FOR THE YEAR ENDED 31 DECEMBER 2023
ANNUAL REPORT
AND ACCOUNTS
CONTENTS
STRATEGIC REPORT
Highlights
3
Chairman’s Statement
4
Business Model
6
Strategy
7
Chief Executive Officer’s Review
8
Our Core Divisions
10
Stakeholder Engagement
13
Chief Financial Officer’s Review
15
Key Performance Indicators
18
Sustainability Review
19
TCFD Report
21
Risk Management
27
CORPORATE GOVERNANCE
Directors’ Biographies
30
Corporate Governance Report
34
Audit Committee Report
41
Directors’ Remuneration Report
44
Directors’ Report
60
FINANCIAL STATEMENTS
Independent Auditor’s Report
63
Consolidated Financial Statements
67
Notes to the Consolidated Financial Statements
72
Other Alternative Measures
111
Company Information
112
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STRATEGIC REPORT
STRATEGIC REPORT
Strong balance sheet with
$40.8m
in cash and short-term investments
NETWORKING
High-performance
connectivity & virtualisation
solutions for next-generation
networks
c
c
Page 11
CYBER
Advanced solutions for
network encryption
c
Page 10
DIAGNOSTICS
IVD reagents and instruments,
focusing on infectious disease
c
Page 12
In-depth process undertaken to assess the Group’s business, strategy and
markets – resulting in
renewed strategic vision
launched mid-year
REVENUE
$122.8m
+6%
(2022: $116.1m)
ADJ. EBITDA*
$9.3m
+12%
(2022: $8.3m)
COMMENCED IMPLEMENTATION OF NEW STRATEGY,
WITH
SOLID PROGRESS
MADE IN H2 2023
OUTSTANDING PERFORMANCE IN CYBER
DIVISION -
$32.4m
ORDERS RECEIVED
NEW PRODUCTS
INTRODUCED TO
DRIVE GROWTH IN DIAGNOSTICS
AND NETWORKING
* Adjusted to exclude share-based (non-cash) payments and the amortisation of intangible assets
BATM’S CORE DIVISIONS
Highlights
ANNUAL REPORT &
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I am pleased to report a year of growth in our revenues
and adjusted EBITDA, which was achieved against
a challenging macroeconomic backdrop. Our Cyber
business performed particularly well, winning orders
totalling over $32m, while our Diagnostics and Networking
businesses introduced innovative new products that are
receiving great interest and which we expect to contribute
to growth in the current year.
Alongside this operational progress, we successfully
navigated some fundamental changes to our business.
From 1 January 2023, Dr. Zvi Marom, who founded
the company and had been the CEO for over 30 years,
assumed the role of Non-executive Director and Moti
Nagar became CEO. On behalf of everyone at BATM, I
would, once again, like to thank Zvi, who remains a highly
valued member of our Board, for his tireless commitment
and contribution to the development and success of
BATM.
I am delighted that Zvi’s successor as CEO is Moti, who
had been our CFO since 1 January 2015 and having joined
BATM in June 2014 as VP Finance. Our Board was further
strengthened with the appointment during the year
of Ran Noy as CFO and an Executive Director, who has
already made an excellent contribution building on his
experience with other international, public companies,
and we look forward to this continuing.
Following Moti becoming our CEO, we embarked on
an extensive strategic review, facilitated by a global
consulting firm. The process involved consultation with
all of our managers across the Group and included
assessing how resources can be best allocated to create
value and where value should be realised from what we
have already. As a result of this, and as discussed further
in this Strategic Report, we have adopted a new strategy
that is far more focused and is designed to enable us
to maximise the strengths across our business through
greater collaboration. We presented this new strategy to
our investors in June, where it was well received. Since
then, we have commenced implementing changes to align
ourselves, operationally and culturally, with our renewed
strategic vision as well as exploring potential transactions
that would add capabilities to our core activities.
Our focus is on the substantial global markets of
networking, cyber and diagnostics. In networking, we
intend to grow our customer base for our innovative carrier
ethernet solutions and establish a leadership position for
Edgility in the fast-growing edge computing market. There
is a significant untapped growth opportunity for our
cyber business to expand into the commercial markets as
well as to further government customers. In diagnostics,
not only are we looking to grow our existing businesses
through greater collaboration and continued innovation,
but we are also pursuing a transformational prospect with
the revolutionary molecular diagnostics platform being
developed by our ADOR Diagnostics associate company.
We know all of this will take time, investment and the
commitment of our teams, but we believe that we have the
right strategy to enable us to capitalise on the substantial
opportunities in these core markets.
As I noted last year, we began a process in 2022 to gain
a greater understanding of our environmental impact
and to systematically assess the risks and opportunities
that are presented to our business by climate change.
In 2023, we took a step forward by putting in place new
frameworks and procedures to support us in addressing
these matters. We have also significantly enhanced the
measurement and reporting of our carbon emissions.
While it is still relatively early days, I am proud of the
Chairman’s
Statement
Dr. Gideon Chitayat
Chairman
ANNUAL REPORT &
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STRATEGIC REPORT
progress that we have made to date, which is detailed in
the TCFD Report on pages 21-26.
To conclude, on behalf of the Board, I would like to thank
our employees across the Group for their hard work and
commitment during a time that has not been without its
challenges. Your efforts are appreciated and we hope that
you are as excited as we are about our future. I would like
to thank our shareholders for their continued support of
BATM. With our new strategy in place, we are confident
in the prospects of the business and our ability to deliver
the substantial value that exists within our company.
STRATEGIC REPORT
ANNUAL REPORT &
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6
Business Model
Our business model leverages our strengths and our values to execute on our strategic priorities to
achieve our vision and generate value for our stakeholders
Our Strengths
Our Culture
Our Strategic
Priorities
Our
Stakeholders
Strengths
•
Transforming IP
into
cutting-edge market-
ready products
•
Operating in
large,
growing
markets
•
International
footprint
from
extensive global
partnerships and
relationships
•
Extensive networking
experience
from 30+
years of providing high-
quality solutions
•
Strategic encryption
provider
for large
government customers
•
Access to European
diagnostics market
with manufacturing
capacity, licences and
reputation
•
Strong balance sheet
to support strategic
execution
Strategic
Priorities
•
Accelerating growth
•
Strengthening
execution
•
Maximising resource
allocation
c
Page 7
Culture
Our vision is to be leaders
in high-technology
innovations that make a
significant difference to
the human experience and
build on our values:
•
Innovation
- We're
all about coming up
with new ideas and
turning them into real
tech solutions that
are market disrupters.
We've got a talented
team that knows how
to make big things
happen.
•
Reliability
- Our
customers trust us to
deliver mission-critical
products. Our products
are built for reliability
and performance, in
challenging conditions
and at scale.
•
Responsibility
- Our
corporate responsibility
extends through our
focus business areas, to
the way we interact with
all our stakeholders
and our impact on the
environment and our
communities.
•
Collaboration and
teamwork
- By bringing
together diverse
perspectives and
expertise, we create
an environment that
encourages creativity,
innovation and shared
success.
Stakeholders
We aim to create value for
our stakeholders by:
•
Growing total
shareholder returns
•
Exceeding our
customers’
expectations
•
Motivating our people
•
Making a positive
contribution to our
communities
c
Page 13
Divisions
Read about our core divisions.
c
Page 10
Principal Risks and Uncertainties
Read about our principal risks and uncertainties.
c
Page 28
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STRATEGIC REPORT
Strategy
In 2023, an in-depth process was conducted to establish a new strategic vision for BATM:
As a global enterprise, BATM will maximise its top assets while providing high-quality solutions in
growing markets with innovative technology, unique know-how and focused businesses
STRATEGIC PRIORITIES
FY 2023 IMPLEMENTATION PROGRESS
Maximising
resource
allocation
-
Prioritising investment to
maximise top assets
-
Leveraging synergies and
strengths across the Group
-
New strategy established focusing on core
areas of Networking, Cyber and Diagnostics
-
Commenced restructuring of secondary
businesses to prepare for divestment
-
Commenced exploring potential divestment
opportunities
-
Commenced process to create synergies
through utilisation of manufacturing
capacity and capabilities in secondary
businesses by core divisions
Strengthening
execution
-
Building the infrastructure to
deliver sustainable growth
-
Commenced reorganisation of core divisions
-
Commenced building corporate
management team to establish an enterprise
structure
-
Allocated resources to establish a global
sales team
-
Commenced introducing processes to foster
collaboration across the business
Accelerating
growth
-
Utilising our IP to target
opportunities in large, growing
markets
-
Sustaining product
development and
commercialisation
-
Supplementing organic growth
with M&A
Alongside
maximising resource
allocation
and
strengthening
execution
-
Allocated resources to enhance sales &
marketing
-
Appointed investment banks in Israel and
the US to explore M&A opportunities in core
activities
-
Introduced two new advanced molecular
diagnostics products
-
Progressed development of:
-
cyber solutions to enable entry into new
markets
-
networking product portfolio to launch new
products that support additional use cases
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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.
Strategy Development
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
Moti Nagar
Chief Executive Officer
Chief Executive
Officer’s Review
ANNUAL REPORT &
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STRATEGIC REPORT
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.
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Our Core Divisions
Our three core divisions of Networking, Cyber and Diagnostics operate from four countries and serve hundreds
of customers across the globe, providing high-quality, innovative solutions to address real-world acute needs.
16%
of core business revenue
$10.3m
FY 2023 Revenue
c. 20
employees
$2.4m
FY 2023 Adj. EBITDA
Competitive strengths
l
Strong brand reputation: strategic encryption provider for large government clients
l
Multi-layer platform security: hardware, operating system and virtual application spaces
l
Highly secure against supply chain attacks
l
Combined security and computing appliance – offering highest computing power available on the market
l
Allows encryption algorithm customisation by customers
l
Quantum Security ready
Products
l
cGate – a combined network encryption and
security platform:
–
A multi-purpose high-speed computing
platform designed for governments, defence
and mission-critical networks
•
cHSM – a hardware security module that
provides extra security for sensitive data and
applications by safeguarding and managing
secrets, such as digital keys
The Cyber division provides integrated hardware and software solutions for network encryption. It is a strategic
provider to large government agency clients, primarily involving the security of mission critical infrastructure.
Growth drivers
l
Increasing attacks targeting supply chain –
unable to trust third-party hardware
l
Quantum computing era requires new quantum
safe encryption algorithms combined with
highly powerful computing power
l
Increasing state level cyber attacks
Cyber Division
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STRATEGIC REPORT
Competitive strengths
l
Edgility:
–
Open architecture: hardware and software agnostic and open source
–
Most scalable edge computing platform on the market
–
Supports both virtual network functions and containers on the same edge device
–
Enables the running of AI-based business applications and network functions within the same workload,
effectively connecting the edge to a cloud or data centre
–
Offered in a SaaS model and managed services model
–
Provides edge virtualisation together with full connectivity solution
l
Carrier ethernet:
–
Best of suite approach
–
Common operating and management systems across suite
– Licence embedded (MPLS)
– Excellent cost:feature ratio
The Networking division provides high-performance connectivity solutions for the network edge, including the
innovative Edgility open edge software platform and a broad portfolio of carrier grade switching and routing
hardware and software products (carrier ethernet). Our customers for Edgility are telecoms operators, managed
service providers and large enterprises and for carrier ethernet it is primarily tier 2 or 3 service providers, located
globally.
Products
l
Edgility is open edge software platform
that enables the deployment and life-cycle
management of apps, network functions and
compute devices at the edge of the network
l
Carrier ethernet comprises a broad portfolio
of carrier grade demarcation and aggregation
products for switching and routing applications
–
Device throughput ranging from 1GE to 100GE
–
Embedded software for controlling and
managing the infrastructure and devices
Growth drivers
l
Drivers of edge computing:
–
Artificial intelligence use cases at the edge
–
Data privacy and security concerns
–
Internet of Things
–
Lower processing costs
–
Demands for increased sustainability
–
5G – an enabling technology
l
Drivers for carrier ethernet growth:
–
Ever-increasing bandwidth demands
–
Growth of IP-based next-generation networks
–
Higher-speed ethernet standards
–
Rise in edge computing deployments
–
Expansion of 5G networks
–
Increased adoption of CE for mobile backhaul
31%
of core business revenue
$19.8m
FY 2023 Revenue
c. 50
employees
$1.7m
FY 2023 Adj. EBITDA
Networking Division
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Competitive strengths
l
Pioneer in fully automated instruments
l
Vast ‘know-how’ from extensive experience
l
Development of both reagents and instruments
l
Proprietary solutions specifically designed for small- to mid-size establishments
l
Established distribution networks with strong partnerships and highly respected brand in local markets
l
Differentiated, patent-protected technology being developed in ADOR
The Diagnostics division is mainly engaged in the sale and distribution of in vitro diagnostics (IVD) reagents
and instruments, including the development and production of proprietary products. Our proprietary product
development is focused on molecular diagnostics by test type and infectious disease by application area. Our
customers for our proprietary solutions are primarily medium-sized laboratories, hospitals and blood banks,
predominantly in Europe, but also Latin America, Africa and Asia. We also distribute third-party products to
customers such as public and private medical laboratories, hospitals, pharmaceutical companies.
In addition, our ADOR Diagnostics associate company is focused on the development of a novel molecular
diagnostics solution, using syndromic multiplexing, for infectious disease.
Products
l
Current proprietary portfolio of 13
instruments and over 250 reagents
–
Molecular diagnostics, clinical chemistry
and immunoassay (ELISA) technologies
–
Infectious disease, diabetes, autoimmune
disease and other applications
l
Substantial third-party product portfolio,
including diagnostics equipment, reagents
and laboratory consumables
l
ADOR is developing NATlab: a cost effective
point-of-care, rapid sample-to-answer solution
providing syndromic multiplex diagnosis
Growth drivers
l
COVID-19 pandemic increased IVD awareness
and accelerated adoption of diagnostic
technologies
l
Ageing population
l
Increasing incidence of chronic diseases
l
Shift to outpatient care
l
Technological advances creating opportunities
for innovative products
53%
of core business revenue
$33.3m
FY 2023 Revenue
c. 160
employees
$3.0m
FY 2023 Adj. EBITDA
Diagnostics Division
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STRATEGIC REPORT
Stakeholder Engagement
BATM seeks to deliver value to, and build strong, long-term relationships with, its stakeholders
The Board of BATM is committed to acting in a way that would most likely promote the long-term success of the
Company for the benefit of its members as a whole. While the Company is not subject to the UK Companies Act 2006
and, accordingly, is not required to comply with the obligations of Section 172 of that legislation, the Directors are
bound by, and comply with, the Israel Companies Act of 1999, which contains similar obligations.
Customers
Our customers rely on our technology solutions
and equipment to operate and continue to grow.
We seek to understand their evolving needs,
enabling both BATM and our customers to share
in the value creation.
How we engage
l
Client relationship managers dedicated
to key customers and key regions
l
Annual customer surveys as part of the
ISO audit and focused on all aspects
of our customer relationships
l
Training programmes on our solutions
and products for our customers
l
Attendance at trade shows
l
Working to understand growth drivers
in our customers’ markets
Financial Investors
The Board has a fiduciary duty to promote the
long-term sustainable success of the Group for its
shareholders. Certain companies within the Group
also have external investors, who are often key to
the continued success of the relevant projects.
How we engage
l
Regular dialogue and interaction
l
Investor communications, including
reports, presentations and website
l
Meetings with institutional shareholders
l
NEDs available to meet with shareholders on
request
l
Establishment of clear timelines, milestones
and strategic goals
2023 HIGHLIGHTS
l
Over 360 new customers won
l
More than 45 customer training
programmes conducted, with participation
of over 800 individuals
l
Customer satisfaction surveys
2023 HIGHLIGHTS
l
Approximately 27 shareholder meetings or
scheduled calls
l
Hosted a capital markets day to provide
investors with an in-depth update on
BATM strategy
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Employees
Our people are our greatest asset. In order
to recruit and retain the best talent, we must
ensure that we are an employer of choice and
that our employment policies are sensitive to our
employees’ priorities and requirements.
How we engage
l
A dedicated Human Resources function
l
Open and transparent communication
with our workforce
l
Annual employee satisfaction surveys
l
Personal and career development
l
Recognition and rewards
l
Code of Conduct
Communities
We strive to be a responsible corporate citizen
within the local and wider communities in which
we operate, by aiming to behave in a sustainable
and socially-responsible manner and supporting
local businesses and charities.
How we engage
l
Research and development and testing
products in the diagnosis of infectious
diseases, including tuberculosis
l
Solutions for the safe treatment of pathogenic
waste, particularly in developing economies
l
Local initiatives that support community
and charitable organisations
l
Encouragement of employees to
work to further charitable goals
2023 HIGHLIGHTS
l
Appointment of Group-wide Global VP
Human Resources
l
A subsidiary took out medical insurance
for all employees
l
Round table discussions held between
employees and management
2023 HIGHLIGHTS
l
Volunteering at a national food bank
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STRATEGIC REPORT
This year marked my first as CFO of BATM and I am pleased
to be able to report that we delivered another strong financial
performance, with solid results across our key metrics, against
a challenging macroeconomic backdrop.
Total Group revenue increased by 5.8% to $122.8m (2022:
$116.1m), reflecting growth in the Cyber division and in our
distribution activities offsetting a reduction in the Networking
division. On an underlying basis, when excluding the
contribution to both years of sales from products related to
COVID-19, total Group revenue increased by 11.7% year-on-
year and by 20.8% for the Diagnostics division specifically.
Our gross margin for the year was broadly maintained at
32.5% compared with 32.7% in 2022, which reflects margin
being largely stable across our divisions.
Sales and marketing expenses were $19.1m (2022: $17.2m),
with the increase primarily reflecting activities to support the
higher revenues and the impact of cost inflation. General
and administrative expenses were $15.1m (2022: $13.0m).
The increase reflects share-based payments, which are non-
cash. R&D expenses were $5.1m (2022: $7.0m), reflecting
cost reduction and recognition of intangible assets. Other
operating income was $1.1m (2022: $2.4m), reflecting non-
recurring income in both years. As a result, total operating
expenses were $38.2m (2022: $34.8m).
On an adjusted basis, to exclude the share-based payments
expense and amortisation of intangible assets, operating
profit grew by 24.3% to $5.0m (2022: $4.0m) due to the
increased revenue and stable gross margin. On a reported
basis, the revenue and gross profit growth was offset by the
increase in total operating costs resulting in an operating
profit of $1.6m compared with $3.1m for 2022.
As a result of the aforementioned, EBITDA (excluding share-
based payments) increased to $9.3m for 2023 compared with
$8.3m for 2022.
Net finance expenses were reduced to $0.2m (2022: $1.2m),
primarily due to an increase in finance income resulting from
higher interest rates.
Profit before tax on an adjusted basis increased to $4.8m
(2022: $2.8m) and was $1.5m on a reported basis (2022:
$1.9m).
We recorded a $0.8m tax expense for 2023 (2022: $0.3m),
which reflects the receipt of a one-time tax credit in the prior
year.
On a reported basis, profit after tax before share of loss
of a joint venture and associated companies was $0.6m
(2022: $1.6m). After the share of loss of a joint venture and
associated companies, we recorded a loss for the year of
$0.2m compared with a profit for 2022 of $0.9m. As a result,
there was a loss per share of 0.04¢ (2022: 0.06¢ earnings per
share).
Chief Financial
Officer’s Review
Ran Noy, CPA
Chief Financial Officer
* Throughout this Chief Financial Officer's Review, '*' indicates adjusted to exclude amortisation of intangible assets and non-cash share-based
payments.
Adjusted*
Reported
$m
2023
2022
2023
2022
Revenue
122.8
116.1
122.8
116.1
Gross margin
32.9%
33.0%
32.5%
32.7%
Operating profit
5.0
4.0
1.6
3.1
EBITDA
9.3
8.3
6.8
8.0
Group Results
ANNUAL REPORT &
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16
As at 31 December 2023, inventories were $38.2m (31
December 2022: $34.5m). Trade and other receivables were
$31.2m (31 December 2022: $36.5m). Intangible assets and
goodwill at 31 December 2023 were $20.8m (31 December
2022: $18.5m).
Property, plant and equipment and investment property was
$16.7m (31 December 2022: $15.9m).
Trade and other payables were $41.7m (31 December 2022:
$46.3m).
Cash inflow from operating activities was $5.0m, which was
primarily generated by our core divisions, compared with
an outflow of $2.8m in 2022. This significant improvement
primarily reflects a strong emphasis on cost management and
collections.
Cash used in investing activities was $6.1m (2022: $16.3m used
in), which primarily reflects investment in fixed and intangible
assets and in joint ventures and associated companies,
including ADOR. Cash used in financing activities was $2.2m
(2022: $7.1m used in), which consists of lease payments. As
a result, the net decrease in cash and cash equivalents was
$3.3m compared with a decrease of $26.2m in the prior
year, with the improvement primarily reflecting tax payments
in 2022 relating to a business disposal along with currency
impacts and returns to shareholders.
At 31 December 2023, we had cash and short-term investments
of $40.8m (31 December 2022: $44.2m).
Divisional Performance
Networking Division
We delivered a significant increase in EBITDA in the Networking
Division in 2023, despite a reduction in revenue and cost
pressures. This is primarily in reflection of lower operating
expenses in 2023 as a result of cost reduction measures
implemented.
Revenue was constrained by the worldwide slowdown in the
telecommunications industry as economic uncertainty and
an inflationary environment caused organisations to pause
or delay purchasing decisions. Revenue generated by Edgility
continued to increase, although revenue generated from
carrier ethernet products continued to account for the vast
majority of the Networking division revenue and was lower
year-on-year. Despite the cost price inflation, there was an
improvement in gross margin in the Networking division,
supported by the greater contribution to revenue from Edgility.
Cyber Division
The Cyber division performed strongly during the year, with
revenue growing by 76.6%. The increased revenue combined
with a slight improvement in gross margin and operating costs
remaining broadly stable resulted in a 289.9% increase in
adjusted EBITDA.
Diagnostics Division
Revenue in the Diagnostics division increased by 20.8%
over 2022 when excluding the contribution to both years
from sales related to COVID-19 products, which accounted
for an immaterial amount in 2023 and c. $7m in 2022, and
was broadly in line on an absolute basis. In addition, there
was growth in the second half over the first half of the year.
Chief Financial Officer’s Review
CONTINUED
$m
2023
2022
Revenue
19.8
22.0
Gross margin*
47.1%
45.9%
EBITDA*
1.7
0.4
$m
2023
2022
Revenue
10.3
5.9
Gross margin*
40.8%
40.6%
EBITDA*
2.4
0.6
$m
2023
2022
Revenue
33.3
33.5
Gross margin*
31.0%
31.9%
EBITDA*
3.0
3.3
ANNUAL REPORT &
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17
STRATEGIC REPORT
The underlying growth was driven by the expansion of our
customer base and product portfolio of distributed diagnostic
products.
The slight reduction in gross margin primarily reflects the
contribution to 2022 from COVID-19 products, which carry a
higher margin. Operating expenses were broadly maintained
and, accordingly, EBITDA was lower due to the slight decrease
in revenue and gross margin.
Secondary Activities
Revenue generated by our secondary businesses grew by 8.3%
year-on-year, driven by the distribution of pharmaceutical
products and test administration. Whilst gross margin was
maintained, EBITDA was lower than the previous year due
to an increase in operating expenses primarily as a result of
inflationary cost pressures.
$m
2023
2022
Revenue
59.3
54.8
Gross margin*
27.9%
27.8%
EBITDA*
2.3
4.0
ANNUAL REPORT &
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18
Key Performance Indicators
The Group reviews its key performance indicators ("KPIs") on an ongoing basis to ensure they remain relevant. As
the Group continues to execute and embed its new strategy, further KPIs will be selected as the most appropriate
measures of business performance.
Revenue
$122.8m
+6%
(2022: $116.1m)
Description
Revenue reflects the element of billings generated and recognised during the period from all operations.
Why it is a KPI
Measures our overall performance at the sales level.
Performance
The increased revenue primarily reflects growth in the Cyber division and the Group’s distribution
activities offsetting a reduction in the Networking division, with the Diagnostics division revenue being broadly in
line as it successfully mitigated the reduced demand for products related to COVID-19. Excluding sales of COVID-19
products in both years, revenue increased by 11.7%.
Cash from operations
$5.8m
+527%
(2022: $1.1m used in operations)
Description
Amount of money the Group brings in from its operating activities before the impact of tax and interest
payments.
Why it is a KPI
Reflects how much cash is generated by our primary activities that can be used to maintain or invest
in the growth of our business.
Performance
The change mainly reflects the Group having significantly increased its cash generated from the
operating activities in its core divisions during the year, along with a strong emphasis on cost management and
collections.
Adj. EBITDA
$9.3m
+12%
(2022: $8.3m)
Description
Group earnings before interest, tax, depreciation and amortisation and adjusted to exclude share-based
payments (which are non-cash).
Why it is a KPI
Measure of our effectiveness in turning revenue into earnings.
Performance
The growth in adj. EBITDA reflects the increased revenue and operational efficiency as the Group
effectively managed resource allocation in line with its new strategy.
ANNUAL REPORT &
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STRATEGIC REPORT
Sustainability Review
Sustainability is a key element of the Group’s business
and building a business to last has always been part of its
ethos. Through medical diagnostics, technologies enabling
a smarter world and eco-friendly waste treatment and
nutrient recovery systems, BATM’s solutions are designed to
address the societal challenges of today and what the Group
believes will be the demands of the future. As detailed in
the following TCFD Report,
in 2023 the Group also began
implementing activities to be able to formally assess and
manage the environmental impact of its operations as well
as the challenges, risks and opportunities posed by climate
change.
PEOPLE
BATM’s people are vital to sustaining success. In order to
recruit and retain the best talent, the Group must ensure
that, across its businesses, it is an employer of choice and
that its employment policies and practices are sensitive to
employees’ priorities and requirements.
BATM has employees in six countries, including scientists,
engineers, sales & marketing personnel and those in
corporate functions, and aims to adhere to certain principles
in terms of employee engagement and employment
practices across the Group.
