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Neve Ne’eman Ind. Area
4 Ha’harash Street, P.O.B. 7318
4524075 Hod Hasharon
Israel
Annual Report and
Accounts
For the year ended 31 December 2020
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 biomedicine and
networking.
BATM’s global footprint
CONTENTS
Strategic Report
Strategic Framework
Performance Highlights
Chairman’s Statement
Chief Executive Officer’s Review
Business Model
Stakeholder Engagement
Markets
Chief Financial Officer’s Review
Key Performance Indicators
Sustainability Review
Risk Management
Corporate Governance
Directors’ Biographies
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Financial Statements
Independent Auditor’s Report
Consolidated Financial Statements
Notes to the Consolidated
Financial Statements
Other Alternative Measures
Company Information
2
3
4
6
10
12
14
16
18
19
22
24
26
32
35
49
53
57
62
110
111
1
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT STRATEGIC REPORT
Strategic Framework
BATM’s purpose is to deliver high-technology innovations that make
a significant difference to the human experience
We deliver high-technology
solutions
That solve complex challenges
in mission-critical, largescale
applications
With a focus on
the global sectors of…
Bio-medical solutions and
Networks and cyber security
And differentiate through…
Our intellectual property
The world-leading expertise of our
employees
Innovative, robust, reliable and cost-
effective solutions
We build value creation
strategies
From idea, to scale up, to mass-market
success
And maximise the long-term value of
our businesses through organic and
inorganic strategies
2
We serve blue-chip customers
worldwide
Including enterprises, governments
and international agencies
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
ANNUAL REPORT & ACCOUNTS 2020 STRATEGIC REPORT
STRATEGIC REPORT
Performance Highlights
Group
Revenue
$183.6m
+49%
(2019: $123.4m)
EBITDA*
$19.7m
+100%
(2019: $9.8m)
Adj. operating
profit*
$15.0m
+183%
(2019: $5.3m)
Earnings per
share
2.22¢
+139%
(2019: 0.93¢)
Cash and financial
assets
$53.4m
+19%
(2019: $44.8m)
Gross profit
$60.7m
+83%
(2019: $33.1m)
Gross
margin
33.1%
+620bps
(2019: 26.9%)
Cash from
operating activities
$18.5m
+158%
(2019: $7.2m)
* This report includes ‘Other Alternative Measures’. For a reconciliation of these measures to IFRS, please refer to page 110.
COVID-19 test kits
Launched RT-PCR and
serologic kits
Strong global demand for
reagents and instruments
Critical care
ventilators
Delivered €29m order
for 1,000 ventilators to a
European government
NFVTime
Secured first tier 1
customer, PCCW Global
Successful proof-of-
concept with Vodafone
REVENUE BY DIVISION
70%
30%
Bio-Medical
Networking & Cyber
ANNUAL REPORT & ACCOUNTS 2020
3
Chairman’s
Statement
Dr. Gideon Chitayat
Chairman
It is with pleasure that I present BATM’s Annual Report
2020 and report on a highly successful year in which we
made strong strategic and financial progress, and our own
contribution to the global fight against COVID-19. BATM’s
purpose is to develop high-technology solutions that
make a clear difference to the human experience, with a
focus on bio-medical and networking applications. 2020
brought into sharp relief the need for the kind of solutions
that we have spent many years developing and, I believe,
has accelerated and increased our market opportunity.
Our key values of innovation, reliability, and responsibility
provide strong foundations for sustainable success in the
coming years.
STRATEGIC AND FINANCIAL PROGRESS
We made excellent strategic progress in both
business divisions in 2020.
Our Bio-Medical division was able to respond rapidly to the
pandemic and quickly brought to market COVID-19 tests
and ventilator equipment. As a result, divisional sales grew
by 100% to $128.7m and adjusted operating profit increased
substantially from $0.1m to $19.4m. The importance of
diagnostics as a critical tool in disease management has
never been so evident; and BATM’s strategy to provide
highly reliable and fast tests for distributed, point-of-care
settings has significant advantages in the fight against all
manner of infectious diseases.
Although revenues in our Networking and Cyber division
fell slightly to $54.9m, as a result of lower business
activity due to the pandemic, we continued to release
to
new products
focused on delivering bandwidth
consumers and businesses and made important progress
with customers for our disruptive Network Function
Virtualisation (“NFV”) technology. As a result of successful
proofs of concept, NFV is expected to make a material
contribution to divisional revenues in 2021. In March 2021,
we sold our non-core digital services business, NG Soft, for
a total of NIS 105.1m (c. $33m), enabling BATM to focus on
key activities, including the growth opportunity of NFV.
MAKING A POSITIVE IMPACT
Our choice of target sectors, within the bio-medical
and networking fields, reflects a desire to have a direct,
positive impact on individuals, communities, businesses,
local economies and the environment. Our diagnostics
solutions, as described above, play a critical role in disease
management; our NFV solutions have the potential to
reduce energy consumption
in the deployment and
management of networks; and our Integrated Sterilizer and
Shredder technology (part of the Eco-Med unit) provides
cost-effective
environmentally-friendly, efficient
treatment of pathogenic waste
the medical,
pharmaceutical and agricultural industries, including for
developing markets.
and
in
BALANCE SHEET
At the end of December 2020, BATM had cash and
financial assets of $53.4m. In March 2021, our balance
sheet was further strengthened with the receipt of the
proceeds from the sale of NG Soft. Our strong balance
sheet puts us in an excellent position to continue our
investments in innovation and sales and marketing and to
4
ANNUAL REPORT & ACCOUNTS 2020 STRATEGIC REPORT
seek acquisitions to accelerate our strategic progress. In
addition, as previously reported, the Board has resolved
to recommend, for shareholder approval, the distribution
of a dividend for 2020.
Varda Shalev as “voice of the workforce”. She will develop
a programme to enable regular dialogue with employees
across the business and report back to the Board to
increase our awareness and understanding of their views.
OUR MANAGEMENT, PEOPLE AND CULTURE
OUTLOOK
I would like to express my thanks to BATM’s Executive
team and all employees for their hard work, dedication
and flexibility in what was a difficult and disruptive year
for many people. The performance of BATM in 2020 is
testament to the teamwork and responsiveness of all
parts of the business.
I believe the future has never looked so exciting for BATM.
Our diversified portfolio balances our risks in the short
term, whilst providing the opportunity for high levels of
new growth, particularly in diagnostics and NFV over the
next five years. I look forward to reporting on our further
progress in 2021.
In February 2021, we were delighted to appoint Prof.
FOCUS ON VALUE CREATION
We are committed to a long-term approach to value creation and seek to maximise value
through organic and inorganic strategies.
Capital allocation
The Board allocates capital to the investments it considers have the highest long-
term returns, based on the size of market opportunity and the Group’s ability to
deliver highly differentiated solutions and take them to market.
Value creation
Our value creation strategies seek to maximise total returns, through buy, build and
partner decisions, appropriate to each opportunity. Through our build strategies, we
leverage shared Group resources, expertise, systems and processes - and seek to
build an optimised company that generates high gross profit and cash generation.
Value realisation
As our portfolio companies mature, we consider options for value realisation. These
options include the sale of companies or the establishment of new vehicles such as
joint ventures.
5
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT Chief Executive
Officer’s Review
Dr. Zvi Marom
Chief Executive Officer
This was an outstanding year for BATM. We delivered
substantial growth, driven by our Bio-Medical division,
which responded rapidly to the outbreak of the pandemic
to develop COVID-19 diagnostic tests and manufacture
critical care ventilators. In our Networking and Cyber
division, we achieved a key milestone in securing our first
tier 1 customer for NFVTime, PCCW Global, who have now
begun the rollout of our solution. Overall, we significantly
advanced the execution of our strategy in both molecular
diagnostics and NFV, which we see as our key future
growth markets.
Bio-Medical Division
Diagnostics
The Diagnostics unit performed exceptionally well during
2020, delivering 318% revenue growth. As a result of our
investment in recent years in transitioning to molecular
diagnostics, we are now able to rapidly provide solutions
for any new pathogen that appears. We also responded
with speed and efficiency when first alerted to the potential
COVID-19 outbreak. Consequently, we were able to quickly
launch diagnostic test kits for COVID-19, which met with
strong demand. Sales of our diagnostic instruments –
mainly DNA and RNA extractors and amplifiers (PCRs)
– increased significantly, and were frequently ordered
alongside the COVID-19 test kit reagents. This momentum
continued throughout the year and the Diagnostics unit
entered 2021 with a substantially higher order book
than at the same point of the prior year. To cater to the
increased demand, we expanded the production capacity
of our Adaltis facility in Rome, Italy.
The customers for our COVID-19 solutions are primarily
public health authorities in Europe and South East Asia.
We also received – with more expected – an order from
a major new customer that is a significant global private
laboratory group, headquartered in Italy, that provides
COVID-19 testing throughout Europe, primarily for large
businesses such as airports and cruise lines.
While significantly expanding our sales and production, we
also increased our R&D efforts to develop multiple new
innovative tests and technologies to be launched in 2021
and 2022.
COVID-19 diagnostic tests
In 2020, we launched both RT-PCR (real-time polymerase
chain reaction) antigen tests and serologic antibody tests
for COVID-19.
Our antigen molecular (RT-PCR) test kit, which detects if
someone currently has the COVID-19 virus, underwent
clinical verification and evaluation by leading universities
and hospitals in February and received certification at
the end of March 2020. We subsequently expanded the
gene discovery capability of this test to five (4+1) genes
(compared with those commonly available in the market
that have up to three gene discoverability), including the
spike (S) gene, which is the protein that the virus uses to
invade human cells. The S gene is present in a person’s
blood even if they have a very low viral load of COVID-19,
which might otherwise go undetected. As a result, this test
can provide more accurate results, reducing the risk of
false positives and false negatives.
Post year end, we launched a self-administered saliva-
based RT-PCR COVID-19 test based on our 4+1 gene
kit. This test avoids the need for swabs or highly-trained
medical personnel and is quicker to process as the RNA
extraction phase is eliminated. We believe there will be
significant demand for this new test.
In partnership with Tor Vergata University of Rome, our
kits are continually tested against any mutation that is
perceived to be clinically material. Our kits are accurately
able to detect all known variants of COVID-19.
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ANNUAL REPORT & ACCOUNTS 2020 STRATEGIC REPORT
In May 2020, we launched our ELISA serological test that
diagnoses if someone has had COVID-19 by detecting
antibodies present
in their blood. We subsequently
advanced this test to be able to measure the quantity of
antibodies in the blood rather than just identifying their
presence or absence (qualitative test). This was in response
to growing medical research suggesting that the volumes
of antibodies in the blood of someone who has recovered
from COVID-19 is low and declines. The upgraded test
measures both IgM antibodies, which are produced a
few days after infection and remain in the blood for a
short period, and IgG antibodies, which are longer-term
antibodies that remain in the blood for a few months.
This test has the same levels of sensitivity and specificity
as those of the market-leading brands, with sensitivity of
100% and specificity of 99.8%.
New molecular diagnostics tests
During the second half of the year, we developed a new
molecular PCR diagnostics test that is able to test for multiple
respiratory pathogens at the same time. In less than an hour,
it can identify the specific cause (pathogen) of a respiratory
illness, enabling the correct treatment or action to be rapidly
implemented. It can detect all prominent respiratory viruses
as well as the bacteria that cause the serious pulmonary
illnesses that are believed to be a secondary infection of
COVID-19, such as pneumonia and Legionnaires’ disease.
This test is in the final stages of CE certification and we
expect to commence production and sales in May 2021.
In addition, we entered into agreements with several
leading universities in Europe for the co-development of
diagnostic solutions, which are expected to be launched
in 2021. These new molecular biology tests will be for the
diagnosis of infectious diseases, which is a key focus area
for our diagnostics activities.
Ador Diagnostics
Ador Diagnostics (“Ador”), our associate company,
is
developing the NATlab molecular biology solution that
provides rapid sample-to-answer diagnosis of bacterial,
viral or fungal infections using DNA or RNA sampling.
During the year, Ador developed an innovative technology
using the rolling circle amplification
(“RCA”) method,
which has been granted several patents in the U.S. This
will enable the NATlab system to provide test results in a
significantly shorter timeframe – within 30 minutes – and
with greater accuracy than Ador previously envisaged.
Ador is in the advanced stages of incorporating the RCA
technology into the NATlab system, which we expect to
be ready for in-hospital trials in H1 2021. To expedite the
development of the new RCA-based system, an additional
$10m was invested in Ador, of which BATM contributed
$3m. Following this investment, Ador has an enterprise
value of $54.5m and BATM’s shareholding is 36.7%.
Eco-Med
The Eco-Med unit achieved significant growth, with revenue
increasing by 509%. This was due to the delivery of a €29m
contract from a European government for 1,000 critical
care ventilators to support that country’s public health
response to COVID-19. The ventilators were manufactured
by our Celitron subsidiary in Hungary, which has been
producing equipment for medical environments globally
for over 10 years.
As a result of the pandemic and the restrictions on travel,
the Eco-Med unit focused on the delivery of the ventilator
project in 2020. As lockdown measures are lifted, we
are resuming work on the installation of our pathogenic
waste treatment solutions based on our
Integrated
Steriliser and Shredder (“ISS”) technology. We expect to
complete delivery on our existing contracts with our food
manufacturing customers in the Philippines and Taiwan
this year. We also expect to complete the delivery of a
contract from Ceva Animal Health, a leading developer
of animal health products, that was awarded in 2020 to
expand and enhance the ISS-based solution installed at its
facility in Hungary.
Towards the end of the year, we completed the delivery
of the first of our new ISS-based instrument that recovers
high-quality protein and oils from insects such as worms
and flies. The customer, which is headquartered in
Belgium, recycles insect nutrients into valuable products
for the feedstock industry. It intends to use our solution
to produce insect protein powder that can be a substitute
for fishmeal and oils used in aquaculture feed. This marks
our entry into a new market segment and is an area we
believe offers great potential as a sustainable source of
protein.
Distribution
Revenue in the Distribution unit increased by 26% in 2020
over the prior year. The increased revenue was due to
growth in existing distribution activities as well as through
the provision of third-party reagents for COVID-19 tests,
both PCR and serologic, to public health authorities in
Eastern Europe. In the second half of the year, our lab
in Romania also began performing COVID-19 tests for
private sector customers. In addition, we established
infrastructure to expand our distribution activities into
Hungary, which is expected to commence this year.
7
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT Chief Executive Officer’s Review CONTINUED
Networking and Cyber Division
NFV solutions
We made significant progress with our NFVTime operating
system, developed by our Telco Systems subsidiary, that
enables network carriers to deploy their own virtualised
software-based networks. Virtual networks can be a key
element in allowing operators to leverage the benefits
of 5G through edge computing and provide additional
differentiated services to their enterprise customers as
well as reducing the costs, time and carbon footprint
involved with physical networks.
We achieved a key milestone in securing our first tier 1
customer, PCCW Global, for NFVTime with a three-year
licensing agreement. PCCW Global selected NFVTime
to enrich its managed SD-WAN service offering, which it
provides to its multinational enterprise customers as well
as to operators that it services on a wholesale basis. We
will receive a licence fee for a minimum of three years for
each deployment of NFVTime. Post year end, PCCW Global
commenced making NFVTime available to its customers.
in Europe.
tier 1 operators
We conducted several successful proofs-of-concept
of NFVTime with
In
particular, Vodafone, a leading global network operator
headquartered in the UK, completed a proof-of-concept of
the Arm-based uCPE that is run on the NFVTime operating
system. The solution, which was tested for both small/
medium business and enterprise use-cases, performed
highly successfully in the deployment and management of
virtual and cloud network functions and was able to handle
high traffic requirements – performing to levels not seen by
other comparable platforms. We continue to work closely
with Arm and Vodafone for the next step in the process,
which we expect will be field trials.
We are receiving significant interest in NFVTime from
prospective customers and the pipeline of potential orders
continues to expand. NFVTime is currently undergoing
evaluation with several leading network operators and
multi-service providers worldwide. A number of these
evaluations are at an advanced stage and we are confident
that they will translate to orders in due course.
Also during the year, we received an order for NFVTime
ICT managed service
from AdcareIT, an outsourced
8
provider in Kenya. AdcareIT intends to use NFVTime
together with Clavister’s virtual cyber security solutions to
provide its customers with SD-WAN and Firewall services.
Clavister is part of our NFVTime Arm-based ecosystem
through a strategic partnership we established in 2019.
Post period, we completed the enhancement of NFVTime
to enable its use in public cloud environments, such as
Amazon Web Services and Microsoft Azure. This expands the
addressable market to customers that operate cloud-based
networks – which is typically enterprise customers or larger
operators with a multinational footprint – as well as those
that lack the internal resource to run the software in their
datacentre.
ICT and Carrier Ethernet solutions and services
Revenue from the installation and servicing of networking
equipment was slightly lower in 2020 due to COVID-19
lockdown measures restricting travel to the premises of
customers and suppliers. However, we expect sales of our
carrier Ethernet solutions and services to return to growth
as these restrictions are lifted.
includes
We continued our development efforts. This
intro ducing new solutions to the T-Marc R3305 series of
multi service business routers to enable customers to meet
the demand for increased home broadband connectivity
and quality. The platform is undergoing proofs-of-concept
worldwide and is in field trials with a tier 2 operator in Europe.
We also received growing interest in our ultra-high capacity
service aggregation and cloud gateway platform, the T-Metro
8104, that enables customers to increase their network
capacity. Following its launch in Q4 2019, we completed the
deployment of hundreds of units for multi-service providers
across North America during the year.
Cyber
In cyber, we were awarded a $4m contract from our
long-standing government defence department customer.
This further order, the majority of which was delivered in
2020, was for the provision of additional hardware and
software cyber security products as the customer rolls out
our solution to encompass further employees. The total
contracted revenue awarded to date by this customer for
this cyber solution is over $18m.
ANNUAL REPORT & ACCOUNTS 2020 Our vision is to be leaders in high-technology innovations that make a significant difference to the human experience
OUR VISION AND VALUES
Innovation
and invention
We harness extraordinary technical
and entrepreneurial talents to bring
leading, disruptive technologies
successfully to market, at scale.
Reliability
Our customers trust us to
deliver mission-critical products.
Our products are built for
reliability and performance at
scale and in challenging
conditions.
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.
Overall, revenue in our cyber security business was lower
as a result of COVID-19 restrictions as well as the diversion
of government budgets in response to the pandemic.
However, we expect increased activity in this area in 2021
as public authorities begin to return to postponed projects.
Outlook
We entered 2021 receiving increasing demand for the
solutions in our key target areas in both of our divisions.
The momentum in the Bio-Medical division has been
sustained as we continue to receive strong demand for
molecular diagnostic test kits and instruments. In the
Diagnostics unit, we started the year with an order book
significantly higher than at the equivalent period last year.
We expect the Bio-Medical Division to remain the largest
contributor to revenues this year.
In the Networking and Cyber division, we expect sales of
NFVTime to make a material contribution to this division’s
full year revenue resulting from the scheduled rollout
by PCCW Global and the anticipated adoption by other
operators. In addition, due to the advanced technology of
our carrier Ethernet and cyber security solutions, we are
confident that sales in these product areas will return to
growth once lockdown restrictions are lifted and normal
business practices resume.
As announced on 19 March 2021, post period, we
completed the sale of NGSoft and received NIS 93.7m (c.
$29m). We intend to use the proceeds from the disposal to
strengthen our innovation and commercialisation engine
organically and through acquisition to accelerate our core
activities – in particular, in NFV and molecular diagnostics.
We believe these areas offer transformational growth
opportunities in the short- to medium-term.
For 2021, we expect revenue growth from continuing
operations, excluding the impact of the large ventilator
contract received in 2020. We also expect to achieve
further improvement in gross margin resulting from the
anticipated increased contribution to revenue from our
molecular diagnostics and NFV solutions. This reflects the
strengthened foundations of the business, which we believe
positions BATM for sustainable growth in profitability.
As a result, we look to the future with great confidence and
look forward to updating the market on our progress.
Investment case
Large, global addressable markets
BATM operates in the large, global markets of networking, cyber
security, diagnostics and other biomedical solutions; and in sub-
segments on the verge of disruption.
Long-term approach
BATM takes a long-term approach to its investments by assessing
long-range industry trends and building differentiated solutions
backed by IP.
Risk diversification
BATM’s portfolio includes a mix of both established and novel
technologies, and targets a range of sub-segments, customer types
and geographical markets.
Leadership & Expertise
BATM has a highly experienced management team and Board,
with significant expertise in its target markets, and engages
systematically with external, world-leading experts.
Strong balance sheet
BATM is cash generative and has a strong net cash position,
supporting growth in investment, a progressive dividend policy and
scope for acquisitions.
Financial growth
BATM targets revenue, margin and EPS growth both organically and
via acquisition; and seeks to maximise shareholder value, where
appropriate, through value realisation opportunities.
9
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT Business Model
Our strategy is powered by our purpose. We bring high-technology solutions that are innovative, cost-effective and reliable,
to our chosen global sectors of networking and biomedicine. We build businesses from idea, to scale up, to mass market
success, through organic and inorganic strategies. We seek to maximise long-term value through our capital allocation and
portfolio management strategies.
