportunities to support our core activities or divestment of secondary businesses. Accordingly, we intend to invest to establish a solid infrastructure that will provide the foundations for sustainable growth.

With regards to the core activities specifically, we have a significant backlog in the Cyber division to be delivered in the current year and beyond. We are also focused on the development of our new encryption product that will enable the Cyber division to penetrate new markets. We are receiving strong interest in our new diagnostic instruments, MDXlab and EXTRAlab NGS Prep, which we expect to make a material contribution to growth in the Diagnostic division alongside a sustained increase in sales of distributed diagnostic products. In the Networking division, we expect growth to be driven by the actions that we are taking to enhance the sales function and other operational infrastructure.

As a result, we remain confident in our prospects and look forward to reporting on our progress.

Moti Nagar
Chif Executive Officer