During the second half of the year, the Group strengthened
its infrastructure with regards to human resources with the
appointment of a Group-wide Global VP Human Resources.
Following this, the Group has commenced implementing new
processes to build on one of its core values of ‘collaboration
and teamwork’ (see page 7).
Engagement
BATM understands the importance of maintaining open and
transparent communication with its workforce, and listening
to its people and taking into account their feedback. To
support employee engagement, the Group has a dedicated
human resources function comprising a network of human
resources departments at subsidiary level each headed up
by a VP-level executive who are overseen by the Global VP
Human Resources.
The senior management within the Group’s businesses
regularly communicate with employees on areas including
Group strategy and progress. The Group holds periodic
‘roundtable’ discussions for employees to meet with
management to share their views, raise any concerns and
make suggestions on how the workflow in their departments
could be improved. The Group also holds off-site team building
events and company celebrations. Following the appointment
of the Global VP Human Resources, the objective is to build
on these activities to create a consistently high standard of
workforce engagement across the business as well as foster a
Group-wide culture and sense of belonging.
BATM prioritises training and development for its workforce,
which was continued during 2023. The Group has training
schemes focused on product training, skills enhancement
and the achievement of additional career-enhancing
qualifications, and often supply in excess of two weeks
training per year for individual employees.
Equality, Diversity & Inclusion
BATM recognises the benefits to its business of supporting
equality, diversity and inclusion for long-term sustainable
success. The Group is committed to providing a working
environment in which all employees feel valued and
respected and are able to contribute to the success of
the business. The Group promotes equal opportunities
within all of its businesses and aligns its approach with
international human rights standards. BATM believes its
employees should be able to work in an environment free
from discrimination, harassment and bullying, and that
employees, job applicants, customers, and suppliers should
be treated fairly regardless of:
l
race, colour, nationality, ethnic or national origins;
l
gender, sexual orientation, marital or family status;
l
religious or political beliefs or affiliations;
l
disability, impairment or age.
As a company incorporated in Israel, BATM is subject to
the Israeli Law of Equal Opportunity at Work (1988), which
forbids discrimination on the basis of (among others) race,
nationality, state of origin and gender, including in hiring
job candidates. The law states that if an employer asks an
employee or candidate for such details, it will be assumed
that the employer has violated the non-discrimination
provision. The Group operates in compliance with this law.
ANNUAL REPORT &
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Health, Safety & Wellbeing
BATM prides itself on providing high levels of standards on
the health and safety of its employees. The Group has, and
adheres to, health and safety guidelines across the Group,
and also has welfare programmes. The Group also provides
clothing for employees working in manufacturing areas. There
were no health and safety incidents reported and the Group
did not receive any regulatory fines or penalties in relation to
health and safety matters during the year.
Anti-bribery & Corruption
BATM promotes responsible business behaviour. During the
year, the Board approved a new anti-bribery and corruption
policy that provides guidance, details prohibited activities and
outlines responsibilities and whistleblowing mechanisms.
The new policy was communicated with all unit managers
who were instructed to ensure that their employees are
aware of the policy, familiar with its provisions and conduct
themselves accordingly.
The whistleblowing procedure is managed by an independent
administrator who is a partner at an Israeli professional
services firm, Chaikin, Cohen and Rubin. Employees are
encouraged to approach the administrator if they have
concerns about possible wrongdoing including potential
or actual breaches of applicable laws and regulations and
fair business conduct. The approach can be anonymous, if
the employee chooses. The Company has undertaken not
to take subsequent disciplinary action against a complainant
unless the report was subsequently judged to have been
made in bad faith or to be malicious.
During 2023, there were no instances of whistleblowing
reports, bribery, corruption or business interruptions as a
result of regulatory activity.
COMMUNITIES
BATM strives to be a responsible corporate citizen within
the local and wider communities in which it operates by
behaving in a socially responsible manner and supporting
local businesses and charities. While the Company does not
have a formal Group-wide approach, during 2023 employees
from one of the Group’s subsidiaries volunteered at a
national food bank.
In addition, a key tenet of BATM’s strategy is the research
and development of solutions to counter the spread and
improve the diagnosis of infectious disease. The Group’s
products are designed to be able to be used at the point-
of-care in community healthcare facilities or in small- to
medium-sized laboratories rather than purely in mega
labs in a central location. The Group achieves this through
producing solutions that, relatively, have a small footprint,
are simple to use and are available at an appropriate price
point.
ENVIRONMENT
The Group has taken important steps during the year towards
assessing and managing its impact on the environment,
incorporating climate-related risks and opportunities into
its business planning and reporting thereon, as detailed
in the TCFD Report that follows. Developing awareness of
environmental guidelines at operating facilities, upgrading
energy
and
lighting
systems
and
developing
waste
management procedures are examples of some of the
initiatives to improve the Group’s environmental impact that
have already been made. The Group has several solutions
that both support environmental sustainability and drive
business opportunities, including:
l
Edgility, the Group's open edge software platform, which
reduces the amount of hardware needed and the need
for on-site provisioning, enabling customers to consume
less energy and reduce the carbon footprint for the same
output.
l
Solutions for the safe, effective and environmentally-
friendly treatment of pathogenic waste from food
production or medical and pharmaceutical facilities.
These solutions enable customers to significantly reduce
their environmental impact and also offer the ability to
recover and recycle proteins and lipids. This technology
can also be used for the recovery of high-quality protein
and oils from insects.
l
Environmental measuring systems, including solutions for
testing air pollution levels in large manufacturing plants.
ANNUAL REPORT &
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STRATEGIC REPORT
TCFD Recommendation
Status
Listing
Governance
a) Describe the board’s oversight of climate-related risks
and opportunities.
Full disclosure
See page 22
b) Describe management’s role in assessing and managing
climate-related risks and opportunities.
Full disclosure
See page 22
Strategy
a) Describe the climate-related risks and opportunities the
organization has identified over the short, medium, and
long term.
Full disclosure
See pages 23-24
b) Describe the impact of climate-related risks and
opportunities on the organization’s businesses, strategy,
and financial planning.
In progress
See page 25
c) Describe the resilience of the organization’s strategy,
taking
into
consideration
different
climate-related
scenarios, including a 2°C or lower scenario.
To be addressed
Risk Management
a) Describe the organization’s processes for identifying and
assessing climate-related risks.
Full disclosure
See pages 25 and 27
b) Describe the organization’s processes for managing
climate-related risks.
Full disclosure
See pages 25 and 27
c) Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organization’s overall risk management.
Full disclosure
See page 25
Metrics and Targets
a) Disclose the metrics used by the organization to assess
climate-related risks and opportunities in line with its
strategy and risk management process.
In progress
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks.
Full disclosure
See pages 25-26
c) Describe the targets used by the organization to manage
climate-related risks and opportunities and performance
against targets.
To be addressed
TCFD Report
The Task Force on Climate-related Financial Disclosures (“TCFD”)
disclosure framework is structured around four thematic
areas that are core to how organisations operate – namely, governance, strategy, risk management and metrics and targets
– with 11 recommended disclosures under these four themes.
This TCFD Report follows the structure of the TCFD 11 recommended climate-related disclosures, setting out those in which
the Company is making full disclosures and those for which full disclosures are not being made for 2023, the reasons for not
including them and the plans in place to make these disclosures going forward.
The table below shows the TCFD recommended climate-related disclosures and the status of each disclosure:
ANNUAL REPORT &
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22
As disclosed in last year’s report, there have been initial
challenges in developing the required processes and
resulting management actions and their integration into
the business, which relate to the availability of data, climate
proficiency and difficulties of operating across multiple
businesses in multiple jurisdictions and in multiple industries.
While recognising that the Group continues to be in the early
stages of its journey in terms of formalising its approach to
climate matters, the Board is pleased with the progress
that has been made in 2023 and to date, which represents
a cultural transition and increase in climate proficiency. In
addition, and as described elsewhere in this annual report,
part of the Group’s new strategy involves investing in
strengthening Group-wide infrastructure and collaboration.
Accordingly, as the Group ramps up the execution on its
strategy in the current year, the Board looks forward to
reporting further progress in next year’s TCFD Report.
GOVERNANCE
The organisation’s governance around climate-related risks &
opportunities.
The following should be read in conjunction with the
Corporate Governance section of this annual report, which
can be found on pages 34 to 40, and which is incorporated
into this TCFD Report by reference. The governance structure
around climate-related risks & opportunities is part of the
Group’s overall risk & opportunities governance structure.
BOARD OVERSIGHT
The overall responsibility for the detection and management
of climate-related risks and opportunities lies with the
Board of Directors. The Board established a Responsible
Business Committee, which oversees the management of
the various responsible business activities of the Group,
including the management of climate-related risks and
opportunities. During 2023, the Committee met quarterly.
In addition, climate-related issues were discussed in full
Board meetings. Prior to their meetings, the Directors are
furnished with information in a form and quality appropriate
for them to discharge their duties concerning the state of
the business and performance. In its meetings during 2023,
the Committee’s discussions included the TCFD disclosure
recommendations, the Group’s risk and opportunities
management framework and the Group’s risks and
opportunities register.
The Board has delegated the daily operational management
of the business to the CEO and CFO. With this, the CEO
communicates material matters arising, including climate
matters, to the Board. The Board also receives a Group-
wide overview of the Group’s activities, including risks
and opportunities, in the CEO’s overview in the quarterly
meetings of the Board.
During the year, Adv. Livneh, the senior manager leading
the planning, delivery and reporting on the climate-related
financial disclosures, provided a training session to the
Board on climate matters as part of an ongoing programme
to increase climate matters proficiency.
MANAGEMENT’S ROLE
Business unit managers oversee and report climate-related
risks and opportunities at division level. BATM’s Executive
Directors serve as directors in Group subsidiaries, giving them
greater insight across the business divisions and optimising
information flow and operational decision-making.
Adv. Livneh and Ran Noy, CFO and the Group Risk and
Opportunity Manager (“GROM”), between them consult
with business unit managers to discuss climate risks and
opportunities identification, management and reporting. The
outcomes of these meetings contribute to the maintenance
of the Group’s Risk and Opportunity (“R&O”) Register, which
integrates climate-related transitional and physical risks and
business opportunities, following the guidance provided by
TCFD framework.
Adv. Livneh oversees the Group’s adherence to the
recommendations
of
the
TCFD
and
the
Group’s
corresponding disclosures. In addition, during the year, Adv.
Yair Livneh provided a training session to senior managers
on climate matters as part of an ongoing programme to
increase climate matters proficiency.
NEXT STEPS
To enhance its governance regarding climate matters,
the Group intends to continue with its climate proficiency
programme in 2024. In addition, it will expand the engagement
with business unit leaders regarding climate-related risks
and opportunities identification and management.
TFCD Report
CONTINUED
ANNUAL REPORT &
ACCOUNTS 2023
23
STRATEGIC REPORT
STRATEGY
The actual and potential impacts of climate-related risks and
opportunities on the organisation’s businesses, strategy, and
financial planning.
Through the intrinsic nature of the Group’s main activities,
BATM’s
purpose is to deliver high-technology innovations that
make a significant difference to the human experience
in the
areas of medical diagnostics, networking and cyber security.
Through its research, innovation and the distribution and
implementation of its solutions, the Group enables a wide
variety of organisations around the globe to enhance
their resource and energy efficiency. The initial steps in
understanding the environmental impact derived from
the Group’s own operations has focused predominantly
on initiatives affecting its people and communities. BATM’s
integration of climate-related risks and opportunities
management into the Group’s processes is at a relatively
early stage, but it has taken important steps to enhance its
processes and reporting and is committed to making further
progress.
The Group’s assessment of its climate-related risks and
opportunities are provided in the following TCFD Risks &
Opportunities Table:
Risk Category
Category Overview
Subcategories
Description (including timeframe)
Transition Risk
Risks related to the
transition to a low-carbon
economy
Policy and Legal
- Potential fines related to level of
GHG emissions (
M
)
- Potential increase of tax liabilities
in certain jurisdictions (
M
)
- Potential of limiting success in
tenders due to insufficient rating in
environment certification (
M
)
- Potential of increased energy
consumption due to increased
temperatures across various
jurisdictions (
L
)
- Potential increase in insurance
premiums or inability to insure
assets (
M
)
- Costs of complying with climate-
related regulation (
S
)
Technology
Market
Reputation
Physical Risk
Physical risks driven by
extreme weather events
(e.g. heatwaves, floods,
wildfires)
or
extended periods of
increased temperatures
leading to the develop-
ment of chronic climate
events (e.g. desertification)
Acute
- Potential damage to infrastructure,
closure of production plant and
business activity interruption due
to wildfires in certain jurisdictions
(
L
)
- Increase in costs due to higher
energy consumption due to
alterations in global temperature
patterns (
L
)
Chronic
ANNUAL REPORT &
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24
TFCD Report
CONTINUED
Risk Category
Category Overview
Subcategories
Description (including timeframe)
Opportunity
Opportunities arising as
the business landscape
transitions to a low-carbon
economy
Resource Efficiency
- Increased customer preference
due to potential reduction
in energy consumption/GHG
emissions (
S
)
- Analysis of alternative energy
source provision to improve costs
and reduce environmental impact
at facilities in certain jurisdictions
(
S
)
- Enhanced resilience compared
with competitors due to earlier
adoption of climate-related risks
and opportunities management (
S
)
Energy Source
Products/Service
Markets
Resilience
KEY:
S
– short term;
M
– medium term;
L
– long term
ANNUAL REPORT &
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STRATEGIC REPORT
The Group considers the short-term time horizon to be
up to two years; medium-term to be between two and
five years; and long-term to be over five years. In defining
such timeframes, the Group took into account the nature
of climate-related issues, which often manifest themselves
over the medium and longer terms; the useful life of the
Group’s assets and infrastructure; and the timeframe that
is relevant and realistic to identify and analyse transitional
changes and to make the necessary adjustments in the
strategy and operations of the Group, such as developing
new product lines or making changes in existing ones.
To determine which risks and opportunities could have
a material financial impact, the Group established and
applied a Risks and Opportunities Management
(“ROM”)
Framework, as described in the Risk Management section
of this report. This Framework incorporates the detection,
evaluation and management of climate-related risks and
opportunities into the Company’s general risk management,
and in its application during 2023 climate-related risks
and opportunities were discussed with unit managers and
considered in the process of maintaining and updating the
Company’s R&O Register.
The
risks
and
opportunities
detection,
analysis
and
evaluation performed by the Group in 2023 did not reveal
any climate-related issues that, in the opinion of the Group,
taking into account the probability, impact and timeframe of
the risks and opportunities, could have a material financial
impact on the Group.
NEXT STEPS
In 2024, the Group will continue to enhance its climate
matters proficiency across the organisation and continue
to develop a comprehensive and systematic approach to
measuring its environmental footprint.
This, along with enlisting the support of specialist ESG
advisers, will enable the Group to execute a Materiality
Assessment and conduct appropriate Climate Scenario
Analysis in due course.
RISK MANAGEMENT
The processes used by the organisation to identify, assess, and
manage climate-related risks.
The Group’s processes to identify, assess and manage
climate-related risks are described in the Risk Management
section on pages 27 to 29, which is incorporated into this
TCFD Report by reference. The processes regarding climate-
related risks are fully integrated into, and form part of, the
processes for all business risks.
As noted in the Risk Management section, the management
of the Group’s business risks, including climate-related risks,
is the responsibility of the Board. The GROM – in conjunction
with the Board, General Counsel, business unit managers
and external advisers – identifies and assesses business
risks, and develops proposed actions for the management
thereof.
Risk management is conducted in accordance with the
Group’s ROM Framework, which incorporates the following
four key steps, as discussed further in the Risk Management
section: detection and list, assessment, action and monitor
and report. This process was initiated towards the end of
2022 and formalised during 2023, enabling the production
of a formal R&O Register. The Group also progressed the
collection of climate-related data, which is required to be
able to fully assess climate-related risks.
NEXT STEPS
The key next steps to enhance the Group’s processes for
the identification, assessment and management of climate-
related risks are:
l
Continuing to fully embed the ROM Framework,
including establishing processes for more dynamic
implementation.
l
Climate proficiency development and deployment
across the business.
l
The identification and establishment of appropriate
consistent climate-related data and reporting, including
necessary processes for data collection and collation.
METRICS AND TARGETS
Disclose the metrics and targets used to assess and manage
relevant climate-related risks and opportunities where such
information is material.
The material impacts from the Group’s business are assessed
based on standards and regulations relevant to the multiple
nature of the Group’s operations. To strengthen its efforts
in understanding, monitoring and mitigating the climate-
related risks to the operations, the depth and breadth of
metrics collected was significantly expanded in 2023. A
comprehensive assessment of BATM’s Greenhouse Gas
ANNUAL REPORT &
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TFCD Report
CONTINUED
(GHG) emissions was undertaken, in accordance with the
Greenhouse Gas Protocol Corporate Standard, with support
from specialist ESG advisers. The following is a summary of
the key insights:
l
A coordinated approach, involving several stakeholders
from over 100 locations across the Group has yielded
an improvement on data availability and quality,
strengthening the reporting figures for Scope 1 & 2.
l
Through dedicated interaction with facility managers
across all jurisdictions, BATM has been able to gather
high quality, primary data for electricity, heating and
fuel consumption through supplier invoices and air
conditioning service certificates.
–
Direct energy consumption figures were obtained
through energy supplier statements from nearly 70%
of the facilities. Where limited energy usage data was
available, location-specific national grid averages
were used, otherwise, market-based calculations
were made.
l
In addition, fuel consumption has been more widely
disclosed, to incorporate the fleet and company
registered vehicles for all divisions.
l
The scope of measurement has been expanded to
include Scope 3 Category 6: Business Travel, supported
by itemised business travel logs and travel agency
invoices.
l
Based on the level of measurement carried out to date,
emissions from Scope 1 & 2 represent 90% of overall
emissions recorded.
l
The overall reported result shows total emissions were
2,172 tCO
2
e
The following table shows the Group’s 2023 GHG emissions
broken down by scope and division, including the Group’s
corporate headquarters and its secondary activities:
In preparation for establishing performance metrics to
assess the environmental impact and progress within each
division, the Group has analysed carbon intensity ratio per
US$ million in revenue in 2023:
NEXT STEPS
To enable the Group to better monitor its emissions,
determine trends, establish reduction targets, analyse
potential areas of risk and identify the opportunities
available, the Group intends to progress:
l
System integration for collecting data throughout the
year across the various divisions.
l
Using emission data to inform decision making through
regular internal reporting and support the management
and eventual reduction of emissions from Scope 1 & 2.
l
Continue
the
expansion
of
Scope
3
categories
measurement.
Division
CO
2
e (tons)
Scope 1&2
Business Travel
CO
2
e (tons)
Scope 3 Cat.6
TOTAL CO
2
e
(tons)
Distribution
Ratio
Corporate HQ
24.20
28.05
52.25
2%
Networking
133.50
72.00
205.50
10%
Cyber
23.39
2.47
25.86
1%
Diagnostics
561.81
36.72
598.53
28%
Secondary
1,213.65
76.59
1,290.24
59%
Total Group
1,956.55
215.83
2,172.38
-
Division*
Revenue
($m)
TOTAL
CO2e
(tons)
tCO2e/
$m
Distribution
Ratio
Networking
19.8
213.92
10.80
10%
Cyber
10.3
30.26
2.94
1%
Diagnostics
33.3
612.71
18.40
28%
Secondary
59.3
1,315.48
22.18
61%
Total Group
122.8
2,172.38
17.69
-
* The emissions for the corporate headquarters have been allocated to the
divisions on a proportionate basis
ANNUAL REPORT &
ACCOUNTS 2023
27
STRATEGIC REPORT
Risk Management
RISK MANAGEMENT PROCESS
The management of the Group’s business risks is the
responsibility of the Board. The process for the identification
and assessment of business risks, and the management
thereof, in accordance with BATM’s corporate Risk and
Opportunity Management (“ROM”) Framework, is as follows:
Detection and Listing
The Group Risk and Opportunity Manager (“GROM”) – in
conjunction with the Board, General Counsel, business
unit managers and external advisers – identify risks and
opportunities (“R&O”) that are material to BATM, and which
includes the consideration of climate-related risks. The
process includes meetings with unit managers and the use
of key relevant information sources. The maintenance of the
resulting R&O list is undertaken by the GROM and approved
by the Board. Mr. Ran Noy, the Group’s CFO and an Executive
Director, was appointed as the GROM of BATM.
Assessment
An assessment of each R&O is undertaken by the GROM, in
conjunction with the parties listed above. This assessment is
based on impact, probability and timeframe and determines
those risks and opportunities that require the development
of appropriate actions.
Action
The GROM, with the appropriate unit managers, develops
proposed actions that are then finalised in conjunction
with the CEO. The GROM and unit managers ensure the
completion of the actions in the agreed timeframe.
Monitor and Report
The Company’s internal auditor (as defined under Israeli law)
monitors the completion of the agreed actions and the CEO
and GROM report regularly to the Board, who monitor and
approve the decisions and actions.
The
process
is
repeated
periodically,
with
dynamic
adjustments to the process itself, if required, and based
on any significant changes in any significant risk and/or
opportunity.
VIABILITY STATEMENT
The Directors have assessed the Company and the Group’s
viability over a period of three years. The Directors have
determined that a three-year period is an appropriate
timeframe for assessment because it is aligned to the
Group’s strategic planning process and therefore reflects the
Board’s best estimate of the future viability of the business.
In making their assessment, the Directors took account
of the Company and the Group’s current financial and
operational positions and contracted capital expenditure.
They also assessed the potential financial and operational
impacts, in severe but plausible scenarios, of the principal
risks and uncertainties set out above and the likely degree
of effectiveness of current and available mitigating actions.
Based on this assessment, the Directors have a reasonable
expectation that the Company and the Group will be able to
continue in operation and meet all their liabilities as they fall
due for the three years to 31 December 2026.
In making this statement, the Directors have also made key
assumptions (see note 4 to the financial statements).
ANNUAL REPORT &
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28
Risk
How we manage the risk
Risk
change
Political and
economic
There is a risk of harm to the
business from political unrest or
disruption, particularly in emerging
markets, and from a deterioration of
economic conditions.
The Group’s operations are dispersed over a number
of locations so that should a material adverse political
or economic event arise in one location, the Group can
continue with its operations elsewhere, thereby helping
to mitigate the impact on its overall business.
Up
Legal and
compliance
There is a risk that legal and/or
regulatory requirements are not
met, leading to the loss of licence
to operate, reputational damage or
financial loss.
The Group retains experienced high calibre legal
advisers for the Company and main subsidiaries in the
Group who provide ongoing advice and updates on
relevant legal compliance requirements. The Group
monitors the regulations relevant to its activities and,
when needed, makes the necessary adjustments to
maintain compliance.
Down
Business
continuity
There are risks to business
continuity from specific events, such
as natural disasters and pandemics.
The Group operates in numerous locations and its
manufacturing contractors are also located in multiple
locations, which would help to mitigate the impact of a
business disaster. In addition, the key employees in the
workforce have been positioned such that they are able
to work without interruption by working remotely from
their homes. The Group also keeps a cash cushion to
ensure that unexpected events don't cause unnecessary
indirect adverse effects beyond the direct outcomes.
No
change
Supply chain
A disruption in the supply of key
raw materials or services to a
manufacturing site could affect the
Group’s ability to make and deliver
products to customers, leading to
interruption in supply, lost revenue
and damage to its reputation as a
reliable supply partner. This could
be resulting from market shortages,
disruption due to global events and
physical climate-related disruption
of upstream supply chains.
The Group has established strong supplier
relationships and collaborates with multiple vendors
globally to broaden the geographical coverage of its
access to available components. The Group requests
that customers provide long-term committed forecasts
and itself provides multi-year forecasts to its contract
manufacturers. In addition, where appropriate,
it reengineers products to enable them to have
replaceable component alternatives. At times when
availability of components is constrained, the Group
seeks alternative sources and to increase inventory
levels of both components and finished goods.
No
change
PRINCIPAL RISKS AND UNCERTAINTIES
The risks outlined below are those that the Board considers to be material to the Group. The Board routinely monitors risks
that could materially adversely affect the ability of the Group to achieve its strategic goals and to maintain financial stability,
assisted by the senior management team.
Risk Management Report
CONTINUED
ANNUAL REPORT &
ACCOUNTS 2023
29
STRATEGIC REPORT
Risk
How we manage the risk
Risk
change
Competition
There is a risk that BATM is unable
to build and maintain competitive
advantage in its focus markets.
In particular, there is a risk that
competitors with greater financial
resources may develop technology
that is superior to that of the
Group and they may also adopt
more aggressive pricing models
or undertake more extensive
advertising and marketing
campaigns.
The Group operates in large markets, but with a focus
on areas where it can establish a leadership position
through technological expertise and innovation. The
diversification of its end markets reduces its exposure
to a large competitor in any one sector. The Group
ensures that its products remain world-leading
through investment in R&D. It maximises its resources
and enhances its routes-to-market by establishing
partnerships, collaborations and joint ventures.
No
change
Customers
and partners
There is a risk of harm to the Group’s
revenues as a result of termination
of business relationships with
material customers or partners
and sales agents. This risk is
increased by the challenging global
macroeconomic conditions and the
impact that this could have on the
business and viability of customers
and partners.
The Group maintains ongoing dialogue with its customers
and business partners in order to identify ahead of
time any potential problems arising on the part of the
customer and in order to maintain a close relationship
with its customers. The Group also does not have a
significant reliance on one or few customers or partners.
Up
Research &
Development
(R&D)
There is a risk that R&D programmes
overrun or do not deliver the
expected benefits.
With respect to its R&D, the Group’s strategy has been
to diversify its R&D operations among a variety of
teams, internally and externally (through universities
and hospitals that carry out clinical tests) and by using
different R&D funding sources – thus reducing the R&D
risk. In addition, any significant new R&D projects are
brought to the Board for consideration. Still, the Group
considers certain level of risk as inherent to R&D activity,
and views R&D activity as valuable to the Group despite
that risk.
No
change
Information
security
(including
cyber security)
There is a risk of information
security, data loss and corruption,
and physical damage to IT
infrastructure.