Bio-Medical division
$128.7m +100%
2020 revenues
Our strategy
Our business units:
• Diagnostics
•
Eco-Med
• Distribution
The Bio-Medical division
is focused on becoming
a leading provider of
molecular diagnostic
laboratory reagents
and equipment as well
as innovative products
to treat biological
pathogenic waste
• In diagnostics, BATM has developed
its own equipment and reagents
and is investing in developing
the most advanced molecular
biotechnology
• The Eco-Med unit develops and
supplies innovative solutions to
treat pathogenic and medical waste
• BATM also administers tests and
distributes diagnostic equipment
and medical supplies of other
leading brands
Revenue model
Revenues are generated from the sale and distribution of consumables and
equipment, and from providing equipment service & maintenance
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ANNUAL REPORT & ACCOUNTS 2020 STRATEGIC REPORT
Networking and Cyber division
$54.9m -7%
2020 revenues
Our continuing
business units:
•
•
Telco Systems
Cyber security
Our strategy
The Networking and Cyber
division is focused on becoming
the leading provider of
Network Function Virtualisation
(NFV), while supplying Carrier
Ethernet and MPLS access
solutions, and cyber network
monitoring and encryption
• The Networking unit services a wide
need for access solutions to mobile,
cloud and wireline infrastructure
markets. Innovation is focused
on cloud-based networks, and
virtualisation and edge network
computing
• In the Cyber unit, BATM provides
network monitoring and encryption
solutions for very high speed, large
area networks
Revenue model
Revenues are generated from solutions that combine integrated hardware
and software; and, in the future, increasingly from the sale of software-only
solutions, to drive high gross margins and annual recurring revenue
ANNUAL REPORT & ACCOUNTS 2020
11
11
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT Stakeholder Engagement and
Value Creation
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
Financial Investors
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.
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 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 Working to understand growth drivers
in our customers’ markets
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
2020 HIGHLIGHTS
l 559 new customers won
l 243 customer training programmes
conducted
2020 HIGHLIGHTS
l Approximately 35 shareholder meetings or
scheduled calls
l Hosted an investor conference in Israel
12
ANNUAL REPORT & ACCOUNTS 2020 Employees
Communities
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,
comprising a network of departments at
subsidiary level
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
We strive to be a responsible corporate citizen
within the local and wider communities in which
we operate, by behaving 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 COVID 19
l Solutions for the safe treatment of pathogenic
waste, particularly in developing economies
l Local initiatives that support community
and charitable organisations
l Active encouragement of employees
to work to further charitable goals
2020 HIGHLIGHTS
2020 HIGHLIGHTS
l Employee base expanded to c. 1,196
l Raised $32k for charitable causes
(2019: 1,138)
l Created ‘voice of the workforce’ NED role
(appointed Prof. Varda Shalev post period)
l Donated computers to a local school
l Supported a non-profit organisation
that finds workplaces for people with
disabilities
13
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT
Markets
BATM has identified its future primary growth markets as Molecular Diagnostics and Network Virtualisation
Molecular Diagnostics
USD 15.4 billion by 2026
Global annual molecular diagnostics market
(Source: Global Market Insights)
9% CAGR
(Source: Global Market Insights)
Macro market drivers
BATM solution demand drivers
y
y
y
y
y
Economic cost of healthcare and disease
Population growth and demographic
trends
New treatment models, including
screening and personalised medicine
Drug and treatment safety
Detection and monitoring of infectious
diseases
y
y
y
y
y
Advances in molecular techniques
and biomarker identification
Accuracy, specificity and speed
Growth of Companion, Point of Care and
at-home diagnostics
Role of molecular diagnostics in oncology
Connectivity, data collection and AI
Molecular diagnostic tests are used to detect
specific biological molecules, or genomic variants,
in order to help diagnose, treat and monitor
infectious and non-infectious diseases. Molecular
diagnostics comprises a number of different
testing methodologies. BATM serves the molecular
diagnostics market
through
the Diagnostics
unit, which comprises Adaltis (instruments and
molecular diagnostic tests) and Ador Diagnostics
(molecular multiplexing instruments and panels)
and through the Distribution unit.
14
14
ANNUAL REPORT & ACCOUNTS 2020
ANNUAL REPORT & ACCOUNTS 2020 STRATEGIC REPORT
Network Function Virtualisation
USD 36.3 billion by 2024
Global annual NFV market
(Source: marketsandmarkets)
22.9% CAGR
(Source: marketsandmarkets)
Macro market drivers
BATM solution demand drivers
y
y
y
y
y
Faster and lower cost deployments
Increased system performance
Automated operations
Efficient inventory management
Lower carbon footprint
y
y
y
y
y
Increasing network traffic
and complexities
Demand for cloud-based services
Enterprise mobility
Deployment of 5G
Internet of Things
Network Function Virtualisation (NFV)
enables multiple network devices –
such as routers, firewalls, SD-WANs
and others – to be replaced with a
single
generic hardware platform
that runs many network
functions
simultaneously. BATM’s NFVTime
is
a
(software) operating system
that
enables different network functions to
run on any hardware and on both x86
(Intel) and arm chipsets.
ANNUAL REPORT & ACCOUNTS 2020
15
15
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT Chief Financial
Officer’s Review
Moti Nagar, CPA
Chief Financial Officer
Total Group revenue for 2020 increased by 49% to $183.6m
(2019: $123.4m). This reflects significant growth in the Bio-
Medical division, which accounted for 70% of total revenue
(2019: 52%) and 30% was contributed by the Networking and
Cyber division (2019: 48%). The second half of the year was
particularly strong, with revenue in H2 2020 being 37% higher
than H1 2020.
The gross margin for the year improved to 33.1% (2019: 26.9%).
This reflects a substantial increase in the gross margin for the
Bio-Medical division, which accounted for 77% of total gross
profit and more than offset a reduction in gross margin in the
Networking and Cyber division as described below.
Sales and marketing expenses were $20.2m (2019: $16.3m),
representing 11% of revenue compared with 13% in 2019. The
increase in sales and marketing expenses is attributable to
the COVID-19 related products in the Diagnostics and Eco-
Med units of the Bio-Medical division. There was also an
increase in sales activity in the Distribution unit, which reflects
its ongoing business development and partially related to the
distribution of COVID-19 solutions.
our rights in IBC Holdings, a joint venture to construct a
fibre optic broadband network in Israel, to Cellcom Israel
Ltd.
EBITDA grew by 100% to $19.7m (2019: $9.8m), reflecting the
increased operating profit.
Net finance expense was $0.9m (2019: $0.3m income), which
is largely due to the adverse effect of foreign exchange
rate fluctuations (primarily in the Euro, Moldovan Leu and
Hungarian Forint), compared with a positive impact in 2019.
Currency fluctuations had an immaterial impact on revenue
and operating profit.
Net profit after tax attributable to equity holders of the parent
increased to $9.8m (2019: $3.9m) resulting in a significant
increase in basic earnings per share to 2.22¢ (2019: 0.93¢).
At 31 December 2020, inventory was $33.9m (31 December
2019: $22.7m). The increase is primarily due to the expansion
of production of diagnostic products to satisfy orders to be
delivered in 2021. Trade and other receivables decreased
slightly to $41.5m (31 December 2019: $42.8m).
General and administrative expenses were $15.9m (2019:
$11.8m), representing 9% of revenue compared with 10% in
2019, reflecting the greater size and activity of the business.
Intangible assets and goodwill at 31 December 2020 were
$23.7m (31 December 2019: $23.7m).
R&D expenses were higher in 2020 than the previous year
at $10.3m (2019: $6.8m), which reflects investment in our
molecular biology and COVID-19 products as well as in our
NFV technology.
Property, plant and equipment and investment property
was $18.0m (31 December 2019: $16.1m). The increase is
mostly due to investments in the Diagnostics unit to expand
production capacity.
Adjusted operating profit increased by 183% to $15.0m
compared with $5.3m in 2019. This growth reflects the
significantly higher revenue and gross profit. It also
includes a capital gain of $0.6m from the revaluation
of our ownership of Ador Diagnostics. The adjusted
operating profit for 2019 includes (under other operating
income) a capital gain of $3.2m from the revaluation of our
ownership of Ador Diagnostics and $3.4m from the sale of
The balance of trade and other payables was $53.6m (31
December 2019: $44.5m). The increase is primarily due to
provisions for suppliers for the ventilator project that were
due to be paid in Q1 2021 as well as for supplies to support
the ongoing demand for our diagnostic solutions.
Cash from operating activities increased to $18.5m for 2020
compared with $7.2m for the prior year. The growth is mainly
16
ANNUAL REPORT & ACCOUNTS 2020 H1 2020
H2 2020
FY 2020
FY 2019
Revenue
$77.4m
$106.2m
$183.6m
$123.4m
Gross margin
Adj. operating profit
29.7%
$2.8m
35.6%
$12.2m
33.1%
$15.0m
26.9%
$5.3m
due to the increased profit for the year and an improvement in
working capital.
Our balance sheet was strengthened with effective liquidity of
$53.4m at 31 December 2020 compared with $44.3m at 30
June 2020 and $44.8m at 31 December 2019. This is comprised
of cash and cash equivalents of $50.6m (30 June 2020: $40.0m;
31 December 2019: $40.6m) and financial assets of $2.8m (30
June 2020: $4.3m; 31 December 2019: $4.3m). Financial assets
represent cash deposits of more than three months’ duration,
held for trading bonds and marketable securities. The change
in financial assets compared with the prior periods reflects
timing of deposit disposals. The increase in cash and cash
equivalents relates to the higher profit and improvement in
working capital.
Divisional performance
Bio-Medical Division
FY 2020
FY 2019
Revenue
$128.7m
$64.4m
Gross margin
36.3%
23.6%
Adj. operating profit
$19.4m
$0.1m
Revenue for the Bio-Medical division increased by 100% to
$128.7m (2019: $64.4m), reflecting significant growth in the
Diagnostics, Eco-Med and Distribution units by 318%, 509%
and 26% respectively. The Diagnostics unit accounted for
18% of the Bio-Medical division’s revenue, the Eco-Med unit
for 31% and the Distribution unit for 51% (2019: 9%; 10%;
81%). Gross margin improved to 36.3% (2019: 23.6%) due to
the high-margin nature of the new molecular biology and
COVID-19 products in the Diagnostics and Eco-Med units.
As a result of the substantially higher revenue and gross
margin, the Bio-Medical division generated an adjusted
operating profit of $19.4m for 2020 compared with $0.1m
in 2019.
Networking & Cyber Division
FY 2020
FY 2019
Revenue
$54.9m
$59.0m
Gross margin
25.5%
30.5%
Adj. operating profit/(loss)
$(4.5)m
$5.2m
Revenue in the Networking and Cyber division was slightly
lower in 2020 than the previous year due to COVID-19
lockdown measures causing restrictions on travelling to
the premises of customers and suppliers. As a result of a
shift in sales mix towards lower margin products mainly
in ICT, combined with the continued investment in new
solutions, notably NFVTime, the Networking and Cyber
division recorded an operating loss. The adjusted operating
profit for the prior year also included the exceptional gain of
$3.4m from the sale of rights in IBC Holdings.
Sale of NGSoft
Post period, as announced on 19 March 2021, we sold our
NG Soft Ltd (“NGSoft”) subsidiary for a total consideration of
NIS 105.1m (c. $33m), of which BATM received NIS 93.7m (c.
$29m), to Aztek Technologies (1984) Ltd., a provider of ICT
cloud services in Israel and a portfolio company of SKY Fund.
NGSoft is a software and digital services comp any that
provides creative digital and technology solutions.
Its
development activities did not include any of our NFV or cyber
solutions. Accordingly, the Board believes it was in the best
interests of BATM and of all shareholders to generate value
from the sale of NGSoft and invest the proceeds to accelerate
our core activities.
Dividend
The Board of BATM has resolved to recommend the
distribution of a dividend for full year 2020. In accordance
with Israeli law, a dividend can only be declared following
the publication of the audited annual report and accounts.
Accordingly, we will provide further details in due course.
17
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT
Key Performance Indicators
The following key performance indicators (“KPIs”) have been selected as the most appropriate measures of strategy
execution for the Group. We review our KPIs on an ongoing basis to ensure they remain relevant.
Group revenue
$183.6m +49%
(2019: $123.4m)
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.
Significant
Performance
our
Bio-Medical division (increased revenue in all
units) more than offset a slight reduction in the
Networking & Cyber division.
growth
in
EBITDA
$19.7m +100%
(2019: $9.8m)
Description Group earnings before interest, tax,
depreciation and amortisation.
Why it is a KPI Key measure of our effectiveness
in turning revenue into earnings.
Performance Substantial
increase reflecting
higher revenue and gross profit plus a capital gain
from the part realisation of our ownership of Ador
Diagnostics.
R&D expenses
$10.3m +51%
(2019: $6.8m)
Description Direct expenditures relating
to
our efforts to develop, design and enhance our
products, services and technologies.
Why it is a KPI Sustained innovation is key to
our strategy and this metric represents our
investment to achieve it.
Performance Increased investment to advance
our molecular biology and COVID-19 products as
well as in our NFV technology.
Cash from operating activities
$18.5m +158%
(2019: $7.2m)
Description Amount of money the Group brings
in from our ongoing, regular business activities.
Why it is a KPI It reflects how much cash is
generated by our core activities that can be used
to maintain or invest in the growth of our business.
Performance Strong increase in cash generation
due to the growth in profit and improvements in
working capital.
The Group monitors certain non-financial performance indicators at an operational level. However, none of these are currently considered to be
individually appropriate as a measure of overall strategy execution success.
18
ANNUAL REPORT & ACCOUNTS 2020 Sustainability Review
Sustainability is at the heart of our business. Through medical
diagnostics, environmental protection and technologies
enabling a smarter world, our solutions are designed to
address societal challenges of today and what we believe will
be the demands of the future. We have built a business to
last and continuously take practical steps to ensure longevity
and the sustainable creation of value for our stakeholders.
At the same time, both through our solutions and our
actions, we are committed to protecting the environment to
preserve our planet for the generations to come.
People
Our people are our greatest asset and vital to sustaining our
success. We have employees in eight countries, including
scientists, engineers, sales & marketing personnel and
those in corporate functions. In order to recruit and retain
the best talent, we must ensure that we are an employer of
choice and that our employment policies and practices are
sensitive to our employees’ priorities and requirements.
Engagement
We are committed to maintaining open and transparent
communication with our workforce, and listening to our
people and taking into account their feedback. To support
employee engagement, we have a dedicated human
function comprising a network of human
resources
resources departments at subsidiary level each headed up
by a VP-level executive. In February 2021, we also appointed
Prof. Varda Shalev, Non-Executive Director, as “voice of the
workforce” to increase the awareness and understanding of
employee views among the Board of Directors. Following an
initial meeting between Prof. Shalev and BATM’s VP Human
Resources, a programme of activity is being developed to
facilitate dialogue between the Board and the workforce,
with information feeding into the Board’s decision-making
process and communications back to the workforce on how
the Board has considered and acted on it.
A number of our subsidiary companies conduct annual
employee satisfaction survey exercises and these have
recorded consistently high results over the past few years.
The senior management within these businesses regularly
communicate with employees on areas including Group
strategy and progress. Within our Telco Systems subsidiary,
and at our NG Soft subsidiary prior to the sale of that
business in March 2021, we hold semi-annual or annual
‘roundtable’ discussions for all employees to meet with the
VP Human Resources to share their views. We also hold an
annual employee event – which was held virtually in 2020 –
and ad hoc social events designed to engender team spirit.
We prioritise training and development for our workforce,
which we continued during 2020 with much of this activity
occurring online. Within our Networking and Cyber division,
we have numerous training schemes focused on skills
enhancement and the achievement of additional career-
enhancing qualifications, and often supply in excess of two
weeks training per year for individual employees. Another
example is the Distribution unit of the Bio-Medical division,
which provides its employees with hundreds of hours of
product training and skill development during the year.
Diversity
BATM strives to provide opportunities for women at all levels
of the business and to increase the proportion of women
working at senior levels over time. As of 31 December 2020,
of the total workforce across the Group 60% of employees
were female and 27% of the total executive management
positions were held by females. We encourage employment
for people drawn from a wide range of socioeconomic
backgrounds. One of our medical diagnostic testing
subsidiaries in Israel, for example, has approximately 50%
of its workforce drawn from religious and ethnic minorities
(a significantly higher proportion than within the country’s
overall population). In addition, one of our subsidiaries
employs a number of people with disabilities via its work with
a non-profit organisation that finds places of employment
for people with disabilities.
EXECUTIVE MANAGEMENT
TOTAL WORKFORCE
27%
40%
73%
60%
Male
Female
19
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT Sustainability Review CONTINUED
Equality
We are 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. We actively
promote equal opportunities within all of our businesses
and align our approach with international human rights
standards. We educate all new employees on our Code
of Conduct and provide training programmes for all of
our workforce on the prevention of sexual harassment.
We believe our 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:
Employees are encouraged to approach the administrator
by phone or email 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 2020, there were no instances of whistleblowing
reports, bribery, corruption or business interruptions as a
result of regulatory activity.
—
race, colour, nationality, ethnic or national origins;
— gender, sexual orientation, marital or family status;
Communities
—
religious or political beliefs or affiliations;
— disability, impairment or age.
During 2020, we updated our corporate website to enable
accessibility for people with disabilities.
Health, Safety & Wellbeing
BATM prides itself on providing high levels of standards on
the health and safety of its employees. We have, and adhere
to, health and safety guidelines at all of our subsidiaries.
During 2020, there were no health and safety incidents
reported and we did not receive any regulatory fines or
penalties in relation to health and safety matters.
We also took extra steps to support our workers during the
pandemic. We allowed employees to work from home and
also to work more flexible hours. For those who needed it
for home working, we provided computers, equipment and
office supplies.
Anti-bribery & Corruption
BATM promotes responsible business behaviour including
the adherence to anti-bribery and corruption guidelines
that have been distributed to all employees along with
information about BATM’s whistleblowing mechanism that is
regularly communicated.
The whistleblowing procedure
is managed by an
independent administrator who is a partner at an Israeli
professional services firm, Chaikin, Cohen and Rubin.
We strive to be a responsible corporate citizen within
the local and wider communities in which we operate by
behaving in a sustainable and socially responsible manner
and supporting local businesses and charities.
We actively encourage every employee to work to further
charitable goals. During 2020, we:
—
were involved with local charitable organisations
and hospitals that are designed to help bridge socio-
economic divides;
— donated used computers to a local school;
—
arranged, at least once a quarter, for the collection
and subsequent distribution of baskets of both
basic food products and toys to disadvantaged
families; and
—
raised $32k for charitable causes.
In addition, a key tenet of our strategy is the research
and development of solutions to counter the spread and
improve the diagnosis of infectious disease, and BATM’s
management team regularly gives their time as expert
advisors in the field of medical diagnostics. Our 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. We achieve this through producing solutions that,
relatively, have a small footprint, are simple to use and are
available at an appropriate price point.
20
ANNUAL REPORT & ACCOUNTS 2020 Environment
We are passionate about protecting the environment, which
is reflected both in our actions as a business and in the
solutions that we produce.
During 2020, we continued to roll-out measures to reduce
our impact on the environment, including:
—
switching cars leased by employees from petrol to
either hybrids or electric, including both the CEO and
CFO using plug-in hybrid electric vehicles (PHEVs);
—
continuing our programme of upgrades to energy
and lighting systems in our plants and offices to
lower energy equivalents, including switching all the
lighting in our Celitron facilities to LED light bulbs; and
—
in our subsidiaries in Italy, we invested in changing
the roofing to improve the sustainability of the
heating and cooling systems.
We also provide environmental guidelines at all of our
operating companies. There were no environmental incidents
and we did not receive any regulatory fines or penalties in
relation to environmental matters during the year.
We have several solutions, particularly within our Eco-Med
unit, that support environmental sustainability:
—
Our Celitron subsidiary produces 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.
—
During 2020, Celitron delivered its first instrument
for the recovery of high-quality protein and oils from
insects. Insects have great potential to become a
sustainable source of protein.
—
Our Green Labs subsidiary produces environmental
measuring systems, including solutions for testing
air pollution levels and in large manufacturing plants.
—
Our network function virtualisation solutions reduce
the amount of hardware needed and increase
network efficiency, enabling customers to consume
less energy and reduce the carbon footprint for the
same output.
21
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT Risk Management
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
How we manage the risk
Risk change
in 2020
Political and
economic
Legal and
compliance
Business
continuity
(including
impact of
COVID-19)
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 .
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.
There are risks to business
continuity from specific
events, including natural
disasters and the COVID-19
pandemic.
Competition
There is a risk that BATM is
unable to build and main-
tain competitive advantage
in its focus markets.
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 little harm
to its overall business.
The Group retains very experienced legal
advisers of a high calibre for the Company and
main subsidiaries in the Group who provide
ongoing advice and updates on relevant legal
compliance requirements.
The Group operates in numerous locations and
its manufacturing contractors are also located in
multiple locations so that in the case of a business
disaster the Group’s recovery would be very
quick and continuity is guaranteed. 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 is a leading company in those
technological areas in which it operates and
aspires to be a dominant player in each such
niche. The Group periodically evaluates how to
improve its efficiency by developing and producing
better quality and performance products at more
attractive prices – thus giving it an advantage over
its competitors.
Customer 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.
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.
—
—
a
—
a
22
ANNUAL REPORT & ACCOUNTS 2020 Risk
How we manage the risk
Risk change
in 2020
Research &
Development
(R&D)
There is a risk that R&D
programs overrun or do
not deliver the expected
benefits.
Information
security
(including
cyber security)
There is a risk of
information security, data
loss and corruption, and
physical damage to IT
infrastructure.
