BATM Advanced Communications Ltd.

BATM Advanced Communications Limited 213800FLQUB9J289RU66 2021-01-01 2021-12-31 213800FLQUB9J289RU66 2020-01-01 2020-12-31 213800FLQUB9J289RU66 2021-12-31 213800FLQUB9J289RU66 2020-12-31 213800FLQUB9J289RU66 2019-12-31 213800FLQUB9J289RU66 2020-01-01 2020-12-31 ifrs-full:IssuedCapitalMember 213800FLQUB9J289RU66 2020-01-01 2020-12-31 ifrs-full:SharePremiumMember 213800FLQUB9J289RU66 2020-01-01 2020-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800FLQUB9J289RU66 2020-01-01 2020-12-31 ifrs-full:OtherReservesMember 213800FLQUB9J289RU66 2020-01-01 2020-12-31 ifrs-full:RetainedEarningsMember 213800FLQUB9J289RU66 2020-01-01 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800FLQUB9J289RU66 2020-01-01 2020-12-31 ifrs-full:NoncontrollingInterestsMember 213800FLQUB9J289RU66 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember 213800FLQUB9J289RU66 2021-01-01 2021-12-31 ifrs-full:SharePremiumMember 213800FLQUB9J289RU66 2021-01-01 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800FLQUB9J289RU66 2021-01-01 2021-12-31 ifrs-full:OtherReservesMember 213800FLQUB9J289RU66 2021-01-01 2021-12-31 ifrs-full:RetainedEarningsMember 213800FLQUB9J289RU66 2021-01-01 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800FLQUB9J289RU66 2021-01-01 2021-12-31 ifrs-full:NoncontrollingInterestsMember 213800FLQUB9J289RU66 2019-12-31 ifrs-full:IssuedCapitalMember 213800FLQUB9J289RU66 2019-12-31 ifrs-full:SharePremiumMember 213800FLQUB9J289RU66 2019-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800FLQUB9J289RU66 2019-12-31 ifrs-full:OtherReservesMember 213800FLQUB9J289RU66 2019-12-31 ifrs-full:RetainedEarningsMember 213800FLQUB9J289RU66 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800FLQUB9J289RU66 2019-12-31 ifrs-full:NoncontrollingInterestsMember 213800FLQUB9J289RU66 2020-12-31 ifrs-full:IssuedCapitalMember 213800FLQUB9J289RU66 2020-12-31 ifrs-full:SharePremiumMember 213800FLQUB9J289RU66 2020-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800FLQUB9J289RU66 2020-12-31 ifrs-full:OtherReservesMember 213800FLQUB9J289RU66 2020-12-31 ifrs-full:RetainedEarningsMember 213800FLQUB9J289RU66 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800FLQUB9J289RU66 2020-12-31 ifrs-full:NoncontrollingInterestsMember 213800FLQUB9J289RU66 2021-12-31 ifrs-full:IssuedCapitalMember 213800FLQUB9J289RU66 2021-12-31 ifrs-full:SharePremiumMember 213800FLQUB9J289RU66 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800FLQUB9J289RU66 2021-12-31 ifrs-full:OtherReservesMember 213800FLQUB9J289RU66 2021-12-31 ifrs-full:RetainedEarningsMember 213800FLQUB9J289RU66 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800FLQUB9J289RU66 2021-12-31 ifrs-full:NoncontrollingInterestsMember iso4217:USD iso4217:USD xbrli:shares Neve Ne’eman Ind. Area 4 Ha’harash Street, P.O.B. 7318 4524075 Hod Hasharon Israel BATM ADVANCED COMMUNICATIONS LTD ANNUAL REPORT AND ACCOUNTS 2021 FOR THE Y EA R E N DE D 3 1 DE CE M B E R 2 02 1 ANNU AL R EPOR T AND A C C O UNTS ANNUAL REPORT & ACCOUNTS 2021 1 STRA TEGIC REPORT CO NTENTS Str ateg ic Repor t Strate gic Fra me wo rk 2 Per f or man ce Hig hlig ht s 3 Chairman’ s Statement 4 Chief E xec ut ive O  c er’s Rev iew 6 E d g i l i t y 10 Stak eholder Engag emen t 1 2 Chief Fina ncial O  cer ’s Review 14 Key P er f or manc e Indica tor s 17 Bus ine ss M odel 1 8 Su st ainabilit y Re view 1 9 Risk Manag ement 22 Corpor at e Governanc e Direc tor s’ Biog r aphie s 2 4 Corporate Governance Report 26 Audit Comm ittee Re port 32 Direct ors’ Remunerat ion Repor t 35 Direct ors’ Repor t 57 Financial St atemen ts Independent Audit or’s Report 61 Con solida ted Fin ancial St ate men ts 65 Notes to the Consol idated Finan cial St atem ent s 70 Ot her A lt ern ati ve Me as ure s 11 0 Comp any In fo rm atio n 11 2 BATM is a leader in real-time technologies. W e bring h igh- techno log y s olutions that are innovative, cost - ef f ecti ve and reli able to ou r chos en g lob al sec t or s of biomedicine and net wor k ing. BATM’ s global foo tprint BATM R&A 2021_Front Section_1_v8.indd 1 BATM R&A 2021_Front Section_1_v8.indd 1 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 2 We deliver high-technology solutions  That solve complex challenges in mission- critical, largescale applications W e bui ld va lue creation strate gies  From idea, to scale up, to mass-market success  And maximise the long-term value of our businesses through organic and inorganic strategies And d i erentiate through …  Our intellectual property  The world-leading expertise of our employees  Innovative, robust, reliable and cost- e ective solutions Whi le seeking to accelerate our gr ow th  By establishing partnerships, collaborations and joint ventures to maximise resources and enhance our routes-to-market T o creat e valu e for our st akehold er s by …  Growing total shareholder returns  Exceeding our customers’ expectations  Motivating our people  Making a positive contribution to our communities We ser ve blue- chip customers worldwid e  Including enterprises, governments and international agencies Strategic Framework BA TM ’ s purpo se is to deliver hi g h- tech nolog y innovations that mak e a signiﬁ cant di erence to the human experience With a focus on the global sectors of…  Bio-medical solutions and  Networking and cyber security STRA TEGIC REPOR T BATM R&A 2021_Front Section_1_v8.indd 2 BATM R&A 2021_Front Section_1_v8.indd 2 13/04/2022 13:46 13/04/2022 13:46 3 STRA TEGIC REPORT Underlying growth across all business units Group revenue Ongoing operations (adj.) $132.8m +18.0% (2020: $112.6m) Reported $140.0m -23.7% (2020: $183.6m) Gross m argi n Ongoing operations (adj.) 37.8% +140bps (2020: 36.4%) Reported 36.5% +340bps (2020: 33.1%) Gross p rot Ongoing operations (adj.) $50.2m +22.5% (2020: $41.0m) Reported $51.1m -15.9% (2020: $60.7m) Operat ing pro t Ongoing operations (adj.) $11.3m +339.5% (2020: $2.6m) Reported $2 4.4m +71.3% (2020: $14.2m) EBI T DA Ongoing operations (adj.) $15.7m +138.8% (2020: $6.6m) Reported $29.6m +50.4% (2020: $19.7m) Cash and nanc ia l ass ets Reported $67.8m +26.9% (2020: $53.4m) Sustained growth for molecular diagnostics  Growth in COVID-19 and non- COVID-19 solutions Launch of Edgility  Won two edge computing contracts  Established four new partnerships  Over $18m received in cyber security contracts * Adjusted to present the results on an ongoing operations basis by excluding (1) the contribution to both years from NGSoft, a subsidiary that the Group sold in March 2021, (2) the contribution to 2020  amortisation of intangible assets for both years. The term ‘ongoing operations’ in this Strategic Report is   ANNUAL REPORT & ACCOUNTS 2021 3 120 90 60 30 BIO-MEDICAL DIVIS ION Revenue from ongoing operations (adj.) 2020 2021 US$ million 20 15 10 5 NETWORKING AND C YBER DIVISION Revenue from ongoing operations (adj.) 2020 2021 US$ million BATM R&A 2021_Front Section_1_v8.indd 3 BATM R&A 2021_Front Section_1_v8.indd 3 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 4 I am del igh ted to p rese nt B A TM ’s A nnua l Rep or t 202 1 . I t                                                                                       BA T M has established solid found ations in c ore technologies – bac ked b y s tro ng in telle c t ual p rope r t y an d pa tent s – that                                                                                                                                                                          PROGRESS ACROSS T HE BUSI NES S                                                                  create d s t rong de man d for di agn os t ic in s tr um ent s and                                                    prod uc t s for o the r dis eas e areas . We are spe cia lis t s not ju s t                          of infe c t io us dis eas es . Pat hoge ns su ch as t ube rculo sis ( T B)                           economic c onse quences, especially in p oorer c ountr ies.                               bac ked b y th e inter na ti onal S top T B Par tne r ship. We                                                                     cur abl e. We are par ti cula rl y p roud of t he p rog res s in our                        has co me to f ruition.                                                                                                                                                                                                                                                                                                                                                                                  prote c t io n. STRA TEG Y                                                                   Chairman’s Statement Dr . Gideon Chitaya t Chairman BATM R&A 2021_Front Section_1_v8.indd 4 BATM R&A 2021_Front Section_1_v8.indd 4 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 5 STRA TEGIC REPORT              exper tise of our empl oyees.                                                                                                                                          be t he de man ds of th e f ut ure. We ampli f y our re so urces t hroug h es ta blis hing s tra teg ic par t ner shi ps an d are foc us ed on c reat ing sh areh old er                                                     OU T L O O K                                                                                            demand for molec ular biolo g y and diagnostic technolog y                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  thi s year a nd b ey ond . STRA TEGIC REPORT BATM R&A 2021_Front Section_1_v8.indd 5 BATM R&A 2021_Front Section_1_v8.indd 5 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 6                                                                                                                                                                                                    Bio -Medic al Di vis ion Diagnostics                                                                                                                                       ex pan de d th e pro duc tio n ca pa ci t y o f our A dal ti s fa cili t y in Rome, Italy. CO VID - 19 d iagnostic tests                                            pub lic he al th au t hor i ti es in Euro pe, t he Mi ddl e Eas t and S ou t h Eas t A sia . We also e xp and ed o ur po r t foli o of              l                                                                                                             sa mpl e coll ec tio n and l ab pro ces sing a nd i t is m ore cos t                                 tes t is b ein g prod uce d at our A dal t is fa cil it y. l              ®                                                                                     in Europ e und er th e Ada lt is b ran d and p rod uced a t Gamidor ’s facilit y in Is rael.                                                                                 spe ed , accu rac y an d eas e of us e. Th is de mon s tr ate s the                        toget her o ur ex pe r tis e and I P , and th e ri gh t par tn er s , to          address com plex challeng es . Prog re ss i n ot her d is ea se a rea s Sa le s of diag no s ti c pro duc t s th at are n ot rela ted to                                                                                         mol ec ular d iag nos t ic s te s t th at is a ble to te s t for m ul tip le                                                 to comme nce in t he c ur rent ye ar . B y de tec ting m ul tip le                          patient sample, patients , laboratories and healthcare                           and gaining impor tant insight s more quick l y . Ador Diagnostics                                      Chief Executive O cer’s Review Dr . Zv i Mar om Chief E xec ut ive O  c er BATM R&A 2021_Front Section_1_v8.indd 6 BATM R&A 2021_Front Section_1_v8.indd 6 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 7 STRA TEGIC REPORT                                                                                                                                                                                                    current ye ar . W ork also c ontinued on i ncorporating the                            ca re set ti ng s ex pe c te d to comm ence n ex t year .                          TB Pa r t ne rs hip, an in ter nat io nal al lian ce comp ri sing                                                                                                                         TB Pa r t ne rs hip.                                                                                                                       Organisation. Eco - M ed On an u nde rl y in g bas is , to exclu de t he con tr ibu t ion to                                                                                                                                                                                                                                              comp let io n of th es e cont rac t s is e xp ec ted to o ccur i n the                                  Distribution                                                                                                                                         Net wor k ing an d C y b er Di vis ion Networking               ( e xclud ing the contribution to both years from NGSoft)             Edgilit y – Edg e C ompu ting and NFV solutions                                                                                                                                                                                                                                                                          fundamen tal in enabling Internet of T hings technol ogies .                                                                                                                                                                                                                                                                                              BATM R&A 2021_Front Section_1_v8.indd 7 BATM R&A 2021_Front Section_1_v8.indd 7 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 8                                                 numb er of t he se to t ran slate to o rder s in 2022.                                                                                                                      par t ner shi ps to acce ler ate th e ad opt ion a nd s al es of Ed gil it y.            l                                                                                                      l                            telecomm unications operators in Eur ope and Lat in                       launched uS phir solution. l                                              l                                                                                                                                                                                                                                                                                Net work Edge solutions and ser vices                                                                       pr imar il y b as ed on re pea t busi nes s f rom e xi s tin g cli ent s , b ut                      as th e pre fer red sup pli er by a t ie r 1 tele comm unic a tio ns                                                                in th is uni t th an at t he s t a r t o f the y ear , al t hou gh t his p ar tl y                       20 22 due to global elec tronic c omponents shor t ages. Cyber                                     depar tment customer . This includes a $ 1 0m contrac t for a n                                                                                                                                                           202 2.                                   of our c y be r se cur i t y s olu t ion a ime d be yon d th e def ence                 Outlook                      backlog for ongo ing operations tha n at the same poi nt the                                                                                                                      Ch ief E x ecutiv e O cer ’s Revie w C ON TINUED BATM R&A 2021_Front Section_1_v8.indd 8 BATM R&A 2021_Front Section_1_v8.indd 8 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 9 STRA TEGIC REPORT                                                                                                                          as normal bus iness prac tices resu me.                                                 increase in or ders for solutions in ot her disease areas as pub lic he al th o rga nis at io ns ret urn f oc us to rou tin e c are.                                                                                                    gl oba l sup pl y cha in ch alle nges , p ar tic ular l y rela ted to an y fur ther shor t ages o f elect ronics components.                                                   market dis r upters. A s these technologies trans ition and                      par tnerships and dispo sals .                                       Innovation and invention We harness extraordinary technical and entrepreneurial talents to bring leading, disruptive technologies successfully to market, at scale. OUR VISION AND V ALUE S Reliability Our c us tom er s tr u st u s to deliver mission-crit ical products. Our pr o duc ts a re b uilt f or reli abili t y an d per for ma nc e at sc ale a nd in ch alle ng ing conditions. Responsibility Our corporate responsibi lit y ex t end s th ro ug h o ur fo cu s bu sin es s ar ea s, t o th e wa y we in ter ac t wit h all o ur st ak eh olde rs a nd our im pac t on t he e nv iro nm ent and o ur co mmu nit ie s. 