The Group routinely carries out proactive measures,
such as IT evaluations, to ensure that its IT systems have
the latest cyber security tools and security procedures in
place. These procedures include implementing security
controls and staff training.
Up
Market risk
There is a risk that changes in market
prices, such as foreign exchange,
inflation and interest rates, will lead
to financial loss.
The Group’s finance department at the corporate
level manages and monitors market conditions and
exposure. Most of the cash, income and expenses in
each company or subsidiary is held in a way to reduce
the Group’s exposure to currency fluctuations. When
this is not possible, the Group uses hedging transactions
when needed to protect itself against potential currency
risk. However, this is only done to a certain extent as
the Board believes it is very difficult to hedge against
currency fluctuations arising from translation in
consolidation in a cost-effective manner.
The Group also monitors the impact of the inflation and
adjusts sales prices to maintain its margins. The Group’s
exposure to interest rate risk is low as it has relatively
low bank debt. However, due to the impact of changes in
interest rates on the financial markets, the Group closely
monitors possible indirect impacts.
No
change
All of the risk categories have elements related to climate change. For further information on the Group's climate-related risk
management, please see the ‘Strategy’ and ‘Risk Management’ sections of the TCFD Report on pages 21 to 26.
ANNUAL REPORT &
ACCOUNTS 2023
30
Directors’ Biographies
Moti Nagar
Executive Director & CEO
Moti Nagar was appointed CEO
effective 1 January 2023, having
been the Group’s CFO since 2015.
During his time at BATM, Mr. Nagar
has been instrumental in driving
the business' growth, including
leading several M&A transactions,
the Group's IPO on TASE and, since his appointment as
CEO, renewing the Group's strategy. He was re-elected as
a Director of BATM in July 2023.
Prior to BATM, Mr. Nagar held several senior positions at
Deloitte, which he joined in 2005. As a Senior Manager, Mr.
Nagar was responsible for handling the accounts of leading
corporate clients in Israel and overseas, with companies
traded on the LSE, NASDAQ and TASE as well as private
businesses operating in a range of sectors.
Mr. Nagar graduated in Business Management and
Accounting and qualified as an Israeli Certified Public
Accountant (CPA, Israel) in 2008. He also holds an MBA in
Financial Management from Tel Aviv University.
Skills and experience
Mr. Nagar brings to the role of CEO business
management and accounting skills and experience he
gathered from his years as CFO at BATM and as an audit
manager to international companies. As CEO of BATM
his core skills include:
l
Business leadership and management
l
International business operations and strategy
l
Business finance
l
M&A experience
l
Stakeholder and shareholder management
l
Forward thinking and calculated risk management
Committee membership
CORPORATE GOVERNANCE
Gideon Chitayat
Non-executive Chairman
Dr.
Gideon
Chitayat
is
the
Chairman and CEO of GMBS Ltd,
a strategic consulting firm. He has
served as the Chairman of Delta
Galil Industries and as a director
of
Milissron
Shopping
malls,
Paz
Oil
Company,
Teva
Israel
Pharmaceutical Industries, Bank Hapoalim and Israel
Aircraft Industries, and has provided consultancy services
in business strategy to the board and presidents of large
companies. He has also served as Adjunct Professor at
Tel Aviv University, Recanati Business School. Dr. Chitayat
holds a Ph.D. in Business & Applied Economics from
the University of Pennsylvania, Wharton School and
a Master’s in Business & Applied Economics from the
Hebrew University, Jerusalem. Dr. Chitayat joined the
Board of BATM in June 2010 and was appointed Chairman
in January 2015. He was re-elected as a Director of the
Board in July 2023.
Skills and experience
Dr. Chitayat has extensive experience in providing
strategic business advice to Boards and executives
across a wide range of sectors including high-tech and
healthcare. He also has vast and in-depth knowledge
of the business of the Group. Other relevant key skills
include:
l
Board management
l
Strategy formulation
l
Financial expertise
l
Corporate governance
l
Shareholder and stakeholder engagement
l
Performance monitoring
Committee membership
N
RB
RB
ANNUAL REPORT &
ACCOUNTS 2023
31
CORPORATE GOVERNANCE
Zvi Marom
Founder &
Non-executive Director
Dr. Zvi Marom founded BATM
in 1992 and served as CEO until
January
2023.
A
former
first
lieutenant
in
the
Israeli
Navy,
he
graduated
with
excellence
from the officers course of the
Naval Academy and with excellence from the Advanced
Naval Command Course. He has a post-graduate degree
in medicine from the Sackler – Gold Schlagger School of
Medicine, Israel and an MSc in Electronics. Dr. Marom was
the Chairman of the Hi-Tech Union of the Manufacturers’
Association of Israel until January 2021, and he now serves
as the head of its quantum forum. In 2021, he received
The Industry Award from the Manufacturers' Association
of
Israel, and in March 2024 he was awarded the Knight's
Cross of the Order of Merit of Hungary. He is Chairman
of ADOR Diagnostics, an associate company of BATM,
and a director of Shore Capital Group plc. Dr. Marom was
re-elected as a Director of BATM in July 2023.
Skills and experience
As the founder of the Company and its CEO for
many years, Dr. Marom has vast relevant business
experience and in-depth knowledge of the Group, its
markets and various stakeholders, and holds important
organisational memory.
Committee membership
Ran Noy
Executive Director & CFO
Ran Noy has been the CFO of BATM
since 1 February 2023, having
served as VP Finance since joining
the Group in 2021, and was elected
as a Director in July 2023.
Prior to BATM, Mr. Noy spent 10
years in the finance department at ADAMA Ltd., a global agri-
chem business that delivered sales of $5bn in 2021. Latterly
as Financial Reporting Manager, he was responsible for
ADAMA’s financial reporting to the Shenzhen Stock Exchange
and the Tel-Aviv Stock Exchange. He was also instrumental
in ADAMA’s listing on the Shenzhen Stock Exchange via the
reverse takeover of a subsidiary of ChemChina and was
responsible for the financial integration of that business. Mr.
Noy is an Israeli Certified Public Accountant who began his
career as an auditor at EY Israel.
Skills and experience
Mr. Noy has skills and experience in developing and
managing financial systems and in financial management
of international businesses with multiple subsidiaries.
His skills include:
l
Financial management
l
Business management
l
Financial reporting
l
M&A and IPOs
l
Financial integration
l
System implementation
Committee membership
ANNUAL REPORT &
ACCOUNTS 2023
32
Varda Shalev
Non-executive Director
Prof. Varda Shalev is a specialist in
epidemiology, medical informatics
and predictive analytics in community
healthcare.
She
was
a
founder
and director of the Morris Kahn &
Maccabi Institute for Health Research
and Innovation and is an active
primary care physician. She has pioneered the development
of multiple disease registries to support chronic disease
management, and has authored or co-authored over
200
publications
in
peer-reviewed
medical
journals.
She is a Managing Partner of Team8 Health, a medtech-
focused venture capital company, and a director of Teva
Pharmaceutical Industries Ltd. In addition, she is a Professor
at the Tel Aviv University School of Public Health and sits on
the advisory board of several med-tech businesses. She was
appointed to the Board of BATM in November 2018 and her
second three-year term, in accordance with Israeli law, was
approved by shareholders in December 2021.
Skills and experience
Prof. Shalev brings 30 years’ experience in medicine,
including clinical research, healthcare information
technology
and
epidemiology.
Her
industry
and
clinical knowledge is complemented by business
acumen, having established and grown a number of
organisations, making Prof. Shalev a valuable addition to
the Group as it develops its bio-medical product offering
and markets.
Committee membership
A
R
N
RB
Harel Locker
Non-executive Director & Senior
Independent Director
Harel Locker has been the Chairman
of the Board of Paz Oil Ltd, the
leading Israeli energy company, since
2021 and was the Chairman of the
Board of Israel Aerospace Industries
Ltd, the leading Israeli aerospace
and defence company, from 2017 to 2021. He served as
the Director General of the Israeli Prime Minister’s Office
and head of the Prime Minister's economic headquarters
between 2011 and 2015. Mr. Locker commenced his career
practicing commercial law for more than 25 years with both
Tel Aviv and Wall Street, New York City, first tier law firms.
He was appointed to the Board of BATM in September 2016
and his third three-year term, in accordance with Israeli
law, was approved by shareholders in December 2022.
Skills and experience
Mr. Locker brings to the Board broad business and
managerial skills based on his vast experience, as well as
in-depth understanding of the dynamics of government
authorities.
Committee membership
A
R
N
RB
Directors’ Biographies
CONTINUED
ANNUAL REPORT &
ACCOUNTS 2023
33
CORPORATE GOVERNANCE
Committee Key
Audit Committee
Remuneration Committee
Nomination Committee
Responsible Business Committee
Committee Chair
Avigdor Shafferman
Non-executive Director
Dr. Avigdor Shafferman had an
established career at the Israel
Institute for Biological Research,
a leading governmental applied
research institute specialising in the
fields of biology, medicinal chemistry
and environmental sciences, where
he worked for almost 40 years. He is a recipient of several
prestigious scientific awards and author of over 200 scientific
papers. Most recently, from 1995 until his retirement in
2013, he was General Director of the organisation. Other
roles have included serving as a visiting professor in the
University of California, San Diego at the biology department
as well as a visiting senior research scientist at various leading
research institutions in the United States in various medical
areas, including vaccines. Dr. Shafferman holds a Ph.D. in
physical chemistry from the Hebrew University of Jerusalem.
He was re-elected as a Director of BATM in July 2023.
Skills and experience
Dr. Shafferman is an influential scientist with experience
in top-management and international cooperation.
His skills span applied medical research, vaccine
development and environmental science, which is
highly relevant for supporting BATM’s developmental
diagnostic activities.
Committee membership
A
R
N
RB
ANNUAL REPORT &
ACCOUNTS 2023
34
Corporate Governance Report
The Company is committed to high standards of corporate
governance and the Board is accountable to the Company’s
shareholders for such governance. The Board carefully reviews
all new regulations relating to the principles of good corporate
governance and practice and endeavours to apply them where
applicable. It also carefully reviews any comments received
from independent reviewing agencies and shareholders and
communicates with them directly. The Company believes
that the combination of the experience of its Chairman, Dr.
Gideon Chitayat, with the experience and expertise of its Non-
executive Directors provides the Company with the relevant
leadership to address its position as an Israeli company that
is traded on the London Stock Exchange and which is also
traded on the Tel Aviv Stock Exchange.
CORPORATE GOVERNANCE FRAMEWORK
The Board has delegated the daily operational management
of the business to the CEO, and holds him to account for
his responsibilities. Business risks and opportunities are
assessed primarily through the leadership of the Executive
Directors (one of whom currently serves as the Group
Risk and Opportunity Manager) in consultation with the
business unit managers. The Board also operates through
several committees: Audit, Remuneration, Nomination
and Responsible Business. Executive Directors serve as
directors in Group subsidiaries. The Board receives a
Group-wide overview of the Group’s activities, including risks
and opportunities, in the CEO’s overview in the quarterly
meetings of the Board. The Board of the Group is able to
validate the information that it receives from the Executive
Directors via the internal auditor (as defined under Israeli
law) and the external auditors' audit of the annual and
interim reports. BATM’s corporate governance structure is
shown in the diagram below.
THE BOARD
During 2023, the Board consisted of the Chairman, two
Executive Directors (Moti Nagar, CEO, and, from 13 July 2023,
Ran Noy, CFO) and four Non-executive Directors, two of
which are defined as ‘external directors’ under Israeli law. All
the Directors bring a broad and valuable range of skills and
experience to the Group (their biographical details are set out
on pages 30 to 33). The division of responsibilities between
the Chairman, CEO and other Directors is clearly established,
and no individual has unrestricted powers of decision.
MATTERS RESERVED FOR THE BOARD
The Israeli Companies Law, which applies to the Company,
sets out and defines the responsibilities and duties of, and
areas of decision for, the Board. These include preparation
and approval of financial statements; distributions (dividends
and
buy-backs);
long-term
objectives
and
commercial
strategy;
appointment,
removal
and
compensation
of
senior management; major investments; risk management;
corporate governance; engagement of professional advisers;
Audit
Committee
Internal
Auditor
Remuneration
Committee
Responsible
Business
Committee
Nomination
Committee
Shareholders
Appointment
and review
Reporting &
accountability
Reporting
Reporting
Board of Directors of the Group
•
Chairman
•
Non-executive Directors
•
External Directors*
•
Executive Directors
Reporting &
accountability
Appointment,
review and
approval
Executive Directors of the Group
(CEO & CFO)
* As defined under Israeli law
ANNUAL REPORT &
ACCOUNTS 2023
35
CORPORATE GOVERNANCE
political donations; internal control arrangements; and
additional responsibilities and duties as defined in the Israeli
Companies Law and the Company’s Articles of Association.
The ultimate responsibility for reviewing and approving the
annual report and financial statements, and for ensuring
that they present a balanced assessment of the Company’s
position, lies with the Board. These provisions have been fully
complied with.
BOARD AND COMMITTEE MEETINGS
In compliance with Israeli company legislation, the Board
meets at least four times a year in formal session. Prior to
each meeting, the Board is furnished with information in a
form and quality appropriate for it to discharge its duties
concerning the state of the business and performance. The
Chairman met with Non-executive Directors, without the
Executive Directors present, during the year.
DIVISION OF RESPONSIBILITIES
The responsibilities of the Chairman, CEO and other Directors
are clearly set out and defined under Israeli Companies Law
and the Company's Articles of Association, with no individual
having unrestricted powers of decision.
The Chairman is responsible for the leadership of the Board,
while the responsibility for the day-to-day management
of the Group has been delegated to the CEO. The CEO is
supported by the executive management team, which
is responsible for making and implementing operational
decisions and for making recommendations to the Board.
INDEPENDENCE
Mr. Locker, Prof. Shalev and Dr. Shafferman qualify as
"Independent Directors" as this term is defined in the
Israeli Companies Law. The Board considers that the
aforementioned directors in addition to Dr. Gideon Chitayat
are independent in accordance with the UK Corporate
Governance Code, being independent in character and
judgment. The interests of the Directors in the Company and
their shareholdings are set out on page 57.
All directors are subject to annual re-election by shareholders
at the Annual General Meeting, except the external directors
– being Harel Locker and Prof. Varda Shalev – who, in
accordance with Israeli law, cannot be subject to annual
re-election (but the law does allow for their removal from
office if certain conditions are met). External directors under
Israeli law are appointed for a minimum of one three-year
term, which may be extended by the Company (subject
to shareholder approval) for no more than two additional
terms of three years each.
DIVERSITY
The Group operates open and inclusive hiring and staff
management
practices,
and
encourages
employment
of people drawn from a wide range of socioeconomic
backgrounds. At present, it does not have a formal diversity
policy due to the requirements of the Israeli Law of Equal
Opportunity at Work (1988) (see ‘Equality, Diversity & Inclusion’
on page 19). However, it appreciates its importance and
intends to explore the ability to produce a policy that complies
with Israeli law. The Board evaluates and reviews its structure,
size and composition on a continual basis, including its balance
Meeting attendance
Director
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Responsible
Business
Committee
Dr. Gideon Chitayat,
Chairman
(1)
10/10
-
-
1/1
4/4
Moti Nagar, CEO
(1)
10/10
-
-
-
4/4
Ran Noy, CFO
(1)(2)
4/4
-
-
-
-
Harel Locker, SID
8/10
5/7
5/7
0/1
3/4
Dr. Zvi Marom, NED
10/10
-
-
-
-
Prof. Varda Shalev, NED
10/10
7/7
7/7
1/1
4/4
Dr. Avigdor Shafferman,
NED
10/10
7/7
7/7
1/1
4/4
(1) The Chairman and/or Executive Directors attend parts of certain meetings of the Audit and Remuneration Committees at the request of
the Committee or when the Committee Chair decides that they are required for the presentation of certain subjects.
(2) Appointed to the Board on 13 July 2023.
ANNUAL REPORT &
ACCOUNTS 2023
36
of skills, knowledge, experience and diversity, while factoring
in the Group’s strategy, risk appetite and future development.
As at 31 December 2023, gender representation on BATM’s
board and executive management team was as shown in
the table below.
EFFECTIVENESS & EVALUATION
The Board’s members have a wide breadth of experience
in areas relating to the Company’s activities, including in
leadership, management, business development, technology
(especially in the bio-medical and diagnostics areas), finance,
entrepreneurship and risk management. All of the Directors
are of a high calibre and standing. The Board is of the
opinion that each of its members has the skills, knowledge,
aptitude and experience to perform the functions required
of a director of a listed company and that the Board is
comprised of a good balance of Executive and Non-executive
Directors to ensure it performs its duties effectively. Further
biographical details can be found on pages 30 to 33.
The Nomination Committee is responsible for succession
planning and conducting the process to appoint new Board
members. However, ultimately, the appointment of any new
Director is a matter for the shareholders at a general meeting.
Non-executive Directors are advised on appointment of
the time required to fulfil their role. The Company’s two
External Directors, as defined under Israeli law, being
Harel Locker and Varda Shalev, have significant additional
appointments, which is customary in Israel owing to the fixed
nature of remuneration and tenure of External Directors. In
addition, the Board considers their broader involvement in
the business community to be of benefit to BATM and it is
satisfied that the Chairman and each of the Non-executive
Directors, including the External Directors, are able to devote
sufficient time to the Company’s business.
During the year, the Board undertook an internal evaluation
of its own performance and that of its committees and
individual Directors. Individual evaluation aims to show
whether each Director continues to contribute effectively
and to demonstrate commitment to the role (including
commitment of time for Board and committee meetings
and other duties). The evaluation was undertaken by the
Chairman, Gideon Chitayat, and his performance was
evaluated by Harel Locker, the Senior Independent Director.
The findings in both cases were reported to the full Board.
INDUCTION
The induction of newly elected Directors into office is
the responsibility of the Chairman of the Board. The new
Directors receive a memorandum on the responsibilities
and liabilities of Directors from the Company’s general
counsel as well as presentations on all activities of the
Company by senior members of management and a guided
tour of the Company’s corporate headquarters and the
premises of its main subsidiaries in Israel.
INFORMATION AND SUPPORT
Prior to each Board meeting, the Directors are furnished
with information in a form and quality appropriate for
them to discharge their duties concerning the state of
the business and performance. The Directors periodically
receive a detailed operating report on the performance of
the Company in the relevant period, including a consolidated
statement of financial position. A fuller report on the
trading and quarterly results of the Company is provided
at every quarterly Board meeting. Once per year, a budget
is discussed and approved by the Board for the following
year. All Directors are properly briefed on issues arising at
Board meetings and any further information requested by a
director is always made available.
The Company Secretary, Yair Livneh, is present at every Board
meeting and Board committee meeting. All of the Directors
have access to Mr. Livneh’s services. In accordance with the
Israeli Companies Law, in special cases the Directors may take
independent professional advice at the Company’s expense
in furtherance of their duties, if the Company’s cover of the
costs is approved by the Board or by a court of law.
Board & executive management diversity
Number of
board members
Percentage
of the
board
Number in
executive
management
Percentage of
executive
management
Male
6
86
33
70
Female
1
14
14
30
Corporate Governance Report
CONTINUED
ANNUAL REPORT &
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37
CORPORATE GOVERNANCE
BOARD COMMITTEES
The Board has appointed an Audit Committee, a Remuneration
Committee and a Nomination Committee to deal with specific
aspects of the Company’s affairs and ensures that each such
committee is fully constituted and operates as required
under the Israeli Companies Law. In addition, the Board has
appointed a Responsible Business Committee to deal with
social, environmental, health and safety practices, diversity and
similar matters with respect to the way the Company conducts
itself. The composition of the aforementioned committees and
an overview of their activities are as detailed below.
Audit Committee
Members:
Harel Locker (Chairman), Prof. Varda Shalev and
Dr. Avigdor Shafferman
The Audit Committee meets at least four times a year.
The membership of the Audit Committee consists of the
Company’s independent Non-executive Directors. The
Board has considered the requirements of the UK Corporate
Governance Code with respect to the composition of audit
committees and is satisfied that all members of the Audit
Committee have recent and relevant financial experience
and that the Committee as a whole has competence relevant
to the sectors in which the Group operates.
The Audit Committee has been delegated responsibility
for ensuring the financial performance of the Company is
properly reported on and reviewed and for the monitoring
of the external auditor, the internal auditor and oversight of
internal controls. Further details on the Audit Committee’s
responsibilities and main activities are set out in the Audit
Committee Report on pages 41 to 43.
Remuneration Committee
Members:
Prof. Varda Shalev (Chair), Harel Locker and Dr.
Avigdor Shafferman
The Remuneration Committee has responsibility for making
recommendations to the Board on the Company’s policy
on staff remuneration and is authorised to decide whether
to approve remuneration of Office Holders (as designated
under Israeli Companies Law), including the Chairman of
the Company and Executive Directors (including pension
rights and any compensation payments). The membership
of the Remuneration Committee consists of the Company’s
independent Non-executive Directors.
Further
details
on
the
Remuneration
Committee’s
responsibilities
and
activities
can
be
found
in
the
Remuneration Committee Report on pages 44 to 45
(within the Directors’ Remuneration Report). Information
on the Company’s policy regarding the setting of Directors’
remuneration, together with the remuneration of Directors,
is set out in the Directors’ Remuneration Report on pages
44 to 59. The Company’s current remuneration policy
as recommended by the Remuneration Committee was
approved at the Annual General Meeting of the Company on
14 December 2021. The remuneration policy is more fully
explained in the Directors’ Remuneration Report.
Nomination Committee
Members:
Dr. Gideon Chitayat (Chairman), Prof. Varda
Shalev, Harel Locker and Dr. Avigdor Shafferman
The membership of the Nomination Committee consists of
the Company’s independent Non-executive Directors. In line
with the Committee's terms of reference, the Chairman of the
Board acts as chairman of the Committee. During the year, the
Nomination Committee met on one occasion where it discussed,
and recommended to the Board, the appointment of Ran Noy
as a Director. In addition, as described under ‘Effectiveness &
Evaluation’ above, the Chairman of the Committee, as Chairman
of the Board, conducted an evaluation of Board performance.
The Nomination Committee is specifically tasked with assessing
the process utilised by the Company in relation to Board
appointments and in monitoring diversity during the recruitment
process and in the context of the resulting appointment
made. During the process, the Nomination Committee
considers the role and capabilities required for a particular
appointment, with consideration given to the balance of skills,
experience, independence and knowledge on the Board. Board
appointments are made on merit, having due regard, amongst
other things, to the benefits of diversity on the Board. The
Nomination Committee considers the skills, experience and
expertise of a potential candidate against the needs of the
Company, and presents its recommendations to the Board.
Responsible Business Committee
Members:
Dr. Gideon Chitayat (Chairman), Moti Nagar,
Harel Locker, Prof. Varda Shalev and Dr. Avigdor Shafferman
The primary role of the Responsible Business Committee is
to assist the Board in:
ANNUAL REPORT &
ACCOUNTS 2023
38
l
understanding the views of key stakeholders in the Company;
l
understanding the Company’s impact on community and
environment;
l
assessing and monitoring climate-related risks and
opportunities; and
l
ensuring that the Board is aware of the processes used
by the Company in engaging with its key stakeholders.
The duties of the Responsible Business Committee pursuant
to its terms of reference are:
l
to assess and monitor culture to ensure alignment with
the Company’s purpose, values and strategy;
l
to be responsible for interaction and engagement with the
workforce on behalf of the Board, as and when relevant;
l
to oversee, monitor and help generate the Company’s
health and safety systems and practices; and
l
to help the Board understand the impact of the Company’s
operations on the community and environment.
The Responsible Business Committee met on four occasions
during the year where it discussed the Taskforce on Climate-
related Financial Disclosures disclosure recommendations,
the Group’s risk and opportunities management framework
and the Group’s risks and opportunities register, the Group’s
Anti-Bribery and Corruption Policy and the Group’s activity
regarding Human Resources.
RELATIONS WITH SHAREHOLDERS AND
SIGNIFICANT SHAREHOLDERS
Communication with shareholders is given high priority. The
half-yearly and annual results are intended to give a detailed
review of the business and developments, and are available
on the Company’s website to all shareholders. Printed copies
of the full Annual Report are made available on request.
The Company’s website (www.batm.com) contains up to
date information on the Company’s activities and published
financial results. The Company solicits regular dialogue with
institutional shareholders (other than during closed periods)
to understand shareholders views. The Board also uses the
Annual General Meeting to communicate with all shareholders
and welcomes their participation. Directors are available to
meet with shareholders at appropriate times. The Company
is committed to having a constructive engagement with its
shareholders. During 2023, the CEO and CFO attended:
l
20 scheduled meetings with UK-based investors (including
three group meetings/presentations); and
l
seven scheduled meetings with Israel-based investors.
The Chairman of the Board attended the Annual General
Meeting. He also met with certain significant shareholders
during the year without the Executive Directors present.
As of 31 December 2023, to the best of the Company’s
knowledge, the following persons or entities had a significant
holding of BATM ordinary shares:
l
Lombard Odier Investment Managers – 28.76%
l
Dr. Zvi Marom, Non-executive Director and founder
– 22.19%
l
Hargreaves Lansdown – 4.35%
l
Herald Investment Management – 4.21%
l
Canaccord Genuity Wealth Management – 3.63%
CULTURE AND CONFLICTS
The Board also works to ensure that within the Group
there exists a culture that is free from discrimination
and harassment in any form. The Board ensures that the
Company complies with Israeli legislation known as the Israeli
Equal Rights for People with Disabilities Law, 5748-1988 to
ensure that appropriate consideration is given to employees
with disabilities. The Company is also in full compliance with
Israeli legislation known as the Law of Equal Opportunity at
Work, 1988, which requires an employer not to discriminate
amongst employees on account of sex, sexual tendencies,
personal status and various other forms of discrimination.
During the year, Prof. Varda Shalev met with Sigal Wolf,
the Global VP Human Resources of the Group, to receive
updates regarding Mrs. Wolf’s conversation and interactions
with the workforce, which were relayed to the full Board. The
Board also resolved during the year to extend Prof. Shalev's
appointment as voice of the workforce for a further year to
the end of 2024. In addition, the Board received a review
from Mrs. Wolf regarding HR matters and discussed the
approach to HR.