Foreign
Exchange
There is a risk that the
Group’s currency exposure
leads to financial loss.
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.
The Group routinely carries out IT evaluations to
ensure that its IT systems have the latest cyber
security tools and security procedures in place.
In addition, BATM and two of its subsidiaries
operating in the networking and cyber niches
are approved suppliers to the Israeli Ministry of
Defense and, as such, are continually monitored
by the MoD and must maintain the highest level of
cyber security.
The Group’s finance department at the corporate
level manages the cash and income in such a
way as to match each company’s or subsidiaries’
revenues to its expenses and keeps these in the
same currency, thereby avoiding any currency
exposure. When this is not possible, the Group
uses hedging transactions when needed to
protect itself against potential currency risk.
a
—
a
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 2023.
In making this statement, the Directors have also made key
assumptions (see note 4 to the financial statements).
23
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT CORPORATE GOVERNANCE
Directors’ Biographies
Gideon Chitayat
Non-executive Chairman
Zvi Marom
Founder & CEO
Moti Nagar
Executive Director & CFO
Dr. Gideon Chitayat is the Chairman and
CEO of GMBS Ltd, a strategic consulting
firm. He served as a Chairman and
Industries,
director of Delta Galil
Milissron Shopping malls,
Paz Oil
Company, Teva Israel Pharmaceutical
Industries, Bank Hapoalim and Israel
Industries. He has provided
Aircraft
consultancy
in business
services
strategy to the board and presidents of
large companies. He 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,
in
Wharton School and a Master’s
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
Director and Chairman of the Board in
December 2020.
Dr. Zvi Marom founded BATM in 1992.
A former first lieutenant in the Israeli
Navy, he graduated with excellence in
Electronics from 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 Industrial
Electronics. Dr. Marom is on the boards
of several national and international
academic committees for computing and
communications, and was the Chairman
of the Board of the Israeli Hi-Tech &
Innovation
Industries Association of
the Manufacturers’ Association of Israel
until January 2021. He is currently a
director of Shore Capital Group plc, a
UK company listed in Bermuda, and
receives remuneration for his services.
Dr. Marom was re-elected as a Director
of BATM in December 2020.
24
global
corporate
Moti Nagar, CPA joined BATM in 2014.
Previously, Mr. Nagar held several
management positions in Deloitte –
Israel. As Senior Manager at Deloitte
– Israel, he interfaced and handled
relationships with
the engagement
leading
clients,
including companies traded on the
LSE, NASDAQ, TSE and large private
companies primarily in the industrial,
services and energy sectors. Mr.
Nagar also led and supported public
offerings of corporations in Israel and
provided advice on taxation, including
international
taxation. Mr. Nagar
graduated in Business Management and
Accounting and qualified as an Israeli
Certified Accountant
in
2008. He also holds an MBA in Financial
Management from Tel Aviv University.
Mr. Nagar does not serve as a director
in any other publicly listed company. He
was re-elected as a Director of BATM in
December 2020.
Israel)
(CPA,
ANNUAL REPORT & ACCOUNTS 2020 CORPORATE GOVERNANCE
Harel Locker
Non-executive Director & Senior
Independent Director
Ari Shamiss
Non-executive Director
Varda Shalev
Non-executive Director
Harel Locker served as the Director
General of the Israeli Prime Minister’s
Office and head of Prime Minister
economic
Netanyahu’s
Benjamin
headquarters between 2011 and 2015.
Mr. Locker practiced commercial law
for more than 25 years with both Tel
Aviv and Wall Street, New York City,
first tier law firms. Mr. Locker has been
the Chairman of the Board of Israel
Aerospace Industries Ltd, the leading
Israeli aerospace and defence company,
since 2017 and of Paz Oil Ltd, the leading
Israeli energy company, since 2021. Mr.
Locker was appointed to the Board of
BATM in September 2016 and his first
three-year term expired in September
2019. He was proposed for re-election
by the Board for a second three-year
term, in accordance with Israeli law,
which was approved by shareholders in
December 2019.
Prof. Ari Shamiss is a co-founder and
managing general partner at Assuta
Life Ventures and, until 2020, was CEO
of Assuta Medical Centers, the largest
private medical network in Israel. He
is a board member of, and adviser to,
numerous high-tech companies and
is involved in several global business
projects in healthcare technology and
infrastructure. Prof. Shamiss is certified
in Internal Medicine, Hypertension and
Healthcare Management and he is a
Professor of Medicine at Ben Gurion
University School of Medicine, with more
than 60 published scientific papers.
Previously, he was a Director of Sheba
General Hospital at Tel Hashomer for 10
years and was the Surgeon General for the
Israel Air Force (Col. Ret.) and the Director
of its Aeromedical Institute. Prof. Shamiss
holds an MD from the Technion Institute
and an MPA from Harvard University, and
he graduated with excellence from the
US Navy Aerospace Medical Institute. He
was appointed to the Board of BATM in
November 2018 for a three-year period
as an external director in accordance with
Israeli law.
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.
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 is
also a practicing family physician. She
was appointed to the Board of BATM in
November 2018 for a three-year period
as an external director in accordance
with Israeli law.
25
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT 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 External 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 CFO, and holds them to
account for their responsibilities. The CEO is supported in
this task by the executive management team. The Board
also operates through a number of committees: Audit,
Remuneration, Nomination and Responsible Business.
THE BOARD
During 2020, the Board consisted of the Chairman, two
Executive Directors and three independent Non-executive
Directors (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 24 to 25. The division of responsibilities
Meeting attendance
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 approval of financial
statements; dividends; Board appointments and removals;
long-term objectives and commercial strategy; changes in
capital structure; appointment, removal and compensation
of senior management; major investments including mergers
and acquisitions; risk management; corporate governance;
engagement of professional advisers; political donations; and
internal control arrangements. 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
Company Secretary, Mr. Arthur Moher, attends all Board
and Board committee meetings. The Chairman met with
Non-executive Directors, without the Executive Directors
present, during the year.
Director
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Responsible
Business
Committee
Dr. Gideon Chitayat,
Chairman
Dr. Zvi Marom, CEO
Moti Nagar, CFO
Harel Locker, SID
Prof. Ari Shamiss, NED
Prof. Varda Shalev,
NED
* Attended by invitation
6/6
6/6
6/6
4/6
6/6
6/6
–
–
3*
2/3
3/3
3/3
1*
–
–
1/1
1/1
1/1
–
–
–
0/0
0/0
0/0
0/0
–
0/0
0/0
0/0
0/0
26
ANNUAL REPORT & ACCOUNTS 2020
CORPORATE GOVERNANCE
DIVISION OF RESPONSIBILITIES
The responsibilities of the Chairman, CEO and other
Directors are clearly set out and defined under Israeli
Companies Law, with no individual having unrestricted
powers of decision. In addition, during the year under
review, the Board adopted formal terms of reference
defining the role and duties of the Chairman.
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.
it performs its duties effectively. Further biographical details
can be found on pages 24 to 25.
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 Board.
The Board is satisfied that the Chairman and each of the Non-
executive Directors are able to devote sufficient time to the
Company’s business. Non-executive Directors are advised on
appointment of the time required to fulfil their role.
Following an internal evaluation of Board effectiveness in
2019, during the year under review the Board took actions
to increase its effectiveness.
INDEPENDENCE
INDUCTION
The Board continues to consider that the Non-executive
Directors, including the Chairman, are independent in
character and judgment and no circumstances or matters
(including any business or other relationship) exist that
could compromise such independence. The interests of the
Directors in the Company and their shareholdings are set
out on page 46.
(including
Independent Non-executive Directors
the
Chairman) form the majority of the Board. The Chairman is
subject to annual re-election by shareholders at the Annual
General Meeting. Harel Locker, Prof. Ari Shamiss and Prof.
Varda Shalev, as ‘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. The external directors, 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).
EFFECTIVENESS & EVALUATION
The Board’s members have a wide breadth of experience
in areas relating to the Company’s activities, including in
business development, technology (especially in the bio-
medical and diagnostics areas), 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
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 receive periodically 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
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 has an experienced Company Secretary,
Mr. Arthur Moher, who is also one of the Company’s legal
advisers, and all the Directors have access to Mr. Moher’s
services. Mr. Moher is present at every Board meeting and
Board committee meeting.
The Directors may take independent professional advice at
the Company’s expense in furtherance of their duties.
ANNUAL REPORT & ACCOUNTS 2020
27
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Corporate Governance Report CONTINUED
BOARD COMMITTEES
Commit tee consists of the Company’s independent Non-
executive Directors.
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. As of 31 December
2020, the composition of the aforementioned committees
and an overview of their activities are as detailed below.
Audit Committee
Members: Prof. Ari Shamiss (Chairman), Harel Locker and
Prof. Varda Shalev
The Audit Committee meets at least twice 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 Group 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 32 to 34.
Remuneration Committee
Members: Prof. Varda Shalev (Chairman), Harel Locker and
Prof. Ari Shamiss
The Remuneration Committee has responsibility for making
recommendations to the Board on the Company’s policy on
staff remuneration and for the determination, within agreed
terms of reference, of specific remuneration packages for
the Chairman of the Company and each of the Executive
Directors (including pension rights and any compensation
the Remuneration
payments). The membership of
in
found
the Remuneration Committee’s
Further details on
responsibilities and activities can be
the
Remuneration Committee Report on pages 35 to 37
(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
35 to 48. The Company’s current remuneration policy
as recommended by the Remuneration Committee was
approved at the Annual General Meeting of the Company in
October 2017 and was re-approved for an additional term of
one year at the last Annual General Meeting of the Company
in December 2020. The remuneration policy is more fully
explained in the Directors’ Remuneration Report.
Nomination Committee
Members: Harel Locker (Chairman), Prof. Ari Shamiss and
Prof. Varda Shalev
The membership of the Nomination Committee consists
of the Company’s independent Non-executive Directors.
During the year under review, Dr. Gideon Chitayat, the
Chairman of the Board, stepped down from the Nomination
Committee and was replaced as Chairman of the Nomination
Committee by Harel Locker, the Senior Independent (Non-
executive) Director.
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 prepares a description of the role and capabilities
required for a particular appointment while evaluating the
balance of skills and experience in identifying a candidate
pool and in the recruitment of Board members from such
potential candidates, with consideration given to the balance
of skills, experience, independence and knowledge on the
Board. Board appointments are made on merit set against
objective criteria having due regard, amongst other things,
to the benefits of diversity on the Board.
Prior to the date of expiration of office of a non-executive
director or in cases of early resignation of a director, the
Nomination Committee considers the necessary skills,
28
ANNUAL REPORT & ACCOUNTS 2020
CORPORATE GOVERNANCE
experience and expertise required of potential candidates
and prepares a list of potential candidates. Since Israel is a
relatively small country, the Nomination Committee is able
to obtain recommendations through objective professional
directors in various industries of persons that could fit the
requirements needed by the Company. Once this is done,
a number of appropriate candidates (who have relevant
experience in those lines of business in which the Company
is engaged and the personal qualifications that fit the
Company) are interviewed by the Chairman of the Board.
After the interview, the Nomination Committee presents its
recommendations to the Board which, if deemed necessary,
may expand on the interview and research process in order
to find the optimum candidate for the office of director in
the Company. Generally, no external search consultancy
firm is used or advertisement published by the Company,
for the reasons explained above.
Responsible Business Committee
Members: Dr. Gideon Chitayat (Chairman), Moti Nagar,
Harel Locker, Prof. Ari Shamiss and Prof. Varda Shalev
The primary role of the Responsible Business Committee is
to assist the Board in:
l understanding the views of key stakeholders in the
Company;
l understanding the Company’s impact on community and
environment; and
l ensuring that the Board is aware of the processes used
by the Company in engaging with its key stakeholders.
reference) of ‘Voice of the workforce’ to be fulfilled by a Non-
executive Director. Prof. Varda Shalev was nominated as the
first Non-executive Director to fulfil this role and, following
her appointment, she has held an initial meeting with the
Group’s VP Human Resources. A programme of activity
is now being developed to facilitate dialogue between the
Board and the workforce to increase the awareness and
understanding of employee views among the Directors,
with information feeding into the Board’s decision-making
process and communications back to the workforce on how
the Board has considered and acted on it.
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 2020, the CEO and CFO attended:
l 20 scheduled meetings with UK-based investors (including
The duties of the Responsible Business Committee pursuant
to its terms of reference are:
two group presentations);
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.
While there were no formal meetings of the Responsible
Business Committee during the year, the members
considered methods for improving workforce representation
in the boardroom. This resulted with the creation, post
period, of the role (with properly constituted terms of
l c. 15 scheduled meetings with Israel-based investors; and
l hosted an investor conference in Israel that was attended
by c. 15 investors and viewed online by a further 20
investors.
The Chairman of the Board attended the Annual General
Meeting. There were no meetings between the Non-
executive Directors and the Company’s shareholders during
2020.
As of 31 December 2020, to the best of the Company’s
knowledge, the following persons or entities had a significant
holding of BATM ordinary shares:
l Dr. Zvi Marom, the Company’s CEO and founder – 21.98%
l Lombard Odier Investment Managers – 27.22%
ANNUAL REPORT & ACCOUNTS 2020
29
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Corporate Governance Report CONTINUED
l Herald Investment Management – 4.28%
l Hargreaves Lansdown – 3.34%
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. As noted above, the Board enhanced
its efforts to monitor and develop workplace culture with the
appointment of a Non-executive Director, Prof. Varda Shalev,
as ‘Voice of the workforce’ in the boardroom. The Board
ensures that the Company complies with Israeli legislation
known as the Israeli Equal Rights for People with Disabilities
Law, 57481988 to ensure that appropriate consideration
is given to employees with disabilities. The Company is
also in full compliance with Israeli legislation known as
the Employment (Equal Opportunities) Law, 5758-1998,
which requires an employer not to discriminate amongst
employees on account of sex, sexual tendencies, personal
status and any other forms of discrimination.
Throughout 2020, 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 2020, no conflicts arose that required the Board to
exercise authority or discretion in relation to such conflicts.
ANNUAL GENERAL MEETING
The 2020 Annual General Meeting (“AGM”) was held on
Thursday 17 December 2020. In light of the COVID-19
pandemic and related public health guidance and legislation,
the AGM was held as a virtual meeting with shareholders
voting by proxy in advance. The results of voting were
published via the Regulatory News Service and on the
Company’s website at www.batm.com. The Chairman, CEO
and CFO attended the AGM and a facility was made available
for shareholders to submit questions in advance of the
meeting to be answered orally during the meeting.
30
ANNUAL REPORT & ACCOUNTS 2020
CORPORATE GOVERNANCE
COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE
The Company, as a company with a Premium Listing and therefore subject to Listing Rule 9.8.6R, is subject to the 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. The Board considers that, during 2020, the Company complied
with the provisions set out in the Code with the exception of the matters referred to below.
Provision
Exception and explanation
5 Engagement with the workforce via a
director appointed from the workforce,
a formal workforce advisory panel or a
designated non-executive director.
During 2020, the Group took into consideration methods for complying
with this provision, which resulted, in February 2021, with Prof. Varda
Shalev being designated as the Non-executive Director responsible for
workforce engagement, with properly constituted terms of reference
being established for this role.
14 The responsibilities of the chair, chief
executive, senior independent director,
board and committees should be clear,
set out in writing, agreed by the board
and made publicly available.
18 All directors should be 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.
The Israeli Companies Law, which applies to the Group, sets out and
defines the responsibilities and duties of the directors and the CEO. The
Group has not adopted a separate formal schedule of responsibilities for
the CEO.
In accordance with Israeli law, the Group 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, Prof. Ari Shamiss 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.
As of June 2020, Dr. Gideon Chitayat, Chairman, has served on the Board
for ten years - six 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,
and there are no relationships or circumstances that could affect his
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 Group as a whole. As a result, the
Board believes that Dr. Chitayat remaining as Chairman is in the best of
interests of the Group 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 Group continues to consider
methods for implementing this provision.
34 The remuneration of non-executive
directors should be determined
in accordance with the Articles of
Association or, alternatively, by the
board.
In accordance with Israeli law, the Board, when approving the nomination
of a new ‘external’ non-executive director, determines the remuneration to
be paid within a set range set forth in the regulations promulgated under
the Israeli Companies Law (that is based on the size of the company and
the professional qualifications or expertise of the nominee director).
ANNUAL REPORT & ACCOUNTS 2020
31
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Audit Committee Report
Dear Shareholder,
I am pleased to present the Audit Committee report for
2020. 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.
This is my first Audit Committee report as Chairman, having
been a member of the committee since joining the Board
in November 2018. On 22 December 2020, I took over
from Harel Locker, who has ably led the committee since
September 2016 and remains a valued member.
MEMBERSHIP AND ATTENDANCE
The members of the Audit Committee are:
l Prof. Ari Shamiss (Chairman), Non-Executive Director
During the year, there were three meetings of the Audit
Committee, which were attended by all members except
for the absence of Mr. Locker from one meeting.
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 FCA’s
Disclosure Guidance and Transparency Rules and the Code.
The Chairman of the Audit Committee maintains close
contact on a regular basis with the key people involved in
the Company’s governance.
l Harel Locker, Senior Independent (Non-Executive)
RESPONSIBILITIES AND ACTIVITIES
Director
l Prof. Varda Shalev, Non-Executive Director
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 Prof. Shamiss, as Chairman, has recent and relevant
financial experience.
The Audit Committee meets at least twice a year, and always
prior to the announcement of interim or annual results. The
external auditors, internal auditor and Chief Financial Officer
are invited to attend all meetings in order to ensure that all
the information required by the Audit Committee is available
for it to operate effectively and the Audit Committee reports
back to the Board. The external auditor communicates
with the members of the Audit Committee during the year,
without executive officers present. The Audit Committee
also meets with representatives of the Company’s external
auditors at least twice per year and raises on a regular basis
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.
The Company Secretary is secretary to the Audit Committee.
The Audit Committee’s terms of reference include, among
other things, monitoring the scope and results of the
external audit, the review of interim and annual results, the
involvement of the external auditors in those processes,
review of whistleblowing procedures,
considering
compliance with legal requirements, accounting standards
and the Listing Rules of the Financial Conduct Authority, and
for advising 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.
In 2020, the Audit Committee’s activities included:
l Examining the Annual Report for the year to 31 December
2019 and the Half-year Report for the six months to 30
June 2020 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.
32
ANNUAL REPORT & ACCOUNTS 2020 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 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.
l Reviewing any material issues of fraud, whistleblowing
and litigation.
INTERNAL AUDIT, INTERNAL CONTROL AND RISK
MANAGEMENT
Risk management is currently reviewed on an ongoing
basis by the Board as a whole. The Company has an
ongoing process for identifying, evaluating and managing
the significant risks faced by the Group that has been
in place from 2011 and up to the date of approval of
the Annual Report and Financial Statements. Principal
controls are managed by the Executive Directors and key
employees, including regular review by management and
the Board of the operations and the financial statements
of the Company.
The Board has 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 they have carried out during
2020 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 (as an example,
one of the potential risks examined during the year under
review was an internal auditor’s report on the Company’s
ability to perform and recover in an IT disaster or similar
occurrence in its computer systems). To this end, in
accordance with the Israeli Companies Law, the Company
has appointed and 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
improving controls and corporate responsibility
for
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 the Group’s IT disaster recovery programme.
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.
include a comprehensive system
l Information and Communication: The Group operating
procedures
for
reporting financial and non-financial information to the
Directors. Financial projections, including revenue and
profit forecasts, are 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 monthly meetings of
business functions, each involving at least one Director,
together with periodic meetings of Executive Directors
and senior management.
l Finance Management: The finance department operates
within policies 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
strictly 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.
33
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Audit Committee Report CONTINUED
reports on the balance of audit to non-audit fees. For 2020,
the external auditor provided $19K of non-audit work (2019:
$20K). Fees paid to Brightman Almagor Zohar and Co. are
set out in note 9 to the financial statements.
Prof. Ari Shamiss
Audit Committee Chairman
18 April 2021
EXTERNAL AUDITOR AND INDEPENDENCE
Brightman Almagor Zohar and Co., Certified Public
Accountants, a Firm in the Deloitte Global Network, serves
as the Company’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,
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 and it is not
common market practice in Israel 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
2018. 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 very
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, receiving
34
ANNUAL REPORT & ACCOUNTS 2020
Directors’ Remuneration Report
REMUNERATION COMMITTEE REPORT
Dear Shareholder
The Board
is pleased to present the Remuneration
Committee’s Report for the year ended 31 December
2020. This is my first Remuneration Committee Report as
Chairman, having been a member of the Committee since
joining the Board in November 2018, after taking over from
Prof. Ari Shamiss on 22 December 2020.
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 other
individuals determined by the Board to be material to the
Company’s current and future prospects.
The Remuneration Committee must ensure
that a
remuneration framework is established and implemented
that addresses the need of the Company to attract, retain and
motivate such individuals, 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.
remains
focused on
The Remuneration Committee
ensuring that the overall remuneration strategy adopted
by the Company remains aligned with the interests of
its shareholders. The Remuneration Committee, when
remuneration
necessary, engages external executive
advisers to give it guidance regarding the accepted levels of
salary, bonuses and LTIs payable by similar sized companies
listed on the London 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 Advanced
Communication’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
(“Remuneration Policy”) came into effect after its approval by
a majority vote of shareholders, prescribed in section 267A
(b) of the Israeli Companies Law, 1999 (“Companies Law”) at
the Annual General Meeting (“AGM”) held in October 2017.