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 BA TM takes a long-term approach to its investments by assessing long-range industry trends and building dierentiated solutions backed by IP . Risk diversication 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 signicant 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, returns to shareholders 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. Our vi si on is to be lea der s in high - te ch nol og y innova tio ns that make a s ig ni c ant di er en ce to the huma n exp eri en ce BATM R&A 2021_Front Section_1_v8.indd 9 BATM R&A 2021_Front Section_1_v8.indd 9 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 10 Edgility Edgility provides customer s with a simpl e and easy-to-use platf orm to deploy , manage and operate multiple vi r tual ser vices /functions on multiple thousands of edge devices at multiple sites. New serv ices ( or sites) can be dep loyed in a mat ter of mi nutes – r ather than days – without the need f or techni cal personnel on-site. This smart e dge computing platfor m comprises t wo components: Edgility O S, a high-per f ormance and smal l footprint operating system, and Edgility Central, a cloud-based management and orchestr ation (MANO) system. Key highlights of Edgility’s oering: l                  pane of glass l   l                     l   l   BATM R&A 2021_Front Section_1_v8.indd 10 BATM R&A 2021_Front Section_1_v8.indd 10 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 11 STRA TEGIC REPORT 11 Case study: CEMEX "We chose Edgility for its superior Management & Orchestration, which provides us with an end-to-end toolset to cost-eectively deploy and then manage the lifecycle of our edge devices. Edgility provides the exibility and scalability to expand and adapt to our fast-changing business requirements, as well as hosting diverse applications on any standard server." Fernando Garcia -Villaraco Casero, IT Strategy and Architecture Manager - Global at CEMEX CEMEX is one of the world's leading construction materials companies, manufacturing and distributing cement, ready-mix concrete, and aggregates in more than 50 countries. With 41,000 employees, CEMEX operations span thousands of sites worldwide. CEMEX decided in 2020 to replace CemexNet with virtualised secure SD-WAN functions across all its sites. CEMEX's overriding goal was to gain control of its network. It sought to reduce the complexity of managing CEMEX’s thousands of edge devices across multiple sites, lower the monthly operational costs and increase exibility. Automated deployment and simple management of edge devices were key requirements due to the large number of sites to be handled by a third-party system integrator. CEMEX selected Edgility as the operating system and management system for the uCPE edge devices in its new enterprise communications network. It enables CEMEX to seamlessly upgrade to a exible, automated, and resilient Enterprise WAN architecture. CEMEX chose Edgility for its advanced automation and intuitive management capabilities – allowing CEMEX to cost-eectively deploy, maintain and integrate best-of-breed network functions and applications from multiple software providers across its network. Case study: e-Qual "We selected Edgility for its distinctive technological superiority over all the alternatives we examined. Edgility provides a single, all-in-one solution including all the orchestration tools we require." Philippe de Lussy, CEO of e-Qual e-Qual is a France-based managed services provider, oering connectivity, IT, and network management services to mid-sized to large organisations in the private and public sectors in 55 countries. e-Qual integrates telecom, network, systems, and security solutions, and operates them from a 24/7 service and operations centre. To streamline and reduce the cost of operations, e-Qual sought a powerful and automated management and orchestration (MANO) system that would increase operational eciency while enabling it to provide highly exible and customised services to its diverse customer base. e-Qual thoroughly examined various solutions and selected Edgility as its next generation edge compute platform. Ideal for meeting its automation needs, Edgility provides e-Qual with a unied, multi-tenant platform to deploy and manage multiple applications including complex connectivity-based services, such as SD-WAN, for its enterprise customers. Edgility oers a high-performance, small form factor operating system that is being deployed on hundreds of edge devices at e-Qual customers sites, as well as a robust MANO solution installed at e-Qual's service and operation centre. Edgility's MANO allows e-Qual to manage its entire managed services operation from a single pane of glass. BATM R&A 2021_Front Section_1_v8.indd 11 BATM R&A 2021_Front Section_1_v8.indd 11 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 12 Stakeholder Engagement BA TM seeks t o deliver va lue to, and bui ld s trong , long- term relationships wi th, it s s takeholde rs                                                                                                                                                   Customers Our customers rely on our technolog y solut ions                                     enab ling b ot h BATM an d our c us tom er s to share       How we en gage l            to key cu s tom er s and ke y reg ion s l             ISO au di t and f ocu se d on al l asp ec t s of our c ustomer rel ationships l             and p rodu c t s for ou r cus to mer s l                 in our c us to mer s ’ ma rke t s Financial Investors                                                                                                                       How we en gage l           l                  l                l             req ues t l                  and s tra teg ic go als 20 2 1 HIGHL IGH T S l  36 2 new custome rs won ( excluding consumer customers - as opposed to bu sin es se s or p ub lic b odi es - by subsi diaries that se r ve the public) l  1 3 9 cus tomer training programme s conducte d, with par ticipation of approximatel y 23 0 indi viduals 20 2 1 HIGHL IGH T S l  App rox imate l y 2 5 shar eh old er m ee tin gs o r sche duled call s l  Hos te d inve st or web inar s to p re se nt F Y 2 02 0 an d H1 2 02 1 re sul ts BATM R&A 2021_Front Section_1_v8.indd 12 BATM R&A 2021_Front Section_1_v8.indd 12 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 13 STRA TEGIC REPORT Employees Our p eo ple a re our g reate s t as s et . In ord er                                             employees’ prior ities and requi rements. How we en gage l                           l                 l                 l           l        l     Communities                                                          businesses and charities. How we en gage l           prod uc t s in th e diag no sis of i nfe c t iou s               l                          l                and charitable organisations l                 20 2 1 HIGHL IGH T S l  Appointe d Prof. V arda Shalev to newl y- created 'voice of the workforce' NED role l  Held ‘round table’ disc us sions between emp loye es a nd man age men t in th e Ne t work in g unit , with nd ing s pre se nte d to the Board 20 2 1 HIGHL IGH T S l  Arran gin g qua r ter ly d onat ion s of ba si c food pro duc ts and toys to disadvant aged families l   Rais ed $ 49. 5k f or ch arit ab le ca us es BATM R&A 2021_Front Section_1_v8.indd 13 BATM R&A 2021_Front Section_1_v8.indd 13 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 14        increased                                                                                                                                      result of the sale of NGSoft. Sales and marketing expenses for ongoing operations                                                               sales not requiring a commensurate increase in expenses, as                                                                           the capital gain from the sale of NGSoft and the contribution                                                                                                and the gain from the sale of NGSoft.                                                                     Chief Financial O cer’s Review Mot i Naga r , CPA Chief F inancial O  c er 1                        BATM R&A 2021_Front Section_1_v8.indd 14 BATM R&A 2021_Front Section_1_v8.indd 14 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 15 STRA TEGIC REPORT                                                         disposal of NGSoft.                     the sale of NGSoft.                                    reduction from the disposal of NGSoft.                                                    payments of tax and interest, net cash from operating                                                                                                more than three months’ duration, held for trading bonds and marketable securities. The increase in cash and cash              Divisional performance Bio-Medical Division On an underlying basis, to exclude the contribution to                              Reported Adjusted $m 2021 2020 Change 2021 2020 Change Revenue 140.0 183.6 (23.7%) 132.8 112.6 18.0% Gross margin 36.5% 33.1% 340bps 37.8% 36.4% 140bps Operating prot 24.4 14.2 71.3% 11.3 2.6 339.5%                                         amortisation of intangible assets for both years. Bio-Medical Division Reported Adjusted $m 2021 2020 Change 2021 2020 Change Revenue 112.0 128.7 (12.9%) 112.0 95.2 17.7% Gross margin 36.4% 36.3% 10bps 36.5% 34.8% 170bps Operating prot 16.5 19.2 (13.7%) 17.0 10.1 67.4%                           BATM R&A 2021_Front Section_1_v8.indd 15 BATM R&A 2021_Front Section_1_v8.indd 15 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 16                                 Networking and Cyber Division                                                                         operations due to increased materials costs related to the                                                                               Sale of NGSoft                                                                        the sale of NGSoft. Networking and Cyber Division Reported Adjusted $m 2021 2020 Change 2021 2020 Change Revenue 28.0 54.9 (49.0%) 20.7 17.3 19.5% Gross margin 36.9% 25.5% 1,140bps 45.0% 45.6% (60)bps Operating prot/(loss) 7.8 (4.9) 259.0% (5.6) (7.6) 25.3% * Adjusted to present the results an ongoing operations basis by excluding (1) the contribution to both years from NGSoft, a subsidiary that the Group sold in March 2021, and (2) the amortisation of intangible assets for both years. BATM R&A 2021_Front Section_1_v8.indd 16 BATM R&A 2021_Front Section_1_v8.indd 16 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 17 STRA TEGIC REPORT Key Performance Indicators The followi ng key per for mance ind icator s ( “KPIs”) have been selected as the mo st appropriate measures of str ateg y execution for the Group. W e rev iew ou r KP Is on an ongoing basis to ensure they remai n relevant. Revenue f rom ong oing oper ation s $132.8m +18% (2020: $112.6m) Descriptio n          billings generated and recognis ed during the per iod from all operations. Why i t is a K PI          Per formance                  R& D e xpens es for ongoing opera tions * $8.6m +1% (2020: $8.5m) Descriptio n                                       Why i t is a K PI                                          Per formance                             Cash f r om opera tions $8.7m –57% (2020: $20.1m) Descriptio n Amount of money the G roup brings in                                              and int erest payment s. Why i t is a K PI                                 Per formance Re duc ti on is p rim ar il y due to t he tim ing of p ay me nt s , na mel y p ay me nt b eing ma de in                       EBI T DA fr om ong oing opera tion s $15.7m +139% (2020: $6.6m) Descriptio n Gro up ear ni ng s be fore in teres t , t a x , depreciation and amor tisation. Why i t is a K PI                  Per formance                  mar gin , pa r tic ular l y due to t he g reate r cont ri bu ti on                                             The Group monitors certain non-nancial 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. Adjusted to present the results on an ongoing operations basis by excluding (1) the contribution to both years from NGSoft, a subsidiary that the Group sold in March          BATM R&A 2021_Front Section_1_v8.indd 17 BATM R&A 2021_Front Section_1_v8.indd 17 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 18 Our strateg y is powe r ed by our pu rpos e. W e bring high-techno log y solutions that are innovative, cost -e ective and reliab le, to our chosen global sector s of net working and biomed icine. W e buil d business es fr om idea, to scale up , to mass mar ket succes s, t hrough org anic and ino r ganic strateg ies . We seek to maximise long -term value through our capital al location and por t folio ma nagement str ateg ies. Business Model Ne t wor k ing an d C y ber Di v is ion Our bu s ine s s un it s : l Ne t work ing ▲ Edgilit y ▲ Net wo rk Ed ge l Cyber l The Networking unit services a wide need for access solutions to mobile, cloud and wireline infrastructure markets, with a focus on the network edge. Innovation is focused on edge computing and Network Function Virtualisation (NFV) l In the Cyber unit, BATM provides network monitoring and encryption solutions for very high speed, large area networks Revenue model Revenues are generated f rom solut ions that combine integrated hardware and sof t ware; and, going for wa rd, inc reas ing ly fr om the sal e of s of t w are - onl y sol ut io ns , inclu ding on a li cen ce model , to d ri v e hig h gros s margi ns and annual rec ur ri ng reve nue Strategic aim Th e Ne t w or k ing an d C yb er d iv is ion i s foc us ed o n be comi ng the l ead ing pro v ide r of edge comp ut in g – incl udin g Net wor k Fu nc t io n Vi r t ual is at ion (N F V ) – tech nol og ies w hil e supp l yi ng ca rr ie r et her ne t and MPL S acces s sol ut io ns for th e net wo rk e dge, and c yber net wor k monitoring and encry ption Bio-Medi cal Di v i s io n Our bu s ine s s un it s : l Diagnostics l Eco - Me d l Distribution l In diagnostics, BATM develops its own equipment and reagents, with a focus on developing the most advanced molecular biology technologies l The Eco-Med unit develops and supplies innovative solutions to treat pathogenic and agricultural waste l BATM also administers tests and distributes diagnostic equipment and medical supplies of other leading brands Revenue model Rev enu es a re gene ra ted f ro m th e sa le an d dis t ri bu ti on of co nsum abl es a nd eq uip men t , an d fr om pro v idi ng eq uipm en t se r vi ce & main ten anc e Strategic aim Th e Bio - Med ic al di v isio n is focu se d on be comi ng a lea ding p rov id er of mol ec ular di agn os t ic lab ora to r y reage nt s an d equi pme nt as we ll as inno va ti ve pro duc t s to trea t biol og ic al pa th ogen ic was t e BATM R&A 2021_Front Section_1_v8.indd 18 BATM R&A 2021_Front Section_1_v8.indd 18 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 19 STRA TEGIC REPORT Sust ainabilit y Re view Sustainability is at the heart of our business. Through medical                                                   At the same time, both through our solutions and our   Peopl e                         in corporate functions. In order to recruit and retain the best                     to our employees’ priorities and requirements. Engag ement We are committed to maintaining open and transparent         people and taking into account their feedback. To support                                                                                                                                                              A number of our subsidiary companies conduct annual                               strategy and progress. Within our Telco Systems subsidiary,                                                                                                           Diversity                                        One of our medical diagnostic testing subsidiaries in Israel, TOTAL WORKFORCE EXECUTIVE MANAGEMENT Male Female 29% 69% 71% 31% BATM R&A 2021_Front Section_1_v8.indd 19 BATM R&A 2021_Front Section_1_v8.indd 19 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 20                   Equality                                                                                   bullying, and that employees, job applicants, customers, and           — disability, impairment or age. Health, Safet y & W ellbeing               to, health and safety guidelines at all of our subsidiaries.                    penalties in relation to health and safety matters.                                                       Anti - bribe r y & Corruption                           regularly communicated.                        Employees are encouraged to approach the administrator                        The approach can be anonymous, if the employee chooses.         disciplinary action against a complainant unless the report           or to be malicious.         reports, bribery, corruption or business interruptions as a  Comm un ities                            and supporting local businesses and charities.           — arranged, at least once a quarter, for the collection and subsequent distribution of baskets of both            In addition, a key tenet of our strategy is the research                                                  laboratories rather than purely in mega labs in a central                     Env ironmen t                 Sus t ainabili t y Rev i ew C ON TINUED BATM R&A 2021_Front Section_1_v8.indd 20 BATM R&A 2021_Front Section_1_v8.indd 20 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 21 STRA TEGIC REPORT           — our programme of upgrades to energy and lighting                                                                                             or medical and pharmaceutical facilities. These                                      source of protein.      measuring systems, including solutions for testing                    less energy and reduce the carbon footprint for the same output. Recommendations of the Task Force on Climate-rela ted Financial Disclosures As we describe above, sustainability is at the heart of our business. Both through our solutions and our actions, we are committed to protecting the environment to preserve our planet for the generations to come – and this is core to who we are. However, it is early days in our transition to formalising our approach and to establishing the framework to address the recommendations of the T ask Force on Climate-related Financial Disclosures (“TCFD”). The areas where we have made initial progress against the TCFD recommendations are as follows: Governance — The overall responsibility for assessing and monitoring clima te-related risks and opportunities is that of the Responsible Business Committee of the Board. For 2022, the Committee intends to increase the frequency of meetings for this purpose (among others). — At present, manag ement’s role in assessing and managing climate- related risks and opportunities is primarily the undertakings of the CEO in this regard, who feeds into the workings of the Responsible Business Committee. In addition, the heads of our subsidiaries in the Eco-Med unit – namely, Celitron and Green Labs – are called upon to provide their insight based on their signicant experience and expertise in environmental matters. Strategy — As described in the introduction to this Sustainability Review , our solutions are designed to address societal challenges of today and what we believe will be the demands of the future, which includes as a result of climate-related changes. — In particular, it is as a result of this tha t, in recent years, we have taken the strategic decision to expand our Eco-Med and related activity – whether through the acquisition of Green Labs, commencing the provision of environmental analysis/testing from our labs in the Distribution unit; expanding into the provision of instruments for the recovery of insect protein (which has a role in combatting climate change and also in oering a source of protein that is less vulnerable to the eects of climate change); and, as announced during 2021, participating in the Great Green W all Accelerator. This continues to be an important element of our strategy. For the recommendations and principles of the TCFD that we have not addressed, this primarily reects the fact that a) BA TM is in the process of formalising and embedding a structured approach to ESG and b) the requirements regarding TCFD are new this year, which is a year during which a substantial amount of time was invested in overhauling the remuneration policy and in undertaking signicant corporate transactional activity, namely the sale of our NGSoft subsidiary. Nonetheless, we recognise the importance of more consistent climate- related disclosures by companies and are committed to placing greater focus on addressing the recommendations of the TCFD this year. To this end, we are in the process of engaging a specialist adviser to work with us to develop and implement a plan that would ensure we are taking climate change properly into account in our planning and operations. Accordingly, we expect to make strong progress towards addressing the recommendations of the TCFD during the period to the publication of our next annual report. BATM R&A 2021_Front Section_1_v8.indd 21 BATM R&A 2021_Front Section_1_v8.indd 21 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 22 R isk Man a gem ent P rin cip al Ris k s an d U nc er t ain t ie s                          Risk How we ma nage t he ri sk Ri sk c hang e Pol it ic a l an d economic  Th er e is a r is k of ha rm t o th e bu sin es s f ro m po li ti c al un re s t or di sr up ti on , p ar ti cul ar l yin em er gi ng ma r ket s , a nd f ro m a deterioration of economic conditions . T he G ro up ’ s op er at io ns ar e dis pe r se d o ver a n um be r of lo c at io ns s o t hat s ho ul d a ma ter ia l ad v er s e po li t ic al or e con om ic e ve nt a ri se i n on e lo ca t io n, t he G ro up c a n con ti nu e wi t h i t s op er at io ns e ls ew he re t he re by h elp in g to mi t iga te t he i mp ac t on i t s ov er all b us ine s s. a Le gal a nd complia nce Th er e is a r is k th at l eg al an d / or re g ula to r y req uir em en t s are n ot m et , l ea di ng to th elo ss o fli cen ceto o pe ra te , rep u t at io na l dam age o r nancial loss. Th e G rou p re t ai ns ve r y ex p er ie nce d le ga l ad v is e rs o f a hig h c al ibr e fo r th e Com pa ny a nd m ain s ub sid iar i es in t he G ro up w ho p rov i de o ngo ing a d v ic e and u pd at es on re le v ant l eg al co mp li anc e re qui re me nt s . T he G ro up mo ni tor s t h e reg ul at io n t hat i s re le va nt t o it s a c t i v i ti es an d, w he n ne e de d, m ake s th e ne ce ss a r y adj us t me nt s to ma in t ain c omp li an ce. _ Busines s cont inuit y Th er e ar e ri sk s to b us in es s con ti nu it y f rom s pe c i c ev en t s , suc h as n at ur al disaster s and pandemics. Th e Gr oup op er at es in nu me rou s lo ca t ion s and i t s man u fa c t ur in g cont ra c t or s are al so lo c at ed in mu lt ip le lo ca t io ns , wh ich w oul d hel p to mit ig at e the im pa c t of a bu sin es s dis a s ter. I n add it io n , the key em pl oye e s in the wo rk for ce hav e be en po si ti on ed su ch th at t he y are ab le to wor k w it ho u t inte r ru pt io n by wor k in g remo te l y fro m th ei r hom es . Th e Gro up al so kee ps a ca sh cu shi on to ens ure t h at un e xp e c te d e ven t s d on ’ t c au s e unn ec es s ar y ind ir ec t adv er s e e ec t s bey on d the di re c t ou tc ome s . _ Sup pl y c ha in A dis ru pt io n in t he s up pl y of key ra w ma te ri al s or s er v ice s to a ma nu fa c t ur in g si te co ul d a ec t th e Gr ou p ’s ab il it y to make a nd d el iv er p ro du c t s to cu s to me r s , lea di ng to int er r up ti on i n sup pl y, lo s t revenue and dama ge to it s r ep ut a t io n as a re lia bl e sup pl y p ar tn er. This c oul d be re su l ti ng f ro m mar ke t sho r ta ge s, d is ru pt io n du e to gl ob al e ve nt s a nd p hy si c al cli ma te - re la te d di sr up ti on of ups tre am s upp l y ch ain s . Th e G rou p ha s es t a bl ish e d s tr on g sup pl ier rel at io ns hip s an d col la bo ra te s wi t h mu lt ip le v en do r s gl ob al ly t o br oa de n th e ge og rap hi c al co ve rag e of i t s acc es s to a va ila bl e com po ne nt s. T he G ro up r eq ue s t s th at c us t om er s pr ov i de l ong - ter m co mm it te d fo rec a s t s an d it s el f p rov i de s mu lt i - yea r fo re ca s t s to i t s co nt r ac t manufac turers. In addition, where appropriate, it r ee ng in ee r s pro du c t s t o en ab le t he m to ha ve rep la cea bl e com po ne nt a l ter n at i ve s. A t t ime s w he n av ail ab ili t y of co mp on en t s is co ns t ra in ed , th e G rou p se ek s a l ter n at i ve s ou rce s an d to in cr eas e in ve nt or y le ve ls of b ot h co mp on en t s an d ni sh ed go o ds . a BATM R&A 2021_Front Section_1_v8.indd 22 BATM R&A 2021_Front Section_1_v8.indd 22 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 23 STRA TEGIC REPORT Viabil i t y S t atemen t                            timeframe for assessment because it is aligned to the                           operational positions and contracted capital expenditure.         Risk How we ma nage t he ri sk Ri sk c hang e Competition Th er e is a r is k th at B ATM is una bl e to b uil d an d ma int a in com pe t it i ve a d va nt a ge in it sf oc us m ar ket s . Th e Gr ou p is a lead in g comp an y in th os e tec hn ol og ic a l are as i n wh ic h it o pe ra te s an d as pir es t o be a d om ina nt pla ye r in eac h suc h nic he . Th e Gr oup p er io di ca ll y ev al uat es h ow to im pro ve i t s e ci en c y by de ve lo pi ng an d pro duc in g be t t er qua li t y and pe r for ma nc e pro du c t s at m ore a t tra c t i ve p r ice s – t hus g i v in g it a n ad v an t age over its competitors. — Cus t om er a nd par tner s Th er e is a r is k of ha rm t o th e Gr ou p ’s re ve nu es a s a re sul t of t er mi na ti on of businessrelationships wi t h ma te ri al c us to me r s or pa r t ne r s an d s al es a gen t s . Th e Gro up mai nt a in s ongoi ng dia lo gu e wi th it s cus to me r s an d bus in es s p ar tn er s in o rd er t o ide nt i f y ah ead o f ti me any po ten t ial pr ob le ms ar isi ng on the pa r t of th e cu s tom er an d in orde r to main t ain a clo se re lat i ons hip wi t h it s cus tom er s . Th e Grou p als o doe s not hav e a sig ni  ca nt re lia nce on on e or few cus tom er s or par t ne rs . — Re se arc h & Development (R & D) Th er e is a ri sk t ha t R& D pro gr am me sov er r un or d o not d el i ver t he e x pe c t ed benet s. Wi t h res pe c t to it s R& D, th e Grou p ’s s tr at eg y has be en to di ve rs i f y it s R&D op er at io ns amo ng a var ie t y of tea ms , int er na ll y and e x te r nal l y (thr ou gh uni v er s it ie s an d hosp it als th at ca r r y out cli nic a l tes t s) and by usi ng di e re nt R& D fun di ng so urc es – thus re du ci ng th e R&D ri sk . In add it io n , any sig ni c a nt ne w R&D pr oje c t s ar e bro ug ht to th e Boa rd fo r consi de ra ti on . Stil l, th e Gro up con sid er s cer t ai n lev el of ris k as inhe re nt to R& D ac t i vi t y, an d vie w s R& D ac t iv i t y as valu ab le to the Gr ou p desp i te that risk . a Informat ion securit y (including c y b ers ec ur i t y) Th er e is a r is k of in fo rm at io n se cu ri t y, dat a l os s an d cor r up ti on , an d ph y sic a l dam aget o IT i nf ra s t r uc t ur e. Th e Gr ou p rou ti ne l y ca r ri es ou t I T ev alu at io ns to en sur e th at i t s IT s y s t em s hav e the la te s t c y b er s ec ur i t y t oo ls an d sec ur i t y pro ced ure s in pl ace . In ad di ti on , BATM an d t w o of i t s su bsi di ar ie s op er at in g in t he n et wo rk i ng an d c y be r nic he s are a pp rov ed su pp lie r s to th e Isr ae li Min is t r y of De fen se a nd , as suc h, a re con t inu all y mo ni tor ed b y th e Mo D an d mu s t ma in t ain t h e hig he s t le ve l of c y be r se cu r it y. _ Foreign E xch an ge Th er e is a r is k th at t he G ro up ’ s cur r en c y e x po sur e le ad s to nancial loss. Th e Gr ou p ’s na nc e dep ar tm en t at t he cor p or at e lev el man age s t he c as h an d in com e in su ch a w ay a s to ma tch e ac h com p any ’s o r su bsi di ar ie s ’ re ve nu es t o it s ex p ens e s an d keep s t he se i n th e s am e cu rr en c y, th er eb y re duc in g cur re nc y ex po su re. W he n thi s is not p os si bl e, th e Gr ou p us es h ed gi ng t ra ns ac ti ons w h en n ee de d to pro te c t i t se l f agai ns t p ote nt ia l cur re nc y ris k . Ho we ve r , by it s nat ure , in th e Bo ar d ’s op in ion , i t is ver y di c ul t to he dge ag ain s t cu rr en c y u c t ua t ion s ar isi ng f rom tr ans la ti on in co ns ol ida t ion in a co s t- e ec ti v e man ne r . _                                       continue in operation and meet all their liabilities as they fall             BATM R&A 2021_Front Section_1_v8.indd 23 BATM R&A 2021_Front Section_1_v8.indd 23 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 24 Direc tors ’ Biogr a phies                                               strategy to the board and presidents of                          Wharton School and a Master’s in                                                                             the Sackler – Gold Schlagger School of Medicine, Israel and an MSc in Industrial                    Manufacturers’ Association of Israel until                                               – Israel, he interfaced and handled     leading corporate global clients, including companies traded on the       companies primarily in the industrial,      Nagar also led and supported public              international taxation. Mr. Nagar graduated in Business Management and                                               Gideon Chitayat Non-executive Chairman Zvi Marom Founder & CEO Moti Nagar Executive Director & CFO CORPORA TE GOVERNANCE BATM R&A 2021_Front Section_1_v8.indd 24 BATM R&A 2021_Front Section_1_v8.indd 24 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 25        epidemiology, medical informatics                              care physician. She has pioneered      registries to support chronic disease management, and has authored or         In addition, she is a Professor at the                                                    General of the Israeli Prime Minister’s         Benjamin Netanyahu’s economic                                 the Board of Israel Aerospace Industries Ltd, the leading Israeli aerospace and                       energy company, since 2021. Mr. Locker                            Varda Shalev Non-executive Director Harel Locker Non-executive Director & Senior Independent Director CORPORA TE GOVERNANCE BATM R&A 2021_Front Section_1_v8.indd 25 BATM R&A 2021_Front Section_1_v8.indd 25 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 26 C or por ate Go v e rnance Repor t                                                                                        company that is traded on the London Stock Exchange and  CORP ORA TE GOV ERN ANCE F R AME WORK The Board has delegated the daily operational management                                       Remuneration, Nomination and Responsible Business. THE BOA RD                                                                                        MA T TERS RESERV ED FOR THE BOARD                      areas of decision for, the Board. These include preparation                                                                                    BOARD AND COMM IT TEE MEE T IN GS         meets at least four times a year in formal session. Prior to          form and quality appropriate for it to discharge its duties Meeting attendance Director Board Audit Committee Remuneration Committee Nomination Committee Responsible Business Committee Dr. Gideon Chitayat, Chairman 8/8 * 4 2 – 1/1 Dr. Zvi Marom, CEO 8/8 * 4 2 – – Moti Nagar, CFO 8/8 * 4 2 – 1/1 Harel Locker, SID 7/8 4/4 2/2 0/0 0/1 Prof. Varda Shalev, NED 8/8 4/4 2/2 0/0 1/1 Prof. Ari Shamiss, NED ** 7/8 4/4 2/2 0/0 1/1 * Attended by invitation ** Retired as a Non-executive Director on 28 November 2021 BATM R&A 2021_Front Section_1_v8.indd 26 BATM R&A 2021_Front Section_1_v8.indd 26 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 27 CORPORA TE GOVERNANCE concerning the state of the business and performance.                        present, during the year. DI V IS I ON OF RE S P O NS IB IL I T IE S                       The Board has also adopted formal terms of reference                                      is responsible for making and implementing operational decisions and for making recommendations to the Board. IN DEPEND ENCE                character and judgment and no circumstances or matters (including any business or other relationship) exist that could compromise such independence. The interests of the                                                                                 EFFECTIVEN ES S & EV ALUA T IO N                          medical and diagnostics areas), entrepreneurship and            and standing. The Board is of the opinion that each of its         to perform the functions required of a director of a listed company and that the Board is comprised of a good                                                                       IN DUC TION                                                         premises of its main subsidiaries in Israel. INFORMA T ION A ND S UPP ORT           information in a form and quality appropriate for them to discharge their duties concerning the state of the business        detailed operating report on the performance of the                        Board meeting. Once per year, a budget is discussed and           are properly briefed on issues arising at Board meetings and                     Board meeting and Board committee meeting. All of the           BATM R&A 2021_Front Section_1_v8.indd 27 BATM R&A 2021_Front Section_1_v8.indd 27 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 28 BOA RD COMMIT TEE S                         ensures that each such committee is fully constituted and          addition, the Board has appointed a Responsible Business                             Audit Committee Members:                                                                                                                                                 Remuneration Committee Members:                                                                                                                                          Nomination Committee Members:                                   the recruitment process and in the context of the resulting                         balance of skills and experience in identifying a candidate pool and in the recruitment of Board members from such                Board. Board appointments are made on merit set against                      or in cases of early resignation of a director, the Nomination         expertise required of potential candidates and prepares a list                                               C orpor ate Gov erna nce Repor t C ON T INUED BATM R&A 2021_Front Section_1_v8.indd 28 BATM R&A 2021_Front Section_1_v8.indd 28 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 29 CORPORA TE GOVERNANCE                                                                        Responsible Business Committee Members:                  l            l       l          l                    l             l           l            l                                                                                                                                                         and discussed by, the Board. REL A T IONS WI TH SH AR EHOL DER S A ND SIGNIFICA NT SH AR EHOL DER S                                                                   institutional shareholders (other than during closed periods)                                              l         l                                2021.                      