Throughout 2023, the Company complied with procedures
in place for ensuring that the Board’s powers to authorise
conflict situations operated effectively and this has also
been considered at a committee level where appropriate.
During 2023, no conflicts arose that required the Board to
exercise authority or discretion in relation to such conflicts.
Corporate Governance Report
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ANNUAL REPORT &
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CORPORATE GOVERNANCE
Board leadership and company purpose
Page reference
Chairman’s Statement
4-5
Business Model
6
Strategy
7
Chief Executive Officer's Review
8-9
Corporate Governance Report
34-40
Stakeholder Engagement
13-14
Division of responsibilities
Matters reserved for the Board and Board and Committee Meetings
34-35
Division of Responsibilities
35
Board Committees
37-38
Composition, succession and evaluation
Directors’ Biographies
30-33
The Board
34
Effectiveness & Evaluation
36
Nomination Committee
37
Audit, risk and internal control
Audit Committee Report
41-43
Risk Management
27-29
Remuneration
Directors’ Remuneration Report
44-59
ANNUAL GENERAL MEETING
The 2023 Annual General Meeting (“AGM”) was held on Thursday 13 July 2023. The results of voting were published via the
Regulatory News Service and on the Company’s website at www.batm.com. The Chairman and CEO attended the AGM in
person and the CFO attended virtually, with a facility also being made available for shareholders to attend remotely and ask
questions.
COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE
The Company, as a company with a Premium Listing and therefore subject to Listing Rule 9.8.7R, is subject to the principles
and provisions of the UK Corporate Governance Code (the “Code”) published by the Financial Reporting Council (“FRC”), a copy
of which is available from the FRC’s website at https://www.frc.org.uk.
Details of how the principles of the Code have been applied can be found throughout the Corporate Governance section and
the Strategic Report as follows:
ANNUAL REPORT &
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40
Corporate Governance Report
CONTINUED
Provision
Exception and explanation
18
All directors should be subject to
annual re-election.
In accordance with Israeli law, the Company is required to appoint at least
two independent non-executive directors (defined as ‘external directors’
within Israeli law), who must be appointed for a minimum of one three-
year term. Mr. Harel Locker and Prof. Varda Shalev are classified as
external directors and cannot be subject to annual re-election (however,
the Israeli Companies Law does provide grounds for removing an external
director from office). All other members of the Board are subject to annual
re-election.
19
The chair should not remain in post
beyond nine years from the date of
their first appointment to the board.
As of June 2023, Dr. Gideon Chitayat, Chairman, has served on the Board
for 13 years - nine of these as Chairman. Dr. Chitayat was appointed to the
Board as Independent Non-executive Director and the Board continues to
consider him as independent in character and judgement. His knowledge
of the business and the understanding of its various components, which
is built on his experience, combined with his independence of mind,
enables a critical review of strategy and operations. In addition, his vast
business experience, expertise and knowledge of directing large business
organisations within Israel is a valuable resource for the Board and the
Company as a whole. As a result, the Board believes that Dr. Chitayat
remaining as Chairman is in the best of interests of the Company and of
shareholders.
21
A regular externally facilitated board
evaluation.
Externally facilitated Board evaluation is not common practice in the Israeli
corporate business environment. The Company performed an internal
Board evaluation.
The Board considers that, during 2023, the Company complied with the provisions set out in the Code with the exception of
the matters referred to below:
ANNUAL REPORT &
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41
CORPORATE GOVERNANCE
Audit Committee Report
Dear Shareholder,
I am pleased to present the Audit Committee report for
2023. I trust that this report will provide you with an insight
into our work, the matters handled and the focus of the
Audit Committee’s deliberations during the year.
MEMBERSHIP AND ATTENDANCE
The members of the Audit Committee are:
l
Harel Locker (Chairman), Senior Independent (Non-
executive) Director ("external director" as this term is
defined in Israeli Companies Law)
l
Prof. Varda Shalev, Non-executive Director ("external
director")
l
Dr. Avigdor Shafferman, Non-executive Director
("independent director" as this term is defined in Israeli
Companies Law)
The Audit Committee members are independent Non-
executive Directors of the Company, with diverse skills
and financial and/or related business experience gained in
senior positions in a range of organisations relevant to the
sectors in which BATM operates. The Board is satisfied that I,
as Chairman, have recent and relevant financial experience,
including having been Chairman of the Audit Committee
from joining the Board in 2016 until 22 December 2020
(and, thereafter, remained a member until resuming the role
of Chairman on 28 November 2021).
The Audit Committee meets at least twice a year, and always
prior to the announcement of interim or annual results.
The external auditors and internal auditor are invited to
attend all meetings. The Audit Committee met with the
external auditor and internal auditor during the year without
executive officers present. The Audit Committee also meets
with the Company’s external auditors at least twice per year
(with executive officers present) and raises any issues it has
with the review and/or audit carried out by the external
auditors and comments on specific issues it believes the
auditors should be focusing on when required.
The Company Secretary is secretary to the Audit Committee.
The Chairman and/or Executive Directors attend parts of
certain meetings of the Audit and Remuneration Committees
at the request of the Committee or when the Committee
Chair decides that they are required for the presentation of
certain subjects.
During the year, there were seven meetings of the Audit
Committee, which were attended by all applicable members
except the absence of Harel Locker for
two meetings (with
Dr. Shafferman and Prof. Shalev chairing one meeting
respectively).
GOVERNANCE AND COMPLIANCE
The Audit Committee adheres to the functions and
requirements prescribed to it by the Israeli Companies
Law and Israeli Regulations as well as to the specific Terms
of Reference adopted by the Board for this committee and
takes account of the relevant provisions of the Disclosure
Guidance and Transparency Rules of the Financial Conduct
Authority ("FCA") and the UK Corporate Governance Code.
The Chairman of the Audit Committee maintains close
contact on a regular basis with the key people involved in the
Company’s governance.
RESPONSIBILITIES AND ACTIVITIES
The Audit Committee’s responsibility is to, among other
things, ensure that the financial information published by
the Group properly presents its activities to stakeholders in
a way that is fair, balanced and understandable; monitor the
scope and results of the external and internal audit; review
whistleblowing procedures; consider compliance with legal
requirements, accounting standards and the Listing Rules of
the FCA; and advise the Board on the requirement to maintain
an effective system of internal controls. The Committee also
keeps under review the independence and objectivity of the
Group’s external auditors, value for money of the audit and
the nature, extent and cost-effectiveness of the non-audit
services provided by the auditors. Pursuant to section 117
(6) of the Israeli Companies Law, the Audit Committee is
responsible to fix procedures and policy for whistleblowing
and to oversee these procedures.
ANNUAL REPORT &
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42
In 2023, the Audit Committee’s activities included:
l
Examining the Annual Report for the year to 31 December
2022 and the Half-year Report for the six months to 30
June 2023 and discussing them with management and
the external auditor to assess whether the reports, taken
as a whole, were fair, balanced and understandable prior
to recommending these to the Board for approval.
l
Reviewing and challenging areas of significant risk and
judgement and the level of disclosure.
l
Challenging the assumptions and analysis produced by
management in relation to the Company’s going concern
basis of preparation, the long-term viability statement
and associated risk assumptions, the accounting policies
and disclosures, the financial reporting issues and the
assumptions and adjustments made.
l
Reviewing and approving the financial results for the first
and third quarters of 2023.
l
Reviewing the findings of the internal audit work and
the follow-ups of reviews done in the previous year and
considering the internal audit work plan for the following
year.
l
Reviewing the effectiveness of the Group’s internal
controls and disclosures made in the Annual Report and
Financial Statements.
INTERNAL AUDIT, INTERNAL CONTROL AND RISK
MANAGEMENT
During 2023, the Company continued to follow the
processes for identifying, evaluating and managing the
significant risks faced by the Group in accordance with its
Risk and Opportunity Management Framework that was
formalised in the previous year, and as described in the
Risk Management section on page 27. Principal controls are
ultimately managed by the Executive Directors,
including
alongside regular review by management and the Board of
the operations and the financial statements of the Company.
The Executive Directors, as part of the Board, have overall
responsibility for ensuring that the Company maintains
adequate systems of internal control and for determining
the nature and extent of principal risks. The Board confirms
that it has carried out, during 2023, a robust assessment of
such risks accordingly, including those that would impact the
Company’s business model, future performance, solvency or
liquidity, and have considered how they are to be mitigated.
In accordance with the Israeli Companies Law, the Company
retains the services of an independent qualified internal
auditor. Each year, the Audit Committee reviews with the
internal auditor potential risks and a proposed plan for
their scope of work. Each year the Audit Committee usually
selects at least two areas of the Company’s operations on
which it requests the internal auditor to focus and prepare
an internal audit report with recommendations. Following
the completion of each report, the internal auditor sends it
to all the Directors and presents their findings to the Audit
Committee. The Audit Committee then reports to the Board
on any major findings together with the internal auditor’s
recommendations for improving controls and corporate
responsibility and the Board instructs management to
implement the recommendations. During the year under
review, the internal auditor presented a report to the Audit
Committee on costing in a subsidiary.
The key features of the financial controls of the Company
include a comprehensive system of financial reporting,
budgeting and forecasting, and clearly laid down accounting
policies and procedures. The main elements of internal
control currently include:
l
Operating Controls: The identification and mitigation of
major business risks on a daily basis is the responsibility
of the Executive Directors and senior management. Each
business function within the Group maintains controls
and procedures, as directed by senior management,
appropriate to its own business environment while
conforming to the Company’s standards and guidelines.
These include procedures and guidelines to identify,
evaluate the likelihood of and mitigate all types of risks on
an ongoing basis.
l
Information and Communication: The Group operating
procedures
include
a
comprehensive
system
for
reporting financial and non-financial information to the
Directors. Financial projections, including revenue and
Audit Committee Report
CONTINUED
ANNUAL REPORT &
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43
STRATEGIC REPORT
profit forecasts, are typically reported on a monthly basis
to senior management compared with corresponding
results for previous periods. The central process for
evaluating and managing non-financial risk is primarily
through meetings of Executive Directors and/or Group
Risk and Opportunity Manager with the business unit
leaders.
l
Finance Management: The finance department operates
within procedures approved by the Directors and the
Chief Financial Officer. Expenditures are tightly controlled
with stringent approvals required based on amount.
Duties such as legal, finance, sales and operations are
also segregated to minimise risk.
l
Insurance: Insurance coverage is provided externally
and depends on the scale of the risk in question and the
availability of coverage in the external market.
EXTERNAL AUDITOR AND INDEPENDENCE
Brightman Almagor Zohar & Co., a Firm in the Deloitte
Global Network, serves as the Group’s auditor. The Audit
Committee as well as the Directors review and assess on
an annual basis, the performance of the external auditors,
their independence and the reasonableness of their audit
fees as compared with peer tier 1 accountancy offices in
Israel, and make recommendations to be brought forward
to the shareholders’ meeting as to the appointment, or
reappointment, or replacement of the external auditors of
the Group. While the Audit Committee as part of its activity
reviews and monitors the external auditor’s independence
and objectivity, there is no requirement under Israeli law
and regulations to have maximum terms for auditors.
Rotation of external auditors is not accepted practice in the
Israeli market and the Company is not subject to EU audit
regulations that relate to rotation of the external auditors.
However, to facilitate auditor independence, based on
the IESBA Code, the audit engagement partner must be
rotated after no more than seven years of service in that
role. The most recent audit partner rotation occurred in
2022. In addition, the Audit Committee has discussed with
the external auditors their independence, and has received
and reviewed written disclosures from the external auditors
regarding independence.
NON-AUDIT SERVICES
Non-audit work is generally put out to tender. In cases which
are significant, the Company engages another independent
firm of accountants to provide consulting work to avoid
the possibility that the external auditors’ objectivity and
independence could be compromised; work is only carried
out by the external auditors in cases where they are best
suited to perform the work, for example, tax compliance.
However, from time to time, the Company will engage
the external auditors on matters relating to acquisition
accounting and due diligence (the scope of which is limited),
thus ensuring the continued objectivity and independence
of the external auditors.
In order to safeguard the independence and objectivity
of the external auditor, the Audit Committee reviews the
nature and extent of the non-audit services supplied, and
receives reports on the balance of audit to non-audit fees.
For 2023, the external auditor provided $33k of non-audit
work (2022: $63k). Fees paid to Brightman Almagor Zohar &
Co., a Firm in the Deloitte Global Network, are set out in note
9 to the financial statements.
Harel Locker
Audit Committee Chairman
2 April 2024
ANNUAL REPORT &
ACCOUNTS 2023
44
REMUNERATION COMMITTEE REPORT
Dear Shareholder
The Board is pleased to present the Remuneration
Committee's Report for the year ended 31 December 2023.
The main purpose of the Remuneration Committee is to
design appropriate remuneration packages to attract,
retain and motivate senior executives and managers of the
experience and expertise required to run the Company
successfully. The Remuneration Committee reviews and
considers the remuneration of, amongst others, the CEO,
CFO, executive and non-executive directors and senior
management.
The Remuneration Committee ensures that a remuneration
framework is established and implemented that addresses
the need of the Company to attract, retain and motivate such
executives and managers, while considering and managing
business risks and ensuring the Company's remuneration
policy facilitates, so far as possible, the Company's long-
term strategy and performance and ensures its sustainable
financial health.
The Remuneration Committee ensures that the overall
remuneration strategy adopted by the Company remains
aligned
with
the interests of
its
shareholders. The
Remuneration
Committee,
when
necessary,
engages
external executive remuneration advisers to give it guidance
regarding the accepted levels of salary, bonuses and long-
term incentives ("LTIs") payable by similar sized companies
listed on the London Stock Exchange and the Tel Aviv Stock
Exchange to its CEO, CFO and other senior executives and
ensures that the level of remuneration offered to its senior
executives is both fair and reasonable.
INTRODUCTION
The Directors’ Remuneration Report sets out BATM's
executive
remuneration
policy
and
details
Directors'
remuneration and benefits for the financial year under
review. The Company is incorporated in Israel, and the
Company's current Remuneration Policy and Guidelines
(the "Policy”) came into effect after its approval by a majority
vote of shareholders, as prescribed in section 267A (b) of
the Israeli Companies Law, 1999 (“Companies Law”), at the
Annual General Meeting (“AGM”) held in December 2021. The
Policy has been effective from the start of the 2022 financial
year and is intended to operate for a period of three years.
While the Company is not subject to the Companies Act 2006
or the amendments introduced in relation to the preparation
and approval of directors' remuneration policies and reports
for listed companies, the Company complies with the UK
Corporate Governance Code (the “Code”) and believes that
the Company's remuneration strategy complies with the
requirements of the Code and of the Companies Act 2006
and related legislation.
THE REMUNERATION COMMITTEE’S RESPONSIBILITIES
The BATM Remuneration Committee (the “Committee”)
was established by the Board of Directors of the Company
and operates in accordance with the functions set forth in
the Israeli Companies Law and UK corporate governance
expectations. This is a separate independent Committee
comprised of external independent directors who are
appointed by the shareholders' meeting.
The Committee’s responsibilities and duties are:
(1)
Recommending for approval to the Board the framework
or broad policy for the remuneration of the Company's
Chairman of the Board, Chief Executive Officer, Executive
Directors, Non-executive Directors and other senior
management and Office Holders (as defined in the Israeli
Companies Law) ("Remuneration Policy");
(2)
Recommending appropriate remuneration packages and
service contracts of the Executive Directors and Officers,
reviewing the ongoing appropriateness and relevance of
the Remuneration Policy, recommending to the Board
updates of the Policy, and monitoring its application;
(3)
Determining whether to approve remuneration of Office
Holders;
(4)
Exempting the remuneration of a candidate for the
role of Chief Executive Officer from the approval of the
general meeting, if the remuneration is according to
the Remuneration Policy, the candidate is not related to
a controlling shareholder (and if there is no controlling
shareholder - to a substantial shareholder, the chairman
of the Board, the Chief Executive Officer or the Chief
Financial Officer), and the Committee found that bringing
the remuneration for the approval of the general meeting
will result in failure of the attempted recruitment of the
CEO candidate;
Directors’ Remuneration Report
ANNUAL REPORT &
ACCOUNTS 2023
45
CORPORATE GOVERNANCE
(5)
Recommending and determining the goals for all
performance-related
remuneration
offered
by
the
Company and approving the total annual payments made
under such schemes;
(6)
Reviewing the design of all long-term incentive schemes,
such as options and equity awards, and recommending
these for approval by the Board and, if and when required
by law, by the shareholders; and
(7)
Reviewing the CEO's compensation policies for Office
Holders.
The Committee’s terms of reference are available on the
Company’s website and are available in hard copy on request
from the Company Secretary.
KEY ACTIVITIES DURING THE YEAR
There were seven meetings of the Committee during the
year to 31 December 2023. The Committee undertook the
following activities in this period:
l
Approving the remuneration package for the new CFO
l
Approving and granting long-term incentive awards to
directors and employees
l
Determining the outcome of the 2022 annual bonus
l
Setting the targets and measures for the 2023 annual
bonus
l
Approving grant of exemption and indemnification to
Office Holders (as exemption and indemnification are
considered remuneration under Israeli Companies Law)
l
Approving updates to the remuneration of Office Holders
BUSINESS PERFORMANCE AND 2023
INCENTIVE OUTCOMES
As discussed further in the Strategic Report, the Group
delivered a strong performance for the twelve months to
31 December 2023. Against a challenging macroeconomic
backdrop, we delivered growth in revenue and adjusted
EBITDA – including more than offsetting the loss of sales
relating to COVID-19 as the global pandemic subsided.
There was a substantial increase in cash generated from
operating activities, resulting from the actions taken to
improve cost management and collections, and we ended
the year with a strong balance sheet. In addition, a significant
amount of work was undertaken in conducting an in-depth
strategic review that resulted in the establishment of a new
strategy, which we began to implement in the second half of
the year. However, we were not immune to the challenging
macroeconomic conditions and, accordingly, the 12%
growth in adjusted EBITDA was slightly lower than the target
that had been set in the annual budget at the beginning of
the year.
The 2023 bonus weightings were 75% of maximum bonus
opportunity to be based on the Group achieving financial
targets and 25% on non-measurable personal criteria.
As further described in the Annual Remuneration Report
below, the measurable and non-measurable criteria were
substantially met and, as a result, the Executive Directors
received a bonus pay-out for 2023 representing 88% of their
maximum bonus opportunity.
STAKEHOLDER VIEWS & ENGAGEMENT
At the AGM in 2023, we proposed one remuneration-
related resolution, which passed with an approval rating of
99.6% (further detail is provided in the Annual Report on
Remuneration section below). On behalf of the Committee,
I thank shareholders for their support and look forward
to receiving further support at this year's Annual General
Meeting.
Prof. Varda Shalev
Remuneration Committee Chair
2 April 2024
REMUNERATION POLICY
This Remuneration Policy sets out the remuneration policy
of BATM Advanced Communications Ltd (hereinafter – the
"Company") for its executive and non-executive directors,
and Officers (as that term is defined in section 1 of the Israeli
Companies Law), which includes the CEO and other senior
executives in the Company that report directly to the CEO
of BATM.
The Directors’ and Officers’ Remuneration Policy (the
“Policy”) was approved by shareholders at the December
2021 Annual General Meeting and took effect from 1
January 2022. The Policy was developed taking into account
the mandatory provisions of the Israeli Companies Law on
directors' and officers' remuneration as well as the principles
of the UK Corporate Governance Code 2018. As a UK-listed
company with a premium listing, the Policy also includes
certain voluntary disclosures as set out in UK company law
under the Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013.
This section summarises the key elements of the Policy. The
full Policy is available on the Company’s website and was
provided in full in the Company’s annual report for the year
ended 31 December 2021.
ANNUAL REPORT &
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Directors' Remuneration Report
CONTINUED
DIRECTORS’ & OFFICERS' REMUNERATION
POLICY TABLE
The table below sets out the main components of the
Remuneration Policy for executive and non-executive
directors and Officers (as that term is defined in section
1 of the Israeli Companies Law), together with further
information on how these aspects of remuneration operate.
The Remuneration Committee (the “Committee”) has
discretion to amend remuneration and benefits to the
extent described in the table and the written sections that
follow it.
Base Salary
Purpose and link to strategy
To provide competitive fixed remuneration.
To attract and retain Executive Directors and Officers of superior calibre in order
to deliver long-term business success.
Reflects individual experience, achievements, expertise, education, skills, role and
responsibility.
The Committee’s aim is to position salaries around the mid-market level of
companies of a similar size, scale and complexity.
Operation
Normally reviewed annually by the Committee with increases typically effective
from 1 January.
Increases take into account:
l
The executive's skills, experience, education, qualifications, achievements,
expertise, role and responsibilities
l
Affordability
l
Pay increases for the workforce
l
Performance
l
External market trends
l
Internal differentials/relativities
l
The value of total remuneration
l
The Committee’s judgement
Significant adjustments are infrequent and normally reserved for material changes
in role, a significant increase in the size/complexity of the Group, or where an
individual has been appointed on a low salary with an intention to bring them to
market levels over time and subject to performance.
Other factors which will be taken into account will include pay and conditions
elsewhere in the Group, progression within the role, and competitive salary levels
in UK premium-listed and Israeli publicly-listed companies of a broadly similar size
and complexity.
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CORPORATE GOVERNANCE
Maximum potential value
No prescribed maximum or maximum increase.
The normal approach will be to limit increases to the average level across the
wider workforce, though increases above this level may be awarded subject to
Committee discretion to take account of certain circumstances, such as those
stated under ‘Operation’ above.
On recruitment or promotion, the Committee will consider previous remuneration
and pay levels for comparable companies (for example, companies of a similar size
and complexity, industry sector or location), when setting salary levels.
This may
lead to salary being set at a lower or higher level than for the previous incumbent.
The Committee also takes into account the ratio between the total remuneration
of the applicable Executive Director and/or Officer and the salary of all other
employees in the Company, especially the ratio between the total remuneration
and the median and average salary of all such other employees in the Company
- this analysis and ratio will be calculated or evaluated on a per division basis and
on a per country basis so as to ensure that the comparison is made on the same
underlying parameters.
Performance targets
Although there are no formal performance conditions, any increase in base salary
is only implemented after careful consideration of individual contribution and
performance and having due regard to the factors set out in the ‘Operation’ row
of this table.
Benefits
Purpose and link to strategy
To provide competitive fixed remuneration.
To attract and retain Executive Directors and Officers of superior calibre in order
to deliver long-term business success.
Operation
Executive Directors, Officers and all employees in Israel may be entitled to benefits
such as a study fund/Further Education funds, expansion of mandatory benefits
(pension and end-of-work compensation) beyond the salary levels on which they
are mandatory or carry tax benefits, travel-related benefits including a car or car
allowance, use of mobile phone and newspaper. Executives will be eligible for any
other benefits which are introduced for the wider workforce on broadly similar
terms.
Any reasonable business-related expenses (and any tax thereon) can be
reimbursed if determined to be a taxable benefit. The Company may also arrange
for reasonable insurance cover for Executive Directors.
Executive Directors and Officers may be eligible to participate in future all-
employee share plans operated by the Company, on the same terms as other
eligible employees.
For external and internal appointments or relocations, the Company may pay
certain relocation and/or incidental expenses as appropriate.
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CONTINUED
Maximum potential value
Study fund contributions are common in Israel and under this arrangement the
employer deposits 7.5% of base salary to a study fund (payable to the employee
with no tax after 6 years), and deducts 2.5% from the employee’s base salary to be
also deposited to this fund.
It is not possible to calculate in advance the cost of some benefits, and therefore a
maximum potential value is not pre-determined.
Performance targets
Not applicable.
Pension
Purpose and link to strategy
To reward sustained contributions by providing retirement benefits.
Operation
The Company funds contributions to an Executive Director or Officer’s pension as
appropriate through contribution to a pension fund.
Maximum potential value
In line with all employees and in line with mandatory requirements in Israel, BATM
contributes 6.5% of base salary towards pension and is obliged to deduct 6% of
salary from the employee’s base salary and deposit it into the pension fund.
In addition, at the end of employment all Israeli employees (including Executive
Directors and Officers) are entitled to end-of-employment compensation of
1 basic salary for every year of employment (1 month for every 12 months, or
8.333%). Israeli employers are bound to make ongoing deposits of at least 6% of
the employee’s (including Executive Directors and Officers) salary to the pension
fund for end-of-employment compensation.
Performance targets
Not applicable.
Annual Bonus
Purpose and link to strategy
Rewards the achievement of annual financial and business targets aligned with the
Group’s KPIs.
Deferred element encourages long-term considerations and discourages excessive
risk taking.
Operation
Bonus is based on performance in the relevant financial year. Any payment is
discretionary and will be subject to the achievement of performance targets.
Bonus is normally paid in cash, except one-third of any bonus which is deferred into
an award over Company shares for two years. In case of immediate tax obligations
due to award of such shares, and subject to the provisions of the Company's
Share Incentive Plan, the receiver of the shares will be allowed to exercise shares
immediately to the extent needed to finance coverage of tax obligations.
Bonuses are not contractual and are not eligible for inclusion in the calculation of
pension arrangements.
Recovery and withholding provisions apply in cases of specific circumstances.
Dividends or dividend equivalents may accrue on deferred shares.
Maximum potential value
Capped at 125% of annual base salary.
ANNUAL REPORT &
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49
CORPORATE GOVERNANCE
Performance targets
The Committee sets performance measures and targets that are appropriately
stretching each year, taking into account key strategic and financial priorities and
ensuring there is an appropriate balance between incentivising Executive Directors
and Officers to meet targets, while ensuring they do not drive unacceptable levels
of risk or inappropriate behaviours.
The Remuneration Committee will set bonus criteria at the start of the year which
reflect the short-term financial and strategic objectives of the Group.
For directors and the CEO, the bonus will be based on performance and on
measurable criteria; but bonus of up to 25% of annual salary can be based
on strategic, non-measurable criteria and considering the director's / CEO's
contribution to the Company.