The Companies Law requires that the Remuneration Policy
must be presented to the shareholders for approval at least
once every three years. During 2020, the Company began,
in concert with UK independent remuneration consultants,
the preparation of a new remuneration policy for the
Company, which it hopes will be more aligned with current
UK recognised incentive schemes and structure. However,
due to COVID-19 restrictions, the process took longer than
initially anticipated. Accordingly, in order to abide by the
provisions of the Companies Law, the Board requested, and
received, approval of the shareholders at the AGM in 2020
to extend the term of the current policy until the AGM in
2021, by which time the Company expects to bring to the
shareholders for their approval a new Remuneration Policy.
In preparing the Remuneration Policy for approval, the
Company has engaged external experienced consultants in
the area of executive remuneration packages both in Israel
and London to provide independent and objective advice
to assist the Company in its endeavours. The Company
will also consult with its largest shareholders in advance to
ensure that shareholder views are taken into account. In
addition, the policy will be prepared with due consideration
for the factors set out in Provision 40 of the UK Corporate
Governance Code (the “Code”).
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 Code
and believes that the Company’s remuneration strategy
would comply with the requirements of the Code and of
the Companies Act 2006 and related legislation.
The Reporting Regulations (International Auditing Reporting
Standards) also require the auditors to report to the
Company’s members in the financial statements within this
report and to state whether in their opinion that part of the
report has been properly prepared. The report is therefore
divided into separate sections for audited and unaudited
information.
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REMUNERATION COMMITTEE RESPONSIBILITIES
AND DUTIES
The Remuneration Committee works within its terms of
reference, and in accordance with the functions set forth
in the Companies Law, to make recommendations to the
Board of Directors of the Company. The Remuneration
Committee’s full terms of reference are available on the
Company’s website.
performance and is compatible with the Company’s
risk policies and systems.
MEMBERSHIP
The Remuneration Committee consists of the three Non-
executive Directors (excluding the Chairman of the Board).
The members of the Remuneration Committee during the
year under review, and up to the signing of these financial
statements, were:
The Remuneration Committee’s responsibilities and duties
are:
l Prof. Varda Shalev (Chairman)
(1) Recommending
to
the Board
for approval
the
framework or broad policy for the remuneration of
the Company’s Chairman of the Board, CEO, Executive
Directors and other senior management and officers
– ensuring that total pay and long-term remuneration
will be sufficient to retain executives who perform.
(2) Recommending appropriate remuneration packages
and service contracts of the senior executives, and
reviewing the ongoing appropriateness and relevance of
the Remuneration Policy – ensuring that individual pay
levels for Executive Directors are generally in line with
levels of pay for executives in similar companies with
similar performance achievement and responsibilities.
(3) Recommending and determining the goals for all
performance-related remuneration offered by the
Company and approving the total annual payments
made under such schemes.
(4) Reviewing the design of all
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.
long-term
(5) Ensuring that share option and bonus schemes are
set at a level that provides sufficient incentive to the
executive to produce results that will reflect and
exceed the Board’s expectations, and be appropriately
balanced alongside fixed-level and more immediate
remuneration.
(6) Ensuring that aggregate pay for all Executive Directors
is reasonable in light of the Company’s size and
36
l Harel Locker
l Prof. Ari Shamiss
None of the Committee members have any personal
financial interests, conflicts of interests arising from cross-
directorships or day-to-day involvement in the running
of the business. None of the Directors plays a part in any
determination of their own remuneration.
INFORMATION AND SUPPORT
The Remuneration Committee receives advice from several
sources, namely:
l The Chairman of the Board, who attends the Remuneration
Committee meetings by invitation only, and the Company’s
Chief Financial Officer, who attends 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 consults with independent consultants on
executive benefits.
During the year, the Remuneration Committee received
advice from the Chairman of the Board, who attended
by invitation, from the Company Secretary, who attends
meetings as Secretary to the Committee, and from the
remuneration consultants who are advising the Company
on the preparation of the new remuneration policy.
ANNUAL REPORT & ACCOUNTS 2020 KEY REMUNERATION ACTIVITIES DURING THE YEAR
the year under
During
the Remuneration
Committee met once and all members were in attendance.
The Committee’s main activities during the year included:
review,
l Agreeing performance against targets for the 2019
annual bonus awards
l Setting targets for the 2020 annual bonus
l Considering levels of remuneration for Executive Directors
following advice from the remuneration consultant advising
on the preparation of the new remuneration policy
The Group made tremendous progress during 2020, both
in its financial performance and achieving a number of
operational milestones that significantly advanced the
execution on its strategy. Dr Zvi Marom, CEO, and Mr. Moti
Nagar, CFO, were instrumental in achieving this success (as
discussed further on page 45), but it is also thanks to the
efforts of the employee base as a whole and our ability to
attract and retain the right staff. We continue to believe
that our Remuneration Policy and practices are appropriate
for incentivising and rewarding our employees and our
Directors, and are in the best interests of the Group as a
whole.
aligned with UK corporate executive compensation practice
and intends to consult with its largest shareholders before
presenting the new policy to the Board of Directors, to
ensure that shareholder views are taken into account.
While the Committee does not consult directly with
employees on the director’s Remuneration Policy, it does
take into consideration salary increases and remuneration
arrangements across
the Group when determining
payments for the Executive Directors.
I am pleased to report that, at the Company’s AGM held
on 17 December 2020, the shareholders approved (as
detailed in the table below) the Remuneration Committee
report for 2019, together with the auditor’s reports on
the auditable part of that report; the extension of the
Remuneration Policy to the AGM in 2021; and the award of
an annual bonus to Mr. Moti Nagar, CFO, in relation to his
performance in 2019 (which was put to shareholders for
approval in accordance with Israeli law).
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 Chairman
18 April 2021
STAKEHOLDER VIEWS & ENGAGEMENT
REMUNERATION POLICY REPORT
As noted above, the current Remuneration Policy was
approved by shareholders in October 2017 and its term
was extended by the approval of the shareholders at the
AGM held on 17 December 2020 until the next AGM. The
Company is currently working in concert with a leading
London based firm of executive compensation consultants
in preparing a new Remuneration Policy that will be more
The philosophy and principles of the Company’s Remuneration
Policy (the “Policy”) are detailed below (unaudited). This
Remuneration Policy was brought for approval to the Annual
General Meeting of the shareholders in October 2017
and was approved by a large majority at that meeting and
extended for an additional term until the next AGM in 2021 by
shareholders at the 2020 AGM held on 17 December 2020.
Resolution
Approval of the
remuneration report
Approval of the
extension of the current
Remuneration Policy
Approval of the CFO
annual bonus
Votes
for
263,228,503
147,276,210
% for
96
90
Votes
against
%
against
Total votes
cast
Votes
withheld
10,293,669
4
273,522,172
0
17,100,278
10
173,568,672*
9,192,184
266,479,847
97
7,040,629
3
273,522,172
1,696
* In accordance with Israeli law, shareholders defined as a ‘controlling shareholder’ or as having a ‘personal interest’ were ineligible to vote
for this resolution
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REMUNERATION PHILOSOPHY AND OBJECTIVES
(5) The Policy should ensure transparency and accountability
and encourage a high-performing culture in the Company.
The Company believes that the most effective executive
remuneration policy is one that is designed to reward
achievement, to encourage a high degree of performance
and that aligns executives’ interests with those of the
Company and its shareholders while ensuring that the
Company can maintain its ability to attract and retain
for the long-term leading employees for key positions.
The remuneration philosophy of the Company is to offer
executives remuneration that is comprised of a mix of fixed
annual salary and variable performance-based bonuses
and/or long-term equity incentives.
The Company has established
remuneration objectives for the Company’s executives:
the
following main
(1) Remuneration should be related to performance on
both a short-term and long-term basis with a portion of a
senior executive’s potential annual bonus and long-term
equity-based remuneration conditional on achievement
of pre-determined performance objectives.
(2) The mix of the fixed and performance-based variable
remuneration should serve
to encourage senior
executives to remain with the Company. The Policy’s
components are designed to retain talented executives.
A significant element of the Policy is therefore long-
term equity-based
incentive remuneration rewards
that vest on a rolling basis over several years. As part
of the retention objective, the Company believes that
remuneration should include a meaningful share option
component to further align the interests of the senior
executives with the interests of the shareholders.
(3) Remuneration should be reasonable for the business
of the Company, its location, industry and its long-term,
multiyear approach to achieving sustainable growth.
(4) Remuneration should be designed to encourage initiative
innovation and appropriate levels of risk. It should be
structured to discourage taking excessive short-term risk
without constraining reasonable risk taking. Therefore a
portion of the incentive variable remuneration should be
linked to longer-term Company performance.
38
REMUNERATION PRINCIPLES
The remuneration of senior executives and officers of the
Company shall consist of all, or part, of the following:
(i)
fixed remuneration – salary (including pensions
and fixed social benefits on a level consistent with peer
companies and only if these are mandatory or commonly
accepted in the relevant employment market) that is
commensurate with the individual executive’s skills,
experience, education, qualifications and responsibilities.
The fixed annual salary, benefits and pension will be set
at a broadly mid-market level (including with reference
to the country in which an executive principally works),
and reviewed annually taking account of individual
responsibilities and performance. The Remuneration
Committee will ensure that the underlying principles,
which form the basis for determining executives’ salaries
are consistent with those on which salary decisions for
the rest of the workforce in the Company are taken.
In addition, before making a recommendation the
Remuneration Committee takes into account the general
salary increase for the broader employee population
when conducting the salary review for the senior
executives. The Remuneration Committee also takes
into account the ratio between the total remuneration of
the applicable director and/or senior executive 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
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; and
(ii) variable remuneration, which can comprise a mix of:
l Annual bonuses; and
l
Long Term (equity-based) Incentives (hereinafter –
“LTIs”) (share options only).
ANNUAL REPORT & ACCOUNTS 2020
The Board of Directors determines the ceilings for payment
of the fixed remuneration and variable remuneration, so
that they are reasonable and appropriate. The targeted ratio
between the fixed salary remuneration and the variable
elements of remuneration that the Company may offer
executives shall be as per the table below.
The annual salary for the Chairman, CEO and senior executives
shall not exceed the following maximum thresholds:
(a) Non-Executive Chairman: $120,000*
(b) CEO: $520,000
(c) Other senior executives: $300,000
*
This amount is based on a 30% part time position of the Chairman
The total remuneration of senior executives and directors
is reviewed annually, taking
into account the above
considerations and focusing on the relevant person’s
contribution and performance as well as the performance of
the Company and its financial status.
In addition to the above, at each such review the Remuneration
Committee may, at its discretion, approve immaterial changes
to all or part of the remuneration package of a senior executive
or officer of up to three salaries (including the amount of the
fixed benefits payable on such salaries) as a reward for his/her
special contribution to the Company in the previous year. With
respect to an immaterial change in the remuneration of the
CEO that is recommended by the Remuneration Committee,
such recommendation will also require the approval of the
Board of Directors of the Company. All instances in which the
Remuneration Committee has used its discretionary powers
to award such a bonus (as, for example, to reward an executive
for his/her special efforts in closing a merger or acquisition for
the Company) will be fully disclosed by the Company in the
relevant annual report.
MEASUREMENT CRITERIA FOR AWARDS OF
ANNUAL BONUS
The level of the cash payment bonus paid to any executive
director, senior executive or officer
(excluding non-
executive independent directors), will be established to link
rewards with the Company’s annual business goals, based
on quantifiable measurements and targets set out at the
start of the financial year by the Remuneration Committee.
The criteria on which the annual bonus is based shall be
calculated, as follows:
(i)
Consolidated/Division financial measures: adjusted
EBIDTA, measured against the targets of the annual
budget as approved by the Board of Directors for the
relevant year; and
(ii) Personal & operational performance measures:
The criteria shall be determined individually when such
personal criteria are set. A list of personal qualitative goals
will be determined by the Remuneration Committee on a
case-by-case basis.
The weight of the corporate/division financial measures and
personal operational performance measures for considering
a bonus award, shall be as per the table at the top of the
following page.
The financial measures are based on defined quantitative
criteria, whereas the personal and operational measures
are based on qualitative criteria. If less than 70% of the
financial measures has been achieved, then no part from the
Consolidated/Division financial annual bonus may be paid;
if however between 70% - 100% of the financial measures
have been achieved, then the relevant executive or senior
officer will be eligible to receive a pro rata portion of the
Consolidated/Division financial annual bonus as determined
Non-Executive Chairman
CEO
Senior Executives
Annual Salary or the equivalent thereof
Other fixed benefits*
Annual Bonus**
LTIs (per vesting annum)
100%
30%-40%
None
None
100%
100%
30%-40%
30%-40%
up to 75%
up to 50%
up to 125%
up to 100%
The percentages above reflect ratios compared with the annual fixed salary and are the maximum rewards that the Company may pay to the relevant
executives. The amount of LTIs will be calculated on a linear basis over the period of vesting.
*
”Other fixed benefits” are comprised of mandatory pension scheme required by Israeli labour laws and regulations (6.5% from base salary), and
may also include Further Education Funds, use of company car, use of mobile phone and newspaper, all as commonly given in Israel in peer compa-
nies. The Company only pays pension on the executives’ basic salary (and not on the variable remuneration).
* * Non-Executive Independent Directors (including External Directors) are not eligible for annual bonuses.
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Consolidated financial measures:
75%-100%
60%-80%
Division financial measures:
–
–
20%-40%
40%-60%
Personal & operational performance:
(non-financial performance criteria)
up to 25%
20%-40%
up to 20%
CEO
CFO
Division Heads
by the Remuneration Committee. Annual bonuses may be
withheld in whole or in part if the business has suffered an
exceptional negative event, even if some specific targets
have been met. The Remuneration Committee has overall
discretion to ensure that a payment that is inappropriate in
all the Company’s circumstances is not made.
The maximum aggregate bonus shall be as set forth in the
above table, per executive level.
If there was a mistake in calculation of the annual bonus by
the Company, or if the Company restates any of the financial
data that was used in calculating the bonus (other than a
restatement required due to changes in financial reporting
standards), then the applicable bonus shall be recalculated
using such restated data (the “Restated Bonus”). The balance
between the original bonus and the Restated Bonus, if any,
(the “Balance”) will be repaid to the Company, or paid to
the executive (as the case may be) by deducting or adding
such Balance from the first amounts payable to such senior
executive as a bonus immediately after the completion of
the restatement. To the extent that no bonus will be payable
to such senior executive in that year, then the Balance shall
be deducted from the bonus payable in the next year and
so forth up to three years. Notwithstanding the above, if
the senior executive’s employment relationship with the
Company terminates before the Balance is fully repaid to
the Company, then the Balance shall be deducted from
all amounts due and payable to such senior executive in
connection with such termination of employment and if
there is still an unpaid balance to the Company, then such
unpaid balance shall be repaid pursuant to the terms
determined by the Board of Directors.
In the event of termination of employment of an executive
during the calendar year (except under circumstances
justifying the non-payment of Severance Pay pursuant to
Israeli labour law and precedent of the Labour Courts),
the amount of the bonus shall be calculated and adjusted
for the entire year in accordance with the provisions of
this Policy and thereafter shall be prorated in accordance
with the actual days of employment of the executive by the
Company during the applicable year and paid to the eligible
executive in full together with the first salary that will be
paid following the approval by the Board of Directors of the
financial statements for such applicable year.
LONG-TERM INCENTIVES
The Company’s long-term incentive package for the CEO
and other senior executives is designed to support the
Company’s strategy by incentivising the delivery of growth,
increase in profitability, superior shareholder returns and
sustained financial performance. Long-term incentives may
be granted by the Board of Directors through the issue of
options under the Company’s Employee Share Option Plan
(“ESOP”). The Company believes that this mechanism is the
preferred long-term incentive package, as the Company
already has in place ESOPs that have been approved by the
relevant Tax Authorities in Israel and this kind of LTI scheme
is more commonly used and understood by high-level
executives in the Israeli market. The Group does not issue
share awards under its LTI scheme.
Any award of long-term incentives by the Remuneration
Committee and the Board of Directors will be made in order
to reward the senior executives for future performance
and building additional value for the shareholders (thus
increasing the price of the share) and to foster a long-term
relationship between the executive and the Company.
(1) The vesting of any LTIs (options) granted by the Board to
a senior executive shall be over time in order to retain
the senior executive in the Company and to incentivise
the executive to increase the value of the Company.
(2) Any LTI (options) granted by the Company to a senior
40
ANNUAL REPORT & ACCOUNTS 2020 executive will vest over a three-year period* as follows: 12
months after the Board approval – 0%; 24 months after
the Board Approval – 50%; and 36 months after the Board
Approval – 50%, provided that the senior executive remains
an employee or in the service of the Company on each
date of exercising the LTIs. If the Company terminates the
employment or services contract of an executive who was
awarded options within the first half of the year from the
Board approval, the eligible executive shall not be entitled
to exercise the options granted, unless the termination by
the Company was unjustified; if the Company terminates
the employment or services contract of an executive
who was awarded options within the second half of the
year from the Board approval, the Board of Directors
will determine whether to allow the eligible executive to
exercise the amount of options which vested immediately
prior to the termination date. Any executive that resigns
from their position in the Company shall forfeit their right
to exercise any non-vested LTIs.
(3) In exceptional circumstances and/or cases of a
restatement of any of the Company’s financial statements,
the Remuneration Committee has the discretion to reduce
future rewards of LTIs to the relevant senior executive.
(4) The Company’s
long-term
incentive schemes, as
applicable to directors and senior executives, provides
that commitments to issue BATM shares must not exceed
(in aggregate across all schemes) 10% of the issued
ordinary share capital (adjusted for share issuance and
cancellation) in any rolling 10-year period.
(5) The maximum levels of variable remuneration and benefits
that the Company may grant to the CEO and other senior
executives in the Company are as set forth above in the
table on page 39.
(6) The exercise price of LTIs is based on the average price of
the Company’s shares on the London Stock Exchange over
the 30 days preceding the award approval. The Company
does not issue nil-cost options.
* The vesting period for share options is over a three-year term,
which is what is customary and recognised in Israeli industry and
changing this to a longer vesting period would adversely affect the
Group's ability to compete in recruiting experienced and highly
skilled managers and executives. This vesting period (as part of the
Remuneration Policy) is brought for approval by an independent vote
of the shareholders.
CEO SERVICE AGREEMENT
Following is a brief summary of the main terms & conditions
of the CEO’s Service Contract, which was approved by
shareholders in June 2018 for a period of three years, between
the Company and the service management company owned
by the CEO, Dr. Zvi Marom (Nostradamus or the “Service
Management Company”):
Remuneration (“Service Fee”) – base salary of approximately
$382,000 (precise reported amount dependent on currency)
plus all relevant social benefits and taxes on this amount.
Annual Bonus: shall be payable by BATM to the Service
Management company in the event that the BATM Group
achieves the adjusted EBITDA for each year which is set in
the annual budget (work plan) approved by the Board at
the beginning of that year (hereinafter– the “Base adjusted
EBITDA”) and subject to the following:
(a) The adjusted EBITDA for the relevant year is more than
$4.3 million.
(b) For each increase in the actual adjusted EBITDA for the
relevant year of 10% as compared with the Base adjusted
EBITDA, the Service Management Company shall be
entitled to a bonus of 1 month’s Service Fee up to a ceiling
of nine monthly Service Fees (should the actual adjusted
EBITDA for the relevant year be 90% or more of the Base
adjusted EBITDA). Two out of the nine monthly Service
Fees, if payable, will be based on personal performance
criteria of the CEO as reviewed by the Board.
Long-Term Incentives:
The CEO was granted, in June 2018, four million options to
purchase BATM ordinary shares. The options are exercisable
at a price of 26.95 pence per share, being the average price
of the Company’s shares on the London Stock Exchange
in the month preceding the shareholders’ approval of this
transaction. Half of the options vested at the end of 24
months from the grant date and the other half at the end
of 36 months from the grant date, provided that Dr. Marom
remains in his position at the Company as of the date of each
vesting and that the Group has achieved a gross profit of at
least $33 million for the previous calendar year in which the
vesting date falls.
REMUNERATION TO NON-EXECUTIVE INDEPENDENT
DIRECTORS (“NEDS”)
Israeli publicly
As an
listed company, BATM’s Board
must include at all times, at least two external (public)
independent non-executive directors
the
the qualifications
mandatory requirements and hold
laid down in the Israeli Companies Law. Such directors
may receive cash remuneration that includes an annual
fixed fee and a per-meeting participation fee as well as
equity-based compensation, all as prescribed in the Israeli
fulfill
that
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ANNUAL REPORT & ACCOUNTS 2020CORPORATE GOVERNANCE CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Directors' Remuneration Report CONTINUED
Companies Regulations ((Rules Regarding Compensation
and Expense Reimbursement of External Directors) 2000
(the “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 Compensation Regulations. The
Company’s remuneration policy with respect to NEDS is
that it offers each of them the relevant scale of annual
fixed fee and “per-meeting” participation fee specified in
the Compensation Regulations that apply to the Company.
NEDs are not eligible to participate
in the variable
remuneration plans offered by the Company to its executives
and officers.
NEDs are also not entitled to notice periods of termination
as their position under the Israeli Companies Law is set for
a defined term of three years following their appointment
by the shareholders’ meeting. Their office may only be
terminated for cause in special circumstances by the
Company’s shareholders’ meeting or by the competent
court at the request of a director or shareholder.