l    l    l    l    l    BATM R&A 2021_Front Section_1_v8.indd 29 BATM R&A 2021_Front Section_1_v8.indd 29 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 30 CULT URE A ND C ONF L IC T S           there exists a culture that is free from discrimination and harassment in any form. The Board ensures that the                                            not to discriminate amongst employees on account of sex, sexual tendencies, personal status and any other forms of discrimination.                                                                     ANN UA L G ENE R A L ME E TIN G                   pandemic and related public health guidance and legislation,                                 www . ba tm . co m                      C orpor ate Gov erna nce Repor t C ON T INUED BATM R&A 2021_Front Section_1_v8.indd 30 BATM R&A 2021_Front Section_1_v8.indd 30 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 31 CORPORA TE GOVERNANCE Provision Exception and explanation 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. The Israeli Companies Law, which applies to the Group, sets out and denes the responsibilities and duties of the directors and the CEO. The Group has not adopted a separate formal schedule of responsibilities for the CEO. 18 All directors should be subject to annual re-election. In accordance with Israeli law, the Group is required to appoint at least two independent non-executive directors (dened as ‘external directors’ within Israeli law), who must be appointed for a minimum of one three- year term. Mr. Harel Locker and Prof. Varda Shalev are classied 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 oce). All other members of the Board are subject to annual re-election. 19 The chair should not remain in post beyond nine years from the date of their rst appointment to the board. As of June 2021, Dr. Gideon Chitayat, Chairman, has served on the Board for 11 years – seven 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 aect 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. Compliance with this provision is not compatible with Israeli law as the fees for the external directors (as dened under Israeli law) are set in law. COMPLIANCE WITH T HE UK CO RPORA T E GOVERNANCE CODE                                             BATM R&A 2021_Front Section_1_v8.indd 31 BATM R&A 2021_Front Section_1_v8.indd 31 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 32 Audit C om mittee R e por t Dear Shareholder,                                                            MEMB E R SHIP A ND AT T E NDA NC E  l     l                                                                                                        prior to the announcement of interim or annual results. The                            back to the Board. The external auditor communicates                                                                   GOVER NANCE AN D COM PL IANCE                            of Reference adopted by the Board for this committee                                  RE S P O NS IB IL I T IE S A ND AC T I V I T IE S                                                legal requirements, accounting standards and the Listing                                                                      these procedures.  l                                BATM R&A 2021_Front Section_1_v8.indd 32 BATM R&A 2021_Front Section_1_v8.indd 32 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 33 CORPORA TE GOVERNANCE     l            l                     and associated risk assumptions, the accounting policies         assumptions and adjustments made. l                                  year. l          controls and disclosures made in the Annual Report and  l          and litigation. I NTERNAL AU D IT , I NTERNAL CONTRO L AN D RI SK MANAG EME NT                                                                        and for determining the nature and extent of principal     2021 a robust assessment of such risks accordingly,                            Group’s appliance of the recommendations of an internal                                                      internal auditor potential risks and a proposed plan for                        the completion of each report, the internal auditor sends it                            responsibility and the Board instructs management to                                                 policies and procedures. The main elements of internal  l          major business risks on a daily basis is the responsibility            and procedures, as directed by senior management,               These include procedures and guidelines to identify,        an ongoing basis. l                                                                       and senior management. l                                         strictly segregated to minimise risk. BATM R&A 2021_Front Section_1_v8.indd 33 BATM R&A 2021_Front Section_1_v8.indd 33 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 34 l         and depends on the scale of the risk in question and the  E X T ERN A L AUDI TOR A ND INDEPE NDENCE                              assess on an annual basis, the performance of the external auditors, their independence and the reasonableness of                           or reappointment, or replacement of the external auditors of                                    Rotation of external auditors is not accepted practice in the            regulations that relate to rotation of the external auditors.                            role. The most recent audit partner rotation occurred in                   regarding independence. NON-AUD IT S ERV ICE S                                                                    the external auditors on matters relating to acquisition                  independence of the external auditors.                                                Harel Locker Audit Committee Chairman 13 April 2022 Aud it Co mmittee Repo r t C ONT INUED BATM R&A 2021_Front Section_1_v8.indd 34 BATM R&A 2021_Front Section_1_v8.indd 34 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 35 CORPORA TE GOVERNANCE RE MUNE R A T ION C OMMI T T E E R E P OR T Dear Shareholder The Board is pleased to present the Remuneration           design appropriate remuneration packages to attract,                                                                                                                                                                                             INT RODUC T ION                                                                   We engaged external experienced consultants in the area                                                                                    and is intended to operate for a period of three years.            or the amendments introduced in relation to the preparation                                  DIRE C TO R S ’ RE MUN ER A T I ON RE V IE W F INDIN G S AND OU R NEW POL ICY               practice in Israel and requirements expected by institutional           l            l                                                                                     Direc tors ’ Remuner ation Repor t BATM R&A 2021_Front Section_1_v8.indd 35 BATM R&A 2021_Front Section_1_v8.indd 35 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 36                           in a mix of cash and deferred shares). l                                                                                                                                                                      l                                        l No shareholding guideline is currently in place. The                      granted and shares purchased from the date this policy                                        standards. BUSIN ES S PERFORMANCE AND 20 2 1 IN CENTI VE OU T C OME S                                                                                                             ongoing operations basis 1                                           NGSoft and strengthening senior talent in the organisation through recruitment. As a result of the strong performance                                                     performance. ST AK EHOLDER VI E WS & ENGAGEM ENT                             Annual General Meeting. Prof. Varda Shalev Remuneration Committee Chair 13 April 2022 Di rec tors' Rem uner ati on Repo r t C ON TINUED 1                  BATM R&A 2021_Front Section_1_v8.indd 36 BATM R&A 2021_Front Section_1_v8.indd 36 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 37 CORPORA TE GOVERNANCE RE MUNE R A T ION POL ICY This Remuneration Policy sets out the remuneration policy                                      the BATM Group.                                                                                   T HE R E MUNE R ATIO N C OM MI T T E E ’ S RE S P O NS IB IL I T IE S                                                                              (2) Recommending appropriate remuneration packages                                                                                        REM UN ERA TION PH ILOSO PHY AND O BJE CTIVES                                                                                                              appropriate balance that takes into account BATM’s Israeli origins and the pay expectations for a company listed on                   l Remuneration should be related to performance on                 l                                                                BATM R&A 2021_Front Section_1_v8.indd 37 BATM R&A 2021_Front Section_1_v8.indd 37 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 38     component to further align the interests of the senior  l                                           l                                     l The Policy should ensure transparency and accountability         CONS IDER A T IONS W HEN DE TE RMINI NG REMUNER A TION P OL ICY In forming our Policy during the course of 2021, and in planning for its implementation, good practice in both Israel                                      l Clarity                               Our Policy is transparent and has been clearly articulated to our shareholders (during prior consultation). l Simplicity                   communicate and operate. l Risk                          is discouraged and mitigated through, for example (i) the                 pay, (ii) the deferral of a proportion of annual bonus into                                     l Predictability                                   l Proportionality                                    ability and openness to the use of discretion to ensure                                              and practices. l Alignment to culture                                                    Di rec tors' Rem uner ati on Repo r t C ON TINUED BATM R&A 2021_Front Section_1_v8.indd 38 BATM R&A 2021_Front Section_1_v8.indd 38 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 39 CORPORA TE GOVERNANCE DIRECTOR S ’ & OFF ICE RS ' RE MUNER A T ION P OL IC Y TA B L E                                                                       Base Salary Purpose and link to strategy                       responsibility.              Operation           from 1 January.  l        expertise, role and responsibilities l  l  l Performance l External market trends l  l  l                                                            and complexity. BATM R&A 2021_Front Section_1_v8.indd 39 BATM R&A 2021_Front Section_1_v8.indd 39 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 40 Maximum potential value No prescribed maximum or maximum increase.                                      stated under ‘Operation’.                                                                                              on a per country basis so as to ensure that the comparison is made on the same underlying parameters. Performance targets Although there are no formal performance conditions, any increase in base                         column of this table. Benets Purpose and link to strategy                Operation                                                            terms.                                                 eligible employees.             Di rec tors' Rem uner ati on Repo r t C ON TINUED BATM R&A 2021_Front Section_1_v8.indd 40 BATM R&A 2021_Front Section_1_v8.indd 40 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 41 CORPORA TE GOVERNANCE Maximum potential value Study fund contributions are common in Israel and under this arrangement the                      also deposited to this fund.          Performance targets Not applicable. Pension Purpose and link to strategy  Operation   appropriate through contribution to a pension fund. Maximum potential value                  salary from the employee’s base salary and deposit it into the pension fund.                                                               Performance targets Not applicable. Annual Bonus Purpose and link to strategy                 risk taking. Operation                                                                Bonuses are not contractual and are not eligible for inclusion in the calculation of pension arrangements.        Maximum potential value        BATM R&A 2021_Front Section_1_v8.indd 41 BATM R&A 2021_Front Section_1_v8.indd 41 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 42 Di rec tors' Rem uner ati on Repo r t C ON TINUED Performance targets                                                                                                                    Long Term Incentive Plan (LTIP) Purpose and link to strategy                       superior shareholder returns. Operation                                                                                                         Any options shall not be exercisable more than ten years after the date of grant. BATM R&A 2021_Front Section_1_v8.indd 42 BATM R&A 2021_Front Section_1_v8.indd 42 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 43 CORPORA TE GOVERNANCE Maximum potential value                                                               Performance targets Performance measures may include, and are not limited to, EPS, absolute or                                                                          Share Ownership Guidelines Purpose and link to strategy  Operation                              Maximum potential value                                                    Performance targets Not applicable. Non-Executive and Non-External Directors’ Salary and Benets Purpose and link to strategy                                                      BATM R&A 2021_Front Section_1_v8.indd 43 BATM R&A 2021_Front Section_1_v8.indd 43 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 44 Di rec tors' Rem uner ati on Repo r t C ON TINUED Operation                                                                                                            Maximum potential value No prescribed maximum or maximum increase.                                              Performance targets Not applicable. External Directors’ Fees and Benets Purpose and link to strategy                                                      BATM R&A 2021_Front Section_1_v8.indd 44 BATM R&A 2021_Front Section_1_v8.indd 44 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 45 CORPORA TE GOVERNANCE Operation                                                                                                                      Maximum potential value No prescribed maximum fee or maximum fee increase.                                             set out in the ‘Operation’ column of this table. Performance targets Not applicable. Recovery of variable remuneration                                                 made. The maximum aggregate bonus shall be as set forth                                      standards), then the applicable bonus shall be recalculated using such restated data (the "Restated Bonus"). The                                                completion of the restatement. To the extent that no bonus        Balance shall be deducted from the bonus payable in the                                                         such unpaid balance shall be repaid pursuant to the terms                                      Director and oce holder insurance                                          remuneration policy (since such insurance is classed as                                          BATM R&A 2021_Front Section_1_v8.indd 45 BATM R&A 2021_Front Section_1_v8.indd 45 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 46 Di rec tors' Rem uner ati on Repo r t C ON TINUED                                                                       assets or obligations, and that the insurance premium and                   ILLUST R A T ION OF TH E APPL ICA T ION OF TH E P OL ICY                                    minimum, on target and maximum performance for each  Assumptions for the Chart below l                             for 2020. l                                       l                  l                    (but no share price appreciation has been assumed for  SEL ECTION OF PERFO RM ANCE MEAS URES AND TA R G E T S Annual bonus The annual bonus arrangements are focused on the                                                                                   report. Long-Term Incentive Plan                                             shareholder returns.       