A graduated scale of targets is normally set for each financial measure, with no
pay-out for performance below a threshold level of performance.
The Committee has discretion to amend the overall bonus pay-out should the
outcome not reflect the Committee’s assessment of overall business and/or
individual performance.
Long Term Incentive Plan (LTIP)
Purpose and link to strategy
Designed to align Executive Directors’ and Officers’ interests with those of
shareholders and to incentivise the delivery of sustainable earnings growth and
superior shareholder returns.
Operation
Awards of conditional shares or nil or nominal cost option awards which normally
vest after three years subject to the achievement of performance targets and
continued service.
For Executive Directors, an additional two-year holding period applies after the
end of the three-year vesting period. Sufficient awards may be sold during the
holding period to satisfy any tax liabilities owed.
Recovery and withholding provisions apply in cases of specific circumstances (see
‘Recovery of Variable Remuneration’ below).
Dividend equivalents may be paid for awards to the extent they vest.
The Committee retains discretion to adjust vesting levels in exceptional
circumstances, including but not limited to regard of the overall performance of
the Company or the grantee’s personal performance.
The Committee also retains discretion to adjust provisions of LTIP regarding
acceleration, change of ownership, restructuring and any other circumstances
that justify adjustment of provisions, considering also the provisions of the Share
Incentive Plan.
Any options shall not be exercisable more than ten years after the date of grant.
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CONTINUED
Maximum potential value
Executive Directors and Officers may receive an award with a face value of up to
125% of basic salary per annum in any financial year.
The Committee will consider the prevailing share price when deciding on the
number of shares to be awarded as part of any LTIP grant.
A 10% in 10 years’ dilution limit governing the issue of new shares to satisfy all
share scheme operated by the Company will apply.
Performance targets
Performance measures may include, and are not limited to, EPS, absolute or
relative total shareholder return, other financial measures, strategic measures
and/or ESG-related objectives.
The Committee retains discretion to set alternative weightings or performance
measures for awards over the life of the Policy.
For directors and the CEO, the LTIP will be based on performance in long-term
view and on measurable criteria; but LTIP of up to 25% of annual salary can be
based on strategic, non-measurable criteria and considering the director's / CEO's
contribution to the Company.
100% of awards vest for stretch performance, up to 25% of an award vests for
threshold performance and no awards vest below this.
Underpins may apply.
Share Ownership Guidelines
Purpose and link to strategy
To increase alignment between Executive Directors and shareholders.
Operation
Nil or nominal cost options which have vested but are yet to be exercised and
deferred bonus awards subject to a time condition only may be considered to
count towards the in-employment shareholding on a notional post-tax basis.
Maximum potential value
Executive Directors are expected to build up and maintain an in-employment
shareholding worth 200% of salary.
Executive Directors are normally expected to hold shares at a level equal to the
lower of their shareholding at cessation and 200% of annual base salary for two
years post-employment (excluding shares purchased with own funds and any
shares from share plan awards made before the approval of the Policy).
Performance targets
Not applicable.
Non-executive and Non-External Directors’ Salary and Benefits
Purpose and link to strategy
Israeli publicly listed companies often have Directors that are both Non-executive
and Non-External, such as the current Chairman. Due to their status and
relationship to the Company, such Directors are distinguished from independent
External Directors.
Non-executive and Non-External Directors should be paid in line with the
demands of the roles at a level that attracts high calibre individuals and reflects
their experience and knowledge.
ANNUAL REPORT &
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51
CORPORATE GOVERNANCE
Operation
Non-executive and Non-External Directors may receive salary in cash or ordinary
shares for their contribution and efforts for the Company. Salary is typically set
by reference to a proportion of the salary for a full-time Executive Director role
(reflecting the part-time nature of the role).
In addition, the Non-executive and Non-External Director may receive modest
benefits on the same basis as an Executive Director (as set out in the policy table
above).
There is limited participation by Non-executive and Non-External Directors in the
variable remuneration plans offered by the Company to its Executive Directors
and Officers. Any participation by Non-executive and Non-External Directors in
the Company’s variable remuneration plans is subject to prior approval by the
Company’s shareholders.
Maximum potential value
No prescribed maximum or maximum increase.
Salary is normally reviewed annually taking into account factors such as the time
commitment and contribution of the role and market levels in companies of
comparable size and complexity.
Any increases will be informed by taking into account internal benchmarks such as
the salary increase for the general workforce and will have due regard to the same
factors that apply to Executive Directors.
Performance targets
Not applicable.
External Directors’ Fees and Benefits
Purpose and link to strategy
As an Israeli publicly listed company, BATM's Board must include at all times, at least
two external (public) independent non-executive directors (known as ‘External’
Directors) that fulfil the mandatory requirements and hold the qualifications laid
down in the Israeli Companies Law.
External Directors should be paid in line with the demands of the roles at a level
that attracts high calibre individuals and reflects their experience and knowledge.
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CONTINUED
Operation
External Directors may receive remuneration in cash or ordinary shares which
includes an annual fixed fee and a per-meeting participation fee, all as prescribed
in the Israeli Companies Regulations ((Rules Regarding Compensation and
Expense Reimbursement of External Directors) 2000 (the "Israeli Compensation
Regulations"), as an incentive for their contribution and efforts for the Company.
In addition, the Company may reimburse said directors for their reasonable
expenses incurred in connection with attending meetings of the Board of
Directors and of any Committees of the Board, all in accordance with the Israeli
Compensation Regulations.
The Company's remuneration policy with respect to the External Directors is that
it offers each of them the relevant scale of annual fixed fee and "per-meeting"
participation fee specified in the Israeli Compensation Regulations which apply to
the Company.
The External Directors are not eligible to participate in the variable remuneration
plans offered by the Company to its Executive Directors and Officers.
Maximum potential value
No prescribed maximum fee or maximum fee increase.
Fees are normally reviewed annually taking into account factors such as the time
commitment and contribution of the role and market levels in companies of
comparable size and complexity.
Increases will be informed by taking into account internal benchmarks such as the
salary increase for the general workforce and will have due regard to the factors
set out in the ‘Operation’ row of this table.
Performance targets
Not applicable.
SELECTION OF PERFORMANCE MEASURES AND
TARGETS
Annual bonus
The annual bonus arrangements are focused on the
achievement of the Company’s short- and medium-term
financial objectives, with financial measures selected to
closely align the performance of the Executive Director
or Officer with the strategy of the business and with
shareholder value creation. Where non-financial objectives
are set, these are chosen to support the delivery of strategic
milestones and which link to those KPIs of most relevance to
each Director or Officer’s individual responsibilities.
Details of the measures to be used for the annual bonus will
be determined at the start of the financial year and disclosed
in the remuneration report the next year.
Long-Term Incentive Plan
The aim of the LTIP is to motivate Executive Directors and
other senior executives to achieve performance superior to
the Company’s peers and to maintain and increase earnings
levels whilst at the same time ensuring that it is not at the
expense of longer-term shareholder returns.
The Committee will review the choice of performance
measures and the appropriateness of the performance
targets prior to each LTIP grant.
Measurable Targets
Measurable targets / performance metrics for the annual
bonus and / or for LTIP schemes can involve a number of
BATM's KPIs and may include any number of the following:
l
Work plan targets
l
Budget targets
l
Accomplishment of specific projects
ANNUAL REPORT &
ACCOUNTS 2023
53
CORPORATE GOVERNANCE
l
Meeting pre-defined goals of -
T
Revenue
T
Profit
T
EBITDA
T
Operating profit
T
Cash from operating activities
T
Free cash flow
T
Share price
T
Earnings per share
T
Return on invested capital
T
Return on capital employed
T
Total shareholder return
T
Absolute total shareholder return
T
Relative total shareholder return
FLEXIBILITY, DISCRETION AND JUDGEMENT
The Committee operates the annual bonus and LTIP
according to the rules of each respective plan which,
consistent with market practice, include discretion in a
number of respects in relation to the operation of each plan.
Discretions include:
l
who participates in the plan, the quantum of an award
and/or payment and the timing of awards and/or
payments
l
determining the extent of vesting
l
treatment of awards and/or payments on a change of
control or restructuring of the Group
l
whether an Executive Director or an Officer is a good/
bad leaver for incentive plan purposes and whether the
proportion of awards that vest do so at the time of leaving
or at the normal vesting date(s)
l
how and whether an award may be adjusted in certain
circumstances (e.g. for a rights issue, a corporate
restructuring or for special dividends)
l
what the weighting, measures and targets should be for
the annual bonus plan and LTIP awards from year to year
l
the Committee also retains the ability, within the Policy,
if events occur that cause it to determine that the
conditions set in relation to an annual bonus plan or a
granted LTIP award are no longer appropriate or unable
to fulfil their original intended purpose, to adjust targets
and/or set different measures or weightings for the
applicable annual bonus plan and LTIP awards with, in the
case of LTIP awards held by Executive Directors, adjusted
performance conditions being not materially less difficult
to satisfy than the original conditions would have been
but for the relevant event(s)
l
the ability to override formulaic outcomes in line with this
Policy
All assessments of performance are ultimately subject to the
Committee’s judgement and discretion is retained to adjust
payments in appropriate circumstances as outlined in this
Policy. Any discretion exercised (and the rationale) will be
disclosed in the relevant Directors’ & Officers' remuneration
report detailing the payment outcome.
ANNUAL REPORT &
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Directors' Remuneration Report
CONTINUED
2023
Salary/Fees
$’000
Performance Bonus
$’000
Total Remuneration
$’000
Executive Directors
Moti Nagar, CEO
(1)
678
294
972
Ran Noy, CFO
(2)
227
76
303
Non-executive Directors
Gideon Chitayat
(3)
100
-
100
Zvi Marom
(4)
316
-
316
Harel Locker
43
-
43
Varda Shalev
46
-
46
Avigdor Shafferman
46
-
46
Single total figure of remuneration
The tables below set out the single total remuneration figures for each director for 2023 and the prior year.
ANNUAL REPORT ON REMUNERATION
This section of the Directors’ Remuneration Report
provides
details of the remuneration earned by the Directors in the
year ended 31 December 2023 and how the Remuneration
Policy will operate for the year ending 31 December 2024.
REMUNERATION COMMITTEE
Roles and responsibilities
The Remuneration Committee works within its terms of
reference, and in accordance with the functions set forth in
Israeli Companies Law, to make recommendations to the
Board of Directors of the Company and to decide whether to
approve certain transactions and whether to exempt certain
transactions from approval. The Remuneration Committee's
full terms of reference are available on the Company's website.
Remuneration Committee members and meetings
The Remuneration Committee consists of all the External and
Independent Directors (as these terms are defined in the
Israeli Companies Law). The members of the Remuneration
Committee during the year under review were:
l
Prof. Varda Shalev (Chair)
l
Harel Locker
l
Dr. Avigdor Shafferman
The Remuneration Committee receives advice from several
sources, namely:
l
The other Directors of the Board, who attend the
Remuneration Committee meetings when specifically
invited by the chairman of the Committee in order to
provide relevant information to the Committee.
l
As and when the Committee deems it necessary,
the Committee is provided advice from independent
consultants.
Key activities during the year
The Committee held seven meetings during the year to 31
December 2023.
As noted in the Remuneration Committee Report, the key
activities undertaken during the year included approving
the remuneration package for the new CFO; approving
and granting long-term incentive awards to directors and
employees; determining the outcome of the 2022 annual
bonus; setting the targets for the 2023 annual bonus;
approving grant of exemption and indemnification to Office
Holders; and approving updates to the remuneration of
Office Holders.
ANNUAL REPORT &
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55
CORPORATE GOVERNANCE
1.
Moti Nagar became CEO on 1 January 2023 and was CFO during 2022. His salary includes social and pension benefits as required by Israeli law for
all employees. His remuneration as CEO was approved by shareholders at the Company’s AGM held on 21 December 2022 (“AGM 2022”).
2.
Ran Noy was appointed CFO on 1 February 2023, having previously been VP Finance of BATM since 2021, and became an Executive Director on 13
July 2023. The above figures represent his remuneration for the 12-month period. His salary includes social and pension benefits as required by
Israeli law for all employees.
3.
Dr. Gideon Chitayat’s annual service fee of $100k was approved by shareholders at the AGM 2022.
4.
Dr. Zvi Marom’s tenure as CEO finished on 31 December 2022, when he became a Non-executive Director. As CEO, Dr. Marom received payment
via a Service Agreement, which included a basic annual salary and associated social and pension benefits and pursuant to which he was entitled to
certain rights with regard to the end of the agreement. Accordingly, from 1 January 2023 until 30 June 2023, Dr. Marom received payment according
to the rights regarding the end of the agreement. From 1 July 2023, he received remuneration equal to the remuneration paid by the Company
to expert External Directors, as prescribed in the Israeli Compensation Regulations as well as $40 thousand per annum pursuant to a consulting
agreement for consultation on issues regarding which Dr. Marom has unique knowledge and expertise, as approved by shareholders at the AGM
2022.
5.
Dr. Marom and Mr. Nagar proposed to waive their right to additional variable remuneration for 2022, which was accepted by the Remuneration
Committee.
6.
Avigdor Shafferman was appointed to the Board on 12 April 2022.
As at 31 December 2023, the total liability for payment related to wages for the Executive Directors was $60 thousand (31
December 2022: $64 thousand), which was paid in January 2024 (2022 liability was paid in January 2023).
Non-executive Directors
In determining the remuneration to its “external directors”
and “independent directors” (as defined under Israeli law),
which during 2023 included Harel Locker, Prof. Varda
Shalev and Dr. Avigdor Shafferman, the Group was required
to comply with Israeli law that formulates the kind and
amounts of remuneration and expenses that an Israeli
public company may pay its external and independent
directors. The applicable Israeli statute is the Israeli
Companies Regulations (Rules Regarding Compensation
and Expense Reimbursement of External Directors) 2000
(the “Compensation Regulations”), which prescribes the level
of remuneration that a publicly listed company may pay its
external directors, and section 249C of the Israeli Companies
Law, which states that the rules regarding remuneration of
external directors will apply also for independent directors.
Cash remuneration payable to these directors is comprised
of two fees: (i) an annual fixed fee; and (ii) a per-meeting
participation fee. The figures set forth in the Compensation
Regulations for these elements are based on the size of
the company calculated by the equity of the relevant listed
company as recorded in its last audited financial statements.
In compliance with the Compensation Regulations, the
Company does not pay any additional amounts to the
external directors. The Compensation Regulations do
not apply to the Chairman or Dr. Zvi Marom who are not
external or independent directors in terms of Israeli law.
The remuneration of the Chairman and Dr. Marom is set out
below.
2022
Salary/Fees
$’000
Performance Bonus
$’000
Total Remuneration
$’000
Executive Directors
Zvi Marom, CEO
(4)
573
-
(5)
573
Moti Nagar, CFO
(1)
307
-
(5)
307
Non-executive Directors
Gideon Chitayat
56
–
56
Harel Locker
52
–
52
Varda Shalev
54
–
54
Avigdor Shafferman
(6)
38
–
38
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Directors' Remuneration Report
CONTINUED
2023 annual bonus outcome
The maximum annual bonus opportunity for Mr. Moti Nagar, CEO, and Mr. Ran Noy, CFO, for 2023 was 67% and 50% of
annual base salary, respectively. The annual bonus is based on a mix of quantitative financial criteria (75% of maximum bonus
opportunity) and qualitative personal and operational criteria (25% of maximum bonus opportunity) as described below.
Moti Nagar, CEO
As approved by shareholders at the AGM 2022, Mr. Nagar’s maximum bonus opportunity is 67% of annual base salary –
comprising 50% subject to the achievement of measurable targets and 17% of annual base salary subject to the achievement
of non-measurable targets. The measurable targets that the Board considers relevant to annual bonus are EBITDA and/or
revenue.
For 2023, Mr. Nagar received an annual bonus of $294k, amounting to 59% of his annual base salary, representing 88% of his
maximum bonus opportunity and reflecting substantial achievement of the measurable and non-measurable criteria.
Ran Noy, CFO
As approved by the Board, Mr. Noy’s maximum bonus opportunity is 50% of annual base salary – comprising 37.5% subject
to the achievement of measurable targets and 12.5% of annual base salary subject to the achievement of non-measurable
targets. The measurable targets that the Board considers relevant to annual bonus are EBITDA and/or revenue.
For 2023, Mr. Noy received an annual bonus of $76k, amounting to 44% of his annual base salary, representing 88% of his
maximum bonus opportunity and reflecting substantial achievement of the measurable and non-measurable criteria.
Long-term incentive awards granted in 2023
On 1 January 2023 (the “Grant Date”), options over Ordinary Shares were granted, as approved by shareholders at the AGM
2022, to certain Directors as follows:
Name
Role
Number of
options granted
Options
exercise price
Period and conditions of
vesting
Expiry
Gideon Chitayat*
Chairman
1,229,369
25.49 pence
The options fully vest on the
first anniversary of the Grant
Date.
01/01/33
Moti Nagar
CEO
16,433,937
25.49 pence
One-third of the options will
vest on each of the first, second
and third anniversaries of the
Grant Date.
01/01/33
* Dr. Chitayat's options were granted to GMBS General Management & Business Strategy Consultants Ltd., a service company through which Dr.
Chitayat provides his services to the Company
The options were granted under the BATM Advanced Communications Ltd. Global Share Incentive Plan (2021). The exercise
price represents the average closing price of the Company’s Ordinary Shares on the London Stock Exchange over the 30
trading days preceding the Grant Date.
No other long-term incentive awards were granted to directors during 2023.
ANNUAL REPORT &
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57
CORPORATE GOVERNANCE
Share interests
Shares owned
outright
(31/12/23)
Shares owned
outright
(31/12/22)
Awards
unvested and
subject to
performance
conditions as at
31/12/23
Options
unvested and
not subject to
performance
conditions as at
31/12/23
Options
vested but not
exercised as at
31/12/23
Shareholding as
a percentage of
salary/service
fee*
Executive Directors
Moti Nagar
-
-
537,109
16,433,937
906,200
0%
Ran Noy
-
-
481,288
-
-
0%
Non-executive Directors
Gideon Chitayat
3,159,000
3,159,000
-
1,229,369
-
815%
Zvi Marom
96,794,500
96,794,500
-
-
4,000,000
7,903%
Harel Locker
-
-
-
-
-
0%
Varda Shalev
-
-
-
-
-
0%
Avigdor
Shafferman
-
-
-
-
-
0%
* According to the share price on the LSE on 31 December 2023 of £0.2025 and the currency rate on 31 December 2023 of £0.7849 per $1.00
Moti Nagar’s vested options have an exercise price of £0.1269 and Dr. Zvi Marom’s vested options have an exercise price of
£0.2695.
Ratio of CEO pay to average full-time
employee
The ratio of CEO base pay to average full-time employee
base pay during 2023 was 7:1 (2022: 6:1) for employees of
Israeli companies in the Group and 23:1 (2022: 21:1) for the
whole Group. The details of CEO pay can be found on page
54. Average full-time employee pay (excluding share-based
payments) for the whole Group, including employees being
paid under service contracts, in 2023 was $29.1k (2022:
$27.6k). (Note 11 to the financial statements – ‘Staff costs’
– does not include employees paid under service contract:
this payment is reflected within general & administrative,
research & development and sales & marketing expenses
and cost of goods).
Relative importance of spend on pay
The table below shows overall spend on employee pay
(including employees on service contracts and the Executive
Directors) across the Group compared with distributions to
shareholders.
* Excluding share-based payments.
** Includes a dividend payment of $4.3m that was declared for 2021 and
paid to shareholders on 5 January 2022 and a share buy-back totalling
$1.3m.
2023
($m)
2022
($m)
% change
Employee
remuneration
costs*
27.2
25.4
7%
Distribution to
shareholders
-
5.6**
(100)%
Profit (EBITDA*)
9.3
8.3
12%
ANNUAL REPORT &
ACCOUNTS 2023
58
Directors' Remuneration Report
CONTINUED
Percentage change in directors’ remuneration
The table below shows the percentage change in each directors’ remuneration (on an actual currency basis). The prior three
years' change has also been shown and this will build up over time to cover a rolling five-year period.
Salary/Fee
Benefits
Annual Bonus
2023
2022
2021
2020
2023
2022
2021
2020
2023
2022
2021
2020
Executive Directors
Moti Nagar
150%
(1)
0%
0%
0%
106%
(1)
0%
0%
0%
-
(2)
(100)%
(2)
0%
24%
Ran Noy
(3)
-
-
-
-
-
-
-
-
-
-
-
-
Non-executive Directors
(4)
Gideon Chitayat
85%
(5)
0%
0%
0%
-
-
-
-
-
-
-
-
Zvi Marom
(45)%
(6)
0%
0%
0%
-
(6)
0%
0%
0%
-
(6)
(100)%
(2)
0%
173%
Harel Locker
(9)%
(7)%
4%
0%
-
-
-
-
-
-
-
-
Varda Shalev
(7)%
(10)%
(4)%
9%
-
-
-
-
-
-
-
-
Avigdor Shafferman
34%
(7)
-
-
-
-
-
-
-
-
-
-
-
1.
Moti Nagar became CEO on 1 January 2023, having previously been CFO since 2015. His remuneration as CEO was as approved by shareholders
at the AGM 2022.
2.
Moti Nagar and Dr. Zvi Marom waived their bonus payments for 2022.
3.
Ran Noy was appointed CFO on 1 February 2023 and became an Executive Director on 13 July 2023.
4.
The number of meetings attended by each director may change from one year to another.
5.
Dr. Gideon Chitayat’s fee was increased from 1 January 2023 as approved by shareholders at the AGM 2022.
6.
Dr. Zvi Marom’s tenure as CEO finished on 31 December 2022, when he became a Non-executive Director.
7.
Avigdor Shafferman was appointed to the Board on 12 April 2022.
Payments for loss of office and/or payments to former directors
Dr. Zvi Marom’s tenure as CEO finished on 31 December 2022, when he became a Non-executive Director. From 1 January
2023 to 30 June 2023, Dr. Marom received payment according to the rights regarding the end of his Service Agreement. From
1 July 2023, he received remuneration equal to the remuneration paid by the Company to expert External Directors, as pre-
scribed in the Israeli Compensation Regulations, as well as $40 thousand per annum pursuant to a consulting agreement, as
approved by shareholders at the AGM 2022.
No payments were made to former directors during the year.
Statement of shareholding voting
At the AGM that took place on 13 July 2023, there was one remuneration-related resolution:
Resolution
Votes for
(including
discretionary*)
% for**
Votes
against
(excluding
withheld)
%
against**
Total (exclud-
ing withheld
and third-party
discretionary*)
Withheld
Approval of the report
of the Remuneration
Committee
281,854,737
99.58
1,188,022
0.42
283,042,759
3,704,339
* There were no discretionary votes cast.
** Excludes withheld votes.
ANNUAL REPORT &
ACCOUNTS 2023
59
CORPORATE GOVERNANCE
Implementation of Policy for FY24
Component of Pay
Implementation for FY24
Base salaries
CEO: NIS 1,800,000
CFO: NIS 624,000
Benefits and pension
In line with the Directors’ Remuneration Policy and past practice, the Company
contributes towards pension in line with mandatory requirements in Israel.
No changes to benefit provisions.
Annual bonus
The CEO’s and CFO’s bonus opportunity will be 67% and 50% of base salary
respectively.
The 2024 bonus will be subject to Group revenue and/or EBITDA.
The targets are currently commercially sensitive and will be reported in next
year's annual report.
LTIP
None
NED fees
The Chairman and NED* fees for FY24 are as follows:
l
Chairman fee: $100,000
l
Non-executive Director and External Director base fee: NIS 123,155**
($33,955***)
l
Non-executive Director and External Director per-meeting fee: NIS 4,735**
($1,305***)
* In addition to the NED fees described herein, Dr. Marom will receive $40,000 pursuant to his consulting agreement with the Company, as approved
by shareholders at the AGM 2022.
** Linked to the consumer price index in Israel.
*** According to the 31 December 2023 currency rate of 3.627 NIS per 1 USD.
On behalf of the Board.
Prof. Varda Shalev
Chair of the Remuneration Committee
2 April 2024
ANNUAL REPORT &
ACCOUNTS 2023
60
Directors’ Report
PRINCIPAL ACTIVITIES
BATM develops, produces, markets and distributes products,
with a focus on real-time technologies and associated
services, in three core application areas: Networking, Cyber
and Diagnostics. Networking comprises data communication
products, namely high-performance connectivity solutions
for the network edge, including the innovative Edgility open
edge software platform that enables the deployment and life-
cycle management of apps, network functions and compute
devices at the edge of the network, and a broad portfolio of
carrier grade switching and routing hardware and software
products. Cyber includes integrated hardware and software
solutions for network encryption. Diagnostics includes the
sale and distribution of in vitro medical diagnostic reagents
and instruments, including the development and production
of proprietary products. In addition, the Group’s non-core
activities comprise the production and supply of eco-
friendly pathogenic waste treatment solutions for medical,
agricultural and pharmaceutical applications, the distribution
of third-party pharmaceutical and environmental monitoring
products, and the administering of diagnostic tests. BATM
has offices in the United States, Israel and Europe.
FINANCIAL PERFORMANCE
The financial performance of the Group for the year ended
31 December 2023 is detailed in the Chief Financial Officer’s
Review on pages 15 to 17 and in the consolidated financial
statements and notes to the consolidated financial statements
on pages 67 to 110, which are incorporated in this Directors’
Report by reference.
RETURNS TO SHAREHOLDERS
While recognising the importance of returns to shareholders,
the Board believes it is in the best interests of the Company
and of shareholders as a whole not to declare a dividend
for 2023 in order to maximise the resources available to the
Group to execute on its new growth strategy. In particular,
and as previously stated, the Group may add capability to its
core businesses through M&A. The Board continues to keep
its dividend policy under constant review and to assess all
options for generating returns for shareholders.
BUSINESS AND STRATEGIC REVIEW
The review of the Group’s business operations, including its
strategy, key performance indicators and principal risks and
uncertainties, are set out in the Strategic Report section
on
pages 3 to 29 and are incorporated in this Directors' Report by
reference.