LINK TO STRATEGY
The Board believes that the Remuneration Policy and
practices of BATM support the strategy by enabling the
Group to recruit and retain executive directors and senior
managers of the calibre to deliver its strategy. The criteria
set for the annual bonus are also designed to support the
achievement of the Group’s strategic objectives while LTIPs
incentivise the delivery of long-term financial return through
the implementation of sustainable strategic growth. The
Chairman’s fee supports the recruitment and retention
of a director of a calibre to lead an effective board and
contribute to the Group’s long-term success. (Please see
above regarding NED fees.)
EXTERNAL APPOINTMENTS FOR EXECUTIVE
DIRECTORS OF THE COMPANY
a conflict of interest between their position in the Company
and their external appointment. In each such instances, the
Company’s executive director may retain the remuneration
paid to them by the other company. The Company provides
a full disclosure on each such instance in its Remuneration
Report contained in the Company’s Annual Report.
RETIREMENT AND TERMINATION OF EMPLOYMENT
OR SERVICES ARRANGEMENTS
As part of the incentives under this Remuneration Policy,
the Company is permitted to approve retirement benefits
and termination arrangements in its employment and
services contracts in order to attract and retain highly
skilled professional executive officers. The retirement and
termination arrangements may include one or more of
the following, as may be approved by the Remuneration
Committee and the Board (unless the termination is in
circumstances that negate the payment of severance pay
pursuant to applicable law):
l
l
Advance Notice of Termination: (i) shall not exceed up to six
monthly base salaries for the CEO; and (ii) shall not exceed
up to four monthly base salaries for other senior executives
(provided, however, that any current employment or
services contracts in effect with senior executives which
contain an Advance Notice of more than six months shall
continue in effect until the relevant contract expires).
Adjusted Payments: A senior executive may be entitled to
adjustment payments as follows: (i) up to a maximum of
six months for the CEO; and (ii) up to a maximum of four
months for other senior executives, provided that any
overlap between the Advance Notice period during which
the senior executive is not working will be accounted for
the purpose of calculating the total adjustment payment
and deducted therefrom. The adjustment payments
will be based on the employment term of each senior
executive with the Company.
The level of adjusted payments to be offered to specific
executives will be discussed by the Remuneration
Committee that will provide its recommendations to the
Board, after considering the following:
The Company does not prohibit its executive directors
from being appointed as non-executive directors in other
companies, provided that such appointment will not create
l The executive is committed to work in the Company for
at least two years.
42
ANNUAL REPORT & ACCOUNTS 2020
l Throughout their term of employment they have made
a significant contribution to advancing the Company’s
business.
l The executive is not leaving the Company under
circumstances justifying the non-payment of severance
pay (as recognised under Israeli labour law and prece-
dent) and upon termination of employment they will
sign a release in favour of the Company against all
claims.
l The recommendation of the CEO (or the Chairman in
the case of the termination of employment of the CEO)
as to the level of severance payment.
l The Company’s performance throughout the period of
their employment by the Company.
l If the executive resigns from the Company during the
calendar year for which they would have been entitled
to an annual bonus, the Remuneration Committee has
the discretion to decide whether and to what extent
that executive should be eligible to receive the bonus
(whether in part, in full, or not at all).
Recruitment policy
The Remuneration Committee will take into consideration a
number of factors, including the current pay for other exec-
u tive directors, external market forces, skills and current
level of pay at previous employer in determining the pay on
recruitment.
In terms of additional benefits, the Committee will offer a
package that is set in line with this Remuneration Policy and
the mandatory pension scheme levels in the Israeli market.
Annual bonus and LTIs will be set in line with this
Remuneration Policy.
Buy-Out awards: where an individual forfeits outstanding
variable opportunities or contractual rights at a previous
employer as a result of their recruitment by the Company,
the Committee may offer compensatory payments or buy-
out awards, dependent on the individual circumstances
of recruitment, determined on a case-by-case basis.
Where appropriate, the Committee may choose to apply
performance conditions to any of these awards.
ANNUAL REPORT ON REMUNERATION
In determining the remuneration to its Non-executive
Directors (who, other than the Chairman, as regarded
as “external directors” under Israeli law), the Group is
is the
Israeli statute
required to comply with Israeli law that formulates the
kind and amounts of remuneration and expenses that
an Israeli public company may pay to its non-executive
directors. The applicable
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 to its external directors. Cash remuneration payable
to the external director 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 shareholders’ equity of the relevant listed company as
recorded in its last audited financial statements. BATM is in
the highest level of companies under these Compensation
Regulations and, accordingly, the amounts payable to
the three external directors currently in office (who are
considered as directors holding expertise qualifications
under the Compensation Regulations) for 2020 were as
follows:
l A n annual fixed fee of NIS 147,095 (c. £33,492).
l A per-meeting participation fee of NIS 5,655 (c. £1,288).
l For any teleconference meeting that the external director
participates in – 60% of the above fee.
l For signing a written resolution of a board meeting,
without a physical meeting having been held - 50% of the
above fee.
The Company complies fully with the Compensation
Regulations and does not pay any additional amounts
to the three non-executive directors. The Compensation
Regulations do not apply to the Chairman who is not
considered an “external director” in terms of Israeli Law but
is considered an independent director and his remuneration
is set out below.
43
ANNUAL REPORT & ACCOUNTS 2020CORPORATE GOVERNANCE Directors' Remuneration Report CONTINUED
Audited information
The table of Directors’ remuneration is set out below.
Table A – Emoluments of the Directors with comparatives
2020
Executive Directors
Zvi Marom, CEO (1)
Moti Nagar, CFO (2)
Non-executive Directors
Gideon Chitayat
Harel Locker
Ari Shamiss
Varda Shalev
2019
Executive Directors
Zvi Marom, CEO (1)
Moti Nagar, CFO (2)
Non-executive Directors
Gideon Chitayat
Harel Locker
Ari Shamiss
Varda Shalev
Salary/Fees
$’000
Performance Bonus
$’000
2020 Total
$’000
547
297
56
53
60
62
410(*)
149(**)
–
–
–
–
957
446
56
53
60
62
Salary/Fees
$’000
Performance Bonus
$’000
2019 Total
$’000
503
287
56
53
57
57
150
120
–
–
–
–
653
407
56
53
57
57
(1) The CEO, Dr. Zvi Marom, receives payment via a Service Agreement, which includes a basic annual salary and associated social and pension benefits
according to his employment agreement. His service fee (which is paid in New Israeli Shekels) in 2020 and 2019 was the same, with the variation in
the exact amounts when presented in reporting currency (US$) being based on currency exchange.
(2) The CFO salary is paid in New Israeli Shekels: the difference in the reported salary (in US$) between 2020 and 2019 is due to currency fluctua-
tion – the underlying salary remained the same. In 2020 and 2019, the salary includes social and pension benefits as required by Israeli law for all
employees.
(*) The bonus criteria for the CEO was approved by the shareholders at the EGM held on 6 June 2018 and the award of his bonus for 2020 received
approval by the Board of Directors on 21 February 2021.
(**) The CFO bonus for 2020 is subject to approval by shareholders at the next AGM.
As at 31 December 2020, the total liability for payment related to wages for the Executive Directors was $73,000 (31 December
2019: $51,000), which was paid in January 2021 (2019 liability was paid in January 2020).
44
ANNUAL REPORT & ACCOUNTS 2020
CORPORATE GOVERNANCE
2020 annual bonus
The maximum annual bonus for Dr. Zvi Marom and Mr. Moti Nagar for 2020 was 75% of annual service fee and 50% of
annual salary respectively. The annual bonus is based on a mix of quantitative financial criteria and qualitative personal and
operational criteria as described below.
Dr. Zvi Marom, CEO
Financial criteria (75%-100% of total bonus)
2020 EBITDA target
% of this part of the bonus
payable on achieving
that target
Target
Maximum
$4.3m
$8.2m
11.11%
100%
Personal criteria (up to 25% of total bonus)
Target
Delivery
2020 actual EBITDA
$19.7m
Strategic advancement of both divisions
• Substantial expansion of molecular diagnostics customer
base with the rapid launch of multiple new tests,
primarily related to COVID-19
• Secured first tier 1 customer for NFV operating system
The CEO, Dr. Marom, met the financial and personal criteria set for him for 2020, entitling him to the maximum bonus award.
Mr. Moti Nagar, CFO
Financial criteria (60%-80% of total bonus)
2020 target
$7.4m
>$3.5m
% of this part of the bonus
payable on achieving
that target
70%
30%
2020 actual
$19.7m
$18.5m
EBITDA
Cash from
operating activities
Personal criteria (20-40% of total bonus)
Target
Delivery
Implementation of new ERP system in the US
• Successful implementation of SAP Business One in Telco
Systems
Restructuring of the BATM subsidiaries to prepare for
future growth
• Reorganisation of the Company structure from a tax
point of view
In addition to these factors, the Board took into consideration the extraordinary service provided by the CFO in 2020 to
support the Company’s heightened activity relating to the COVID-19 pandemic.
The CFO, Mr. Nagar, met the financial and personal criteria set for him for 2020, entitling him to the maximum bonus award.
In accordance with Israeli law, Mr. Nagar’s bonus remains subject to shareholder approval.
ANNUAL REPORT & ACCOUNTS 2020
45
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Directors' Remuneration Report CONTINUED
Share options
No options were granted to, or exercised by, the Directors during the year.
Details of Executive Director options held, granted, exercised or lapsed during the year are as follows:
As at 1 Jan
2020
Granted
Exercised
Lapsed
As at 31 Dec
2020
Exercise
price(*)
Expiry date
Zvi Marom
4,000,000
Moti Nagar
906,200
-
-
-
-
-
-
4,000,000
906,200
0.2695
0.1269
5 June 2028
4 May 2025
(*) The exercise price per share calculated by the average price of the Company’s shares on the London Stock Exchange during the month preceding the
Board approval of the option grant.
Directors’ shareholdings
While the Company does not require any Director to hold
shares in the Company, the interests of the Directors and
their immediate families, both beneficial and non-beneficial,
in the ordinary shares of the Company as at 31 December
2020 and 2019 were as follows:
2020
Ordinary
Shares
2019
Ordinary
Shares
Executive Directors
Zvi Marom
Moti Nagar
96,794,500
96,794,500
–
–
Non-executive Directors
Gideon Chitayat
3,159,000
3,159,000
Harel Locker
Ari Shamiss
Varda Shalev
–
–
–
–
–
–
IMPLEMENTATION OF THE REMUNERATION POLICY
IN 2021
Salaries
During 2021 up to the publication of these financial
statements, Dr. Marom’s service fee (which includes salary,
pension and benefits) and Mr. Nagar’s base salary were
unchanged from 2020. As noted, the Company will be
publishing its new remuneration policy and seeking approval
from shareholders at the next AGM in 2021, the provisions
of which may differ from the existing policy.
Pension and benefits
As above, Dr. Marom’s service fee (which includes pension
and benefits) is currently unchanged from 2020. Mr. Nagar’s
pension is determined by Israeli law, with the amount
currently unchanged from 2020.
Annual bonus
The criteria for the annual bonus for 2021 will be determined
by the new remuneration policy that BATM will put forward
for approval by shareholders at the next AGM.
The bonus targets are deemed to be commercially sensitive
and have not been disclosed prospectively. The performance
targets set and actual performance against those targets will
be provided on a retrospective basis in next year’s Directors’
Remuneration Report.
Non-Executive Director fees
The fees for the Chairman are currently unchanged in 2021.
In accordance with Israeli law, the remuneration to be paid
to “external” Non-Executive Directors is within a set range
set forth in the Regulations promulgated under the Israeli
Companies Law (that is based on the size of the company and
the professional qualifications or expertise of the director).
As at the date of this report, the fees are unchanged in 2021
and remain as disclosed on page 43.
46
ANNUAL REPORT & ACCOUNTS 2020 INFORMATION NOT SUBJECT TO AUDIT
As a company registered in Israel, BATM is not subject to the
requirements of the UK Companies Act 2006. Accordingly,
the Company makes the following disclosures voluntarily.
Ratio of CEO pay to average full-time employee pay
The ratio of CEO pay to average full-time employee pay
during 2020 was 26:1 (2019: 20:1). The details of CEO pay
can be found on page 44. Average full-time employee pay,
including employees being paid under service contracts, in
2020 was $36,638 (2019: $32,861). (In accordance with IFRS,
note 11 to the financial statements – ‘Staff costs’ – does not
include employees paid under service contract: this payment
is reflected within general & administrative, research &
development and sales & marketing expenses and cost of
goods. Employees who have chosen to work for BATM under
a service agreement have the same rights and obligations as
any other employee, such as the same notice period.).
Percentage change in pay
The table below shows the percentage change between
2019 and 2020 in the value of salary and annual bonus (on
an actual currency basis) for the Directors compared with
the average full-time employee (including those on service
contracts) of the Company.
Relative importance of spend on pay
The table below shows overall spend on employee
(including employees on service contracts and the Executive
Directors) across the Group compared with distributions to
shareholders.
2020
($m)
2019
($m)
% change
39.9
35.5
12.5
–
–
–
Employee
remuneration
costs
Distribution to
shareholders
Notice periods
No employee has a notice period of more than 12 months.
The notice period for the Directors (excluding “external”
directors) is up to six months. The external Non-Executive
Directors are not entitled to notice periods as their position
under the Israeli Companies Law is set for a defined term of
three years following their appointment by the shareholders’
meeting. Their office may only be terminated for cause in
special circumstances by the Company’s shareholders’
meeting or by the competent court at the request of a
director or shareholder.
Salary/Fees
Performance
Bonus
Executive Directors
Zvi Marom
Moti Nagar
Non-executive Directors
Gideon Chitayat
Harel Locker
Ari Shamiss**
Varda Shalev**
Employees
0%
0%
0%
0%
5.3%
8.8%
173%
24%*
–
–
–
–
Average FTE***
4%
69%
* The CFO bonus for 2020 is subject to approval by shareholders at the
next AGM.
** Prof. Shamiss and Prof. Shalev joined more meetings during 2020
compared with 2019: there was no change in their annual fee or per-
meeting fee.
*** Excluding Executive Directors
47
ANNUAL REPORT & ACCOUNTS 2020CORPORATE GOVERNANCE CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Directors' Remuneration Report CONTINUED
Total shareholder return
The following graph shows BATM’s share price performance
on the London Stock Exchange over the last five years
compared with the FTSE SmallCap
Index, which has
been chosen because it includes companies of a broadly
comparable size to BATM. The Group has not declared a
dividend over the last five financial years. Under Israeli law,
a company may only declare a dividend if it has generated
accrued profit over the previous two years, provided that
there is no concern that the distribution will prevent the
company from meeting its current and future undertakings
when they become due. As noted above, the Board has
resolved to recommend a dividend for the year ended 31
December 2020. In accordance with Israeli law, a dividend
can only be recommended by the Board after the publication
of audited annual accounts and shall be payable only after
the same has been approved by ordinary resolution of
the General Meeting. Accordingly, the Group will provide
shareholders with further details in due course.
BATM Advanced Communications Ltd
FTSE SMALL CAP INDEX
July
2016
January
2017
July
2017
January
2018
July
2018
January
2019
July
2019
January
2020
July
2020
January
2021
%
700
600
500
400
300
200
100
0
48
ANNUAL REPORT & ACCOUNTS 2020 Directors’ Report
PRINCIPAL ACTIVITIES
BATM is focused on the development, production and marketing
of real-time technologies focusing on two main application
areas: Networking & Cyber and Bio-Medical. Networking
& Cyber includes products and services related to carrier
ethernet, NFV and cyber network monitoring for large area
networks. Bio-Medical includes medical diagnostic solutions,
bio-waste treatment and sterilisation, and distribution of third
party medical equipment and supplies. BATM has offices in
North America, Israel and Europe.
FINANCIAL STATEMENTS
The Directors present their report together with the audited
financial statements for the year ended 31 December 2020. The
results of the year are set out in the consolidated statements
of profit or loss. After reporting a $0.7 million amortisation of
intan gible assets for the year, BATM recorded a net profit of
$11.5 million.
DIVIDENDS
The Board has resolved to recommend the distribution of
a dividend for the year ended 31 December 2020 following
the publication of the audited annual report and accounts, in
accordance with Israeli law, and which shall be payable only
after the same has been approved by ordinary resolution
at a General Meeting. The Board looks forward to providing
shareholders with further details in due course.
BUSINESS AND STRATEGIC REVIEW
The review of the Group’s business operations, including
strategic framework, key performance indicators and principal
risks and uncertainties, are set out in the Strategic Report
section on pages 2 to 23 together with this Directors’ Report.
DIRECTORS
The Directors who served for the year ended 31 December
2020 and are currently serving are as follows:
• Dr. Gideon Chitayat, Non-Executive Chairman
•
•
Dr. Zvi Marom, Executive Director and Chief Executive Officer
Moti Nagar, CPA, Executive Director and Chief Financial
Officer
Harel Locker, Non-Executive External Director and Senior
Independent Director (SID)
Prof. Ari Shamiss, Non-Executive External Director
Prof. Varda Shalev, Non-Executive External Director
•
•
•
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 24 to 51 which
is incorporated into the Directors’ Report by reference.
DIRECTORS’ REMUNERATION AND INTERESTS
The Directors’ remuneration and interests are set out in the
Directors’ Remuneration Report on pages 35 to 48.
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 public
external appointed 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
49
ANNUAL REPORT & ACCOUNTS 2020CORPORATE GOVERNANCE Directors' Report CONTINUED
created, in the Board of directors by way of ordinary
resolution. Non-executive public “external” directors, as
defined by Israeli Company Law, 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 re-election
of external non-executive directors at the end of each three-
year term, which are mandatory for the Company.
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 two Executive Directors, being the CEO, Dr. Zvi Marom,
and the CFO, Mr. Moti Nagar, as well as the Chairman of the
Board, Dr. Gideon Chitayat, were re-elected at the Annual
General Meeting of 17 December 2020 until the following
AGM and will be proposed for re-election at the Annual
General Meeting of 2021. Their biographies appear on page
24 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. 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.
•
•
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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 Group in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards
Board (IFRS). Israeli company law requires the Directors to
prepare and approve such financial statements.
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
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:
• properly select and apply accounting policies;
•
present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
make an assessment of the Company’s ability to continue
as a going concern and disclose where they consider it
appropriate; and
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.
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, they continue to adopt the
going concern basis in preparing the accounts.
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.
50
ANNUAL REPORT & ACCOUNTS 2020 in
Israel governing
Legislation
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
18 April 2021
CORPORATE GOVERNANCE
ANNUAL REPORT & ACCOUNTS 2018 51
51
ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORT BATM
Consolidated Financial Statements for the year ended 31 December 2020
52
ANNUAL REPORT & ACCOUNTS 2020
52
ANNUAL REPORT & ACCOUNTS 2020 FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Independent Auditor’s Report to the Shareholders
of BATM Advanced Communications Ltd.
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 57 to 109, which comprise the consolidated statement of financial position as at 31 December
2020, and the consolidated statement of profit and loss, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and
notes to the consolidated financial statements, including a summary of significant accounting policies.
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 2020, 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’ 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.
ANNUAL REPORT & ACCOUNTS 2020
53
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 2020, the
Group had goodwill and other intangible assets of $23,717
thousand.
Goodwill and other intangible assets arise as a result of acqui-
sitions by the Group. 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, fair value less costs to sell or 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 signif-
icant judgement is required by the management in determining
the cash-generating units and the fair value less costs to sell or
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 directors.
Our audit procedures included:
Evaluating whether the model used to calculate the fair
value less costs to sell and 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 estima-
tions 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 infor-
mation, market researches when available, contractual
arrangements and approved budgets, search for available
contradictory information, including the macroeconomic
impacts resulting from the ongoing COVID-19 pandemic.
Performing stress analysis on key estimates.
Performing discussions, when applicable, with key manage-
ment 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.
the consolidated financial statements,
In preparing
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
54
ANNUAL REPORT & ACCOUNTS 2020
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Independent Auditor’s Report to the Shareholders
of BATM Advanced Communications Ltd. (CONTINUED)
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
judgement 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, related safeguards.
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
about the matter or when, in extremely rare circumstances,
ANNUAL REPORT & ACCOUNTS 2020
55
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.
The engagement partner on the audit resulting in this
independent auditor’s report is Efrat Binshtok.
Brightman Almagor Zohar and Co., Efrat Binshtok
Certified Public Accountants
A Firm in the Deloitte Global Network
1 Azrieli Center, Tel Aviv
Israel
18 April 2021
56
ANNUAL REPORT & ACCOUNTS 2020
Consolidated Statements of Profit or Loss
for the year ended 31 December
for the year ended 31 December 2019
Revenues
Cost of revenues
Gross profit
Operating expenses
Sales and marketing expenses
General and administrative expenses
Research and development expenses
Other operating expenses (income)
Total operating expenses
Operating profit
Finance income
Finance expenses
Profit before tax
Income tax expenses
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
Profit for the year
Attributable to:
Owners of the Company
Non-controlling interests
Profit for the year
Profit per share (in cents) basic
Profit per share (in cents) diluted
Note
5, 6
7
8
9
10
12
13
14
15
16
16
2020
US$’000
183,566
122,856
60,710
20,197
15,884
10,258
138
46,477
14,233
820
(1,754)
13,299
(1,043)
12,256
(774)
11,482
9,793
1,689
11,482
2.22
2.21
2019
US$’000
123,396
90,251
33,145
16,307
11,753
6,772
(6,169)
28,663
4,482
1,612
(1,316)
4,778
(475)
4,303
(1,033)
3,270
3,917
(647)
3,270
0.93
0.92
The accompanying notes are an integral part of these financial statements.