of performance measures and the appropriateness of the performance targets prior to each LTIP grant. It is         BATM R&A 2021_Front Section_1_v8.indd 46 BATM R&A 2021_Front Section_1_v8.indd 46 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 47 CORPORA TE GOVERNANCE Measurable Targets                      l Work plan targets l Budget targets l  l                    Share price  Earnings per share     Return on capital employed  Total shareholder return  Absolute total shareholder return    FL E X IBI L IT Y , DISCRET ION AN D JUDGEM ENT                          number of respects in relation to the operation of each plan.  l                   payments l  l          control or restructuring of the Group l                             l           circumstances (e.g. for a rights issue, a corporate  l                l                    conditions set in relation to an annual bonus plan or a                                                    l     Policy All assessments of performance are ultimately subject to the         payments in appropriate circumstances as outlined in this           report detailing the payment outcome. LEGACY AR R ANGEM ENTS                                          APP ROACH TO RECRUITMENT REMUNERA T ION                             pay on recruitment.                                                            BATM R&A 2021_Front Section_1_v8.indd 47 BATM R&A 2021_Front Section_1_v8.indd 47 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 48 Di rec tors' Rem uner ati on Repo r t C ON TINUED                 SER VIC E CONTRA CTS, LE T TERS O F APPO I NTME NT AND POLICY ON P A Y MENTS FOR LOS S OF OFFICE                          in order to attract and retain highly skilled professional                           termination is in circumstances that negate the payment of  l                           of basic salary (but excluding any bonus, commission,                l                                                                       l                                              rate to a lesser extent) if it decides it is appropriate to do                                                   performance against the performance conditions and  l The Group may pay outplacement and professional legal               pay any statutory entitlements or settle compromise                           of the plans. l                  Name Date of service contract Duration Dr. Zvi Marom               Moti Nagar           BATM R&A 2021_Front Section_1_v8.indd 48 BATM R&A 2021_Front Section_1_v8.indd 48 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 49 CORPORA TE GOVERNANCE CHAIR AN D E X TERNAL DIRE CTORS                                only be terminated for cause in special circumstances by                                   Name Date of appointment Term Dr. Gideon Chitayat   Harel Locker   Prof. Varda Shalev  Three years E X TER NAL APPO INTM ENTS                                                             CONS IDER A T ION OF S H ARE HOL DER VIE W S                                                             from time to time (including any updates to shareholders’ remuneration guidelines), is then considered as part of the         implementation. CONS IDER A T ION OF E MPL OYME NT CONDI TION S ELSE WHERE IN TH E GROU P                             employees across the Group. While employees are not formally consulted on the design                                               DI F FERENCES IN P A Y P OLICY FOR E XECUT IVE DI RECTORS AND SENIO R E MPLOYEES COMP ARED TO EMPLOYEES MORE GEN ER AL L Y                            employees, accounting for national and regional talent            salary increases and pay and employment conditions across  BATM R&A 2021_Front Section_1_v8.indd 49 BATM R&A 2021_Front Section_1_v8.indd 49 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 50 ANNUAL REPOR T ON REMUNERATION      the operation of the Remuneration Policy. RE MUNER A TI ON C OMMI T T EE Roles and responsibilities                                                          Remuneration Committee members and meetings                          l   l   l           l                                 l                                                                         to BATM. Key activities during the year                   l                l                    l         l   l Set the targets and measures for the 2021 annual bonus Di rec tors' Rem uner ati on Repo r t C ON TINUED BATM R&A 2021_Front Section_1_v8.indd 50 BATM R&A 2021_Front Section_1_v8.indd 50 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 51 CORPORA TE GOVERNANCE 2021 Salary/Fees $’000 Performance Bonus $’000 Total Remuneration $’000 Executive Directors Zvi Marom, CEO (1) 584 438 * 1,022 Moti Nagar, CFO (2) 317 158 ** 475 Non-executive Directors Gideon Chitayat 56 – 56 Harel Locker 58 – 58 Varda Shalev 62 – 62 Ari Shamiss (3) 57 – 57 Si ngl e tot al gu re of re mun erat io n ( a ud ite d)  2020 Salary/Fees $’000 Performance Bonus $’000 Total Remuneration $’000 Executive Directors Zvi Marom, CEO 547 410 957 Moti Nagar, CFO 297 149 446 Non-executive Directors Gideon Chitayat  -  Harel Locker  -  Varda Shalev  -  Ari Shamiss  -                                                                                                            employees.                                                                            BATM R&A 2021_Front Section_1_v8.indd 51 BATM R&A 2021_Front Section_1_v8.indd 51 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 52 Di rec tors' Rem uner ati on Repo r t C ON TINUED Non - Executive Directors                                   kind and amounts of remuneration and expenses that         directors. The applicable Israeli statute is the Israeli                                                                                                    pay any additional amounts to the external directors. The                considered an independent director and his remuneration  2021 annual bonus outcome                     Dr. Zvi Marom, CEO Performance Measure Weighting Threshold (11.11% Payable) Max (100% Payable) Actual FY21 Achievement Bonus Outcome (% Of Total Bonus) EBITDA 80% $4.3m $8.2m $29.6m 80%                        Objectives Achievements in 2021 Bonus Outcome (% of Total Bonus) Successful completion of the sale of NGSoft Recruitment of senior employees to strengthen the Group's management Achieved successful completion of the NGSoft sale Recruited several senior employees, both at the Group level and in the individual activities 20%  Mr. Moti Nagar, CFO Weighting 2021 Target Achievement in 2021 Bonus Outcome (% Of Total Bonus) EBITDA 80% $25.8m $29.6m 80% BATM R&A 2021_Front Section_1_v8.indd 52 BATM R&A 2021_Front Section_1_v8.indd 52 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 53 CORPORA TE GOVERNANCE                        Objectives Achievements in 2021 Bonus Outcome (% of Total Bonus) Successful completion of the sale of NGSoft Recruitment of senior employees to strengthen the Group's management Achieved successful completion of the NGSoft sale Recruited several senior employees, both at the Group level and in the individual activities 20%                              Long-term incentive aw ards granted in 2 021           Share inter ests Shares owned outright (31/12/21) Shares owned outright (31/12/20) Awards unvested and subject to performance conditions as at 31/12/21 Options unvested and not subject to performance conditions as at 31/12/21 Options vested but not exercised as at 31/12/21 Shareholding as a percentage of salary/service fee Executive Directors Zvi Marom 96,794,500 96,794,500 – – 4,000,000 18,886% Moti Nagar – – – – 906,200 0% Non-Executive Directors Gideon Chitayat 3,159,000 3,159,000 – – – 6,426% Harel Locker – – – – – 0% Varda Shalev – – – – – 0% Ari Shamiss – – – – – 0%                       BATM R&A 2021_Front Section_1_v8.indd 53 BATM R&A 2021_Front Section_1_v8.indd 53 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 54 Di rec tors' Rem uner ati on Repo r t C ON TINUED TS R pe r fo rm anc e char t TSR performance                                                      recognised index containing companies of a broadly similar  70 0 600 500 400 300 200 10 0 0 T o t al Sha re ho ld er Re t ur n (reba s ed to 100) D e c 2 0 11 D e c 2 0 12 D e c 2 0 13 D e c 2 0 14 D e c 2 0 15 D e c 2 0 16 D e c 2 0 17 D e c 2 0 18 D e c 2 0 19 D e c 2020 D e c 202 1 B AT M A dv an ce d Comm un ic a ti on s Ltd F T S E SmallCap Rat io of CE O pay to average full -t im e emplo yee pay                                                                                              goods). Rela ti ve imp or t anc e of spe nd on pay                           shareholders. 2021 ($m) 2020 ($m) % change Employee remuneration costs 29.5 39.9 (26.1%) Distribution to shareholders 4.3 – – Prot (EBITDA on reported basis) 29.6 19.7 50.4% BATM R&A 2021_Front Section_1_v8.indd 54 BATM R&A 2021_Front Section_1_v8.indd 54 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 55 CORPORA TE GOVERNANCE Per cen tage c ha nge in d ir ec to rs ’ r emu ne rati on an d em pl oyee pay      Salary/Fee Benets Annual Bonus 2021 2020 2021 2020 2021 2020 Executive Directors Zvi Marom 0% 0% 0% 0% 0% 173% Moti Nagar 0% 0% 0% 0% 0% 24% Non-executive Directors Gideon Chitayat  0% – – – – Harel Locker  0% – – – – Varda Shalev  8.8% – – – – Ari Shamiss  5.3% – – – – * The number of meetings attended by each director may change from one year to another. Payme nts fo r loss of o ce an d/or payme nts to f or mer di re ct ors (audi te d)                  Statement of shareholding voting  Resolution Votes for (including discretionary) % for Votes against (excluding withheld) % against Total (excluding withheld and third- party discretionary) Withheld Approval of the report of the Remuneration Committee 279,405,938 99.63 1,051,158 0.37 280,457,096 0 Approval of the Directors’ and Ocers' Remuneration Policy 156,548,999 91.92 13,754,743 8.08 * 188,412,596 18,108,854 Approval of the CFO’s 2021 bonus relating to FY2020 performance 262,716,534 93.67 17,740,561 6.33 280,457,096 1 Authorisation for the Remuneration Committee to determine bonus and LTIP grants for executive directors 266,702,351 95.10 13,754,743 4.90 280,457,096 2 Authorisation for the Remuneration Committee to update employment and service agreements 177,432,821 96.61 6,229,774 3.39 188,412,596 4,750,001                     resolutions. BATM R&A 2021_Front Section_1_v8.indd 55 BATM R&A 2021_Front Section_1_v8.indd 55 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 56 Di rec tors' Rem uner ati on Repo r t C ON TINUED Imp le me nta ti on of Po lic y for F Y 2 2 Component of Pay Implementation for FY22 Base salaries       Benets and pension       Annual bonus          LTIP       Total Shareholder Return on vesting date compared to share price on date of grant Vesting percentage of the awards              NED fees   l   l   l    On behalf of the Board Prof. Varda Shalev Chair of the Remuneration Committee 13 April 2022 BATM R&A 2021_Front Section_1_v8.indd 56 BATM R&A 2021_Front Section_1_v8.indd 56 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 57 CORPORA TE GOVERNANCE Direc tors ’ Repor t P RINC IPAL AC T I V I T IES                                                                      Israel and Europe. FI NANC IAL ST A T EMENTS                  2021. The results of the year are set out in the consolidated             RE T URN S TO SH ARE HOL DER S The Board considers returns to shareholders to be an                                share capital at that date. As at the date of this annual report, the Group had purchased 200,000 Ordinary Shares under its share buyback programme. BUSIN ES S AND STR A TEGIC REVIEW                  risks and uncertainties, are set out in the Strategic Report  DIRECTOR S                      l   l            l            l           l   l            CORP ORA TE GOV ERN ANCE S T A TE MENT                                       DI RECTORS’ REMUNERA TION AND I N TERES TS     RULES ABOU T A P P OIN T M ENT AND REPL ACEMENT OF DIRECT ORS                BATM R&A 2021_Front Section_1_v8.indd 57 BATM R&A 2021_Front Section_1_v8.indd 57 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 58                    the Board are subject to a formal, rigorous and transparent               full and transparent information and background to the                                                                                                                            meeting and is eligible for reappointment at that meeting.                                                                 reasonable opportunity to present their position to the             if the director is found to be of unsound mind, or becomes            director in a public company.                                               A MEND MEN T OF A RT I CL E S      articles by a simple majority of the shareholders at a General   any proposed amendments to the articles regarding                               GOING CONCERN                         the foreseeable future. Accordingly, the Group continues          concern basis. S T ATE ME N T OF DIR EC T OR S ’ RE S P ONS IB IL I T IE S                                                                                                              for assets, liabilities, income and expenses set out in the                   Di rec tors' Repo r t CONTINUED BATM R&A 2021_Front Section_1_v8.indd 58 BATM R&A 2021_Front Section_1_v8.indd 58 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 59 CORPORA TE GOVERNANCE           l   l present information, including accounting policies, in a         l                  l                  users to understand the impact of particular transactions,                                           and detection of fraud and other irregularities and for                            legislation in other jurisdictions.                                                                                       description of the principal risks and uncertainties they                                 model and strategy.                      Dr . Gideon Chitaya t Chairman 1 3 Apr il 2022 BATM R&A 2021_Front Section_1_v8.indd 59 BATM R&A 2021_Front Section_1_v8.indd 59 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 60 ANNUAL REPORT & ACCOUNTS 2021 BATM Consoli dated Financ ia l Statements for the year ended 31 Decembe r 2021 60 BATM R&A 2021_Front Section_1_v8.indd 60 BATM R&A 2021_Front Section_1_v8.indd 60 13/04/2022 13:46 13/04/2022 13:46 ANNUAL REPORT & ACCOUNTS 2021 61 Neve Ne’eman Ind. Ar ea 4, Ha ’h ara sh S tr ee t, P . O.B. 73 18 452 4075 Hod Ha sh aro n, Is rael Opinion We ha ve aud ite d the co nso lid ated  nanc ial s t a temen t s of BATM Ad v an ced Commu nic at io ns Ltd. a nd i t s subs idia ri es ( “ t he Grou p ” ) s et ou t on page s 65 to 109, w hic h compr is e the con so lida ted s t ate men t of nan cial p osi ti on as at 31 D ece mbe r 20 21 , and t he consolidated s t atement of prot and loss, the consolidated s t atement of compr ehensive income, the cons oli date d s ta teme nt of cha nges in equ it y and t he cons oli date d s ta teme nt of ca sh ow s for t he yea r then en de d, an d note s to the co ns olid ate d nan cia l s t atem ent s, in clu ding a s umma r y of sig ni c ant a ccoun tin g pol ici es . In our opinion, the accompanying consolidat ed nancial s t atements present fairl y , in all material respec ts , t he consolidated nan cia l posi t ion of th e Group a s a t 31 De cemb er 2021 , an d i t s co nso lida ted n anc ial pe r fo rm ance an d it s co nso lida ted ca sh o ws f or t he yea r th en end ed i n accorda nce w it h In tern at ion al F ina ncia l Rep or tin g St and ards ( IF R Ss). Ba sis f or O pinion We cond uc te d o ur a udi t i n acco rdance w it h In ter nat io nal S t anda rds o n A udi ti ng ( IS A s). O ur re spo nsib ili t ies und er t hos e st andards are fur t her describe d in the Auditor ’s Responsibilities for t he Audit of the Consolidat ed F inancial St atements se c t ion of our repo r t . We are ind epe nde nt of t he Gro up i n a ccorda nce wi th th e I nter na tio nal Ethi c s S ta nda rds Boa rd for Accountants ’ Code of Ethic s fo r Profes sio nal A ccountant s (I ESB A Cod e) , and w e hav e f ul ll ed o ur ot her ethi c al resp on sibi li tie s in a ccorda nce wi th th e I ESB A Code. We bel ie ve tha t t he audi t ev id ence we hav e o bt ain ed is su cie nt and app rop ria te to prov i de a ba sis fo r our o pini on. Key Au dit M a tters Key au di t mat ter s are th ose m at te rs t ha t , in our p rofes si onal j udg men t , were of m os t sig ni c a nce in ou r audi t of t he cons oli date d nan cial s t a temen t s of the cu rren t per io d. T hes e mat ters we re addre ss ed in t he conte x t of our au di t of the consolidated nancial s ta tements as a whole, and in forming our opinion thereon, and we do not provide a separate opi nion o n th es e mat ter s. Independent Auditor’s Report to the S hareholders of BA TM Advanced Communications Ltd. FINANCIAL ST ATEMENTS BATM R&A 2021_Financial Section_3.indd 1 BATM R&A 2021_Financial Section_3.indd 1 13/04/2022 13:49 13/04/2022 13:49 ANNUAL REPORT & ACCOUNTS 2021 62 Key audit matter How our a udit a ddr es s ed t he key a udi t mat te r Impair men t of g oo dwill and ot her in t ang ible a ss et s As detailed in Notes 23 and 24, as at 31 December 2021, the Group had goodwill and other intangible assets of $16,033 thousand. Goodwill and other intangible assets arise as a result of acquisitions 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 significant 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 ow 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 estimations applied in the discount rates used in the value in use calculations.  