DIRECTORS
The Directors who served for the year ended 31 December
2023 and are currently serving (unless otherwise stated) are
as follows:
l
Dr. Gideon Chitayat, Non-executive Chairman
l
Moti Nagar, CPA, Executive Director and Chief Executive
Officer
l
Ran Noy, CPA, Executive Director and Chief Financial Officer*
l
Dr. Zvi Marom, Founder and Non-executive Director
l
Harel Locker, Non-executive External Director and Senior
Independent Director ("SID")
l
Prof. Varda Shalev, Non-executive External Director
l
Dr. Avigdor Shafferman, Non-executive Director
* Ran Noy was appointed Chief Financial Officer on 1 February 2023 and
became an Executive Director on 13 July 2023.
CORPORATE GOVERNANCE STATEMENT
The information that fulfils the requirement of the corporate
governance statement in accordance with Rule 7.2 of the
Financial Conduct Authority’s Disclosure and Transparency
Rules can be found in this Directors’ Report and in the
Corporate Governance information on pages 34 to 40,
which is incorporated in this Directors’ Report by reference.
DIRECTORS’ REMUNERATION AND INTERESTS
The Directors’ remuneration and interests are set out in the
Directors’ Remuneration Report on pages 44 to 59.
ANNUAL REPORT &
ACCOUNTS 2023
61
CORPORATE GOVERNANCE
RULES ABOUT APPOINTMENT AND REPLACEMENT
OF DIRECTORS
Pursuant to the Company’s articles of association and Israeli
Companies Law, directors are elected at the Annual General
Meeting by the vote of the holders of a majority of the voting
power represented at such meeting in person or by proxy
and voting on the election of directors. Appointments to
the Board are subject to a formal, rigorous and transparent
procedure after the Company’s Nomination Committee
has considered each nominee and the Company gives
full and transparent information and background to the
shareholders on each candidate that it wishes to propose
for election and/or re-election to the Board. Each director
(except for the external directors) shall serve until the next
Annual General Meeting following the Annual General
Meeting at which such director was appointed, or their
earlier removal. The holders of a majority of the voting power
represented at a General Meeting and voting thereon shall
be entitled to remove any director(s) from office, to elect
directors in place of the directors so removed or to fill any
vacancy, however created, in the Board of directors by way
of ordinary resolution. Such vacancy may also be temporarily
filled by the continuing directors, and any director so
appointed shall hold office until the next annual general
meeting and is eligible for reappointment at that meeting.
“External” directors, as defined by Israeli Companies Law,
are non-executive directors that are appointed and elected
for a mandatory term of three years, which is renewable for
no more than two further terms of three years each. The
appointment of the external directors must be approved by
the shareholders in general meeting. The Israeli Companies
Law defines the procedures and conditions for election and
re-election of external non-executive directors.
Apart from the authority of the General Meeting to remove
a director from office, subject to giving such director a
reasonable opportunity to present their position to the
General Meeting, under the Company’s articles, the office of
a director shall be vacated ipso facto, upon their death, or
if the director is found to be of unsound mind, or becomes
bankrupt or if they become prohibited by law from being a
director in a public company.
The CEO, Mr. Moti Nagar, the Chairman of the Board, Dr.
Gideon Chitayat, and Non-executive Directors Dr. Zvi Marom
and Dr. Avigdor Shafferman were re-elected and the CFO,
Ran Noy, was elected at the Annual General Meeting of 13
July 2023 until the following AGM. Their biographies appear
on pages 30 to 33 above.
AMENDMENT OF ARTICLES
Under the Israeli Companies Law, a company may amend its
articles by a simple majority of the shareholders at a General
Meeting. According to the Company’s articles of association,
any proposed amendments to the articles regarding
modification of rights attached to shares of the Company
and/or dividing the share capital into various classes of
shares requires the approval of the holders of 75% of the
issued shares in the Company.
GOING CONCERN
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group will be able
to operate within the level of available facilities and cash for
the foreseeable future. Accordingly, the Company continues
to prepare its financial statements according to the going
concern basis.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual
Report,
the
Directors’
Remuneration
Report
and
the
financial statements in accordance with applicable laws and
regulations. The Directors are required to prepare financial
statements for the Company in accordance with International
Financial Reporting Standards as issued by the International
Accounting Standards Board. Israeli company law holds the
Directors responsible for preparing such financial statements
and requires the Directors to approve them.
International Accounting Standard 1 requires that financial
statements present fairly for each financial year the
Company’s financial position, financial performance and
cash flows. This requires the faithful representation of
the effects of transactions, other events and conditions in
accordance with the definitions and recognition criteria
ANNUAL REPORT &
ACCOUNTS 2023
62
for assets, liabilities, income and expenses set out in the
International Accounting Standards Board’s ‘Framework for
the Preparation and Presentation of Financial Statements’.
In virtually all circumstances, a true and fair presentation will
be achieved by compliance with all applicable International
Financial Reporting Standards.
Directors are also required to:
l
properly select and apply accounting policies;
l
present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
l
make an assessment of the Company’s ability to continue
as a going concern and disclose where they consider it
appropriate; and
l
provide additional disclosures when compliance with
the specific requirements in IFRS is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity’s financial
position and financial performance.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time
the financial position of the Company, for safeguarding
the assets, for taking reasonable steps for the prevention
and detection of fraud and other irregularities and for
the preparation of a Directors’ Report and Directors’
Remuneration Report that comply with the Listing Rules and
the Disclosure and Transparency rules.
Legislation
in
Israel
governing
the
preparation
and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Each of the Directors confirms to the best of his or her
knowledge:
1.
the financial statements, prepared in accordance with
International Financial Reporting Standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole;
2.
the strategic report includes a fair review of the
development and performance of the business and the
position of the Company and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they
face; and
3.
the annual report and financial statements, taken as
a whole, are fair, balanced, and understandable, and
provide the information necessary for shareholders to
assess the Company’s position, performance, business
model and strategy.
The Directors’ Report has been brought for review to the
Board and has been approved in its present form.
The Directors’ Report is signed on behalf of the Board by:
Dr. Gideon Chitayat
Chairman
2 April 2024
Directors' Report
CONTINUED
ANNUAL REPORT &
ACCOUNTS 2023
63
Neve Ne’eman Ind. Area
4, Ha’harash Street, P.O.B. 7318
4524075 Hod Hasharon, Israel
Opinion
We have audited the consolidated financial statements of BATM Advanced Communications Ltd. and its subsidiaries (“the
Group”) set out on pages 67 to 110, which comprise the consolidated statement of financial position as at 31 December
2023, and the consolidated statement of profit and loss, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at 31 December 2023, and its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for
Accountants’
International Code of Ethics for Professional Accountants
(IESBA Code)
, and we have fulfilled our other ethical
responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Independent Auditor’s Report to the
Shareholders
of BATM Advanced Communications Ltd.
FINANCIAL STATEMENTS
Tel Aviv - Main Office
1 Azrieli Center Tel Aviv, 6701101 P.O.B. 16593 Tel Aviv, 6116402
Tel: +972 (3) 608 5555 |
info@deloitte.co.il
Jerusalem
3 Kiryat Ha’Mada
Har Hotzvim Tower
Jerusalem, 914510
Tel: +972 (2) 501 8888
Fax: +972 (2) 537 4173
info-jer@deloitte.co.il
Haifa
5 Ma’aleh Hashichrur
P.O.B. 5648
Haifa, 3105502
Tel: +972 (4) 860 7333
Fax: +972 (4) 867 2528
info-haifa@deloitte.co.il
Eilat
The City Center
P.O.B. 583
Eilat, 8810402
Tel: +972 (8) 637 5676
Fax: +972 (8) 637 1628
info-eilat@deloitte.co.il
Nazareth
9 Marj lbn Amer St.
Nazareth, 16100
Tel: +972 (73) 399 4455
Fax: +972 (73) 399 4455
info-nazareth@deloitte.co.il
Beit Shemesh
Yigal Alon 1 St.
Beit Shemesh, 9906201
ANNUAL REPORT &
ACCOUNTS 2023
64
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and other intangible
assets
As detailed in Notes 23 and 24, as at 31 December 2023, the
Group had goodwill and other intangible assets of $20,782
thousand.
Management conducted their annual impairment test to assess
the recoverability of the goodwill and consider whether there are
indicators of impairment with respect to other intangible assets.
In order to establish whether an impairment exists, the value
in use is determined and compared to the net book value of
cash-generating unit to which the goodwill is allocated and other
intangible assets.
This determination of an impairment is highly subjective as
significant judgement is required by the management in
determining the cash-generating units and the value in use as
appropriate. The value in use is based on the cash flow forecast
model for each cash-generating unit and requires the estimation
of valuation and business assumptions, most importantly the
discount rate and growth rate.
We focused our testing of the impairment of goodwill and
other intangible assets on the key assumptions made by the
management and the directors. Our audit procedures included:
Considering whether there are indicators of impairment
with respect to other intangible assets.
Evaluating whether the model used to calculate the value
in use of the individual cash-generating units complies with
the requirements of IAS 36: Impairment of Assets.
Using our internal valuation specialists when applicable to
assess the appropriateness of management’s estimations
applied in the discount rates used in the value in use
calculations.
Challenging management’s assumptions applied and inputs
in the respective models by comparing it to historical
information, market research when available, contractual
arrangements and approved budgets, search for available
contradictory information.
Performing stress analysis on key estimates.
Performing discussions, when applicable, with key
management about new significant clients and markets
penetration, new significant contracts and bids, certification
status of new products.
Findings
We found the models and assumptions applied in the goodwill
impairment assessments to be appropriate. We considered
the disclosure of the goodwill and other intangible assets to
be appropriate for purposes of the consolidated financial
statements.
Other Information
Management is responsible for the other information. The
other information comprises the information included
in the annual report but does not include the financial
statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does
not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If, based
on the work we have performed, we conclude that there is
a material misstatement of this other information, we are
required to report that fact. We have nothing to report in
this regard.
Responsibilities of Management and
Those Charged with Governance for the
Consolidated Financial Statements
Management is responsible for the preparation and fair
presentation of the consolidated financial statements
in accordance with IFRSs, and for such internal control
as management determines is necessary to enable the
preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In
preparing
the
consolidated
financial
statements,
management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going
ANNUAL REPORT &
ACCOUNTS 2023
65
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
concern basis of accounting unless management either
intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for
overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with ISAs, we exercise
professional
judgment
and
maintain
professional
skepticism throughout the audit. We also:
l
Identify and assess the risks of material misstatement of
the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive
to those risks and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
l
Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of
the Group’s internal control.
l
Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by management.
l
Conclude on the appropriateness of management’s use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
l
Evaluate the overall presentation, structure, and content
of the consolidated financial statements, including the
disclosures, and whether the consolidated financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.
l
Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for
the direction, supervision, and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated financial
statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure
Independent Auditor’s Report to the Shareholders
of BATM Advanced Communications Ltd.
(CONTINUED)
ANNUAL REPORT &
ACCOUNTS 2023
66
about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated
in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public
interest benefits of such communication.
As required by the Financial Conduct Authority (FCA)
Disclosure
Guidance
and
Transparency
Rule
(DTR)
4.1.14R, these financial statements form part of the ESEF-
prepared Annual Financial Report filed on the National
Storage Mechanism of the UK FCA in accordance with
the ESEF Regulatory Technical Standard (‘ESEF RTS’). This
auditor’s report provides no assurance over whether the
annual financial report has been prepared using the single
electronic format specified in the ESEF RTS.
The engagement partner on the audit resulting in this
independent auditor’s report is Elad Cazaz.
Brightman Almagor Zohar and Co.
Certified Public Accountants
A Firm in the Deloitte Global Network
1 Azrieli Center, Tel Aviv
Israel
2 April 2024
ANNUAL REPORT &
ACCOUNTS 2023
67
FINANCIAL STATEMENTS
2023
2022
Note
US$’000
US$’000
Revenues
5, 6
Cost of revenues
7
Gross profit
Operating expenses
Sales and marketing expenses
8
General and administrative expenses
9
Research and development expenses
10
Other operating income
12
(1,096 )
(2,428 )
Total operating expenses
Operating profit
Finance income
13
Finance expenses
14
(1,516 )
(2,011 )
Profit before tax
Income tax expenses
15
(839 )
(339 )
Profit for the year before share of loss of a joint
venture and associated companies
Share of loss of a joint venture and associated companies
26
(822 )
(686 )
Profit (loss) for the year
(200 )
Attributable to:
Owners of the Company
(193 )
Non-controlling interests
(7 )
Profit (Loss) for the year
(200 )
Earnings (loss) per share (in cents) basic
16
(0.04 )
Earnings (loss) per share (in cents) diluted
16
(0.04 )
Consolidated Statements of Profit or Loss
for the year ended 31 December
The accompanying notes are an integral part of these financial statements.
ANNUAL REPORT &
ACCOUNTS 2023
68
2023
2022
US$’000
US$’000
Profit (loss) for the year
(200 )
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating foreign operations
(5,810 )
(5,810 )
Items that will not be reclassified subsequently
to profit or loss:
Re-measurement of defined benefit obligation
Total other comprehensive income (loss) for the year
(5,745 )
Total comprehensive income (loss) for the year
(4,875 )
Attributable to:
Owners of the Company
(5,727 )
Non-controlling interests
(4,875 )
Consolidated Statements of Comprehensive Income
The accompanying notes are an integral part of these financial statements.
for the year ended 31 December
ANNUAL REPORT &
ACCOUNTS 2023
69
FINANCIAL STATEMENTS
2023
2022
Note
US$’000
US$’000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
18
Short-term investment in deposits and other securities
17
Inventories
19
Non-current assets
Property, plant and equipment
20
Investment property
21
Right-of-use assets
22
Goodwill
23
Other intangible assets
24
Investment in joint venture and associate
26
Investments carried at fair value
Deferred tax assets
27
Total assets
Equity and liabilities
Current liabilities
Short-term bank credit
28
Trade and other payables
28
Current maturities of lease liabilities
28
Tax liabilities
Non-concurrent liabilities
Long-term bank credit
28
Long-term liabilities
28
Long-term lease liabilities
28
Deferred tax liabilities
27
Retirement benefit obligation
35
Total liabilities
Equity
Share capital
29
Share premium account
Reserves
(29,865 )
(32,812 )
Accumulated deficit
(279,767 )
(279,579 )
Equity attributable to the:
Owners of the Company
Non-controlling interests
(908 )
(1,066 )
Total equity
Total equity and liabilities
The financial statements were approved by the board of directors and authorised on 2 April 2024. They were signed on its behalf by:
M. Nagar, CEO
R. Noy, CFO
Consolidated Statements of Financial Position
The accompanying notes are an integral part of these financial statements.
for the year ended 31 December
ANNUAL REPORT &
ACCOUNTS 2023
70
Consolidated Statements of Changes in Equity
The accompanying notes are an integral part of these financial statements.
Share
Capital
Share
Premium
Account
Translation
Reserve
Other
Reserve
Accumulated
Deficit
Attributable
to Owners of
the Company
Non-
Controlling
Interests
Total
Equity
US$ in thousands
Balance as at
1 January 2022
(19,337 )
(512 )
(279,888 )
(3,289 )
Profit for the year
Re-measurement of
defined benefit
obligation
Exchange differences
on translating foreign
operations
(6,036 )
(6,036 )
(5,810 )
Total
comprehensive
income (loss)
(6,036 )
(5,727 )
(4,875 )
Dividend paid to non-
controlling interest
(681 )
(681 )
Share buy-back
(1,325 )
(1,325 )
(1,325 )
Share-based
payments
Transaction with non-
controlling interests
(666 )
(4,936 )
(5,602 )
(3,550 )
Balance as at
1 January 2023
(26,039 )
(6,773 )
(279,579 )
(1,066 )
Loss for the year
(193 )
(193 )
(7 )
(200 )
Re-measurement of
defined benefit
obligation
Exchange differences
on translating foreign
operations
Total
comprehensive
income (loss)
(188 )
Share-based
payments
Balance as at
31 December 2023
(23,092 )
(6,773 )
(279,767 )
(908 )
for the years ended 31 December 2023 and 2022
ANNUAL REPORT &
ACCOUNTS 2023
71
FINANCIAL STATEMENTS
2023
2022
Note
US$’000
US$’000
Net cash from (used in) operating activities
31
(2,784 )
Investing activities
Purchases of property, plant and equipment
(2,404 )
(2,414 )
Increase of other intangible assets
(2,782 )
(2,054 )
Investment in joint venture and associated companies
(2,060 )
(4,386 )
Proceeds on disposal of property, plant and equipment
Investment in subsidiary
(550 )
Tax payment related to disposal of a subsidiary
(4,953 )
Proceeds on disposal of deposits and securities
Purchases of deposits and securities
(1,879 )
(11,733 )
Other
Net cash used in investing activities
(6,120 )
(16,342 )
Financing activities
Lease payment
22
(2,162 )
(2,192 )
Bank loan repayment
28
(7,498 )
(11,017 )
Bank loan received
28
Dividend paid
(4,300 )
Dividend paid to non-controlling interests
(681 )
Share buy-back
30
(1,325 )
Net cash used in financing activities
(2,160 )
(7,050 )
Net decrease in cash and cash equivalents
(3,271 )
(26,176 )
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance of cash
held in foreign currencies
(3,999 )
Cash and cash equivalents at the end of the year
Consolidated Statements of Cash Flow
The accompanying notes are an integral part of these financial statements.
for the year ended 31 December
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
General Information
Law. The address of the registered office is POB 7318, Nave Ne’eman Ind. Area 4, Ha’harash Street, 4524075 Hod
supply of real-time technologies and associated services in three core application areas: Networking, Cyber and
Diagnostics. In addition, the Group’s non-core activities comprise the production and supply of eco-friendly pathogenic
waste treatment solutions for medical, agricultural and pharmaceutical applications, and the distribution of third-party
New and revised International Financial Reporting Standards (IFRSs)
Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
The amendments to IAS 1 published in January 2020 (2020 amendments) affect only the presentation of liabilities as
current or non-current in the statement of financial position and not the amount or timing of recognition of any asset,
liability, income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in
existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an
entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied
with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers
to the transfer to the counterparty of cash, equity instruments, other assets or services.
In October 2022 the IASB published additional amendments (2022 amendments) that specify that only covenants
that an entity is required to comply with on or before the end of the reporting period affect the entity’s right to
defer settlement of a liability for at least twelve months after the reporting date (and therefore must be considered in
assessing the classification of the liability as current or non-current). Such covenants affect whether the right exists at
the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date.
However, if the entity’s right to defer settlement of a liability is subject to the entity complying with covenants within
twelve months after the reporting period, an entity discloses information that enables users of financial statements to
understand the risk of the liabilities becoming repayable within twelve months after the reporting period.
The 2022 and 2020 amendments are applied retrospectively for annual reporting periods beginning on or after 1
January 2024. Earlier application of the amendments is permitted: the Company did not early adopt the amendments.
Amendments to IAS 1 – Disclosure of Accounting Policies
The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments
replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting
policy information is material if, when considered together with other information included in an entity’s financial
statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial
statements make on the basis of those financial statements.
The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial
transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be
material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial.
However, not all accounting policy information relating to material transactions, other events or conditions is itself material.
The IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step
materiality process’ described in IFRS Practice Statement.
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
73
Significant Accounting Policies
The consolidated financial statements have been prepared in accordance with International Financial Reporting
The consolidated financial statements have been prepared on a historical cost basis except for certain properties and
financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as
Israel-Hamas conflict
The Group continues to monitor the ongoing conflict between the state of Israel and Hamas. This situation did not have a
material impact on the Company’s operations or on BATM’s consolidated financial results.
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company and its subsidiaries. Control is achieved when the Company has power over the investee, is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to use its power to affect its returns.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated statement of profit or loss and other comprehensive income from the
date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to
the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate
in the financial and operating policy decisions of the investee but without control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
An investment in an associate or a joint venture is accounted for using the equity method from the date on which the
investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture,
any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and
liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any
excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment,
after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.
The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with
respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount
of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
74
single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its
carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal
of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the
investment subsequently increases. The carrying value of the investment in associates and joint ventures considering
Changes in the Group’s ownership interests in existing subsidiaries
subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-
controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair value of the assets
transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests
issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit
or loss as incurred.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
When the consideration transferred by the Group in a business combination includes a contingent consideration
arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the
consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify
as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill.
Measurement period adjustments are adjustments that arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that
existed at the acquisition date.
When a business combination is achieved in stages, the Group’s previously held interests (including joint operations) in
the acquired entity are remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised
in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been
recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate
if that interest were disposed of.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the
entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’
proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the
business less accumulated impairment losses, if any. Goodwill is not amortised but is reviewed for impairment at least
annually. For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or
groups of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating
unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
75
amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and
then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment
loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in
The Group recognises revenue from the following major sources:
l
Sale of goods (point in time) – networking products, network encryption products, medical diagnostics reagents and
instruments, and pathogenic waste treatment and sterilisation products
l
Rendering of services – Related mainly to software services such as training and technical support, laboratory service
and maintenance related to products sold
l
Construction contracts (over time)
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer
and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a
product or service to a customer.
Sale of goods
For sales of goods, revenue is recognised when control of the goods has transferred generally, being when the goods
have been shipped to the customer’s specific location (delivery). Following delivery, the customer has full discretion over
the manner of distribution and price to sell the goods, has the primary responsibility when onselling the goods and bears
the risks of obsolescence and loss in relation to the goods.
A receivable is generally recognised by the Group when the goods are delivered to the customer as this represents the
point in time at which the right to consideration becomes unconditional, as only the passage of time is required before
payment is due.
Rendering of services
Services provided by the Group are recognised as a performance obligation satisfied over time. Revenue is recognised
based on the stage of completion of the contract. The management have assessed that the stage of completion
determined as the proportion of the total time expected to install that has elapsed at the end of the reporting period
is an appropriate measure of progress towards complete satisfaction of these performance obligations under IFRS 15.
Construction contracts
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised over time
by reference to the stage of completion of the contract activity at the date of the consolidated statements of financial
position. This is normally measured by the proportion that contract costs incurred for work performed to date compare
to the estimated total contract costs except where this would not be representative of the stage of completion or
engineering completion. The management consider that this input method is an appropriate measure of the progress
towards complete satisfaction of these performance obligations under IFRS 15. Variations in contract work, claims and
incentive payments are included to the extent that they have been agreed with the customer.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent
of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period
in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
76
The Group as a lessee
At inception of the contract, the Group assesses whether an arrangement is a lease or contains a lease. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the
lessee, except for assets leased for a period of less than 12 months, and also to lease of assets with low economic value.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its
incremental borrowing rate.
The lease liability is subsequently measured at amortised cost using the effective interest method.
Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses, and are
depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of
the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option,
the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the
commencement date of the lease.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified
impairment loss.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any
environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the
results and financial position of each Group company are expressed in the US dollar, which is the presentation currency
for the consolidated financial statements.
In preparing the financial statement of the individual companies, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.
At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are
included in profit or loss for the period.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations (operations in foreign currencies) are translated at exchange rates prevailing at the end of each reporting
period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non-
controlling interests as appropriate) within the Group’s translation reserve. Such translation reserves are reclassified
from equity to profit or loss in the period in which the foreign operation is disposed.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities
of the foreign operation and translated at the closing rate. Exchange differences arising are recognised in other
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
77
Government grants are assistance from government in the form of transfers of resources to an entity in return for past
or future compliance with certain conditions relating to the operating activities of the entity.
Forgivable loans are loans where the lender (Israeli Chief Scientist Officer (ISO)) undertakes to waive repayment under
certain prescribed conditions. In a case where a government grant takes the form of a forgivable loan, a liability is
recognised in regards to this loan at fair value, based on estimations of future cash flows related to the relevant grant.
The Group’s policy is to designate such loans as financial liabilities measured at amortised cost according to IFRS 9. The
Share-based payment transactions of the Company
Equity-settled share-based payments to employees and others providing similar services are measured at the fair
value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled
share-based transactions are set out in note 34.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a
corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of
equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit
or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share
The income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. The Group’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised
for all deductible temporary differences to the extent that it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised
if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries
and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with such investments and interests are only recognised to
the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the
temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
78
liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted
by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences
that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial
Land and buildings held for use in the Company’s operation are stated in the consolidated statements of financial
position on a historical cost basis, being the historical cost at the date of acquisition, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
Properties in the course of construction are carried at cost, less any recognised impairment loss. Cost includes
professional fees. Depreciation of these assets, on the same basis as other property assets, commences when the
assets are ready for their intended use.
Freehold land is not depreciated. Fixtures and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss.
Depreciation is charged so as to write off the cost of assets, other than land over their estimated useful lives, using the
straight-line method, on the following bases:
Buildings | 3%-6% |
Plant and equipment | 10%-33% |
Motor vehicles | 15%-25% |
Furniture and fittings | 6%-15% |
Leasehold improvements | 6%-20% |
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales
Internally-generated intangible assets - research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal
project) is recognised if, and only if, all of the following have been demonstrated:
l
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
l
the intention to complete the intangible asset and use or sell it;
l
the ability to use or sell the intangible asset;
l
how the intangible asset will generate probable future economic benefits;
l
the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
l
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
79
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible
Acquired intangible assets are measured initially at purchase cost and are amortised on a straight-line basis over their
estimated useful lives.
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised
at their fair value at the acquisition date (which is regarded as their cost).
Amortisation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line
method, on the following bases:
Customer relationships and backlog | 10%-12.5% |
Technology | 10%-20% |
Other | 10% |
Subsequent to initial recognition, intangible assets are reported at cost less accumulated amortisation and accumulated
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated
to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where
applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present
location and condition. Cost is determined on the “first-in-first-out” basis. Net realisable value represents the estimated
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
80
Financial assets and financial liabilities are recognised on the Group’s consolidated statements of financial position
Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost
using the effective interest rate method. Appropriate allowances to recognise expected lifetime credit losses are
recognised in profit or loss at the end of the reporting period. The allowance recognised is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses
recognised in profit or loss. The net gain or loss recognised in profit or loss is included in the ‘other gains and losses’, or
The Group recognises a loss allowance for expected credit losses on trade receivables. The amount of expected credit
losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective
financial instrument.