57
ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
Consolidated Statements of Comprehensive Income
for the year ended 31 December
Profit for the year
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating foreign operations
Items that will not be reclassified subsequently
to profit or loss:
Revaluation of investment
Re-measurement of defined benefit obligation
2020
US$’000
11,482
3,148
14,630
(508)
16
(492)
2019
US$’000
3,270
398
3,668
–
(44)
(44)
Total comprehensive income for the year
14,138
3,624
Attributable to:
Owners of the Company
Non-controlling interests
13,560
578
14,138
3,664
(40)
3,624
The accompanying notes are an integral part of these financial statements.
58
ANNUAL REPORT & ACCOUNTS 2020
Consolidated Statements of Financial Position
for the year ended 31 December
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Inventories
Non-current assets
Property, plant and equipment
Investment property
Right-of-use assets
Goodwill
Other intangible assets
Investment in joint venture and associate
Investments carried at fair value
Deferred tax assets
Total assets
Equity and liabilities
Current liabilities
Short-term bank credit
Trade and other payables
Current maturities of lease liabilities
Tax liabilities
Non-current liabilities
Long-term bank credit
Long-term liabilities
Long-term lease liabilities
Deferred tax liabilities
Retirement benefit obligation
Total liabilities
Equity
Share capital
Share premium account
Reserves
Accumulated deficit
Equity attributable to the:
Owners of the Company
Non-controlling interests
Total equity
Total equity and liabilities
Note
18
17
19
20
21
22
23
24
12
26
27
27
27
27
27
27
26
34
28
2020
US$’000
50,575
41,467
2,803
33,893
128,738
16,109
1,878
9,607
16,838
6,879
13,271
1,027
5,759
71,368
2019
US$’000
40,584
42,784
4,254
22,672
110,294
14,203
1,899
9,945
16,804
6,941
9,497
1,013
3,234
63,536
200,106
173,830
5,365
53,618
2,244
3,046
64,273
675
6,416
8,440
711
828
17,070
81,343
1,320
425,686
(14,323)
(290,090)
122,593
(3,830)
118,763
200,106
5,915
44,459
2,070
313
52,757
762
6,215
8,339
626
715
16,657
69,414
1,320
425,477
(18,582)
(299,391)
108,824
(4,408)
104,416
173,830
The financial statements were approved by the board of directors and authorised on 18 April 2021. They were signed on its behalf by:
Dr. Z. Marom, CEO
M. Nagar, CFO
The accompanying notes are an integral part of these financial statements.
59
ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
Consolidated Statements of Changes in Equity
for the years ended 31 December 2020 and 2019
Share
Capital
Share
Premium
Account
Translation
Reserve
Other
Reserve
Accumulated
Deficit
Attributable
to owners of
the company
Non-
Controlling
Interests
Total
Equity
US$ in thousands
Balance as at
1 January 2019
1,217
407,796
(17,861)
(512)
(303,264)
87,376
(4,368)
83,008
Profit (loss) for the year
–
Re-measurement
of defined benefit
obligation
Exchange differences
on translating foreign
operations
–
–
Total comprehensive
income (loss) for the year –
–
–
–
–
Issue of share capital
93
16,981
10
595
–
105
–
–
(209)
(209)
–
–
–
–
–
–
–
–
–
–
3,917
3,917
(647)
3,270
(44)
(44)
–
(44)
–
(209)
607
398
3,873
–
–
–
3,664
17,074
605
105
(40)
3,624
–
–
–
17,074
605
105
Exercise of share-
based options by
employees
Recognition of share-
based payments
Balance as at
1 January 2020
Profit for the year
Re-measurement
of defined benefit
obligation
Revaluation of
investment
Exchange differences
on translating foreign
operations
Total comprehensive
income for the year
Exercise of share-
based options by
employees
Recognition of share-
based payments
Balance as at
31 December 2020
1,320
425,477
(18,070)
(512)
(299,391)
108,824
(4,408)
104,416
–
–
–
–
–
–
–
–
–
–
–
–
51
158
–
–
–
4,259
4,259
–
–
–
–
–
–
–
–
–
9,793
9,793
1,689
11,482
16
16
(508)
(508)
–
–
16
(508)
–
4,259
(1,111)
3,148
9,301
13,560
578
14,138
–
–
51
158
–
–
51
158
1,320
425,686
(13,811)
(512)
(290,090)
122,593
(3,830)
118,763
The accompanying notes are an integral part of these financial statements.
60
ANNUAL REPORT & ACCOUNTS 2020
Consolidated Statements of Cash Flow
for the year ended 31 December
Net cash from operating activities
Note
30
Investing activities
Interest received
Proceeds on disposal of property, plant and equipment
Tax paid on disposal of property, plant and equipment
Proceeds on disposal of deposits
Proceeds on disposal of financial assets carried at fair value
through profit and loss
Proceeds on sale of investment
Purchases of property, plant and equipment
Increase of other intangible assets
Purchases of financial assets carried at fair value through
profit and loss
Purchases of deposits
Investment in joint venture
Investment in associated companies
Acquisition of subsidiaries
Net cash used in investing activities
Financing activities
Lease payment
Bank loan repayment
Bank loan received
Proceed on issue of share capital, net
Proceed on exercise of shares
31
31
22
27
27
Net cash from (used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance of cash
held in foreign currencies
Cash and cash equivalents at the end of the year
2020
US$’000
18,459
101
39
–
3,122
761
–
(3,386)
(328)
(2,009)
(314)
(3,000)
(467)
–
(5,481)
(2,428)
(13,852)
12,980
–
51
(3,249)
9,729
40,584
262
50,575
2019
US$’000
7,166
205
113
(19)
3,234
–
3,430
(686)
(1,523)
(760)
(3,112)
(1,952)
(575)
(937)
(2,582)
(2,361)
(9,922)
10,086
17,074
605
15,482
20,066
20,811
(293)
40,584
The accompanying notes are an integral part of these financial statements.
61
ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
1. General Information
BATM Advanced Communications Ltd. (“the Company”) is a company incorporated in Israel under the Israeli Companies
Law. The address of the registered office is POB 7318, Nave Ne’eman Ind. Area 4, Ha’harash Street, 4524075 Hod
Hasharon, Israel. The Company and its subsidiaries (“the Group”) are engaged in the research and development,
production and marketing of data communication products in the field of metropolitan area networks and of bio-
medical products, primarily laboratory diagnostics and eco-med equipment. The Bio-Medical division also distributes
products of third parties.
2
Adoption of new and revised International Financial Reporting Standards (IFRSs)
2.1 New and amended IFRS standards that are effective for the current year
Impact of the initial application of other new and amended IFRS Standards that are effective for the current year
In the current year, the Group has applied the below amendments to IFRS Standards that are effective for annual
periods beginning on or after 1 January 2020. Their adoption has not had any material impact on the disclosures or on
the amounts reported in these financial statements.
Amendments to References to the Conceptual Framework in IFRS Standards
The Group has adopted the amendments included in Amendments to References to the Conceptual Framework in
IFRS Standards for the first time in the current year. The amendments include consequential amendments to affected
Standards so that they refer to the new Framework. Not all amendments, however, update those pronouncements
with regard to references to and quotes from the Framework so that they refer to the revised Conceptual Framework.
Some pronouncements are only updated to indicate which version of the Framework they are referencing to (the IASC
Framework adopted by the IASB in 2001, the IASB Framework of 2010, or the new revised Framework of 2018) or to
indicate that definitions in the Standard have not been updated with the new definitions developed in the revised
Conceptual Framework.
The Standards which are amended are IFRS 2, IFRS 3, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38.
Amendments to IFRS 3 Definition of a business
The Group has adopted the amendments to IFRS 3 for the first time in the current year. The amendments clarify that
while businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify
as a business. To be considered a business an acquired set of activities and assets must include, at a minimum, an input
and a substantive process that together significantly contribute to the ability to create outputs.
The amendments remove the assessment of whether market participants are capable of replacing any missing inputs
or processes and continuing to produce outputs. The amendments also introduce additional guidance that helps to
determine whether a substantive process has been acquired.
The amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired
set of activities and assets is not a business. Under the optional concentration test, the acquired set of activities and
assets is not a business if substantially all of the fair value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar assets.
Amendments to IAS 1 and IAS 8 Definition of material
The Group has adopted the amendments to IAS 1 and IAS 8 for the first time in the current year. The amendments
make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of
materiality in IFRS Standards. The concept of ‘obscuring’ material information with immaterial information has been
included as part of the new definition.
62
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 The threshold for materiality influencing users has been changed from ‘could influence’ to ‘could reasonably be expected
to influence’. The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1.
In addition, the IASB amended other Standards and the Conceptual Framework that contain a definition of ‘material’ or
refer to the term ‘material’ to ensure consistency.
2.2 New and revised IFRS Standards in issue but not yet effective
The Group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective:
Amendments to IAS 1
Amendments to IFRS 3
Classification of Liabilities as Current or Non-current
Reference to the Conceptual Framework
Annual Improvements to IFRS Standards 2018-2020 Cycle
Amendments to IFRS 9 Financial Instruments
Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
The amendments to IAS 1 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 dis-
closed about those items.
The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in exist-
ence 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.
The amendments are applied retrospectively for annual periods beginning on or after 1 January 2023, with early
application permitted.
Amendments to IFRS 3 – Reference to the Conceptual Framework
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework.
They also add to IFRS 3 a requirement that, for obligations within the scope of IAS 37, an acquirer applies IAS 37 to
determine whether at the acquisition date a present obligation exists as a result of past events. For a levy that would be
within the scope of IFRIC 21 Levies, the acquirer applies IFRIC 21 to determine whether the obligating event that gives
rise to a liability to pay the levy has occurred by the acquisition date.
Finally, the amendments add an explicit statement that an acquirer does not recognise contingent assets acquired in
a business combination.
The amendments are effective for business combinations for which the date of acquisition is on or after the beginning
of the first annual period beginning on or after 1 January 2022. Early application is permitted if an entity also applies
all other updated references (published together with the updated Conceptual Framework) at the same time or earlier.
3
Significant Accounting Policies
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (IASB).
63
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS Basis of preparation
The consolidated financial statements have been prepared on the 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
explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into
account the characteristics of the asset or liability if market participants would take those characteristics into account
when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in
these consolidated financial statements is determined on such a basis, except for share-based payment transactions
that are within the scope of IFRS 2, leasing transactions that are within the scope of IFRS 16, and measurements that
have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
l Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date;
l Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
l Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including
structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:
l has power over the investee;
l is exposed, or has rights, to variable returns from its involvement with the investee; and
l has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
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.
64
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 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
and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in
line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members
of the Group are eliminated in full on consolidation.
Investments in associates and joint ventures
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 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.
When the Group reduces its ownership interest in an associate or a joint venture, but continues to use the equity
method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised
in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified
to profit or loss on the disposal of the related assets or liabilities.
When a Group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the
transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to
the extent of interests in the associate or joint venture that are not related to the Group.
Changes in the Group’s ownership interests in existing subsidiaries
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the
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
received is recognised directly in equity and attributed to owners of the Company.
65
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS Business combinations
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 values 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.
At the acquisition date, the identified assets acquired and the liabilities assumed are recognised at their fair value, except
that:
l deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 respectively;
l liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured
in accordance with IFRS 2 at the acquisition date; and
l assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale
and Discontinued Operations are measured in accordance with that Standard.
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. If, after reassessment, the net of the
acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds 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
interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
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
basis is made on a transaction-by-transaction basis.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from
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 the 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.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement
period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified
as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity.
Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in
accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the
corresponding gain or loss being recognised in profit or loss.
When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is 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.
66
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are
recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that,
if known, would have affected the amounts recognised at that date.
Goodwill
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
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
subsequent periods.
Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or
disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary
for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale,
which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that
subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will
retain a non-controlling interest in its former subsidiary after the sale.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying
amount and fair value less costs to sell.
Revenue recognition
The Group recognises revenue from the following major sources:
l Sale of goods - Communication products, Bio-Medical products such as laboratory diagnostics and sterilisation eco-
med products
l Rendering of services - Software services such as training, technical support and maintenance related to the
communication products, mobile & web solutions, UI, UX design, branding, graphical design, drivers & embedded
solutions
l Construction contracts
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.
67
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS Sale of goods
For sales of goods, revenue is recognised when control of the goods has transferred, 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 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
The Group provides a service of installation of various software products for specialised business operations.
Such services are recognised as a performance obligation satisfied over time. Revenue is recognised for these
installation services 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 bear
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
expense immediately.
Dividend and interest income
Dividend income from investments is recognised when the shareholder’s right to receive payment has been established
(provided that it is probable that the economic benefits will flow to the Group and the amount of income can be meas-
ured reliably).
Leases
The Group as a lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. 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
short-term leases (defined as leases with a lease term of 12 months or less). For these leases, the Group recognises the
lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic
basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
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.
68
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at
or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets 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 right-of-use assets are presented as a separate line in the consolidated statement of financial position.
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
lease and associated non-lease components as a single arrangement. The Group has used this practical expedient.
The Group as lessor
The Group enters into lease agreements as a lessor with respect to some of its investment properties.
Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease.
All other leases are classified as operating leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial
direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognised on a straight-line basis over the lease term.
Foreign currencies
The individual financial statements of each Group company are prepared in the currency of the primary economic
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
are measured in terms of historical cost in a foreign currency are not retranslated.
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
69
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS 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 compre-
hensive income and accumulated in equity.
Government grants
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 arising from the relevant grant.
It is the Group’s policy to designate all such loans as financial liabilities measured at amortised cost according to IFRS 9.
Government grants are not recognised until there is reasonable assurance that the Group will comply with the
conditions attached to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises
as expenses the related costs for which the grants are intended to compensate.
Government grants towards research and development costs are netted against related expenses over the periods
necessary to match them with the related costs.
Employee benefits
Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have
rendered service entitling them to the contributions.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit
method, with actuarial valuations being carried out at the end of each annual reporting period.
Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable)
and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with
a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement
recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified
to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is
calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorised as follows:
l service cost (including current service cost, past service cost, as well as gains and losses on curtailments and
settlements);
l net interest expense or income; and
l remeasurement.
70
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 The Group presents the first two components of defined benefit costs in profit or loss in the line item employee
benefits expense. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the consolidated statement of financial position represents the actual
deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present
value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to
the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the
termination benefit and when the entity recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in
the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange
for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the ben-
efits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated
future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting
date.
Share-based payments arrangements
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 33.
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
premium reserve.
Taxation
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. Taxable profit differs from profit before tax as reported in
the consolidated statement of profit or loss because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or deductible. 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
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
71
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS 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 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
accounting for a business combination, the tax effect is included in the accounting for the business combination.
Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are
measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are
measured at cost.
All of the Group’s property interests held under operating leases to earn rentals or for capital appreciation purposes
are accounted for as investment properties and are measured using the cost model.
Transfers from owner-occupied property to investment property are made when the Company ends owner-occupation.
Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, 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 for production, administrative purposes, or for purposes not yet determined,
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:
72
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 Buildings
Plant and equipment
Motor Vehicles
Furniture and fittings
Leasehold Improvements
3%-4%
10%-33%
15%-20%
6%-15%
7%-20%
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in income.
Research and development expenditure
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.
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
asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Depreciation 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
Technology
Other
10%-12.5%
14%-20%
10%
Acquired intangible assets
Acquired intangible assets are measured initially at purchase cost and are amortised on a straight-line basis over their
estimated useful lives.
73
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS 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). Subsequent to initial recognition, intangible
assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible assets that are acquired separately.
Impairment of tangible and intangible assets other than goodwill
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
impairment loss is treated as a revaluation decrease.
Inventory
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
selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s consolidated statements of financial position
when the Group becomes a party to the contractual provisions of the instrument.
Trade and other receivables
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 for estimated irrecoverable amounts are recognised
in profit or loss when there is objective evidence that the asset is impaired. 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 interest rate computed at initial recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments
that are readily convertible to a known amount of cash.
74
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 Financial assets and investments
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time
frame established by regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
l the financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and
l the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through other
comprehensive income (FVTOCI):
l the financial asset is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling the financial assets; and
l the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
The majority of financial assets are measured subsequently at fair value through profit or loss (FVTPL).
Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period.
For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-
impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash
receipts (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of
the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on
initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate
is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of
the debt instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition
minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference
between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a
financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at
amortised cost and at FVTOCI. For financial assets other than purchased or originated credit-impaired financial assets,
interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset,
except for financial assets that have subsequently become credit-impaired. For financial assets that have subsequently
75
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost
of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument
improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective
interest rate to the gross carrying amount of the financial asset.
For purchased or originated credit-impaired financial assets, the Group recognises interest income by applying the
credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition.
The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so
that the financial asset is no longer credit-impaired.
Equity instruments designated as at FVTOCI
On initial recognition, the Group may make an irrevocable election (on an instrument by instrument basis) to designate
investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held
for trading or if it is contingent consideration recognised by an acquirer in a business combination.
A financial asset is held for trading if:
l it has been acquired principally for the purpose of selling it in the near term; or
l on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and
has evidence of a recent actual pattern of short-term profit-taking; or
l it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument).
Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs.
Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in
other comprehensive income and accumulated in the investments revaluation reserve. The cumulative gain or loss is
not reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings.
Financial assets at FVTPL
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’ line item. Fair value is determined in the manner described in note 36.
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate at the end of each reporting period.
Impairment of financial assets
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.
76
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected
life of a financial instrument. In contrast, 12 month ECL represents the portion of lifetime ECL that is expected to result
from default events on a financial instrument that are possible within 12 months after the reporting date.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If
the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may
have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the
Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition
of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the
investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in equity
instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previ-
ously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained
earnings.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of
the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in
a business combination, (ii) held for trading, or (iii) it is designated as at FVTPL.
A financial liability is classified as held for trading if:
l it has been acquired principally for the purpose of repurchasing it in the near term; or
l on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and
has a recent actual pattern of short-term profit-taking; or
l it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument.
A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business
combination may be designated as at FVTPL upon initial recognition if:
l such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise; or
77
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS l the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and
its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or
investment strategy, and information about the grouping is provided internally on that basis; or
l it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire combined
contract to be designated as at FVTPL.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of
each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the
instruments.
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign
exchange rate risks, including foreign exchange forward contracts, interest rate swaps and cross currency swaps.
Further details of derivative financial instruments are disclosed in note 36.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or
loss immediately.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance
charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an
accrual basis in profit or loss account using the effective interest method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they arise.
Trade and other payables
Trade and other payables and other financial liabilities are subsequently measured at amortised cost using the effective
interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments (including all fees and points paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable
that the Group will be required to settle that obligation. Provisions are measured at the directors’ best estimate of
the expenditure required to settle the obligation at the consolidated statements of financial position date, and are
discounted to present value where the effect is material.
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the
date of sale of the relevant products, at the directors’ best estimate of the expenditure required to settle the Group’s
obligation.
78
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 4
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.
Impairment of intangible assets and goodwill
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
of the CGU and a suitable discount rate in order to calculate present value. The carrying amount of intangible assets
and goodwill at the consolidated statement of financial position date was $23.7 million (2019: $23.7 million), see note
23 and note 24.
Judgments with respect to deferred tax assets
For the purposes of measuring deferred tax assets arising from loss carry-forwards in different territories, management’s
estimation that it will be able to utilise them in the foreseeable future, 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 direct labour costs and the engineering status is subjective and requires the
use of management’s best judgments based on the information available at that time. Total revenues and expenses
recognised for the year ended 31 December 2020 amounted to $46,812 thousand and $37,679 thousand, respectively.
Judgments with respect to warranty provision
Warranty provision was made on the basis of management’s estimation and on past experience.
5
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 in the following major product lines.
An analysis of the Group’s revenues is as follows:
Year ended 31 December
Sales of goods
Services
Construction contracts
2020
$’000s
101,341
35,413
46,812
183,566
2019
$’000s
74,387
34,327
14,682
123,396
79
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS 6
Business and Geographical Segments
Business segments
Information reported to the chief operating decision maker (CEO of the Company) for the purposes of resource allocation
and assessment of segment performance focuses on the types of goods or services delivered or provided, and in
respect of two major operating segments - Networking and Cyber Division and Bio-Medical Division. These divisions
are the basis on which the Group reports its primary segment information. The principal products and services of
each of these divisions are as follows: Networking and Cyber Division mostly includes the research and development,
production and marketing of data communication products, such as Network Function Virtualisation (“NFV”) in the field
of local and wide area networks and premises management systems. Sales for this segment are global. The Bio-Medical
Division is engaged in the research and development, production, marketing and distribution of medical products,
primarily laboratory diagnostic equipment and sterilisation equipment. Sales for this segment are primarily in Europe.
The accounting policies of the reportable segments are the same as the Group’s accounting policies. Adjusted operating
profit is the measure reported to the Group Chief executive for the purpose of assessment of the segment performance.