Challenging manageme nt’s assumptions applied and inputs in the respective models by comparing it to historical information, 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 management about new signicant clients and markets penetration, new signicant contracts and bids, certication status of new products. Fin ding s 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 nancial statements. Other Information Manag ement is responsible for the other information. The other information comprises the information included in the annual repor t , but does not incl ude the nan cia l s t atem ent s and ou r audi tor ’s rep or t th ereo n. Our opinion on the consolid a ted nanci al statement s does not cov er the ot her in for mat io n and we do not ex pres s any form of assuranc e conclusion ther eon. In connec tion wi th our audit of the consolidated nancial statement s, our responsibilit y is to read the other info rm ati on a nd, in d oing so, con side r wh et her t he other information is materially inconsistent with the consolidated nancial s tatement s or our k nowledge obtained in the aud it or oth er wis e app ear s to b e mater ial ly mis s t a ted. If, bas ed on t he wor k we have per formed, we conclude that there is a mate ri al mi ss ta temen t of t his ot her i nfor ma ti on, we a re requi red to repor t that fac t. We have noth ing to repor t in thi s regard . Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Manag ement is responsible for the preparation and fair presentation of the consolidated nancial s tatements in accord ance w i th IF R S s , an d for su ch in tern al con trol as ma nagem ent deter min es is ne ces s ar y to en abl e t he preparation of consolidated nancial s tatement s that are f ree fro m mater ial mis s t ate men t , whe the r due to fraud or er ror . In preparing the consolidated nancial st atements, manage ment is respons ible for assessing the Group’s abilit y to cont inu e as a going conce rn , dis cl osin g , a s app lic ab le, mat ter s rel ated to go ing conce rn and usi ng t he going BATM R&A 2021_Financial Section_3.indd 2 BATM R&A 2021_Financial Section_3.indd 2 13/04/2022 13:49 13/04/2022 13:49 ANNUAL REPORT & ACCOUNTS 2021 63 FINANCIAL ST ATEMENTS FI NANC IAL ST A TEM ENTS concern basis of accou nting unless management either inten ds to liq uida te t he Group or to ceas e o per at ion s , o r has n o realis tic a lter na ti v e bu t to do so. T hos e ch arge d w it h gov er nance are res pon sib le fo r ove rs ee ing th e Gro up ’s n anc ial rep or ti ng pro ces s. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objec ti ves are to obt ain reasonable assurance about whether the consolidat e d nancial st atements as a whole are f ree f rom ma teri al mis s t a teme nt , w het he r due to f ra ud or e rro r , an d to is sue an a udi tor ’s repor t that inc lud es our opinion. Re asonable assurance is a high level of as surance, bu t is not a g uar ante e tha t an a udi t cond uc te d in accordan ce wi t h IS A s will a lw ay s d ete c t a mate ria l mi ss ta teme nt w he n i t ex is t s . Miss t a teme nt s can aris e from frau d or error and are con sid ere d mat er ial i f, in di v id ual l y or i n th e ag gre ga te, th e y coul d reaso nab ly b e ex pe c te d to inu ence th e econ omi c dec isi ons of us er s ta ken on th e bas is of the se con so lida ted nancial statements . A s par t of an a udi t in accord ance wi t h IS A s , we e xercis e professional judgement and maintain pr ofessional skept ici sm th roug ho ut t he au di t . We also: l Ident i f y and ass es s the risk s of ma ter ial mis s t atem ent of the consolidated nancial s tatements , whet her due to fraud or erro r , d esig n and per fo rm aud it pro cedu res respo nsi v e to t ho se r isk s, an d o bt ain a udi t ev id ence t hat is su  cien t and approp ri ate to p rov id e a b asi s for our op inio n. T h e ris k of n ot de tec tin g a ma ter ial m is s t atem ent re sul t ing fro m f rau d is highe r th an fo r on e res ul tin g f rom e rror , as fraud may involve collusion, forger y , intentional omissions, misrep res ent a tio ns , or the over ri de of intern al contro l. l O bt ain a n und er s t an ding o f inter na l cont rol rel ev an t to the audi t in ord er to des ign audi t proce dure s tha t are app rop ria te in th e circu ms t an ces , but not for the pur po se of expre s sing an opinio n on the eec ti ven es s of the G roup ’ s inte rna l cont rol . l Ev aluate the appropriateness of accounting policies used and the reasonableness of accountin g es timates and relate d dis cl osure s mad e by ma nagem ent . l C onclude on the appropriateness of management ’s use of the goi ng co ncer n bas is of a ccoun tin g a nd, b ase d on the audi t e v ide nce ob ta ine d, w he th er a mate ria l unce r t ai nt y ex is t s relate d to e ven t s or condi t ion s th at m ay c as t signicant doubt on the G roup’s abilit y to continue as a going conce rn . I f w e con clu de tha t a mater ia l un cer ta int y ex is t s , we are req uired to dra w a t ten ti on in our au di tor ’s repor t to the relat ed disclosur es in t he consolid ated nancial st atement s or , if such disclosures ar e inadequate, to modi f y our opinion. O ur conclusions are based on the audi t ev i den ce o bt ain ed up to t he date of our au di tor ’s repor t. However , f uture events or conditions may cause the Gro up to cease to contin ue as a going concer n. l Evaluate the overall presentat ion, s truc ture and conte nt of t he consolidated nancial s tatement s, including the disclosures, and whet her the consolidated nancial st atements re present the underl ying t ransac tions and eve nt s i n a mann er th at a chie ve s fai r pres en ta ti on. l Obt ain su c ient approp ria te audi t ev ide nce rega rding the nancial information of the entities or business ac ti v it ie s w i th in t he Gro up to ex pre ss an opin ion on the consolidat ed nancial s t atements. We are responsible for the direc ti on , sup er v isio n and per for man ce of t he Group audit. We remain solely responsible for our audit opi nion. We co mmun ic ate w i th t hos e ch arge d wi t h gov ern ance rega rding , am ong ot her ma t ter s , th e p lann ed s cope an d timing of the audit an d signic ant audi t ndings , including any signicant deciencies in internal control that we iden ti f y dur in g our au di t. We als o prov id e thos e char ged wi t h gover nan ce wi th a s t atem ent t hat we ha ve comp lie d w i th rel ev an t e thi c al requi remen t s rega rding in dep end ence , and to co mmu nic ate wi t h them all rela tio nsh ips and ot her ma t ter s tha t may reas onab l y b e th oug ht to bea r on our i nde pen de nce, a nd wh ere ap plic a ble, re late d sa feg uard s. From th e mat ter s com muni ca ted w i th th ose char ged wi th gove rna nce, we de ter min e th os e ma t ter s tha t we re of most signicance in t he audit of the consolidated nancial s t atem ent s of the cu rren t per io d and a re the refore t he key audi t mat ter s. We des cr ib e t hes e m at ters in our audi tor ’s repor t unles s law or regulation p recludes public discl osure abo ut the ma t ter or w h en, in e x t reme l y ra re circ ums t a nces , Independent Auditor’s Report to the S hareholders of BA TM Advanced Communications Ltd. (CONTINUED) BATM R&A 2021_Financial Section_3.indd 3 BATM R&A 2021_Financial Section_3.indd 3 13/04/2022 13:49 13/04/2022 13:49 ANNUAL REPORT & ACCOUNTS 2021 64 we d eter min e t hat a ma t ter shou ld n ot b e co mmun ic ate d in o ur re por t bec au se the ad ve rs e co nse qu ence s of doin g so woul d reasona bl y be exp ec ted to ou t weig h the publi c intere s t be ne t s of such co mmu nic at ion . A s requ ired by th e F in anc ial Condu c t Au th or it y ( F C A ) Dis cl osure G uid ance a nd T r an spare nc y Rul e (DT R) 4. 1 . 14R, t he se n anc ial s t a temen t s fo rm p ar t of the E SEF - prep ared A nn ual F ina ncia l R epo r t l ed on t he Nat ion al Stora ge M ech ani sm of t he UK F C A in acco rdance w i th the ESEF Re gu lato r y T ech nic al S ta nda rd (‘ ESEF R TS ’ ). T his auditor ’s repor t provides no assurance over w hether the annu al na ncia l repo r t ha s be en prep ared us ing th e sing le ele c t roni c for ma t spe ci e d in th e ESEF R T S . T he en gagem ent par t ner o n th e au di t resu lt ing in t his ind epe nde nt au di tor ’s repo r t i s Efr at B insh tok . Br igh tman A l mago r Zoh ar an d Co. Cer tie d Public Accountant s A Fir m in th e De loi t te G lob al Ne t w ork 1 A zr ie li Cen ter , T el Av i v Isra el 1 3 Ap ril 2 02 2 BATM R&A 2021_Financial Section_3.indd 4 BATM R&A 2021_Financial Section_3.indd 4 13/04/2022 13:49 13/04/2022 13:49 ANNUAL REPORT & ACCOUNTS 2021 65 FINANCIAL ST ATEMENTS 2021 2020 Note US$’000 US$’000 Revenues 5, 6 140,038 183,566 Cost of revenues 7 88,977 122,856 Gross prot 51,061 60,710 Operating expenses Sales and marketing expenses 8 18,290 20,197 General and administrative expenses 9 12,243 15,884 Research and development expenses 10 8,713 10,258 Other operating expenses (income) 12 (12,563) 138 Total operating expenses 26,683 46,477 Operating prot 24,378 14,233 Finance income 13 1,466 820 Finance expenses 14 (911) (1,754) Prot before tax 24,933 13,299 Income tax expenses 15 (9,337) (1,043) Prot for the year before share of loss of a joint venture and associated companies 15,596 12,256 Share of loss of a joint venture and associated companies (839) (774) Prot for the year 14,757 11,482 Attributable to: Owners of the Company 14,340 9,793 Non-controlling interests 417 1,689 Prot for the year 14,757 11,482 Prot per share (in cents) basic 16 3.26 2.22 Prot per share (in cents) diluted 16 3.23 2.21 Consolidated Statements of Prot or Loss The accompanying notes are an integral part of these nancial statements. for the year ended 31 December BATM R&A 2021_Financial Section_3.indd 5 BATM R&A 2021_Financial Section_3.indd 5 13/04/2022 13:49 13/04/2022 13:49 ANNUAL REPORT & ACCOUNTS 2021 66 2021 2020 US$’000 US$’000 Prot for the year 14,757 11,482 Items that may be reclassied subsequently to prot or loss: Disposal of a foreign operation (522) – Exchange dierences on translating foreign operations (4,880) 3,148 9,355 14,630 Items that will not be reclassied subsequently to prot or loss: Revaluation of investment – (508) Re-measurement of dened benet obligation 162 16 162 (492) Total comprehensive income for the year 9,517 14,138 Attributable to: Owners of the Company 8,976 13,560 Non-controlling interests 541 578 9,517 14,138 Consolidated Statements of Comprehensive Income T he acco mpa ny ing n otes a re an inte gr al p ar t of the se  nan cial s ta teme nt s . for the year ended 31 December BATM R&A 2021_Financial Section_3.indd 6 BATM R&A 2021_Financial Section_3.indd 6 13/04/2022 13:49 13/04/2022 13:49 ANNUAL REPORT & ACCOUNTS 2021 67 FINANCIAL ST ATEMENTS 2021 2020 Note US$’000 US$’000 Assets Current assets Cash and cash equivalents 65,331 50,575 Trade and other receivables 18 34,932 41,467 Financial assets 17 2,432 2,803 Inventories 19 30,951 33,893 133,646 128,738 Non-current assets Property, plant and equipment 20 18,107 16,109 Investment property 21 1,739 1,878 Right-of-use assets 22 6,570 9,607 Goodwill 23 11,385 16,838 Other intangible assets 24 4,648 6,879 Investment in joint venture and associate 12 12,667 13,271 Investments carried at fair value 1,027 1,027 Deferred tax assets 26 3,375 5,759 59,518 71,368 Total assets 193,164 200,106 Equity and liabilities Current liabilities Short-term bank credit 27 1,634 5,365 Trade and other payables 27 47,519 53,618 Current maturities of lease liabilities 27 2,186 2,244 Tax liabilities 6,548 3,046 57,887 64,273 Non-current liabilities Long-term bank credit 27 1,356 675 Long-term liabilities 27 3,888 6,416 Long-term lease liabilities 27 5,108 8,440 Deferred tax liabilities 26 170 711 Retirement benet obligation 34 621 828 11,143 17,070 Total liabilities 69,030 81,343 Equity Share capital 28 1,320 1,320 Share premium account 425,840 425,686 Reserves (19,849) (14,323) Accumulated decit (279,888) (290,090) Equity attributable to the: Owners of the Company 127,423 122,593 Non-controlling interests (3,289) (3,830) Total equity 124,134 118,763 Total equity and liabilities 193,164 200,106 The nancial statements were approved by the board of directors and authorised on 13 April 2022. They were signed on its behalf by: Dr. Z. Marom, CEO M. Nagar, CFO Consolidated Statements of Financial Position The accompanying notes are an integral part of these nancial statements. for the year ended 31 December BATM R&A 2021_Financial Section_3.indd 7 BATM R&A 2021_Financial Section_3.indd 7 13/04/2022 13:49 13/04/2022 13:49 ANNUAL REPORT & ACCOUNTS 2021 68 Consolidated Statements of Changes in Equity The accompanying notes are an integral part of these nancial statements. Share Capital Share Premium Account Translation Reserve Other Reserve Accumulated Decit Attributable to Owners of the Company Non- Controlling Interests Total Equity US$ in thousands Balance as at 1 January 2020 1,320 425,477 (18,070) (512) (299,391) 108,824 (4,408) 104,416 Prot for the year – – – – 9,793 9,793 1,689 11,482 Re-measurement of dened benet obligation – – – – 16 16 – 16 Revaluation of investment – – – – (508) (508) – (508) Exchange dierences on translating foreign operations – – 4,259 – – 4,259 (1,111) 3,148 Total comprehensive income for the year – – 4,259 – 9,301 13,560 578 14,138 Exercise of share- based options by employees – 51 – – – 51 – 51 Recognition of share- based payments – 158 – – – 158 – 158 Balance as at 1 January 2021 1,320 425,686 (13,811) (512) (290,090) 122,593 (3,830) 118,763 Prot for the year – – – – 14,340 14,340 417 14,757 Disposal of a foreign operation – – (522) – – (522) - (522) Re-measurement of dened benet obligation – – – – 162 162 – 162 Exchange dierences on translating foreign operations – – (5,004) – – (5,004) 124 (4,880) Total comprehensive income for the year – – (5,526) – 14,502 8,976 541 9,517 Exercise of share- based options by employees () 58 - - - 58 - 58 Recognition of share- based payments – 96 – – – 96 – 96 Dividends – – – – (4,300) (4,300) - (4,300) Balance as at 31 December 2021 1,320 425,840 (19,337) (512) (279,888) 127,423 (3,289) 124,134 for the years ended 31 December 2021 and 2020 () Less than 1K USD BATM R&A 2021_Financial Section_3.indd 8 BATM R&A 2021_Financial Section_3.indd 8 13/04/2022 13:49 13/04/2022 13:49 ANNUAL REPORT & ACCOUNTS 2021 69 FINANCIAL ST ATEMENTS 2021 2020 Note US$’000 US$’000 Net cash from operating activities 30 5,592 18,459 Investing activities Interest received 3 101 Proceeds on disposal of property, plant and equipment 18 39 Proceeds on disposal of deposits 315 3,122 Proceeds on disposal of nancial assets carried at fair value through prot and loss 402 761 Purchases of property, plant and equipment (2,889) (3,386) Increase of other intangible assets (400) (328) Purchases of nancial assets carried at fair value through prot and loss – (2,009) Purchases of deposits (315) (314) Investment in joint venture and associated companies (727) (3,467) Proceeds from sale of a subsidiary 31 18,662 – Net cash from (used in) investing activities 15,069 (5,481) Financing activities Lease payment 22 (2,174) (2,428) Bank loan repayment 27 (13,252) (13,852) Bank loan received 27 10,431 12,980 Proceed on exercise of shares 58 51 Net cash used in nancing activities (4,937) (3,249) Net increase in cash and cash equivalents 15,724 9,729 Cash and cash equivalents at the beginning of the year 50,575 40,584 Eects of exchange rate changes on the balance of cash held in foreign currencies (968) 262 Cash and cash equivalents at the end of the year 65,331 50,575 Consolidated Statements of Cash Flow The accompanying notes are an integral part of these nancial statements. for the year ended 31 December BATM R&A 2021_Financial Section_3.indd 9 BATM R&A 2021_Financial Section_3.indd 9 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 70 1. General Information BA T M Adv anced Communications Ltd. (“ the Company ” ) is a company incorporated in Israel under t he Israeli Companies L aw. The add res s of t he reg is tere d oce is POB 731 8, Nav e Ne ’eman Ind . Area 4, Ha ’ hara sh Stre et , 452 4 075 Hod Hashar on, Israel. T he Company and i ts subsidiaries (“ the Group” ) are engaged in the research and development , prod uc tio n a nd marke ti ng of dat a commu nic at io n p rodu c t s in th e field of metrop ol it an area net w or k s and of b io - medical product s, primarily laborator y diagnostic s and eco-med equipment. The Bio -Medical div ision also distr ibutes prod uct s of third parties. 