The Group recognises lifetime ECL for trade receivables. The expected credit losses on these financial assets are
estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time value of money where appropriate.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected
Critical Accounting Judgments and Key Sources of Estimation Uncertainty
Critical judgments in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in note 3, management has made the
following judgments that have the most significant effect on the amounts recognised in the financial statements (apart
from those involving estimations, which are dealt with below):
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the consolidated
statements of financial position date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are discussed below.
Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating units (CGU)
to which goodwill has been allocated. The value-in-use calculation requires the entity to estimate the future cash flows
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
81
Judgments with respect to deferred tax assets
For the purposes of measuring deferred tax assets arising from loss carry-forwards in different territories, management
is required to use considerable judgment in estimation of the carried forward losses in which it expects to be able to
utilise in the foreseeable future. For additional information in respect of deferred tax assets see note 15.
Judgments with respect to construction contracts
The Company accounts for its revenue in accordance with IFRS 15 revenue from contracts with customers, which
requires estimates to be made for contract costs and revenues. Revenue is recognised using the percentage of
completion method based on the ratio of contract costs incurred to total estimated contract costs or engineering
completion percentage. Estimating total costs is subjective and requires the use of management’s best judgments
based on the information available at that time.
Judgments with respect to recognition of internally generated intangible assets
The company recognizes costs related to development of software in accordance with the conditions for recognizing
internally generated intangible assets. Estimation of meeting the conditions specified for recognition of intangible
Revenues
The Group derives its revenue from contracts with customers for the transfer of goods at a point in time and services
and construction contracts over time. An analysis of the Group’s revenues is as follows:
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Sales of goods (point in time) | 98,690 | 95,344 |
Services | 14,662 | 13,191 |
Construction contracts (over time) | 9,478 | 7,588 |
122,830 | 116,123 | |
Business and Geographical Segments
Business segments
Operational segments are identified on the basis of internal reports about the Group’s components that are reviewed
by the main operational decision maker of the Group (“CODM”), the CEO of the Company, for the purpose of allocating
resources and evaluating the performance of the operational segments. Information reported to the CODM for the purpose
of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or
provided.
During the year, following an in-depth process, the Group renewed its strategic vision. Accordingly, the CODM now receives
reports based on the new strategy, which identifies the Group’s core areas of activity, and which are prioritised for resource
allocation, and secondary (non-core) activities.
The principal products and services of each of these segments are as follows: Networking – marketing, research and
development of data communication products, which includes high-performance connectivity solutions for the network
edge, including the innovative Edgility open edge software platform that enables the deployment and life-cycle management
of apps, network functions and compute devices at the edge of the network, and a broad portfolio of carrier grade switching
and routing hardware and software products. Cyber – provision of integrated hardware and software solutions for network
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
82
encryption, including hardware security modules (HSMs). Diagnostics – mainly engaged in sales and distribution of in vitro
diagnostics reagents and instruments, including the development and production of proprietary products. Its proprietary
products are focused on molecular diagnostics by test type and infectious disease by application area. Secondary – mainly
the distribution of pharmaceutical and environmental monitoring products and diagnostic tests, and the production of
eco-friendly pathogenic waste treatment solutions for medical, agricultural and pharmaceutical applications.
The results for the year ended 31 December 2022 have been re-presented in accordance with the new segmentation listed
above.
A.
Segment revenues and segment results
Year ended 31 December 2023
Networking | Cyber | Diagnostics | Secondary | Total | |
$’000s | $’000s | $’000s | $’000s | $’000s | |
Revenues from external customers | 19,800 | 10,346 | 33,342 | 59,342 | 122,830 |
Operating profit/(loss) | (224) | 1,496 | 334 | 42 | 1,648 |
Net finance expenses | (187) | ||||
Profit before tax | 1,461 |
Year ended 31 December 2022
Networking | Cyber | Diagnostics | Secondary | Total | |
$’000s | $’000s | $’000s | $’000s | $’000s | |
Revenues from external customers | 22,006 | 5,858 | 33,473 | 54,786 | 116,123 |
Operating profit/(loss) | (899) | 366 | 1,587 | 2,080 | 3,134 |
Net finance expenses | (1,239) | ||||
Profit before tax | 1,895 |
B.
Segment assets, liabilities and other information
As at 31 December 2023
Networking | Cyber | Diagnostics | Secondary | Total | |
$’000s | $’000s | $’000s | $’000s | $’000s | |
| Assets excluding cash & cash | |||||
equivalents | 27,063 | 5,476 | 58,396 | 42,928 | 133,863 |
Liabilities | 8,863 | 5,926 | 21,350 | 19,052 | 55,191 |
Depreciation and amortisation | 1,091 | 189 | 1,822 | 2,074 | 5,176 |
Additions to non-current assets | 2,884 | 204 | 1,692 | 2,371 | 7,151 |
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
83
As at 31 December 2022
Networking | Cyber | Diagnostics | Secondary | Total | |
$’000s | $’000s | $’000s | $’000s | $’000s | |
Assets excluding cash & cash | |||||
| equivalents | 29,823 | 4,369 | 52,997 | 43,825 | 131,014 |
Liabilities | 15,659 | 4,280 | 19,442 | 21,799 | 61,180 |
Depreciation and amortisation | 1,117 | 187 | 1,686 | 1,901 | 4,891 |
Additions to non-current assets | 2,773 | 77 | 1,179 | 3,072 | 7,101 |
C.
Revenue from major products and services
The following is an analysis of the Group’s revenue from operations from its major products and services.
| Year ended 31 December | 2023 | 2022 |
$’000s | $’000s | |
Networking and cyber products | 24,093 | 18,898 |
Software services | 6,053 | 8,966 |
Diagnostic medical products and | ||
services | 33,342 | 33,473 |
Secondary | 59,342 | 54,786 |
122,830 | 116,123 |
D. Revenue from major sources
Year ended 31 December 2023
Networking | Cyber | Diagnostics | Secondary | Total | |
$’000s | $’000s | $’000s | $’000s | $’000s | |
Sales of goods (point in time) | 16,488 | 776 | 29,793 | 51,633 | 98,690 |
Services | 3,312 | 92 | 3,549 | 7,709 | 14,662 |
Construction contracts (over time) | - | 9,478 | - | - | 9,478 |
19,800 | 10,346 | 33,342 | 59,342 | 122,830 |
Year ended 31 December 2022
Networking | Cyber | Diagnostics | Secondary | Total | |
$’000s | $’000s | $’000s | $’000s | $’000s | |
Sales of goods (point in time) | 18,872 | - | 30,342 | 46,130 | 95,344 |
Services | 3,134 | 394 | 3,131 | 6,532 | 13,191 |
Construction contracts (over time) | - | 5,464 | - | 2,124 | 7,588 |
22,006 | 5,858 | 33,473 | 54,786 | 116,123 |
The cumulative revenue related to construction contracts, which has not been recognized yet, totals to $24.2 million.
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
84
The Group operates in three principal geographical areas: the United States of America, Israel and Europe. The Group’s
revenue from external customers and information about its segment assets by geographical location are presented by
the location of operations and are detailed below:
$’000s | Revenue from external customers | Non-current assets | ||
2023 | 2022 | 2023 | 2022 | |
Area A | 85,425 | 82,052 | 44,841 | 40,897 |
Area B | 26,535 | 22,272 | 12,607 | 12,372 |
Area C | 10,870 | 11,799 | 2,242 | 2,207 |
Total | 122,830 | 116,123 | 59,690 | 55,476 |
Cost of revenues
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Direct costs – Components and subcontractors | 78,767 | 74,665 |
Changes in inventory | (3,766) | (3,510) |
Salaries and related benefits | 3,978 | 3,220 |
Overheads and depreciation | 3,063 | 2,388 |
Other expenses | 898 | 1,402 |
82,940 | 78,165 | |
Sales and marketing expenses
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Salaries and related benefits | 12,240 | 10,804 |
Commissions | 1,017 | 977 |
Outside services | 402 | 457 |
Advertising and sales promotion | 1,250 | 826 |
Overheads and depreciation | 2,678 | 2,457 |
Travelling and other expenses | 1,543 | 1,688 |
19,130 | 17,209 | |
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
85
General and administrative expenses
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Salaries and related benefits | 8,402 | 6,289 |
Professional services(*) | 2,640 | 2,818 |
Overheads and depreciation | 1,893 | 1,678 |
Other expenses | 2,192 | 2,233 |
15,127 | 13,018 | |
(*) Including auditors’ remuneration for audit | ||
| services | 343 | 353 |
Amounts payable to the auditors by the Group undertakings in respect of non-audit services in 2023 were $33 thousand
(2022: $63 thousand). In addition, payables in respect of non-audit services to other than the Company’s auditors, for tax
and internal audit services in 2023, were $70 thousand and $56 thousand, respectively (2022: $24 thousand and $13
Research and development expenses
| Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Salaries and related benefits | 3,296 | 4,284 |
Components and subcontractors | 1,389 | 1,705 |
Overheads and depreciation | 546 | 866 |
Other expenses | 352 | 442 |
Government grants | (502) | (272) |
5,081 | 7,025 | |
Staff costs
The average monthly number of employees in 2023 (including executive directors) was 980 (2022: 949).
| Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Wages and salaries | 25,608 | 24,299 |
Share-based payments | 2,308 | 298 |
27,916 | 24,597 | |
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
86
Other operating income
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Gain from disposal of property | (83) | (2,021) |
Change in liabilities | (860) | - |
Gain from business combination achieved in stages | - | (404) |
over an associated company (1) | ||
Gain from revaluation of investment carried at fair | - | (193) |
value | ||
Amortisation of intangible assets | 94 | 143 |
Other | (247) | 47 |
(1,096) | (2,428) | |
(1)
Finance income
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Interest on bank deposits and other | 1,028 | 729 |
Gain on financial assets at FVTPL | 301 | - |
Gain on derivative financial instruments | - | 43 |
1,329 | 772 | |
Finance expenses
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Interest on loans and bank fees | (691) | (593) |
Interest expense on liabilities | (683) | (740) |
Foreign exchange differences, net | (142) | (456) |
Loss on financial assets at FVTPL | - | (222) |
(1,516) | (2,011) | |
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
87
Income tax expenses
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Current tax | (1,071) | (430) |
Tax on previous years | 20 | 53 |
Deferred tax (note 27) | 212 | 38 |
(839) | (339) | |
Taxation under various laws:
Israel
The Company is an “industrial company” as defined in the Israeli Law for the Encouragement of Industry (Taxes) 1969.
1.
The corporate income tax rate for the years 2022 and 2023 is 23%.
2.
Encouragement of Capital Investments Law:
a. The corporate tax rate for each company with Preferred Enterprise status for the years 2022 and 2023 is 7.5%.
b.
Including additional tax tracks for Preferred Technological Enterprise (tax rate of 7.5% in Area “A” and tax rate of 12%
in Area “Other”) and for special Preferred Technological Enterprise (tax rate of 6%).
c.
Determining relief of the threshold conditions to enter the track of “Special Preferred Enterprise” relevant for huge
companies (tax rates of 5% in Area “A” or 8% in the Area “Other”).
The Company has Preferred Enterprise status in Area A and its Israeli subsidiaries are being assessed according to the
corporate income tax rate.
The Company and its Israeli subsidiaries have tax loss carry-forwards of $132.1 million for which the Group did not
create deferred tax assets. According to the Israeli tax law there is no expiry date to use such losses.
The Company tax assessments for the years up to and including the 2018 tax year are considered as final.
The United States of America
Telco Systems incurred losses for tax purposes. In addition, in accordance with U.S. tax law, Telco Systems elected to
amortise a substantial part of the excess cost paid by the Company in its acquisition over a period of 15 years, which
has resulted in tax loss carry-forwards. According to U.S. law, losses created until 2017 can be carried forward for 20
years. As of 31 December 2023, the total carry-forward losses of Telco Systems amounted to $222.5 million of which
deferred tax assets of $3.1 million have been recognised in respect of such losses to the extent that a sufficient taxable
profit will be available in the foreseeable future.
The corporate income tax for the years 2022 and 2023 is 21%.
Other jurisdictions
Taxation for other jurisdictions than those mentioned above is calculated at the rates prevailing in the respective
jurisdictions. The corporate income tax rate for subsidiaries with significant sales are: Moldova is 12%, Romania is 16%
and Italy is 24%.
The Group has tax loss carry-forwards of $8.1 million in European subsidiaries and the Group did not recognise deferred
tax assets in respect of $7.1 million of such losses.
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
88
The income tax expenses for the year can be reconciled to the profit per the consolidated statement of profit or loss
as follows:
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Profit before tax | 1,461 | 1,895 |
Tax expense at the Israeli statutory corporate income tax rate of 23% | 336 | 437 |
Difference between equity method measurement basis and cost basis for | ||
| tax purposes | (53) | 315 |
Current year losses for which no deferred tax assets were recognised | 767 | 342 |
Differences between statutory tax in Israel (23%) and subsidiaries tax rate | (109) | 418 |
Tax losses utilised in current period for which no deferred tax assets have | ||
| been recognised | (204) | (774) |
Deferred tax assets recognised | (199) | (24) |
Tax on previous years | (20) | (53) |
Other | 321 | (322) |
Tax expenses for the year | 839 | 339 |
Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Year ended 31 December | ||
2023 | 2022 | |
Earnings for the purposes of basic and diluted earnings per share ($’000s) | ||
| attributable to Owners of the Company | (193) | 244 |
Number of shares | ||
Weighted average number of ordinary shares for the purposes of basic | ||
| earnings per share | 436,051,454 | 440,167,097 |
Effect of dilutive potential ordinary shares | 766,993 | 2,190,019 |
Weighted average number of ordinary shares for the purposes of | ||
calculation of diluted earnings per share | 436,818,447 | 442,357,116 |
The number of dilutive instruments that could potentially dilute basic earnings per share in the future, but were not
included in the calculation of diluted earnings per share because they are antidilutive for the year, is 25,049,219 (2022:
1,778,220).
The weighted average number of ordinary shares for the purposes of basic earnings per share for 2022 is taking into
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
89
Short-term investment in deposits and other securities
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Interest-bearing deposits | 281 | 1,182 |
Financial assets at FVTPL | 8,144 | 7,829 |
8,425 | 9,011 | |
Trade and other receivables
31 December | ||
2023 | 2022 | |
Trade and other receivables | $’000s | $’000s |
Trade receivable account | 21,806 | 25,606 |
Prepaid expenses & Deposits | 3,898 | 4,581 |
Construction contracts (see following table) | 2,528 | 2,159 |
Government authorities | 1,217 | 2,516 |
Other debtors | 1,770 | 1,633 |
31,219 | 36,495 | |
31 December | ||
2023 | 2022 | |
Construction contracts | $’000s | $’000s |
Composition: | ||
Cumulative costs incurred due to works construction contracts | 18,232 | 13,795 |
In addition - Recognised profits | 2,306 | 3,474 |
Less accounts submitted to project customers | (18,010) | (15,110) |
2,528 | 2,159 | |
No interest is charged on the receivables. An allowance has been made at 31 December 2023 for estimated irrecoverable
amounts from the sale of goods of $3,215 thousand (2022: $3,085 thousand), including a loss allowance for expected credit
losses according to IFRS 9. The directors consider that the carrying amount of trade and other receivables approximates
their fair value.
As of 31 December 2023, trade receivable account includes amounts of $6.9 million for which the maturity date has
expired (including a receivable in the amount of $1.8 million that is overdue by more than a year), but the Group, based on
past experience and on the credit quality of the debtors and given that a substantial part of the debts have been collected
by the date of the approval of this annual report, has not made an allowance for doubtful debts since the Company
expects that those debts are collectible.
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
90
The Group’s principal financial assets are cash and cash equivalents, trade and other receivables, deposits and
investments at fair value. The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented
Inventories
| 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Raw materials | 7,537 | 6,552 |
Work-in-progress | 3,864 | 4,727 |
Finished goods | 26,826 | 23,182 |
38,227 | 34,461 | |
During 2023, $0.1 million of slow-moving inventory was impaired and expensed to the profit or loss account (2022: $0.2
Property, plant and equipment
Furniture | ||||||
Land and | Plant and | Motor | and | Leasehold | Total | |
($’000s) | buildings | equipment | vehicles | fittings | improvements | |
Cost | ||||||
At 1 January 2022 | 9,708 | 21,528 | 2,133 | 4,460 | 3,716 | 41,545 |
Additions | 37 | 1,264 | 346 | 90 | 463 | 2,200 |
Disposals | (2,478) | (558) | (43) | (439) | (193) | (3,711) |
Business combination | - | 42 | - | 3 | - | 45 |
Effect of translation adjustment | (477) | (695) | (201) | (204) | (196) | (1,773) |
At 1 January 2023 | 6,790 | 21,581 | 2,235 | 3,910 | 3,790 | 38,306 |
Additions | 130 | 1,454 | 179 | 299 | 489 | 2,551 |
Disposal | (17) | (340) | (135) | (21) | (176) | (689) |
Effect of translation adjustment | 322 | 376 | 169 | 158 | 15 | 1,040 |
At 31 December 2023 | 7,225 | 23,071 | 2,448 | 4,346 | 4,118 | 41,208 |
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
91
Furniture | ||||||
Land and | Plant and | Motor | and | Leasehold | Total | |
($’000s) | buildings | equipment | vehicles | fittings | improvements | |
Accumulated depreciation | ||||||
At 1 January 2022 | 2,965 | 13,759 | 1,254 | 4,097 | 1,363 | 23,438 |
Depreciation expense | 258 | 1,157 | 178 | 174 | 284 | 2,051 |
Disposals | (970) | (418) | (43) | (330) | - | (1,761) |
Business combination | - | 20 | - | 2 | - | 22 |
Effect of translation adjustment | (194) | (293) | (118) | (123) | (25) | (753) |
At 1 January 2023 | 2,059 | 14,225 | 1,271 | 3,820 | 1,622 | 22,997 |
Depreciation expense | 253 | 1,145 | 225 | 203 | 393 | 2,219 |
Disposals | (3) | (333) | (106) | (19) | (110) | (571) |
Effect of translation adjustment | 112 | 186 | 90 | 107 | 17 | 512 |
At 31 December 2023 | 2,421 | 15,223 | 1,480 | 4,111 | 1,922 | 25,157 |
Carrying amount | ||||||
At 31 December 2023 | 4,804 | 7,848 | 968 | 235 | 2,196 | 16,051 |
At 31 December 2022 | 4,731 | 7,356 | 964 | 90 | 2,168 | 15,309 |
Investment property
Additional Information
Fair value disclosures for investment properties measured using the cost model
Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at year end are as
follows:
31 December 2023 | 31 December 2022 | |||
At amortised cost | Fair value | At amortised cost | Fair value | |
$’000s | $’000s | $’000s | $’000s | |
Italy | 612 | 1,014 | 620 | 1,166 |
The fair value of the asset was determined based on the market comparable approach that reflects recent transaction
prices for similar properties, where the market rentals of all lettable units of the properties are assessed by reference
to the rentals achieved in the lettable units as well as other lettings of similar properties in the neighbourhood. The
capitalisation rate adopted is made by reference to the yield rates observed by the valuers for similar properties in the
locality and adjusted based on the valuers’ knowledge of the factors specific to the respective properties.
Average market price, taking into account the differences in location and individual factors, such as frontage and size,
between the comparables and the property, was $1,220 per square metre for the property in Italy.
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
92
Right-of-use assets
Plant and | ||||
($’000s) | equipment | Buildings | Motor vehicles | Total |
Cost | ||||
At 1 January 2022 | 848 | 9,662 | 1,261 | 11,771 |
Additions | 286 | 957 | 175 | 1,418 |
Disposals | (77) | (669) | (216) | (962) |
Effect of translation adjustment | (44) | (144) | (38) | (226) |
At 31 December 2022 | 1,013 | 9,806 | 1,182 | 12,001 |
Additions | 241 | 1,272 | 305 | 1,818 |
Disposals | - | (1,912) | - | (1,912) |
Effect of translation adjustment | 34 | 196 | 16 | 246 |
At 31 December 2023 | 1,288 | 9,362 | 1,503 | 12,153 |
Plant and | ||||
($’000s) | equipment | Buildings | Motor vehicles | Total |
Accumulated depreciation | ||||
At 1 January 2022 | 128 | 4,457 | 616 | 5,201 |
Charge for the year | 228 | 1,685 | 312 | 2,225 |
Disposals | (44) | (484) | (216) | (744) |
Effect of translation adjustment | (6) | (129) | (7) | (142) |
At 31 December 2022 | 306 | 5,529 | 705 | 6,540 |
Charge for the year | 251 | 1,580 | 303 | 2,134 |
Disposals | - | (1,034) | - | (1,034) |
Effect of translation adjustment | 14 | 141 | 7 | 162 |
At 31 December 2023 | 571 | 6,216 | 1,015 | 7,802 |
Carrying amount | ||||
At 31 December 2023 | 717 | 3,146 | 488 | 4,351 |
At 31 December 2022 | 707 | 4,277 | 477 | 5,461 |
The Group leases several assets including buildings and motor vehicles. The average lease term of buildings and motor
vehicles is approximately 5 and 3 years, respectively.
The maturity analysis of lease liabilities is presented in note 28.
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
93
Amounts recognised in profit or loss
2023 | 2022 | |
$’000s | $’000s | |
Depreciation expense on right-of-use assets | 2,134 | 2,225 |
Interest expense on lease liabilities | 194 | 192 |
Expense relating to short-term leases | 978 | 893 |
At 31 December 2023, the Group was committed to $0.8 million for short-term leases (2022: $0.7 million). The total cash
Goodwill
The Group annually tests goodwill for impairment or more frequently if there are indications that goodwill might be
impaired. The Group has four reportable business segments and goodwill is allocated to CGUs as follows:
Networking Segment: an amount of $1,984 thousand (2022: $1,984 thousand).
Diagnostics Segment: $1,360 thousand (2022: $1,313 thousand), which is allocated to two CGUs: Diagnostics: $1,057
thousand (2022: $1,020 thousand) and Distribution of diagnostics: $303 thousand (2022: $293 thousand).
Secondary Segment: $9,419 thousand (2022: $9,286 thousand), which is allocated to four CGUs: Eco-Med: $2,550
thousand (2022: $2,550 thousand), Distribution of pharmaceutical: $776 thousand (2022: $779 thousand), Provider of
genetics tests: $2,513 thousand (2022: $2,376 thousand), Analytical instruments distribution: $3,580 thousand (2022:
$3,580 thousand).
The recoverable amounts of the CGUs are determined from value-in-use calculations. The key assumptions for the
value-in-use calculations are those regarding the discount rates, growth rates and expected related expenses during
the period. Pre-tax discount rates of between 10.6% - 18.7% have been used. Changes in expenses are based on recent
history and expectations of future changes in the market.
For the purpose of the goodwill impairment test, the Group prepares cash flow forecasts derived from the most
recent financial budget approved by management and extrapolates indefinite cash flows based on estimated growth
rates. For the purposes of this calculation management have used revenue growth rates for the Networking CGU of
30% average growth per year for 1-5 years and 1% thereafter; for the Diagnostics CGU of 26% average growth per
year for 1-5 years and 3% thereafter; for the Distribution of diagnostics CGU of 16% average growth per year for
1-5 years and 5% thereafter; for the Eco-Med CGU of 36% average growth per year for 1-5 years and 0% thereafter;
for the Distribution of pharmaceutical CGU of 13% average growth per year for 1-5 years and 5% thereafter; for the
Distributor and provider of genetics tests CGU of 8% average growth per year for 1-5 years and 0% thereafter; and for
the Analytical instruments distribution CGU of 10% average growth per year for 1-5 years and 1% thereafter.
The average operating expenses have been assumed to grow for the Networking CGU at 25% average growth per year
for 1-5 and 1% thereafter; for the Diagnostics CGU at 5% average growth per year for 1-5 then assumed to remain
constant thereafter; for the Distribution of diagnostics CGU at 10% average growth per year for 1-5 then assumed
to remain constant thereafter; for the Eco-Med CGU at 19% average growth per year for 1-5 then assumed to remain
constant thereafter; for the Distribution of pharmaceutical CGU at 9% average growth per year for 1-5 then assumed to
remain constant thereafter; for the Distributor and provider of genetics tests CGU at (1%) average growth per year for
1-5 then assumed to remain constant thereafter; and for the Analytical instruments distribution CGU at 10% average
growth per year for 1-5 then assumed to remain constant thereafter. The average cost of goods sold has been assumed
to grow for the Networking CGU at 15% average growth per year for 1-5 and 1% thereafter; for the Diagnostics CGU at
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
94
26% average growth per year for 1-5 and 5% thereafter; for the Distribution of diagnostics CGU at 16% average growth
per year for 1-5 and 5% thereafter; for the Eco-Med CGU at 28% average growth per year for 1-5 then assumed to
remain constant thereafter; for the Distribution of pharmaceutical CGU at 12% average growth per year for 1-5 and 5%
thereafter; for the Distributor and provider of genetics tests CGU at 8% average growth per year for 1-5 then assumed
to remain constant thereafter; and for the Analytical instruments distribution CGU at 8% average growth per year for
1-5 and 1% thereafter.
Sensitivity of the recoverable amount to changes in the key assumptions
The recoverable amount of the Analytical instruments distribution activity is higher than the carrying amount in the amount
of $3.2 million. Reduction of 2% growth rate taken into account in calculating the value-in-use of the activity will result in a
decrease of $1.1 million recoverable amount of the activity and no goodwill impairment will be recorded. Increase of 3%
in pre-tax discount rate taken into account in calculating the value-in-use of the activity will result in a decrease of $1.5
million recoverable amount of the activity and no goodwill impairment will be recorded. The changes in assumptions for
the sensitivity analysis will lead to changes in other assumptions used in the calculation of value-in-use.