A. Segment revenues and segment results
Year ended 31 December 2020
Revenues
Adjusted operating profit (loss)(*)
Reconciliation - Other operating
expenses
Operating profit
Net finance expenses
Profit before tax
Year ended 31 December 2019
Revenues
Adjusted operating profit(*)
Reconciliation - Other operating
expenses
Operating profit
Net finance income
Profit before tax
Networking and Cyber
$’000s
Bio-Medical
$’000s
Unallocated
$’000s
54,884
(4,479)
128,682
19,430
–
–
Total
$’000s
183,566
14,951
(718)
14,233
(934)
13,299
Networking and Cyber
$’000s
Bio-Medical
$’000s
Unallocated
$’000s
Total
$’000s
58,960
5,144
64,436
132
–
–
123,396
5,276
(794)
4,482
296
4,778
(*) Excluding amortisation of intangible assets see note 24, including other operating income see note 12
Revenue reported above represents revenue generated from external customers. There were immaterial inter-segment
sales in the year.
80
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020
B. Segment assets, liabilities and other information
As at 31 December 2020
Assets
Liabilities
Depreciation and amortisation(*)
Additions to non-current assets
As at 31 December 2019
Assets
Liabilities
Depreciation and amortisation (*)
Additions to non-current assets
(*) See also note 30
Networking and Cyber
$’000s
Bio-Medical
$’000s
Unallocated
$’000s
73,830
30,955
2,403
925
124,398
50,388
2,984
4,672
1,878
–
88
–
Networking and Cyber
$’000s
Bio-Medical
$’000s
Unallocated
$’000s
88,799
35,540
2,563
1,579
83,132
33,874
2,706
1,421
1,899
–
86
–
Total
$’000s
200,106
81,343
5,475
5,597
Total
$’000s
173,830
69,414
5,355
3,000
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
Networking and cyber products
Software services
Distribution of medical products and services
Diagnostic products
Eco-Med products
2020
$’000s
13,552
41,332
65,961
22,962
39,759
183,566
2019
$’000s
21,507
37,452
52,378
5,535
6,524
123,396
81
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS D. Revenue from major product lines
Year ended 31 December 2020
Revenues
Sales of goods
Services
Construction contracts
Year ended 31 December 2019
Revenues
Sales of goods
Services
Construction contracts
E. Geographical segments
Networking and Cyber
$’000s
Bio-Medical
$’000s
Unallocated
$’000s
13,552
29,272
12,060
54,884
87,789
6,141
34,752
128,682
–
–
–
–
Networking and Cyber
$’000s
Bio-Medical
$’000s
Unallocated
$’000s
18,167
29,045
11,748
58,960
56,220
5,282
2,934
64,436
–
–
–
–
Total
$’000s
101,341
35,413
46,812
183,566
Total
$’000s
74,387
34,327
14,682
123,396
The Group operates in three principal geographical areas: United States of America (USA), 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
Area A
Area B
Area C
Total
Revenue from external customers
Non-current assets
2020
126,791
47,671
9,104
183,566
2019
59,595
53,035
10,766
123,396
2020
36,276
23,621
4,685
64,582
2019
29,802
24,511
4,976
59,289
7
Cost of revenues
Year ended 31 December
Direct costs- Components and subcontractors
Changes in inventory
Salaries and related benefits
Overhead and depreciation
Other expenses
2020
$’000s
110,244
(8,599)
16,666
3,030
1,515
122,856
2019
$’000s
69,852
(703)
16,565
3,055
1,482
90,251
82
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 8
Sales and marketing expenses
Year ended 31 December
Salaries and related benefits
Commissions
Outside services
Advertising and sales promotion
Overhead and depreciation
Travelling and other expenses
2020
$’000s
10,870
4,289
435
867
2,149
1,587
20,197
2019
$’000s
9,484
1,084
586
1,096
2,036
2,021
16,307
9
General and administrative expenses
Year ended 31 December
Salaries and related benefits
Professional services(*)
Overhead and depreciation
Other expenses
(*) Including auditors’ remuneration for audit
services
2020
$’000s
6,148
4,888
1,300
3,548
15,884
281
2019
$’000s
4,722
3,340
1,289
2,402
11,753
295
Amounts payable to Deloitte by the Company and its subsidiaries’ undertakings in respect of non-audit services in 2020
were $19,000 (2019: $20,000). In addition, payables in respect of non-audit services to others than the Company’s auditors,
for tax and internal audit services in 2020, were $18,000 and $11,000, respectively (2019: $8,000 and $23,000, respectively).
10 Research and development expenses
Year ended 31 December
Salaries and related benefits
Components and subcontractors
Overhead and depreciation
Other expenses
Government grants
2020
$’000s
3,882
4,930
938
617
(109)
10,258
2019
$’000s
2,916
3,089
1,082
533
(848)
6,772
83
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS 11 Staff costs
The average monthly number of employees in 2020 (including executive directors) was 1,196 (2019: 1,138).
Year ended 31 December
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
12 Other operating expenses (income)
Gain on reduce of holdings in associated company(1)
Gain on sale of investment(2)
Amortisation of intangible assets
Other
2020
$’000s
31,733
4,242
1,591
37,566
2019
$’000s
28,227
4,153
1,307
33,687
Year ended 31 December
2020
$’000s
(602)
–
304
436
138
2019
$’000s
(3,161)
(3,380)
372
–
(6,169)
(1)
On 4 April 2019, the Group signed an agreement for an investment of up to $30m to provide additional funds for the commercialisation of
NATlab. The majority of this investment - up to $25m - is to be provided by leading medical investors from the US and Puma Brandenburg
Investments Ltd. The investment is being made in two tranches into a new company that owns 100% of Ador. An initial $14.5m was funded in
April 2019 and a further $15.5m was expected by the end of 2020, subject to certain milestones being achieved. Following the initial invest-
ment, the new company had a valuation of $45m and BATM had an ownership interest of 38.2%. During 2020 the Group and all its partners
in Ador have invested an additional amount of $10m, of which BATM has contributed $3m, pursuant to an amendment to the investment
agreement. Following this additional investment, the Group’s shareholding in Ador is 36.7%.
(2)
On 31 July 2019, the Group and its consortium partners signed an agreement with Cellcom Israel Ltd to sell their rights in IBC Holdings. BATM
received NIS12m ($3.4m) for its rights in IBC.
13 Finance income
Year ended 31 December
Interest on bank deposits
Gain on derivative financial instruments
Gain on marketable securities
Foreign exchange differences, net
Other interest income
2020
$’000s
94
223
81
–
422
820
2019
$’000s
200
–
113
564
735
1,612
84
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 14 Finance expenses
Loss on derivative financial instruments
Foreign exchange differences, net
Interest on loans and bank fees
Interest on lease liabilities
15
Income tax expenses
Current tax
Tax on previous years
Deferred tax (note 26)
Taxation under various laws:
Israel
Year ended 31 December
2020
$’000s
–
(684)
(768)
(302)
(1,754)
2019
$’000s
(245)
–
(802)
(269)
(1,316)
Year ended 31 December
2020
$’000s
(3,352)
(2)
2,311
(1,043)
2019
$’000s
(652)
(19)
196
(475)
The Company is an “industrial company” as defined in the Israeli Law for the Encouragement of Industry (Taxes) 1969.
a. The corporate income tax rate for the years 2019 and 2020 is 23%
b. Encouragement of Capital Investments Law:
a. The corporate tax rate for each company with Preferred Enterprise status for the years 2019 and 2020 is 7.5%.
Including additional tax tracks for Preferred Technological Enterprise (tax rate of 7.5% in Area “A” and tax rate
b.
of 12% in Area “Other”) and for special Preferred Technological Enterprise (tax rate of 6%).
Determining relieves of the threshold conditions to enter the track of “Special Preferred Enterprise” relevant
for huge companies entitle (tax rates of 5% in Area “A” or 8% in the Area “Other”).
c.
The Company has Preferred Enterprise status in area A and its Israeli subsidiaries are being assessed according to the
corporate income tax rate.
During 2013, approval was received from the tax authorities in Israel regarding the merger for tax purposes of the
subsidiary Vigilant with the Company. As of 31 December 2020, the balance of non utilisation losses from the merger
is $18.0m.
The Company and its Israeli subsidiaries have tax loss carry-forwards of $109.9 million and the Group did not create
deferred tax assets in respect of any of these losses. According to the Israeli law there is no expiry date to use such
losses.
The Company tax assessments for the years up to and including the 2015 tax year are considered as final.
85
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
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. This has
resulted in tax loss carry-forwards which may expire before having been utilised. Accordingly, the future use of part
of this benefit is uncertain. Other US subsidiaries are assessed for tax purposes on a consolidated basis with Telco
Systems. Deferred tax assets of $3.1 million have been recognised in respect of such losses. The amount of carry-
forward losses is $279.9 million. According to US law, losses created until 2017 can be carried forward for 20 years.
Accordingly, the first portion of the tax losses in the US subsidiary, amounting to $29.7m, will expire in 2021.
On 22 December 2017, the President of the United States of America signed into law the Tax Cuts and Jobs Act (the
“Tax Act”). The Tax Act contains significant changes to federal corporate taxes, including a permanent reduction of the
corporate tax rate from 35% to 21% effective 1 January 2018. The reduction in the federal corporate tax rate required a
one-time revaluation of certain tax-related assets and liabilities. As a result of the revaluation of its deferred tax assets
and liabilities at 31 December 2017, the Company recorded a one-time tax expense of approximately $1.0 million. In
addition, based on the Act only 80 percent of taxable income created from 1 January 2018 may be used to offset future
income.
Other jurisdictions
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The Group has tax
loss carry-forwards of $17.8 million in European subsidiaries and the Group did not recognise deferred tax assets in
respect of $6.9 million of such losses. $0.1 million tax loss carry-forwards out of the $6.9 million above according to the
tax law in the territory these losses related to will expire during the years 2021-2024. The corporate income tax rate in
Moldova is 12% and in Italy is 24%.
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
Profit before tax:
Tax expense at the Israeli corporate income tax rate of 23%
Tax losses utilised in current period which no deferred tax assets have been
recognised in prior periods
Recognition of deferred tax assets
Write-off of deferred tax assets
Tax on previous years
Other including tax rate differences
Tax expenses for the year
2020
$’000s
13,299
3,059
(166)
(4,072)
1,818
2
402
1,043
2019
$’000s
4,778
1,099
(869)
(203)
7
19
422
475
86
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 16 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Year ended 31 December
2020
2019
Earnings for the purposes of basic and diluted earnings per share ($'000s)
attributable to Owners of the Company
9,793
3,917
Number of shares
Weighted average number of ordinary shares for the purposes of basic
earnings per share
440,291,783
421,141,507
Effect of dilutive potential ordinary shares:
Share options
3,763,448
3,955,104
Weighted average number of ordinary shares for the purposes of diluted
earnings per share
444,055,231
425,096,611
The number of Share Options 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 400,000 (2019: 450,000).
17 Financial assets
Interest-bearing deposits
Financial assets at FVTPL
Year ended 31 December
2020
$’000s
157
2,646
2,803
2019
$’000s
2,964
1,290
4,254
The average interest rate of deposits is 0.25% and 1.99% in 2020 and 2019 respectively.
18 Trade and other receivables
Trade and other receivables
Trade receivable account
Participation in research and development: Government of Israel
VAT authorities
Tax authorities
Construction contracts (see table below)
Prepaid expenses
Other debtors
31 December
2020
$’000s
24,889
1,101
1,273
126
5,790
6,468
1,820
2019
$’000s
29,218
1,094
845
336
4,909
4,892
1,490
41,467
42,784
87
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
Construction contracts
Composition:
Cumulative costs incurred due to works construction contracts
In addition - Recognised profits
Less accounts submitted to project customers
31 December
2020
$’000s
15,019
1,023
(10,252)
5,790
2019
$’000s
11,617
3,992
(10,700)
4,909
The average credit period taken on sales of goods is 54 days (2019: 66 days). No interest is charged on the receivables. An
allowance has been made at 31 December 2020 for estimated irrecoverable amounts from the sale of goods of $3,556
thousand, (2019: $2,396 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 2020, trade receivable account includes amounts of $6.1 million, which maturity date has expired
(including a receivable in the amount of $1.0 million that is overdue for more than a year), but the Group, based on past
experience and on the credit quality of the debtors, and since most of the debts have been collected until the date of the
annual report release, has not made an allowance for doubtful debts since the Company expects that those debts are to
be collectible.
Credit risk
The Group’s principal financial assets are bank balances and cash, trade and other receivables and investments.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the consolidated
statements of financial position are net of allowances for doubtful receivables. An allowance for impairment is
made where there is an identified loss event, which, based on previous experience, is evidence of a reduction in the
recoverability of the cash flows. The Group has no significant concentration of credit risk, with exposure spread over a
large number of counterparties and customers.
19
Inventories
Raw materials
Work-in-progress
Finished goods
31 December
2020
$’000s
7,166
3,353
23,374
33,893
2019
$’000s
4,544
2,917
15,211
22,672
During 2020, $1.2 million of slow moving inventory was impaired, and expensed to the Profit and Loss account (2019:
$0.3 million).
88
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 20 Property, plant and equipment
($’000s)
Cost
Land and
buildings(*)
Plant and
equipment
Motor
vehicles
Furniture
and
fittings
Leasehold
improvements
Total
At 1 January 2019
8,520
16,343
1,934
4,233
2,487
33,517
Additions
Disposals
Effect of translation adjustment
Acquisition of subsidiaries
At 31 December 2019
Additions
Disposals
Effect of translation adjustment
10
(20)
27
1,198
9,735
29
–
445
860
(268)
53
100
82
(102)
6
62
81
(247)
14
100
23
–
8
19
1,056
(637)
108
1,479
17,088
1,982
4,181
2,537
35,523
2,352
419
(271)
(323)
565
5
351
(35)
25
334
–
121
3,485
(629)
1,161
At 31 December 2020
10,209
19,734
2,083
4,522
2,992
39,540
Accumulated depreciation
At 1 January 2019
Depreciation expense
Disposals
Effect of translation adjustment
Acquisition of subsidiaries
1,967
354
(1)
19
53
11,531
744
(108)
112
73
957
344
(66)
9
41
3,943
188
(218)
38
56
At 31 December 2019
2,392
12,352
1,285
4,007
Depreciation expense
Disposals
Effect of translation adjustment
295
–
211
1,002
(154)
260
247
(248)
3
191
(34)
7
1,043
231
–
10
–
1,284
290
–
41
19,441
1,861
(393)
188
223
21,320
2,025
(436)
522
At 31 December 2020
2,898
13,460
1,287
4,171
1,615
23,431
Carrying amount
At 31 December 2020
At 31 December 2019
(*) see note 21
7,311
7,343
6,274
4,736
796
697
351
174
1,377
1,253
16,109
14,203
89
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
21
Investment property
At 1 January
Depreciation expense
Exchange rate differences
At 31 December
– The useful lives used: between 27-33 years.
Amounts recognised in the consolidated statements of profit or loss
Rental income from investment property
Operating expenses related to income from investment property
Operating expenses related to investment property which produced no income
Additional Information
2020
$’000s
1,899
(88)
67
1,878
2019
$’000s
2,004
(86)
(19)
1,899
31 December
2020
$’000s
171
(154)
(34)
2019
$’000s
206
(201)
(11)
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 2020
31 December 2019
At amortised cost
$’000s
Fair value
$’000s
At amortised cost
$’000s
Fair value
$’000s
1,099
779
1,804
1,341
1,156
743
1,547
1,227
USA
Italy
The fair value in Italy and the USA 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 $1,276 per square metre for the property in Italy and $149 per square
foot for the property in the USA.
90
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 22 Leases (Group as a lessee)
Right-of-use assets
($’000s)
Cost
At 1 January 2019
Additions
Disposals
Effect of translation adjustment
At 31 December 2019
Additions
Disposals
Effect of translation adjustment
At 31 December 2020
Accumulated depreciation
At 1 January 2019
Charge for the year
Disposals
Effect of translation adjustment
At 31 December 2019
Charge for the year
Disposals
Effect of translation adjustment
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
Buildings
Motor vehicles
Total
10,778
94
–
337
11,209
1,301
–
330
12,840
–
1,923
–
7
1,004
187
(71)
43
1,163
481
(213)
62
1,493
–
537
(43)
3
1,930
497
1,950
–
58
3,938
8,902
466
(214)
39
788
705
9,279
666
11,782
281
(71)
380
12,372
1,782
(213)
392
14,333
–
2,460
(43)
10
2,427
2,416
(214)
97
4,726
9,607
9,945
The Group leases several assets including buildings and motor vehicles. The average lease term of buildings and motor
vehicles from the implementation date, 1 January 2019, is 7.7 and 2.5 years, accordingly.
The maturity analysis of lease liabilities is presented in note 27.
91
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS Amounts recognised in profit and loss
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases
2020
$’000s
2,416
302
466
2019
$’000s
2,460
269
279
At 31 December 2020, the Group is committed to $0.3 million for short-term leases (2019: $0.2 million). The total cash
outflow for leases amount to $2,428 thousand (2019: $2,361 thousand).
23 Goodwill
The Group tests annually goodwill for impairment or more frequently if there are indications that goodwill might be
impaired. The Group has two reportable business segments and goodwill is associated with CGUs within the Bio-Medical
segment or CGUs within the Networking and Cyber segment. The goodwill regarding Bio-Medical at the amount of
$9,478 thousand (2019: $9,819 thousand) has been divided into 5 CGUs: Eco-Med, Diagnostic, Distribution, Distributor
and provider of genetics tests and Analytical instruments distribution. The goodwill regarding Networking and Cyber
segment at the amount of $7,360 thousand (2019: $6,985 thousand) has been divided into 2 CGUs: Telecommunications
and Software services.
The goodwill is allocated to the following CGUs:
Eco-Med: $2,550 thousand (2019: $2,550 thousand)
Diagnostic: $1,173 thousand (2019: $1,577 thousand)
Distribution: $1,137 thousand (2019: $1,146 thousand)
Distributor and provider of genetics tests: $1,038 thousand (2019: $966 thousand)
Analytical instruments distribution: $3,580 thousand (2019: $3,580 thousand)
Telecommunications: $1,984 thousand (2019: $1,984 thousand)
Software services: $5,376 thousand (2019: $5,001 thousand)
The recoverable amounts of the CGUs are determined from value in use calculations except of the Diagnostic CGU
and Software services CGU. The key assumptions for the value in use calculations are those regarding the discount
rates, growth rates and expected changes to selling prices and direct costs during the period. Pre-tax discount rates
of between 8.9% - 15.1% have been used. Changes in selling prices and direct costs are based on recent history and
expectations of future changes in the market.
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 of 38%,92%,32%,49%,55% for years 1-5 respectively, and then 1% thereafter, for the
Telecommunications CGU and (75)% for year 1 and 10% for years 2-5, and then 1% thereafter for the Eco-Med CGU and
92
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 0% for year 1 and 10% for years 2-5, and then 1% thereafter for the Distribution CGU and 24% for year 1 and 15% for
years 2-5, and then 1% thereafter for the Distributor and provider of genetics tests CGU and (3)% for year 1 and 9% for
years 2-5, and then 1% thereafter for the Analytical instruments distribution CGU.
The average fixed expenses have been assumed to grow at 41%, 134%, 43%, 12%, 26% for years 1-5 respectively, and
then 3% thereafter in the Telecommunications CGU and (24)%, 5%, 4%, 5%, 5% for years 1-5 respectively, and then have
been assumed to remain constant thereafter for Eco-Med, Distribution, Distributor and provider of genetics tests and
Analytical instruments distribution CGUs. The average variable expenses (directly linked to sales) have been assumed
to grow at 33%, 61%, (6)%, 22%, 33% for years 1-5 respectively, and then 1% thereafter for the Telecommunications
CGU, and (25)%, 8%, 10%, 10%, 10% for years 1-5 respectively, and then 1% thereafter for the Eco-Med, Distribution,
Distributor and provider of genetics tests and Analytical instruments distribution CGUs. The rates used above reflect
historical rates achieved and expected levels for 2021 but then are adjusted for subsequent years.
The recoverable amount of the diagnostics unit is determined based on the conditional agreement and according to it
no impairment was required (see also note 12(1)). The recoverable amount of the Software services unit is determined
based on option agreement and according to it no impairment was required (see also note 38).
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 $4.3 million. Reduction of 5% growth rate taken into account in calculating the value in use of the activity
will result in a decrease of $4.1 million recoverable amount of the activity and no goodwill impairment will be recorded.
Decrease in growth rate as stated will lead to changes in other assumptions used in the calculation of value in use.
Increase of 9% in pre-tax discount rate taken into account in calculating the value in use of the activity will result in a
decrease of $4.3 million recoverable amount of the activity and no goodwill impairment will be recorded.
Balance at 1 January
Additions in the year (*)
Disposal in the year
Foreign exchange difference
Balance at 31 December
(*) see note 31.
2020
$’000s
16,804
-
(504)
538
16,838
2019
$’000s
16,343
58
(10)
413
16,804
93
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS 24 Other intangible assets
Customer Relationships
and Backlog
$’000s
Technology
$’000s
Other
$’000s
Total
$’000s
Cost
At 1 January 2019
Additions (*)
Disposals
Effect of translation adjustments
At 31 December 2019
Additions (*)
Disposals
Effect of translation adjustments
At 31 December 2020
Accumulated amortisation
At 1 January 2019
Effect of translation adjustments
Amortisation expense
Disposal
At 31 December 2019
Effect of translation adjustments
Amortisation expense
Disposals
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
16,011
522
(263)
150
16,420
–
–
716
17,136
15,779
52
119
(132)
15,818
659
154
–
15,917
1,083
–
180
17,180
328
–
562
2,939
34,867
–
–
(245)
2,694
–
–
1,605
(263)
85
36,294
328
–
142
1,420
18,070
2,836
38,042
10,481
250
571
–
2,329
(200)
104
–
28,589
102
794
(132)
11,302
2,233
29,353
328
463
–
105
101
–
1,092
718
–
16,631
12,093
2,439
31,163
505
602
5,977
5,878
397
461
6,879
6,941
(*) Includes capitalised development costs (NFV and diagnostics) according to IAS 38.