2 Adoption of new and revised International Financial Reporting Standards (IFRSs) Amendments to IAS 1 – Classication of Liabilities as Current or Non-current T he a men dme nt s to I A S 1 ae c t on ly t he p res ent a tio n o f lia bil it ie s as c urre nt o r n on - cu rren t i n t he s t atem ent of nan cia l position and not t he amount or timing of recognition of any as set , liabilit y, income or expenses , or the information dis clo se d abo u t tho se i tem s. The amendment s clarif y that the clas sication of liabilities as c urrent or non - current is b ased on right s t hat are in ex is ten ce at the end of t he repo r t ing per io d, spe ci f y that cla ssi  ca ti on is unaec ted by exp ec t at ion s abou t whe the r an ent it y w il l exerc ise it s r ig ht to defer s et tle men t of a lia bili t y, e xp lain tha t r ig ht s are in exis te nce i f co ven ant s are co mpl ied wi t h a t t he end of th e re por t ing per io d, an d i ntro duce a de ni ti on of ‘ s et tle men t ’ to m ake clea r t ha t s et tle men t re fer s to the t ra ns fer to t he co unter p ar t y of c as h, e qui t y ins t ru men t s , oth er as s et s o r ser v i ces. T he am end men t s w ill b e app lie d ret rosp ec ti v el y for a nnua l pe ri ods beg inn ing o n or af ter 1 Janua r y 2023, w i th e ar ly app lic at io n per mi t te d. 3 SignicantAccountingPolicies Statement of compliance The co nsolidated nancial st atements have been prepared in accor dance wit h International Financial Repor ting St anda rds (I FR S St anda rds) as is sue d by t he In tern at ion al Acco unt ing St a ndard s Bo ard (I A SB). Basis of preparation T he con sol ida ted n anc ial s t a temen t s ha ve b een p repa red o n the h is tor ic al co s t b asis e xcept fo r cer ta in pro per ti es and na ncia l ins tr um ent s that are measure d at revalu ed amo unt s or f air va lue s at the end of each repor tin g peri od , as ex plai ne d in th e accou nti ng po lic ies b el ow. His to ri ca l cos t is ge ner all y b ase d on t he f air v alu e of th e consi der at ion g i ven i n excha nge for go od s and s er v ice s. Fair va lue is t he pr ice t hat wo uld b e recei v ed to sel l an as se t or pa id to tra ns fe r a l iabi li t y in an o rder l y tr ans ac ti on be t we en ma rke t par ti cip an t s at t he mea surem ent d ate, reg ardl es s of w het her t ha t pr ice is di rec tl y obs er v abl e or es timated using anot her valuat ion technique. In es tima ting the f air value of an as set or a liab ilit y , th e Group takes into accou nt the characteris tic s of the asset or liabilit y if market par ticipant s would take those charac teristic s into ac count when pricing the asset or liabil it y at the measur ement date . F air value f or meas urement and/or disclosure purpose s in these consolidated nancial s tatement s is determined on such a basis, e xc ept for share-base d pay ment trans ac tions tha t are w i thi n th e sco pe of I FR S 2 , le asing tra ns ac tio ns t hat a re wi t hin t he s cope of IF R S 1 6 , an d mea surem ent s tha t hav e som e simi lar it ie s to fai r va lue b ut a re not f air v alu e, suc h as ne t reali sa ble v al ue in I A S 2 or va lue i n use i n IA S 36 . In add it ion , for n anc ial repo r ting pu rp os es , fai r valu e meas ureme nt s are c atego ri se d into Lev el 1 , 2 or 3 bas ed on th e deg ree to whi ch the inp ut s to t he fa ir val ue meas ureme nt s are obs er va ble an d the sig ni c ance of the inp u t s to the fair va lue me asure men t in i t s ent ire t y, whi ch are de sc ri be d as fol low s: BATM R&A 2021_Financial Section_3.indd 10 BATM R&A 2021_Financial Section_3.indd 10 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 71 FINANCIAL ST ATEMENTS l Le ve l 1 i npu t s are qu oted p ri ces (unadju s ted ) in ac ti ve mar ket s f or ide nt ic al as se t s or lia bil it ie s that t he en ti t y c an acces s a t the m eas ureme nt date; l Le ve l 2 inpu t s are inp u t s , o the r t han quote d p ri ces inclu ded wi th in Level 1 , t hat are ob se r vab le for t he ass et or liab ili t y , e it her d irec tl y or i ndi rec tl y ; and l Leve l 3 inpu t s a re unob se r vab le in pu t s for t he a s set o r liab ili t y . T he pr in cip al acco unt ing p oli cie s are se t ou t be low. Basis of consolidation The consolidated nanci al st atements incorporate the nancial st atements of the Company and entities control led by the Company and i t s subsidiaries. Control is achieved when the Company has power over the inves tee is ex posed, or has rig ht s, to v ar iab le retur ns fro m i t s inv ol vem ent w it h t he inv es te e a nd has the abi li t y to us e it s po wer to a ec t i t s ret ur ns . T he Compan y rea s se ss es whe th er or n ot it contro ls an i nve s tee if fac t s and circums ta nces indi c ate that the re a re chan ges to on e or mo re of th e th ree el emen t s of co ntro l lis te d ab ove. Consolid ation of a subsidiar y beg ins w hen the Com pany obt ains control over the subsidiar y and ceases when the Compa ny lo se s co nt rol of th e subs idia r y . S pe ci c all y, i ncom e and e xp ens es of a sub sidi ar y acqu ired or di spo se d of during the ye ar ar e included in the c ons olidated statement of prot or los s and other comprehensive i ncome f rom t he date t he Comp any g ain s cont rol un til t he d ate w hen t he Comp an y ceas es to con trol t he s ubsi diar y. Prot or loss and each component of other comprehensive income are at tr ibuted to the owner s of the Company and to the non- controlling interests . T ot al comprehens i ve income of subsidi aries is at tribu ted to the owner s of the Company and to t he no n - cont rol ling in teres t s eve n if t his re sul t s in t he n on - con trol ling i nteres t s hav i ng a de ci t ba lan ce. Wh en nece ss a r y , ad jus t me nt s are mad e to the nanc ial s t atem ent s of subsidi ari es to bri ng thei r account ing p olic ie s in line w i th t he G roup ’ s accoun ti ng po lic ies . All intragroup asset s and liabilities, equit y , income, e xpenses and c ash  ows relating to trans ac tions bet ween member s of th e Grou p are eli mina ted in f ul l on con sol ida tio n. Investments in associates and joint ventures A n asso cia te is an ent it y over whic h the Group has sig ni c ant inu ence. Sign i c ant inu ence is the pow er to p ar tic ip ate in th e na ncia l and o pe rat ing p oli c y d ec isio ns of t he in ves tee bu t w it ho ut co nt rol or j oint co nt rol ov er th os e po lici es . A joint ven ture is a joint ar range men t where by the pa r tie s that hav e joint con trol of the ar ran geme nt have r igh t s to the net as set s of the joint arrangement. J oint control is t he contrac tually agreed sharing of control of an arrangement, which ex is t s o nl y w hen d eci sio ns ab ou t th e rele va nt ac ti v i ti es req uire un anim ous co nse nt of t he p ar tie s shar in g cont rol. An investment in an associat e or a joi nt vent ure is ac cou nted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the inves tment in an as sociate or a joint venture, any e xces s of t he cos t of th e inv es t me nt ov er t he G roup ’ s share o f th e net fair v alu e of t he id ent i ab le as s et s a nd liab ili ti es of the inve s tee is recog nis ed as goo dw ill , whi ch is inclu de d wit hin th e car r y ing amo unt of the inve s t men t. A ny exces s of the Group ’s share of the net fair va lue of the iden ti ab le as se t s and liabil it ie s over the cos t of the inves tme nt , af ter reas s es sme nt , is re cogn ise d imm ed iatel y i n pro t or l os s in t he pe ri od in w hi ch t he inv es t me nt is a cquire d. T he req uirem ent s of I A S 3 6 are ap pli ed to de ter min e wh et her i t is nece s sa r y to recog nis e an y imp air men t lo ss w i th resp ec t to th e Grou p ’s inve s t men t i n an ass oc iate or a joi nt ven ture. Wh en nece s sa r y , t he en tire c ar r yi ng amo unt of BATM R&A 2021_Financial Section_3.indd 11 BATM R&A 2021_Financial Section_3.indd 11 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 72 the inv es t men t (inc ludi ng good w ill ) is te s ted for impa irm ent in accordan ce wit h IA S 36 Impai rm ent of A ss et s as a si ng le as se t by comp ar ing it s recov erab le amo unt (hig her of valu e in u se and fair val ue les s cos t s of d isp os al ) wit h it s car r y ing amount. A ny impairment loss recognised forms par t of the carr ying amount of the inves tment . Any revers al of that imp air men t l os s i s re cogn ise d in a ccordan ce w i th I A S 36 to t he ex tent tha t t he reco ver abl e a moun t o f t he inv es t men t subsequently increases. Wh en t he G roup reduce s i t s o wn er ship interes t in an a s so ciate or a j oint ventu re, bu t co nt inu es to use t he e qui t y met ho d, t he G roup re cla s si es to p ro t or l os s th e pro por t ion o f th e gain or lo s s tha t ha d prev i ous ly be en reco gni se d in oth er comprehe nsi ve income relat ing to tha t reduc ti on in ow ne rsh ip interes t if t ha t g ain or l os s woul d be reclas si e d to pro t or l os s on t he dis pos a l of th e relate d as se t s or l iab ili ti es . Changes in the Group’s ownership interests in existing subsidiaries Cha nges in t he Group ’ s o wn er ship intere s t s in s ubsi diar ie s t ha t d o not re sul t in th e Group losing cont rol over the subsidia ries are accounted for as equit y transac tions. T he car r y ing amounts of the Group’s interest s and the non - cont roll ing intere s t s are ad jus te d to re ec t t he ch anges in th eir rela ti v e in teres t s i n t he sub sidi ar ies . An y di eren ce bet ween t he amount by which the non - controll ing inter est s ar e adjusted and the fair value of the c onsideration paid or recei ve d is re cogn ise d dire c t l y in e qui t y a nd a t t rib u ted to ow ne rs o f the Com pan y. Business combinations Acquisitions of businesses are account ed for using t he acquisition met hod. T he consideration trans ferred in a business comb inat io n i s meas ured a t f air v alu e, wh ich is c al cula ted as t he sum of t he acq uisi t ion - da te fair v alu es of t he as se t s transferred by the Group , liabi lities incurred by the Group t o the former owners of the acq uiree and the equit y inte rest s is sue d by t he Gro up in e xchan ge for con tro l of th e acqu iree. A cquis it ion - rela ted co s t s are gen era ll y recog ni se d in pro t or los s as inc ur red. Goodw ill is measu red as the excess of the sum of the c onsideration trans ferred, the amount of any non- controlling i n t e r e s t s i n t h e a c q u i re e , a n d t h e f a i r va l u e o f t h e ac q u i r e r ’ s pr e v i o u s l y he l d e q u i t y in t e re s t i n t h e a c q u i re e ( i f an y ) o v e r th e net of the acqu isition- date amount s o f t he identi able as set s ac quired and the liabilities as sumed. If, af ter reasses sment, the net of th e a cquis it io n- date amo unt s of t he iden ti a ble ass et s acq uire d a nd liabili t ies assu med exceed s t he sum of the consideration transferred, t he amount of any non -controlling interest s i n the ac quiree and the fair value of the acq uire r ’s prev i ousl y hel d intere s t in t he a cqui ree ( if any) , t he e xces s is reco gn ise d imm ed iatel y i n pro t o r los s a s a ba rga in pu rcha se gain. Non- controllin g interest s that are present ow nership interest s and entitle their holders to a propor tionate share of the e n t i t y ’ s n e t a s s e t s i n t h e e v e n t o f l i q u i d a t i o n m a y b e i n i t i a l l y m e a s u r e d e i t h e r a t f a i r v a l u e o r a t t h e n o n - c o n t r o l l i n g i n t e r e s t s ’ propor tionate share of t he recognised amounts of the acquiree’s identi able net ass et s. T he choice of measurement bas is is mad e on a trans a c t ion - by - tr ans ac ti on bas is. Goodwill Goo dw ill a ri sing o n an acq uisi t ion o f a busi nes s is c a rr ie d at cos t as es t a blis hed at t he date o f acqu isi ti on of t he busi nes s le ss acc umu late d impa irm ent lo s ses , i f any. Go od wi ll is not amo r tis ed bu t is rev ie wed fo r impa irm ent at le as t annu all y. F o r the pur pos es of impa irm ent tes t ing , good wil l is alloc ate d to e ach of the Grou p ’s cash - gen era tin g unit s (or gro ups o f c ash - gener at ing u ni t s) tha t is ex pe c te d to b ene  t f rom t he s yn erg ie s of t he comb inat io n. A ca sh -ge ner at ing uni t to whi ch goo d wi ll has b een a llo ca ted is te s ted fo r imp air men t annu all y, or more fre que nt ly w he n the re is an indi c ati on th at the un it ma y be impa ired. I f the reco ver abl e amoun t of the ca sh - gener at ing uni t is les s tha n it s c ar r yi ng amo unt , th e im pa irm ent lo ss is all oc a ted r s t to red uce the c ar r y ing amo unt of any goo dw il l al lo ca ted to t he uni t and the n to th e ot her a ss et s of th e uni t pro r at a b as ed o n the car r y ing a mou nt of ea ch a ss et i n th e uni t . A ny im pai rm ent los s for go od w ill is reco gn ise d di rec tl y i n pro t or l os s . A n i mpa ir men t lo ss recog ni sed for good w ill is n ot re ver s ed in subsequent per iods. BATM R&A 2021_Financial Section_3.indd 12 BATM R&A 2021_Financial Section_3.indd 12 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 73 FINANCIAL ST ATEMENTS On di spo sa l of an op er ati ng uni t , t he at tr ibu t ab le am oun t of goo dw il l is inc lud ed i n t he d eter min at ion of t he p ro t or los s on d isp os al. Revenue recognition T he Gro up reco gni se s reve nue f rom t he fo llo wi ng maj or so urces : l Sal e of go od s – Com muni ca ti on prod uc t s, bio -m edi c al prod uc t s such as labo ra tor y diagn os t ic s and ster ili sa ti on eco - me d pro duc t s l R end er ing of ser vi ces – Related main ly to s of t wa re se r vi ces s uch as t rai ning and tech nic al supp or t , la bor ator y ser v ice and m ainte nan ce relate d pro duc t s so ld l Constr uc tion contract s Rev enu e is mea sured b as ed o n the co nsi der ati on to w hic h the G roup e xp ec t s to be e nti t le d in a cont ra c t w i th a cus tomer and e xcludes amoun t s collec ted o n behal f of third par ties . Th e Group recognise s revenue w hen it t rans fer s cont rol of a p rodu c t o r ser v ice to a c us to mer . Sale o f goods F or sal es of good s, rev enue is recog nis ed w hen cont rol of the goo ds has tran s fer red , being w hen the goo ds hav e been shipped t o the customer ’s specic location ( deliver y). Following deliver y, the cus tomer has full discretion over t he mann er of dis tri bu ti on a nd p ri ce to s ell the goo ds , ha s t he p ri mar y re spo nsib ili t y wh en o nse llin g th e go ods and bea r s the r is k s of o bso le scen ce and l os s in rel ati on to t he goo ds . A rec ei vable is reco gnised by the Group when the goods are delivered to the custome r as this repr esent s the point in time at which the right to consideration becomes unconditional, as only the pas sage of t ime is required before pay ment is due. Rendering of ser vices T he Gro up pro v ide s a ser v ice o f ins t a llat io n of va ri ous s of t wa re prod uc t s for sp ec iali se d busi ne ss o per at ion s. Suc h ser vi ces are recogni se d as a per f or man ce obliga ti on sat is  ed ove r time. Reve nue is recogni se d for thes e inst allation ser vices based on t he s tage of completion of the contract . T he management have ass essed that t he s t age of compl et ion d eter min ed as t he prop or ti on of th e to t al tim e ex pec ted to ins tal l tha t h as ela pse d at th e end of t he re po r t ing per io d i s an app rop ria te m easure of p rog res s tow ards comp le te s at is f ac tio n of th ese pe r f or mance obl iga tio ns un der I FR S 1 5. Construction contrac ts Wher e the outc ome of a co nstruc tion contr act c an be estimat ed re lia bly , revenue and co st s are reco g nised over time by ref erenc e to the st age of co mpletio n of the contract ac tivi t y at the dat e of the consol idated s tateme nts of nanc ial position. This is normally measur e d by the propor tion that contrac t cos ts incurred for work per formed to date b ear to t he est ima ted tota l con tr ac t cos t s e xcept w h ere t his woul d no t b e re pres ent a ti ve of t he st age of comp let io n o r eng ine er ing co mpl et ion . T he ma nagem ent co nsi der t ha t thi s inp ut met ho d is a n ap prop ria te mea sure of th e prog res s towards complete satisf ac tion of these per formance obligations under IFR S 1 5. V ariations in contract work , clai ms and incen ti v e pa ym ent s are inc lud ed to t he ex tent t ha t the y ha ve be en ag ree d w it h th e cus tomer . Where the ou tcome of a constr uc tion contrac t cannot be es timated reliably , contrac t revenue is recognised to the ex tent of cont ra c t cos t s i ncu rre d t ha t i t is pro bab le w ill be re cove rab le. Cont rac t co s t s are reco gni se d a s ex pen se s i n the p er io d in w hic h the y are in cur red . BATM R&A 2021_Financial Section_3.indd 13 BATM R&A 2021_Financial Section_3.indd 13 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 74 Wh en it i s p rob abl e tha t tot al cont ra c t cos t s wi ll excee d tot al con tra c t re ven ue, th e ex pe c te d l os s is reco gni se d as an expense i mmediately . Leases The G ro up as a l es see At inception of the contrac t, the Group asses ses whether an arrangement is a lease or contains a lease. The Group r e c o g n i s e s a r i g h t - o f - u s e a s s e t a n d a c o r r e s p o n d i n g l e a s e l i a b i l i t y w i t h r e s p e c t t o a l l l e a s e a r r a n g e m e n t s i n w h i c h i t i s t h e les s ee, except for ass et s leas ed for a p er iod of less tha n 1 2 month s , and also to lease of a s se t s wit h low econom ic valu e. T he