2023 | 2022 | |
$’000s | $’000s | |
Balance at 1 January | 12,583 | 11,385 |
Business combination (1) | - | 1,429 |
Foreign exchange difference | 180 | (231) |
Balance at 31 December | 12,763 | 12,583 |
(1)
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
95
Other intangible assets
Customer Relationships | ||||
and Backlog | Technology | Other | Total | |
$’000s | $’000s | $’000s | $’000s | |
Cost | ||||
As at 1 January 2022 | 11,705 | 16,556 | 1,705 | 29,966 |
Additions(*) | - | 2,054 | - | 2,054 |
Disposals | - | (62) | - | (62) |
Effect of translation adjustments | (320) | (290) | (68) | (678) |
At 1 January 2023 | 11,385 | 18,258 | 1,637 | 31,280 |
Additions(*) | - | 2,782 | - | 2,782 |
Effect of translation adjustments | 362 | 196 | (27) | 531 |
At 31 December 2023 | 11,747 | 21,236 | 1,610 | 34,593 |
Accumulated amortisation | ||||
At 1 January 2022 | 11,657 | 12,210 | 1,451 | 25,318 |
Amortisation expense | 10 | 427 | 121 | 558 |
Effect of translation adjustments | (321) | (173) | (50) | (544) |
At 1 January 2023 | 11,346 | 12,464 | 1,522 | 25,332 |
Amortisation expense | 10 | 702 | 83 | 795 |
Effect of translation adjustments | 350 | 103 | (6) | 447 |
At 31 December 2023 | 11,706 | 13,269 | 1,599 | 26,574 |
Carrying amount | ||||
At 31 December 2023 | 41 | 7,967 | 11 | 8,019 |
At 31 December 2022 | 39 | 5,794 | 115 | 5,948 |
(*)
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
96
Subsidiaries
A list of the significant direct and indirect investments in subsidiaries, including the country of incorporation, and percent
of ownership interest as at 31 December 2023 is presented below.
Principal | Country of | Ownership | |
Subsidiary | activity | incorporation | interest |
Entity A | Telecommunication | United States of America | 100% |
Entity B | Distribution of diagnostics | Romania | 100% |
Entity C | Eco-Med | Hungary | 100% |
Entity D | Distribution | Moldova | 51% |
Entity E | Diagnostics | Italy | 96% |
Entity F | Diagnostics | Italy | 96% |
Entity G | Cyber | Israel | 67% |
Entity H | Distribution | Hungary | 100% |
Entity I | Distribution | Israel | 100% |
The most significant NCIs (49%) are related to entity D which the loss for 2023 amounts to $40 thousand (2022: profit of
Investment in joint venture and associate
2023 | 2022 | |
$’000s | $’000s | |
As at 1 January 2023 | 15,555 | 12,667 |
Additions | 2,456 | 4,780 |
Disposal of investment in associated company | - | (372) |
Equity Profit (loss) | (822) | (686) |
Effect of translation adjustments | 705 | (834) |
At 31 December 2023 | 17,894 | 15,555 |
Most of the carrying amount is related to investment in ADOR Diagnostics Ltd (“ADOR”). During the year, ADOR secured
an investment of $7.5 million, of which the Group is contributing $3.5 million, to be paid on the completion of milestones.
As at the balance sheet date, the Group had invested the first tranche, resulting in a shareholding of 42.2%. Following the
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
97
Deferred tax
Deferred tax assets
The following are deferred tax assets recognised by the Group and movements thereon during the current and prior
reporting period (see also note 15).
Losses carried | |||
forward | Other | Total | |
$’000s | $’000s | $’000s | |
At 1 January 2022 | 3,375 | – | 3,375 |
Effect of translation adjustments | (13) | – | (13) |
At 1 January 2023 | 3,362 | – | 3,362 |
Change for the period | – | 135 | 135 |
Effect of translation adjustments | 10 | – | 10 |
At 31 December 2023 | 3,372 | 135 | 3,507 |
The Company incurred tax losses in certain jurisdictions, to which deferred tax assets relate, to the extent that it is
expected that future taxable profit will be available and can be utilised against them. The deferred tax assets were
analysed based on forecasted operations and existing agreements and backlog. The Company expects that taxable
profits will be available, as a result of an increasing demand, new products and expansion to new markets.
Deferred tax liabilities
Intangible | Tangible assets | ||
assets | and other | Total | |
$’000s | $’000s | $’000s | |
At 1 January 2022 | 73 | 97 | 170 |
Change for the period | (14) | (24) | (38) |
Effect of translation adjustments | (5) | (7) | (12) |
At 1 January 2023 | 54 | 66 | 120 |
Change for the period | (11) | (66) | (77) |
Effect of translation adjustments | (4) | - | (4) |
At 31 December 2023 | 39 | - | 39 |
The following are unrecognised taxable temporary differences associated with investments and interests:
Taxable temporary differences in relation to investments in subsidiaries for which deferred tax liabilities have not been
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
98
Financial and other liabilities
31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Trade creditors | 22,532 | 20,990 |
Salary accruals | 6,219 | 6,708 |
VAT and other tax | 2,580 | 3,013 |
Provision | 115 | 221 |
Liability for acquisition | 2,788 | 3,779 |
Other creditors and accruals | 7,428 | 11,545 |
41,662 | 46,256 | |
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The
Long-term bank credit
| 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Long-term bank credit | 1,328 | 2,000 |
1,328 | 2,000 | |
| 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Liability to the office of the chief scientist | 2,319 | 2,845 |
Government institutions and other | 1,130 | 627 |
3,449 | 3,472 | |
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
99
Changes in financial liabilities where the cash flows in respect thereof are classified as to financing activities
Open | Cash flow from finance | Foreign exchange | Close | |
balance | activities, net | differences | balance | |
2023 | $’000s | $’000s | $’000s | $’000s |
Short term | 2,235 | 737 | 304 | 3,276 |
Long term | 2,000 | (735) | 63 | 1,328 |
4,235 | 2 | 367 | 4,604 |
Open | Cash flow from (used in) | Foreign exchange | Close | |
2022 | balance | finance activities, net | differences | balance |
$’000s | $’000s | $’000s | $’000s | |
Short term | 1,634 | 609 | (8) | 2,235 |
Long term | 1,356 | 839 | (195) | 2,000 |
2,990 | 1,448 | (203) | 4,235 |
Lease liabilities
2023 | 2022 | |
$’000s | $’000s | |
Balance as at 1 January | 5,742 | 7,294 |
Cash payments | (2,327) | (2,384) |
Other | 1,201 | 1,421 |
Foreign exchange impact | (136) | (589) |
Balance as at 31 December | 4,480 | 5,742 |
| 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Maturity analysis | ||
Year 1 | 1,830 | 1,984 |
Year 2 | 1,279 | 1,475 |
Year 3 | 729 | 1,102 |
Year 4 | 442 | 758 |
Onwards | 200 | 423 |
4,480 | 5,742 | |
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
100
Share capital
Ordinary shares of NIS 0.01 each (number of shares) | ||
2023 | 2022 | |
Authorised: | 1,000,000,000 | 1,000,000,000 |
Issued and fully paid: | 440,684,134 | 440,534,124 |
The Company has one class of ordinary shares which carry no right to fixed income.
During 2023, 150,010 RSUs were exercised by an employee. In addition, three share-based grants were made (see also
note 34).
Buy-back
On 17 March 2022, the general meeting of shareholders of the Group approved a buy-back programme. During 2022,
the Company purchased a total of 4,495,000 ordinary shares for a total of $1,325 thousand (net of transaction costs) for
Note to the cash flow statement
Year ended 31 December | ||
2023 | 2022 | |
$’000s | $’000s | |
Operating profit from operations | 1,648 | 3,134 |
Adjustments for: | ||
Amortisation of intangible assets | 795 | 557 |
Depreciation of property, plant and equipment and investment property | 4,381 | 4,334 |
Capital gain of property, plant and equipment | (19) | (2,021) |
Gain from revaluation of investment carried at fair value | - | (192) |
Gain from business combination achieved in stages over an associated | ||
| company | - | (404) |
Share-based payments | 2,518 | 298 |
Increase in retirement benefit obligation | 24 | 23 |
Operating cash flow before movements in working capital | 9,347 | 5,729 |
Increase in inventories | (3,998) | (3,258) |
Decrease (increase) in receivables | 4,606 | (803) |
Decrease in payables | (5,644) | (1,186) |
Effects of exchange rate changes on the balance sheet | 1,454 | (1,556) |
Cash from operations | 5,765 | (1,074) |
Income taxes paid | (694) | (985) |
Interest paid | (62) | (725) |
Net cash from (used in) operating activities | 5,009 | (2,784) |
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
101
Business combination achieved in stages over an associated company
Towards the end of 2022, the Group gained control of one of its associated companies. As a result, the Group recorded
a capital gain of $404 thousand.
2022 | |
US$ in thousands | |
Net assets acquired | |
Current assets | 523 |
Cash | 29 |
Property, plant and equipment | 22 |
Current liabilities | (514) |
60 | |
Goodwill | 1,429 |
Total consideration | 1,489 |
Satisfied by: | |
Disposal of investment in associated company | 775 |
Liability of acquisition | 714 |
Total consideration | 1,489 |
Net cash inflow arising on business combination: | |
Cash and cash equivalents acquired | 29 |
Guarantees and liens
The Group provided from time-to-time bank guarantees due to advances from customers. The Company registered
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
102
Share-based payments
Equity-settled share option scheme
In November 2021, the Company approved a Global Share Incentive Plan (hereinafter: “the 2021 Plan”), under which
the Company can grant options or restricted share units or allot shares (including restricted shares), according to the
procedures, terms and conditions specified in the 2021 Plan. Options granted prior to the 2021 Plan are subject to the
terms and conditions under which they were granted.
Details of the share options outstanding during the year are as follows:
| 2023 | 2022 | |||
Number | Weighted average | Number | Weighted average | |
of share | exercise price | of share | exercise price | |
options | (in GBP) | options | (in GBP) | |
Outstanding at beginning of year | 5,481,200 | 0.2976 | 5,631,200 | 0.3008 |
Granted during the year | 20,174,200 | 0.2522 | - | - |
Forfeited during the year | - | - | (150,000) | 0.4196 |
Exercised during the year | - | - | - | - |
Outstanding at the end of the year | 25,655,400 | 0.2619 | 5,481,200 | 0.2976 |
Exercisable at the end of the year | 5,406,200 | 0.2871 | 5,264,534 | 0.2718 |
The outstanding options at 31 December 2023 had a weighted average exercise price of GBP 0.2619, and a weighted
average remaining contractual life of 8.0 years.
On 1 January 2023, the Company granted a total of 17,663,306 options over ordinary shares of 0.01 NIS each in the capital
of the Company (“Ordinary Shares”) to the Chairman and CEO of the Company. The options were granted under the 2021
Plan after receiving the approval of shareholders at a general meeting. In May and December 2023, the Company granted
2,110,894 and 400,000 options, respectively, to senior employees under the 2021 Plan.
The inputs into the Black-Scholes model for the options granted are as follows:
2023 | 2023 | 2023 | |
1st grant | 2nd grant | 3rd grant | |
Weighted average share price (GBP) | 0.2549 | 0.2386 | 0.2052 |
Weighted average exercise price (GBP) | 0.2549 | 0.2386 | 0.2052 |
Expected volatility | 48% | 49% | 49% |
Expected life | 6 | 6 | 6 |
Risk-free rate | 3.6% | 3.4% | 4.5% |
Expected dividends | 0% | 0% | 0% |
Fair value of the grant | $3,091k | $300k | $55k |
Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous
3 years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects
of non-transferability, exercise restrictions and behavioural considerations.
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
103
Details of the restricted share units (“RSUs”) outstanding during the year are as follows:
Number of RSUs | Number of RSUs | |
2023 | 2022 | |
Outstanding at beginning of year | 2,190,359 | - |
Granted during the year | - | 2,190,359 |
Forfeited during the year | (240,644) | - |
Exercised during the year | (150,010) | - |
Outstanding at the end of the year | 1,799,705 | 2,190,359 |
During 2022, three share-based grants were made. In April 2022, the Company granted to an executive officer 537,109
RSUs under the Group’s 2021 Plan. The RSUs vest on the third anniversary of the grant date subject to total shareholder
return (“TSR”) performance over the three-year period as follows:
TSR on vesting date compared to | Vesting percentage of the RSUs |
share price on date of grant | |
Less than +15% | 0% |
+15% | 25% |
Between +15% and +25% | Pro rata between 25% and 80% |
+25% | 80% |
Between +25% and +50% | Pro rata between 80% and 100% |
50% or higher | 100% |
The fair value of the grant is $224 thousand and was calculated using the Bionomic model as follows:
2022 | |
Weighted average share price (GBP) | 0.50 |
Expected volatility | 57% |
Expected life | 3 |
Risk-free rate | 1.5% |
Expected dividends | 0% |
Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous
3 years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects
of non-transferability and behavioural considerations.
In July and September 2022, the Company granted 1,653,250 RSUs to four employees, with vesting periods of two to
three years and subject to performance conditions. The total fair value of this grant of RSUs to four employees amounts
to $700 thousand, based on the Company’s average closing share price over the 30 trading days preceding the grant
date.
The Group recognised total expenses of $2,518 thousand and $298 thousand related to equity-settled share-based
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
104
Retirement benefit obligation
Defined contribution plans
The Group operates defined contribution retirement benefit schemes for all qualifying employees in Israel. The assets
of the schemes are held separately from those of the Group in funds under the control of trustees. Where there are
employees who leave the schemes prior to vesting fully in the contributions, the contributions payable by the Group
are reduced by the amount of forfeited contributions.
Total expenses related to the contribution retirement benefit schemes are: $531 thousand in the year 2023 (2022: $515
thousand).
The employees of the Group’s subsidiaries in the United States are members of a state-managed retirement benefit
scheme operated by the government of the United States. The subsidiary contributes a specified percentage of payroll
costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the
retirement benefit scheme is to make the specified contributions.
Defined benefit plans
The Group operates defined benefit schemes for qualifying employees of the Company and its subsidiaries in Israel
and in Italy.
In Israel, this scheme provides severance pay provision as required by Israeli law.
In Italy, each employee is entitled to
severance payment at the end of employment.
An actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out by an
external appraisal, regarding the employees in Israel. The present value of the defined benefit obligation, the related
current service cost and past service cost were measured using the projected unit credit method. The discount rate
was based on high quality corporate bonds.
The principal assumptions used for the purposes of the actuarial valuations were as follows:
2023 | 2022 | |
Discount rate(s) | 5.13% | 2.22% |
Expected rate(s) of salary increase | 3-4% | 3-4% |
Expected inflation rate | 2.59% | 2.71% |
Employee turnover rate | 8% | 8% |
Amounts recognised in comprehensive income in respect of these defined benefit plans are as follows:
Service cost:
2023 | 2022 | |
$’000s | $’000s | |
Current service cost | 163 | 150 |
Net interest expenses | 22 | 3 |
Components of defined benefit costs recognised in profit or loss | 185 | 153 |
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
105
Re-measurement on the net defined benefit liability:
2023 | 2022 | |
$’000s | $’000s | |
Return on plan assets (excluding amounts included in net interest | ||
| expense) | (23) | (5) |
Actuarial gains and losses arising from changes in financial assumptions | 4 | 42 |
Actuarial gains and losses arising from other | 24 | 28 |
Components of defined benefit costs recognised in other comprehensive | ||
| income | 5 | 65 |
The amount included in the consolidated statements of financial position arising from the entity’s obligation in respect
of its defined benefit plans is as follows:
2023 | 2022 | |
$’000s | $’000s | |
Present value of funded defined benefit obligation | 1,581 | 1,665 |
Fair value of plan assets | (983) | (1,128) |
Net liability | 598 | 537 |
Movements in the present value of the defined benefit obligation in the current period were as follows:
2023 | 2022 | |
$’000s | $’000s | |
Opening defined benefit obligation | 1,665 | 2,044 |
Current service cost | 163 | 150 |
Interest cost | 56 | 31 |
Remeasurement gains arising from changes in financial assumptions | (29) | (87) |
Benefits paid | (197) | (284) |
Exchange rate differences | (77) | (189) |
Closing defined benefit obligation | 1,581 | 1,665 |
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
106
Movements in the present value of the plan assets in the current period were as follows:
2023 | 2022 | |
$’000s | $’000s | |
Opening fair value of plan assets | 1,128 | 1,423 |
Interest income | 34 | 28 |
Remeasurements gains/(losses) return on plan assets (excluding | ||
amounts included in net interest expense) | (24) | (22) |
Contributions from the employer | 33 | 39 |
Benefits paid | (153) | (180) |
Exchange rate differences | (35) | (160) |
Closing fair value of plan assets | 983 | 1,128 |
Related party transactions
2023 | 2022 | |
$’000s | $’000s | |
Short- and long-term employee benefits | 1,596 | 1,845 |
Share-based payments | 2,128 | 56 |
3,724 | 1,901 |
At the end of the year, the Group had a liability to a related party in the
amount of $483 thousand.
associated companies
During the year, the Group provided various services (mostly lab services) to an associated company for an amount of
$1,971 thousand. At the end of the year, the Group assets and liabilities related to associated companies were in an
Financial Instruments
Management’s policy is to maintain a strong capital base in order to preserve the ability of the Group to continue
operating so that it may provide a return on capital to its shareholders, benefits to other holders of interests in the Group
such as credit providers and employees of the Group, and sustain future development of the business. Management
of the Group monitors return on capital defined as the total amount of equity attributable to the shareholders of the
Group and also the amount of dividends distributed to the ordinary shareholders.
The Group’s management reviews the capital structure on a periodic basis. As a part of this review the management
considers the cost of capital and the risks associated with each class of capital. Based on management’s
recommendations, the Group will balance its overall capital structure through the payment of dividends. The Group’s
(b) Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 3 to the financial statements.
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
107
(c) Categories of financial instruments
2023 | |
$’000s | |
Financial assets | |
Cash and cash equivalents* | 32,339 |
Fair value through profit or loss** | 9,121 |
Fair value through OCI** | 524 |
Receivables | 26,104 |
Financial liabilities | |
At amortised cost | 50,368 |
2022 | |
$’000s | |
Financial assets | |
Cash and cash equivalents* | 35,156 |
Fair value through profit or loss | 9,707 |
Fair value through OCI | 524 |
Receivables | 29,392 |
Financial liabilities | |
At amortised cost | 55,843 |
* Cash and cash equivalents comprises $13.3 million deposits up to three months and $19.0 million cash (2022: $2.4 million deposits up to three months
and $32.8 million cash).
** The amounts include ‘Short-term investment in deposits and other securities’ and ‘Investments carried at fair value’ in the amounts of $8,425 thousand
and $1,220 thousand respectively.
The majority of the assets included in fair value through profit or loss section measurements are level 1 fair value
measurements, defined as those derived from quoted prices (unadjusted) in active markets for identical assets.
The Group’s finance function provides services to the business, coordinates access to domestic and international financial
markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports
that analyse exposure by degree and magnitude of risks. These risks include market risk (including currency, interest rate
and inflation risk), credit risk, liquidity risk and cash flow interest rate risk.
The Group seeks to minimise the effects of these risks by using derivatives only for economic hedging and does not apply
hedge accounting. The use of financial derivatives is governed by the Group’s policies approved by the board of directors,
which provide principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-
derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
108
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (refer to sec
-
tion f) and interest rates (refer to section g). The Group enters into a variety of derivative financial instruments to manage
its exposure to interest rate and foreign currency risk, including: structured deposits, call options and forward foreign
exchange contracts to hedge the exchange rate risk, which derive mostly from existing monetary assets and liabilities.
There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures
the risk. However, due to recent changes and market volatility, the Group is monitoring closely its exposure and possible
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate
fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign
exchange contracts.
The Company does not implement hedge accounting.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date is as follows:
| Liabilities | Assets | |||
2023 | 2022 | 2023 | 2022 | |
$’000s | $’000s | $’000s | $’000s | |
EUR | 18,650 | 23,396 | 13,376 | 20,909 |
NIS | 4,173 | 5,595 | 12,962 | 11,572 |
RON | 4,451 | 5,252 | 14,744 | 10,026 |
MDL | 5,803 | 2,765 | 4,884 | 4,682 |
GBP | 419 | 360 | 92 | 133 |
Other | 1,879 | 4,939 | 1,256 | 1,822 |
Foreign currency sensitivity
The Group is mainly exposed to EUR, NIS, MDL, RON and GBP.
The following table details the Group’s sensitivity to a 10% change in USD against the respective foreign currencies
in 2023. The 10% is the rate used when reporting foreign currency risk internally to key management personnel and
represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis of the
Group’s exposure to foreign currency risk at the reporting date has been determined based on the change taking place
at the beginning of the financial year and held constant throughout the reporting period. A positive number indicates
an increase in profit or loss and other equity where the USD weakens against the respective currency. If the USD were
to strengthen by the same percentage against the respective currency there would be a similar but reverse impact on
the profit or loss and equity as presented in the tables below.
FINANCIAL STATEMENTS
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
109
Profit or loss
2023 | 2022 | |
$’000s | $’000s | |
NIS Impact | 796 | 783 |
EUR Impact | (10) | 104 |
GBP Impact | 1 | (2) |
Equity
2023 | 2022 | |
$’000s | $’000s | |
NIS Impact | 83 | (185) |
EUR Impact | (518) | (352) |
MDL Impact | (92) | 192 |
GBP Impact | (33) | (21) |
RON Impact | 1,029 | 477 |
Other Currencies Impact | (63) | (312) |
The Group’s main exposure derives from its cash, receivables and payables at year end.
The Company engages in financial instruments contracts such as forward contracts, call and put options and structured
(g) Interest rate risk management
The Group is exposed to interest rate risk because entities in the Group may borrow funds at both fixed and floating
interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate
borrowings. The Group’s exposure to interest rate on financial assets and financial liabilities are detailed in the following
table (refer to section h). The exposure to floating rate loans is not material.
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities,
by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and
(continued)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
ANNUAL REPORT &
ACCOUNTS 2023
110
Financial liabilities
Weighted average | |||||
effective interest | 3 months to | ||||
rate | 0-3 months | 1 year | 1-5 years | Total | |
% | $’000s | $’000s | $’000s | $’000s | |
31 December 2023 | |||||
Non-interest bearing | |||||
| loans | - | 38,001 | 597 | 3,804 | 42,402 |
Bank loans interest | |||||
| bearing (*) | 5.58 | 99 | 3,177 | 1,328 | 4,604 |
Lease liabilities | 3.39 | 457 | 1,373 | 2,650 | 4,480 |
38,557 | 5,147 | 7,782 | 51,486 | ||
31 December 2022 | |||||
Non-interest bearing | |||||
| loans | - | 42,396 | 725 | 4,703 | 47,824 |
Bank loans interest | |||||
| bearing(*) | 5.21 | 403 | 1,832 | 2,000 | 4,235 |
Lease liabilities | 2.64 | 496 | 1,488 | 3,758 | 5,742 |
43,295 | 4,045 | 10,461 | 57,801 |
(*)
Part of the bank loans are linked to a fix rate plus Euribor.
The future bank loan interest to be paid is $171 thousand.
(i) Finance liabilities
Loans from banks are measured at amortised cost using the effective interest method. The difference between the fair
value of the loans and their book value is not significant.
The fair value of the financial instruments of the Group carried at amortised cost is not considered to be materially
Other Alternative Measures
Income statement adjustments
The Group has made reference in the annual report to a number of adjustments regarding adjustments related to the
amortisation of intangible assets and share-based payments. These adjustments are outlined below:
Year ended 31 December 2023
(Unaudited)
Reported
results
Adjustments(*)
Adjusted
results
US$ thousands
Gross profit
39,890
568
40,458
Gross margin (%)
32.5%
-
32.9%
Operating profit
1,648
3,313
4,961
EBITDA
6,824
2,518
9,342
Year ended 31 December 2022
(Unaudited)
Reported
results
Adjustments(*)
Adjusted
results
US$ thousands
Gross profit
37,958
414
38,372
Gross margin (%)
32.7%
-
33.0%
Operating profit
3,134
855
3,989
EBITDA
8,025
298
8,323
(*) Adjusted to exclude amortisation of intangible assets and share-based payments.
The above does not form part of the audited financial statements.
FINANCIAL STATEMENTS
ANNUAL REPORT &
ACCOUNTS 2023
111
EBITDA measurement
The Group uses EBITDA as a performance measure, which is calculated as follows:
Year ended 31 December
2023
(Unaudited)
2022
(Unaudited)
Operating profit
1,648
3,134
Amortisation of intangible assets
795
557
Share-based payments
2,518
298
Depreciation
4,381
4,334
Adj. EBITDA
9,342
8,323
The above does not form part of the audited financial statements.
ANNUAL REPORT &
ACCOUNTS 2023
112
Company Information
Registered Office
P.O.B. 7318
, Neve Ne’eman Ind. Area, 4 Ha’harash Street, 4524075 Hod Hasharon, Israel
Company Number
520042813
– Registered in Israel
Company Secretary
Mr. Yair Livneh
Auditors
Brightman Almagor Zohar & Co., a Firm in the
Deloitte Global Network
1 Azriely Center,
Tel-Aviv, Israel
Financial Adviser &
Stockbroker
Shore Capital
Cassini House,
57 St James's Street,
London SW1A 1LD, UK
Legal Counsel in UK
Fladgate LLP
16 Great Queen Street,
London WC2B 5DG, UK
Registrar
Link Group
10th Floor, Central Square,
29 Wellington Street,
Leeds LS1 4DL, UK
Financial PR Consultants
Gracechurch Group
48 Gracechurch Street,
London EC3V 0EJ, UK
ANNUAL REPORT &
ACCOUNTS 2023
113
Notes
ANNUAL REPORT &
ACCOUNTS 2023
114
Notes
BATM IS A LEADER IN REAL-TIME TECHNOLOGIES
We bring high-technology solutions that are innovative, cost-effective and
reliable to our chosen global sectors of networking, cyber and diagnostics.
For more information visit:
www.batm.com
X
@BATMLtd
@BATM
@BATMgroup
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 this 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.
Neve Ne’eman Ind. Area
4 Ha’harash Street, P.O.B. 7318
4524075 Hod Hasharon
Israel