Other intangible assets are amortised on a straight-line basis over their estimated useful lives.
Amortisation by categories:
Customer Relationships and Backlog: mainly 8 to 10 years
Technology: 5 to 7 years
Other: mainly 10 years
94
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020
25 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 2020 is presented below.
Subsidiary
Principal
activity
Country of
incorporation
Ownership
interest
Entity A
Entity B
Entity C
Entity D
Entity E
Entity F
Entity G
Entity H
Entity I
Entity J
Telecommunication
United States of America
100%
Distribution
Software
Eco-Med
Distribution
Diagnostics
Diagnostics
Cyber
Distribution
Distribution
Romania
Israel
Hungary
Moldova
Italy
Italy
Israel
Hungary
Israel
100%
100%
75%
51%
100%
100%
67%
100%
100%
Date of
acquisition
April 2000
June 2007
October 2007
February 2008
July 2008
February 2009
November 2009
April 2012
January 2016
January 2017
26 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).
Retirement benefit
obligations
$’000s
Losses carried
forward
$’000s
Other(*)
$’000s
At 1 January 2019
Credit to income
Effect of translation adjustments
At 31 December 2019
32
3
1
36
Credit (charge) to income
(36)
Effect of translation adjustments
–
At 31 December 2020
–
(*) Including goodwill and other temporary differences
2,591
562
15
3,168
2,415
176
5,759
32
1
(3)
30
(29)
(1)
–
Total
$’000s
2,655
566
13
3,234
2,350
175
5,759
The Company incurred current 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
are mainly attributed to profitable companies or to companies that have current losses but a history of profitable
operations. The deferred tax assets were also 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.
95
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
Deferred tax liabilities
At 1 January 2019
Charge (credit) to income
Effect of translation adjustments
At 31 December 2019
Charge (credit) to income
Effect of translation adjustments
At 31 December 2020
Losses carried
forward
$’000s
Intangible
assets
$’000s
Tangible assets
and other
$’000s
Total
$’000s
(346)
364
(18)
–
–
–
–
131
(40)
7
98
(15)
7
90
443
46
39
528
54
39
621
228
370
28
626
39
46
711
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
recognised: $15,386 thousand as of 31 December 2020 (31 December 2019: $19,258 thousand).
27 Financial and other liabilities
Trade and other payables
Trade creditors
Salary accruals
VAT and other tax
Liability to the office of the chief scientist
Liability on acquisition of a subsidiary*
Provision
Other creditors and accruals**
31 December
2020
$’000s
22,373
8,511
3,515
349
311
2,059
16,500
53,618
2019
$’000s
20,450
6,774
2,342
335
434
360
13,764
44,459
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The
average credit period taken for trade purchases is 58 days (2019: 64 days). The directors consider that the carrying
amount of trade payables approximates to their fair value.
* See also note 31
** Including a liability to a related party, amounting to $148 thousand, that was repaid at the beginning of 2021
96
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 Long-term bank credit
Long-term bank credit
Long-term liabilities
Liability to the office of the chief scientist
Liability on acquisition of a subsidiary
Government institutions and other
31 December
2020
$’000s
675
675
2019
$’000s
762
762
31 December
2020
$’000s
3,269
–
3,147
6,416
2019
$’000s
3,330
8
2,877
6,215
Changes in financial liabilities where the cash flows in respect thereof are classified as cash flows from financing
activities
2020
Short term
Long term
2019
Short term
Long term
Open
balance
$’000s
Cash flow from
finance activities
$’000s
Business
combination
$’000s
Foreign exchange
differences
$’000s
Close
balance
$’000s
5,915
762
6,677
Open
balance
$’000s
5,369
486
5,855
(830)
(42)
(872)
–
–
–
280
(45)
235
Cash flow from
finance activities
$’000s
Business
combination
$’000s
Foreign exchange
differences
$’000s
517
(353)
164
134
635
769
(105)
(6)
(111)
5,365
675
6,040
Close
balance
$’000s
5,915
762
6,677
97
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS Lease liabilities
Analysed as:
Non-current
Current
Disclosure required by IFRS 16
Maturity analysis
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards*
* Include options
31/12/2020
$’000s
8,440
2,244
10,684
31/12/2020
$’000s
2,244
2,116
1,489
1,082
1,006
2,747
10,684
31/12/2019
$’000s
8,339
2,070
10,409
31/12/2019
$’000s
2,070
1,519
1,276
1,144
991
3,409
10,409
All lease obligations are denominated in currency contracts.
28 Share capital
Authorised:
Issued and fully paid:
Ordinary shares of NIS 0.01 each (number of shares)
2020
1,000,000,000
440,434,124
2019
1,000,000,000
440,279,074
The Company has one class of ordinary shares which carry no right to fixed income.
During 2019, the Company raised, in aggregate, net proceeds of $17.1 million through the issue of a total of 33,283,254
New Ordinary Shares.
Listing on TASE
On 11 July 2019, the Group’s shares commenced trading on its Secondary Listing on the Tel Aviv Stock Exchange under
the symbol “BVC”. The Group maintains its Primary Listing on the Premium Listing Segment of the Official List of the
FCA and its shares continue to trade on the Main Market of the London Stock Exchange. Shares are fully transferrable
and fungible between the two markets. BATM has not issued any new shares in connection with the Secondary Listing.
During the year, 155,050 options were exercised by 20 employees (see also note 33). During 2019, 3,395,000 options
were exercised by three employees and a Director.
98
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 29
Investments
Investments and loan carried at FVTPL
During 2013, the Company made an investment of $3.5m into a consortium for the construction of a new nationwide
fiber optic infrastructure network in Israel named Israel Broadband Company (2013) Ltd (Hereinafter - “IBC”). During
2015, as part of the consortium agreement in IBC, the Company transferred an additional NIS 25m ($6.5m) upon IBC’s
call for the additional investment, comprising NIS 6.25m ($1.6m) as an additional equity investment in IBC and NIS
18.75m ($4.9m) as a shareholder loan.
In July 2019 the Company signed an agreement with Cellcom to sell its rights in IBC for an amount of NIS12m (c. $3.4m).
The Company received the full amount in July 2019 and there was no outstanding balance as of 31 December 2020.
30 Note to the cash flow statement
Operating profit from operations
Adjustments for:
Amortisation of intangible assets
Depreciation of property, plant and equipment and investment property
Capital loss of property, plant and equipment
Gain on sale of investment
Capital gain on reduce of holdings in associated company
Stock options granted to employees
Increase in retirement benefit obligation
Increase in provisions
Decrease (increase) in inventory
Decrease (increase) in receivables
Increase in payables
Effects of exchange rate changes on the balance sheet
Income taxes paid
Income taxes received
Interest paid
Net cash from operating activities
Year ended 31 December
2020
$’000s
14,233
718
4,757
31
-
(602)
158
96
2,114
(11,198)
2019
$’000s
4,482
794
4,561
31
(3,380)
(3,161)
105
121
298
1,387
916
(7,896)
7,111
1,729
(637)
3
(970)
18,459
11,361
(264)
(410)
10
(873)
7,166
99
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS 31 Business combinations and acquisition of subsidiaries
During 2019, the Group acquired 51% of Remedium for a consideration of $0.3 million.
This transaction has been accounted for by the purchase method of accounting.
REMEDIUM
Net assets acquired
Property, plant and equipment
Net working capital
Short-term bank credit
Long term liabilities
Non-controlling interest
Gain from bargain purchase
Total consideration
Satisfied by:
Cash
Consideration recorded as a contingent liability
Net cash outflow arising on acquisition
Cash consideration
Cash and cash equivalents acquired
2019
US$ in thousands
1,257
607
(134)
(635)
1,095
(543)
(248)
304
304
–
304
316
(12)
304
Remedium contributed $1,939 thousand revenue and loss of $217 thousand to the Group’s profit before tax for the
period between the date of acquisition and 31 December 2019.
GREEN LAB
In January 2016 the Group acquired 100% of the issued share capital of Green Lab for a consideration of $3,813 thousand
payable in cash of $1,913 thousand on acquisition and $1,900 thousand over a three-year period ($633 thousand at the
beginning of each year commencing January 2017). During 2019, the Company paid the last portion of the liability. Green
Lab is one of the leading distributors of analytical instruments for environmental and industrial sectors. Green Lab has
exclusive relationships in Hungary with some of the most prominent operators in the industry.
BUSINESS COMBINATION
At the end of 2018, the Group acquired the major assets of a mass alert platform company. The Company estimates that
the total consideration will be up to $614 thousand subject to certain milestones being achieved, of which $208 thousand
was paid during 2019 and $144 thousand was paid during 2020. The remaining conditional liability is $311 thousand,
which will be paid within one year subject to the progress of milestones being achieved. The Company has completed the
purchase price allocation to the assets, liabilities and contingent liabilities.
100
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 32 Guarantees and liens
The Group provided from time to time bank guarantees due to advances from customers.
The Company registered several liens in favour of banks.
33 Share-based payments
Equity-settled share option scheme
The Company has a share option scheme for all employees of the Group. Options are usually exercisable at a price equal
to the average quoted market price of the Company’s shares on the date of grant. The vesting period is between three to
five years. Unexercised options expire ten years from the date of grant. Options are forfeited when the employee leaves
the Group. Options to certain management employees are exercisable at a price equal to the average quoted market
price of the Company’s shares over the 30 days before the date of grant.
Details of the share options outstanding during the year are as follows:
2020
Weighted average
exercise price
Number
of share
options
Outstanding at beginning of year
5,575,395
Granted during the year
400,000
Forfeited during the year
Exercised during the year
(64,145)
(155,050)
Outstanding at the end of the year
5,756,200
Exercisable at the end of the year
3,056,200
0.2613
0.6385
0.3701
0.2475
0.2867
0.2360
Number
of share
options
8,906,598
450,000
(386,203)
(3,395,000)
5,575,395
1,125,395
2019
Weighted average
exercise price
(in GBP)
0.2035
0.4487
0.2313
0.1378
0.2613
0.1575
The options outstanding at 31 December 2020 had a weighted average exercise price of 0.2867 GBP, and a weighted
average remaining contractual life of 7.30 years. 400,000 options were granted on 21 May. The aggregate of the esti-
mated fair values of the options granted on this date according to the Black-Scholes model is $249,000. In 2019, options
were granted on 23 May, 15 August and 28 November. The aggregate of the estimated fair values of the options granted
on these dates is $76,000.
The inputs into the Black-Scholes model are as follows:
Weighted average share price (GBP)
Weighted average exercise price (GBP)
Expected volatility
Expected life
Risk-free rate
Expected dividends
2020
0.34
0.26
27-67
3-5
0.9%
0%
2019
0.28
0.29
27-36
3-5
0.9%
0%
101
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
The inputs into the Black-Scholes model for the options granted in 2020 are as follows:
Weighted average share price (GBP)
Weighted average exercise price (GBP)
Expected volatility
Expected life
Risk-free rate
Expected dividends
2020
0.92
0.64
67
3
1.3%
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, exercise restrictions, and behavioural considerations.
The Group recognised total expenses of $158 thousand and $105 thousand related to equity-settled share-based
payment transactions in 2020 and 2019, respectively.
34 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: $1,112 thousand in the year 2020 (2019:
$1,056 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 Unites 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. Under the plans, the employees
are entitled to post-employment benefits equivalent to years of service multiplied by 8.33% of final salary on either
attainment of a retirement age of 67 (men) and 64 (women) or redundancy. No other post-retirement benefits are
provided to these employees.
102
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 In Italy each employee is entitled to have a severance payment as soon as he ends the employment under one of the
conditions specified below as except those who decide to choose private insurance during the employment. Principal
conditions to release the liability are: 1. Full retirement age 2. Accumulation of minimal working years 3. Termination of
employment by the employer 4. Death of employee 5. Occurrence of employee’s disability.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried
out at 3 January 2021 by Elior Weissberg, FILAA on behalf of Elior Weissberg Ltd. a member of the Institute of Actuaries
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:
Discount rate(s)
Expected rate(s) of salary increase
Expected inflation rate
Employee turnover rate
2020
2.10%
1-4%
1.40%
8%
2019
3.72%
1-4%
1.36%
8%
Amounts recognised in comprehensive income in respect of these defined benefit plans are as follows:
Service cost:
Current service cost
Net interest expenses
Components of defined benefit costs recognised in profit or loss
Re-measurement on the net defined benefit liability:
Return on plan assets (excluding amounts included in net interest
expense)
Actuarial gains and losses arising from changes in financial assumptions
Actuarial gains and losses arising from other
Components of defined benefit costs recognised in other comprehensive
2020
$’000s
215
12
227
2020
$’000s
4
2
(21)
(15)
2019
$’000s
216
27
243
2019
$’000s
(30)
64
8
42
103
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
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:
Present value of funded defined benefit obligation
Fair value of plan assets
Net liability
2020
$’000s
2,574
(1,746)
828
2019
$’000s
2,445
(1,730)
715
Movements in the present value of the defined benefit obligation in the current period were as follows:
Opening defined benefit obligation
Current service cost
Interest cost
Remeasurement losses arising from changes in financial
assumptions
Benefits paid
Exchange rate differences
Closing defined benefit obligation
2020
$’000s
2,445
215
41
19
(247)
101
2,574
Movements in the present value of the plan assets in the current period were as follows:
Opening fair value of plan assets
Interest income
Remeasurements gains return on plan assets (excluding amounts
included in net interest expense)
Contributions from the employer
Benefits paid
Exchange rate differences
Closing fair value of plan assets
2020
$’000s
1,730
28
4
51
(190)
123
1,746
2019
$’000s
2,152
216
69
91
(229)
146
2,445
2019
$’000s
1,576
42
49
75
(146)
134
1,730
104
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020
35 Related party transactions
Remuneration of key management personnel
Short- and long-term employee benefits
Shared-based payment
2020
$’000s
2,378
84
2,462
2019
$’000s
1,630
93
1,723
Transactions with associated companies
During the year, the Company provided various services to an associated company for an amount of $61 thousand.
36 Financial Instruments
(a) Capital risk management
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
overall strategy remains unchanged from 2006.
(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.
(c) Categories of financial instruments
Financial assets
Cash and cash equivalents*
Fair value through profit or loss
Fair value through OCI
Receivables
Financial liabilities
At amortised cost
Fair value through profit or loss
2020
$’000s
50,575
3,306
524
40,068
57,353
–
105
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS Financial assets
Cash and cash equivalents*
Fair value through profit or loss
Fair value through OCI
Receivables
Financial liabilities
At amortised cost
Fair value through profit or loss
2019
$’000s
40,584
4,758
509
41,532
51,766
8
* Cash and cash equivalents comprises $11.6 million deposits up to three months and $39.0 million cash (2019: $11.5 million deposits up to three
months and $29.1 million cash).
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.
All fair value through profit or loss liabilities measurements are level 3 fair value measurements, derived from net present
value of royalties liability based on estimated future revenues.
(d) Financial risk management objectives
The Group’s Finance function provides services to the business, coordinates access to domestic and international finan-
cial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk
reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency
risk, fair value interest rate risk and price 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
reviewed by the internal auditors on a continuous basis.
(e) Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (refer to
section 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 arising on the export of telecommunications equipment to
the United States.
There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures
the risk.
(f) Foreign currency risk management
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.
106
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020 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:
New Israeli Shekel
Euro
RON
MDL
GBP
Other
Liabilities
Assets
2020
$’000s
14,873
26,559
4,300
1,983
323
4,810
2019
$’000s
10,014
18,512
5,163
2,784
263
2,562
2020
$’000s
21,034
32,680
8,871
3,532
441
1,019
2019
$’000s
23,475
9,213
3,567
4,157
10,914
1,597
Foreign currency sensitivity
The Group is mainly exposed to Euro, NIS, RON, GBP and MDL.
The following table details the Group’s sensitivity to a 10% change in US$ against the respective foreign currencies
in 2020 (2019: 10 percent). The 10 percent 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 US$ weakens against the
respective currency. If the US$ 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.
Profit or loss
NIS Impact
Euro Impact
GBP Impact
Equity
NIS Impact
Euro Impact
MDL Impact
GBP Impact
Other currencies Impact
2020
$’000s
417
(151)
29
2020
$’000s
199
763
155
(17)
78
2019
$’000s
620
(164)
1,081
2019
$’000s
726
(766)
137
(16)
(256)
107
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS
This is mainly attributable to the exposure outstanding US$ receivables and payables at year end in the Group.
The Company engaged in financial instruments contract such as forward contracts, call and put options and structured
instruments in order to manage foreign currencies exposure.
During the year the Company engaged in five financial instruments which resulted in $223 thousand recorded as
finance income (2019: four financial instruments which resulted in $245 thousand recorded as finance expenses).
(g) Interest rate risk management
The Group is exposed to interest rate risk because entities in the Group 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 below (refer to section h).
The exposure to floating rate loans is not material.
(h) Liquidity risk management
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
liabilities.
Financial liabilities
Weighted average
effective interest
rate
31 December 2020
Non-interest bearing
Bank loans interest
bearing (*)
Lease liabilities
31 December 2019
Non-interest bearing
Bank loans interest
bearing (*)
Lease liabilities
%
–
3.12
2.92
–
3.64
3.12
0-3 months
3 months to
1 year
1-5 years
Total
$’000s
$’000s
$’000s
$’000s
47,695
736
561
48,992
41,424
1,070
518
43,012
405
4,629
1,683
6,717
388
5,038
1,552
6,978
6,325
54,425
675
6,040
8,440
15,440
10,684
71,149
6,482
48,294
569
6,677
8,339
15,390
10,409
65,380
(*) Part of the bank loans are linked to a fix rate plus Euribor.
The future bank loan interest to be paid is $178 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.
108
Notes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020
(j) Fair value of financial instruments carried at amortised cost
The fair value of the financial instruments of the Group carried at amortised cost is not considered to be materially
different from the stated amortised cost.
(k) Fair value measurements recognised in the consolidated statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at
fair value, grouped into Level 3 based on the degree to which their fair value is observable:
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the liabilities that
are not based on observable market data (unobservable inputs).
Reconciliation of Level 3 fair value measurements of Investments carried at fair value - IBC
31 December
Opening balance
Translation differences
Proceed on sale of investment
Gain on sale of investment
Closing balance
37 Non-cash transactions
2020
$’000s
–
–
–
–
–
2019
$’000s
47
3
(3,430)
3,380
–
In 2016 the acquisition of Green Lab was for a total consideration of $3.8m payable over a three-year period of which:
$1.9m was paid in 2016, $0.6m was paid in 2017, $0.6m was paid in 2018 and the remaining $0.7m was paid in 2019.
38 Post balance sheet events
On 19 March 2021, the Group sold its NG Soft Ltd (“NGSoft”) subsidiary for a total consideration of NIS 105.1m (c. $33m),
of which the Group received NIS 93.7m (c. $29m), to Aztek Technologies (1984) Ltd., a provider of ICT cloud services in
Israel and a portfolio company of SKY Fund. Certain employees of NGSoft received the balance of NIS 11.4m through
cash out of their employee options and rights on completion.
NGSoft is a software and digital services company that provides creative digital and technology solutions. Its
development activities did not include any of the Group’s NFV or cyber solutions. Accordingly, the Board believes it was
in the best interests of BATM and of all shareholders to generate value from the sale of NGSoft and invest the proceeds
to accelerate the Group’s core activities.
109
Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2020ANNUAL REPORT & ACCOUNTS 2020FINANCIAL STATEMENTS Other Alternative Measures
The Group uses adjusted operating profit and EBITDA as performance measures, which are calculated as per the following table:
GAAP operating profit
Amortisation of intangible assets
Adjusted operating profit
Depreciation
Depreciation of right-of-use assets
EBITDA
The above does not form part of the audited financial statements.
Year ended 31 December
2020
$’000s
14,233
718
14,951
2,341
2,416
19,708
2019
$’000s
4,482
794
5,276
2,101
2,460
9,837
110
ANNUAL REPORT & ACCOUNTS 2020
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. Arthur Moher, Lipa Meir & Co.
Auditors
Brightman Almagor Zohar & Co.
Certified Public Accountants
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 Israel
Lipa Meir & Co.
Beit Amot Hashkaot, 2 Weitzman
Street, Tel-Aviv 64239, Israel
Legal Counsel in UK
Fladgate LLP
16 Great Queen Street,
London WC2B 5DG, UK
Bankers
Bank Hapoalim
4 Hatzoran,
Netanya, Israel
Bank Leumi
7 Menahem Begin Street,
Ramat-Gan, Israel
Registrar
Link Group
10th Floor, Central Square,
29 Wellington Street,
Leeds LS1 4DL, UK
Financial PR Consultants
Luther Pendragon
48 Gracechurch Street,
London EC3V 0EJ, UK
ANNUAL REPORT & ACCOUNTS 2020
111
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Neve Ne’eman Ind. Area
4 Ha’harash Street, P.O.B. 7318
4524075 Hod Hasharon
Israel
Annual Report and
Accounts