l eas e liab ili t y is i ni tial l y mea sure d at the pres ent value of th e le ase pay men t s t hat a re no t pa id a t th e com men cemen t date, di sco unte d by usi ng th e rate i mpli ci t in t he lea se. I f th is ra te ca nnot b e read il y de term ine d, t he le s se e use s it s incremental borrowing rate . T he lea se lia bili t y is subs eq uen tl y mea sure d at amo r tis ed cos t using th e ee c t i ve in teres t me th od . The right-of-use as set s comprise the initial measureme nt of the corresponding lease liabilit y, plus any lease pa yment s mad e at or be fore t he comm ence men t day, less a ny lea se in cent i ves re cei ve d and an y ini tia l direc t cos t s . Rig ht- of-u se as se t s are sub se quen tl y mea sure d a t co s t les s acc umul ated de prec iat io n a nd imp air me nt los s es , a nd are d e p r e c i a t e d o v e r t h e s h o r t e r p e r i o d of l e a s e te r m a n d u s e f u l l i f e o f t h e u n d e r l y i n g a s s e t . I f a l e a s e t r a n s f e r s o w n e r s h i p o f the u nde rl y ing a ss et o r the co s t of th e rig ht-o f-us e as se t re ec t s tha t th e Group e xp ec t s to exerci se a purc has e opt io n, the relate d r ig ht-of- us e as s et i s de prec iate d ov er t he use fu l li fe of the unde rl y in g as s et . T he depre cia ti on s tar t s at t he comm encem ent da te of th e leas e. T he Group appli es IA S 36 to d eter min e whe th er a rig ht-of- us e ass et is im pai red and accou nt s for a ny iden ti e d impairmen t loss. A s a prac tical ex pedient, IF R S 1 6 permit s a less ee not to separate non- lease components , and ins tead account for any leas e an d as soc iate d non - le ase co mpo nen t s as a sing le a rr angem ent . T he Gro up has us ed t his p rac ti ca l ex ped ien t. Foreign currencies The individual nancial 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 nancial statements, the results and nancial position of each Group company are expressed in the US dollar, which is the presentation currency for the consolidated nancial statements. In preparing the nancial 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 dierences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in prot or loss for the period. For the purpose of presenting consolidated nancial statements, the assets and liabilities of the Group’s foreign operations (operations in foreign currencies) are translated at exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates uctuate signicantly during that period, in which case the exchange rates at the date of transactions are used. Exchange BATM R&A 2021_Financial Section_3.indd 14 BATM R&A 2021_Financial Section_3.indd 14 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 75 FINANCIAL ST ATEMENTS dierences 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 reclassied from equity to prot 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 dierences arising are recognised in other comprehensive income and accumulated in equity. Government grants Gov er nme nt gran t s are as sis ta nce from govern men t in the for m o f tra ns fe rs of re so urces to an enti t y in retur n for p as t or f ut ure comp lia nce w it h cer t ain con di ti ons rel at ing to th e op era tin g ac ti v i tie s of th e ent i t y. F org i va bl e loa ns are l oan s wh ere th e len der ( Isr aeli C hi ef S cie nti s t O ce r (ISO)) un der t akes to w ai ve rep ay me nt un der cer ta in pre sc ri be d con di tio ns . In a cas e w here a go ver nme nt g ra nt t ake s t he fo rm of a for gi v ab le l oan , a liabili t y is recog nis ed i n rega rds to t his l oan a t fa ir v alue , bas ed on es tima ti ons o f fu tu re ca sh o w s relate d to th e rel ev ant g ra nt . T he Gro up pol ic y to de sig nate d suc h l oa ns as na nci al liab ili t ies me asure d at am or tis ed cos t a ccordin g to IF R S 9. T h e di eren ce bet we en th e liab ili t y and p rocee ds a re recog nis ed in t he re sea rch an d dev elo pm ent e xp ens es . Employee benets Re tir eme nt b ene t c os ts a nd te rmi na tio n ben e ts Payment s to dene d contribution retirement bene t plans are recognised as an e xpense when employees have rend ered s er v ice en ti tl ing t hem to t he con tr ibu t ion s. F or d en ed be ne t reti remen t p lans , th e cos t of p rov id ing ben e t s is d eter min ed usin g th e p roje c te d uni t cred it met ho d, w i th a c t uar ial v alua ti ons b eing c a rr ie d ou t at t he en d of eac h ann ual rep or tin g per io d. Reme asure men t , com pr ising ac t uar ial g ain s an d l os se s, the e e c t o f t he c hange s to the as s et ceiling ( i f ap pli ca bl e) and the retu rn on pl an a s set s (exclud ing i ntere s t) , is ree c te d im med iate ly in t he s ta teme nt o f n anc ial posi t ion wi th a charg e or cr e dit reco gnised in other compr ehensive income in the period in which they occur . Remeasurement recog nis ed i n oth er com preh ensi v e inco me is re e c te d imm edi atel y in ret aine d ear ni ng s and wil l not b e rec las si e d to p ro t or lo s s. Pas t s er v ice cos t i s re cog nis ed in p ro t or los s in t he p eri od of a pl an ame ndm ent . Ne t intere s t is ca lcu late d b y ap pl y ing the d is count rate a t t he begi nnin g of the p er iod to the net d e ned bene  t lia bil it y o r as s et . De ne d ben e t cos t s are c atego ri se d as fol low s: l service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); l n et in teres t exp ens e or i ncom e; and l remeasur ement. T he G roup pres en t s t he  r s t t wo com po nen t s of de ne d b ene t cos t s in p ro t or lo ss und er e mpl oye e b ene  t s ex pen se. Cur t ailm ent g ain s and l os se s are accou nte d for as p as t s er v ice co s t s . The retirement bene t obligation recognised in th e consolidated st atement of nancial position represent s the ac t ual de ci t o r s ur plus in t he Grou p ’s d e ned b ene t p lans . A ny sur plu s re sul tin g f rom th is ca lc ulat io n is li mite d to t he pres en t va lu e of an y eco no mic b en e t s av ail abl e in t he f or m of ref u nds fro m th e pl ans or red uc ti on s in f u ture cont r ib ut io ns to the p lan s. A l iabi li t y for a termi nat ion bene  t i s recog nis ed at t he earli er of wh en the e nt it y ca n n o longe r w i th dra w the oer of th e term ina tio n ben e t an d w hen t he en ti t y recog nis es an y rela ted res tr uc t ur ing cos t s. BATM R&A 2021_Financial Section_3.indd 15 BATM R&A 2021_Financial Section_3.indd 15 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 76 Shor t-te rm an d oth er lo ng -t erm e mpl oyee b ene t s A liability is recognised for benets 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 benets expected to be paid in exchange for that service. Liabilities recognised in respect of short-term employee benets are measured at the undiscounted amount of the benets expected to be paid in exchange for the related service. Liabilities recognised in respect of other long-term employee benets are measured at the present value of the estimated future cash outows 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 pay ment transactions of the C ompany Equi t y- se t t led sha re- b ase d pay m ent s to emplo yee s and othe rs pro vi ding simi lar ser v ice s are m easure d at the fair va lue of the equ it y ins tr um ent s at the gra nt date. Deta ils regard ing the deter min at ion of the fair value of equi t y - se t t led share - ba se d tr ans ac ti ons a re set o u t in note 3 3. T he fa ir v alu e dete rmi ne d at t he g ran t date of t he e qui t y- se t t le d share - b ase d p ay men t s is e x pen se d on a s t rai gh t-line bas is ov er th e ves ting p er io d, b ase d on t he G roup ’s e s ti mate of e qui t y ins t r umen t s t hat w ill e ven tua ll y ve s t , wi t h a cor resp ond ing inc reas e in equi t y . At the en d of each rep or tin g per io d, th e Group re v ise s it s es tim ate of th e numb er of equit y instr uments expec ted to vest . The impac t of the revision of the original estimates, if any , is recognised in prot or los s suc h t hat t he cumu lat i ve ex pen se re ec t s t he rev i se d e s ti mate, w it h a cor res pon ding a djus tmen t to t he share prem ium res er ve. Taxation T he inco me t a x ex pen se rep res ent s the su m of th e t ax c urre ntl y p ay ab le an d def erre d t ax . Current tax T h e t a x c u r r e n t l y p a y a b l e is b a s e d o n t a x a b l e p r o  t f o r t h e ye a r. Ta x a b l e p ro  t d i  e r s f r o m pr o  t b e f o r e t a x as r e p o r t e d in t h e c o n s o l i d a t e d s t a t e m e n t o f p r o  t o r l o s s b e c a u s e i t e x c l u d e s i t e m s o f i n c o m e o r e x p e n s e t h a t a r e t a x a b l e o r d e d u c t i b l e in o th er year s and it fu r ther excl ude s item s t hat are nev er ta xa ble or ded uc tib le. T h e G roup ’ s l iabi li t y for cur ren t t a x i s ca lcu late d using t ax ra tes th at hav e bee n enac ted or subs ta nti v el y ena c te d by the en d of the repo r t ing p eri od . Deferred tax Def erre d t ax is reco gni se d on te mpo rar y d ie rence s be t w een t he c ar r y ing a mou nt s o f as se t s an d lia bil it ie s in th e cons ol ida ted  nan cia l s t ate men t s an d th e cor resp on din g ta x b as es us ed in t he co mpu t a ti on of t ax ab le pro  t. D efe rre d ta x liab ili ti es are ge ner all y recogni se d fo r a ll t a xa ble tempor ar y d i erence s. Defer red tax ass et s are gene rall y recogni se d for al l d ed uc t ib le temp or ar y di eren ces to th e ex tent th at i t is pro bab le t hat t a xab le pro t s w il l be av ail abl e agai ns t wh ich thos e de du c t ibl e tem po rar y di eren ces ca n b e u ti lis ed . Su ch deferre d t a x a s se t s a nd liabili ti es are not recogni se d if t he temp or ar y di eren ce ari se s from go od w ill or f rom t he ini t ial reco gni t ion (oth er th an in a busi nes s com bin at ion) of oth er as se t s an d liab ili ti es in a tr ans a c t ion t hat a ec t s nei t her t he t ax abl e pro t nor t he acco unt ing pro t . Def erre d tax liabi li tie s a re re cog nis ed for t a xab le tempor ar y dieren ces ass oc iate d w i th inve s tm ent s in subsi diar ie s and as so cia tes , an d in teres t s in j oin t ven ture s , excep t w here t he Grou p is a bl e to con tro l th e rev er s al of th e temp or ar y di eren ce a nd it i s p rob abl e t ha t t he tempor ar y di eren ce w ill not r eve rs e in th e f ores eea ble fu ture. Defer red tax ass et s ar ising f rom de duc tib le temp ora r y d i erence s as so cia ted wi t h such in ves tme nt s an d i ntere s t s are onl y reco gni se d to the ex tent th at it is prob abl e that th ere will be su c ien t tax ab le pro t s agai ns t wh ich to uti lis e the ben e t s of the temp ora r y die rence s and t hey a re exp ec ted to rev er se in t he fore se eabl e fu t ure. BATM R&A 2021_Financial Section_3.indd 16 BATM R&A 2021_Financial Section_3.indd 16 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 77 FINANCIAL ST ATEMENTS T he ca rr y ing am oun t o f d efer red t a x a ss et s is re vi ew ed at th e end of eac h re por t ing per io d and red uce d to th e e x tent t h a t i t is n o l o n g e r p r o b a b l e t h a t s u  c i e n t t a x a b l e pr o  t s w i l l b e a v a i l a b l e t o a l l o w al l o r p a r t of t h e a s s e t t o b e r e c o v e r e d . Def erre d ta x l iab ili ti es and as se t s are m easu red at the t ax rate s t ha t a re e xp ec ted to ap pl y in t he per io d in w hi ch the liab ili t y is s et tl ed or t he as se t real ise d, base d on tax rates (and tax law s) tha t ha ve been e nac ted o r su bs t an ti v el y en ac ted by the end of the repo r t ing peri od. The measure men t of defer red ta x liab ili ti es and as s et s reec t s t he tax conse quen ces tha t w oul d fo llo w f rom th e ma nner in wh ich th e G roup ex pe c t s, at th e en d of th e rep or ti ng p er io d, to reco ver or se t t le the c ar r y ing am oun t of it s a ss et s and liab ili t ies . Curr ent a nd d ef err ed ta x fo r the ye ar Curren t and defe rre d ta x are recogn ise d in pro t or los s , except wh en the y relate to item s that are recog ni se d in other comp rehen si ve incom e o r d irec tl y in e qui t y , in whi ch ca se, the cur ren t an d d efe rre d t a x a re al so recog nis ed in o th er comp rehen si ve in come o r direc tl y in e qui t y resp ec ti vel y. Whe re cur rent t a x or de fer red t ax a ri ses f rom t he in it ial accoun ti ng for a b usin es s comb ina ti on, t he t a x ee c t is inc lud ed in t he acco unt ing fo r th e bus ine ss co mbin at ion . Investment Property Investment proper ties are proper ties held to earn rentals and /or for capi tal appreciation. Inves tment p roper ties are meas ured i ni tia ll y at cos t, i ncl udin g tr ans ac ti on cos t s. Subs eq uen t to init ial recogni t ion the Group ’s proper t y in teres t s he ld u nde r o per at ing lease s to earn renta ls o r fo r ca pi t al ap prec iat io n pur po se s are accou nted f or as in ve s tm ent p rop er tie s and a re meas ured u sing t he cos t mod el. Dep rec iat ion i s cha rge d so a s to w ri te o t he co s t of a ss et s, o ver t hei r es t ima ted u se fu l li ve s, using t he s tr aig ht-lin e met ho d, b et wee n 27 -33 year s. T rans fers f rom owner - occupied proper t y to invest ment proper t y are made when t he Company ends owner - occupation. Property, plant and equipment L and and b uil ding s h eld for us e in the p rod uc tion or su ppl y o f goo ds o r se r vi ces , or for a dmin is t rat i ve p ur pos es , a re s t ated in the cons oli date d s t a teme nt s of n anc ial posi t ion on a his tori ca l cos t ba sis , b ein g th e hi s tor ic al cos t at t he date of a cquis it io n, le s s any s ubs equ ent a ccum ulate d dep rec iat ion a nd su bse qu ent acc umu late d imp air men t los s es . Prop er tie s in the co ur se of cons tr uc tio n for pro duc tio n, a dmini s tr at i ve pur p ose s , or for pu rp os es not y et de term ine d, are ca rr ie d at cos t , les s an y recog nis ed imp air me nt los s . Cos t incl ude s profes si ona l fees . Dep rec iat ion of th es e as se t s , on th e s ame b asi s as ot her p rop er t y as s et s , co mmen ces w he n the a s set s are read y fo r th eir in tend ed us e. Fre eho ld la nd i s not depre cia ted . F ix tures and e qui pme nt a re s t ate d at co s t le s s acc umula ted d epre cia ti on a nd an y recog nis ed i mpa irm ent l os s . Dep rec iat ion is cha rged so as to wr ite o th e cos t of asse t s , oth er tha n land ove r their es tima ted us ef ul li ves , usin g the s tr aig ht-lin e met ho d, o n th e foll ow ing b as es: Building s 3% - 6% Plan t and e quip me nt 1 0 % -33% Motor ve hicles 1 5%-25 % Fur ni tu re and  t ting s 6% - 1 5% Leasehold Im provements 6%-2 0 % BATM R&A 2021_Financial Section_3.indd 17 BATM R&A 2021_Financial Section_3.indd 17 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 78 T he gai n or lo ss a ri sing o n the d isp os al or re tirem ent o f an as se t is de ter min ed as t he di e rence b et w ee n the s al es proce ed s and t he c ar r y ing am oun t of th e as se t an d is recog ni se d in ot her in come o r ex pe nse. Research and development expenditure Internally-generated int angible assets - research and development expenditure E xp end it ure on res earc h ac ti v it ie s is reco gni se d as an e xp en se in t he p er iod i n wh ich i t is in cur red . An internally-generated intangible asset arising f rom de velopment ( or from the development phase of an internal proje c t) is recog nis ed i f, and o nl y i f, all of t he fol low ing h ave b ee n dem ons tra ted: l the tech nic al fea sibi li t y of comp le tin g the int a ngi ble as s et so th at i t will b e avai lab le for us e or sal e; l the inten ti on to compl ete th e int ang ibl e as se t and use or s ell it ; l the ab ili t y to use or sell th e int ang ib le as se t ; l how th e int ang ib le as se t wil l gener ate prob abl e fu tu re econo mic be ne t s; l the ava ilab ili t y of a deq uate tech nic al , nanc ial and oth er resou rces to compl ete the de vel opm ent and to use or sell the int an gib le as se t ; and l the ab ili t y to measure relia bl y the e xp end it ure at t r ibu t abl e to the int an gib le as s et dur ing i t s dev elo pm ent . T h e a m o u n t i n i t i a l l y r e c o g n i s e d f o r i n t e r n a l l y - g e n e r a t e d i n t a n g i b l e a s s e t s i s t h e s u m o f t h e e x p e n d i t u r e i n c u r r e d f r o m t h e date when t he intangible ass et rs t meet s the recognition cr iteria listed above. Where no internally-generated int angible as se t ca n be recog ni sed , de vel opm ent e xp end it ure is reco gni se d in pro t or lo ss i n the p er iod in w hi ch it i s incu rre d. Acquired intangible assets Acqu ired in ta ng ibl e ass et s are measure d ini ti all y at pu rchas e cos t an d are amor ti se d on a s tra igh t-line b asis o ver t heir es t ima ted us ef ul li v es . Int an gib le as se t s acqu ired in a b usin es s comb inat io n a nd recog nis ed se pa rate l y f rom goo dw il l are ini t iall y reco gni se d at t heir f air v alu e at t he ac quisi t ion d ate (w hic h is reg arde d as t heir co s t). A mor ti s ati on is ch arge d s o as to w ri te o t he co s t of as se t s o ver th eir e s t imate d u sef ul li ve s , usi ng t he s tra igh t-line met ho d, o n the f oll ow ing b ase s: Cus tome r rela tio nshi ps an d ba ck lo g 1 0% - 1 2.5% T ec hno log y 1 4% -20% O th er 10% Subs eq uen t to ini t ial re cog ni tio n, int an gib le a ss et s are rep or ted a t cos t les s a ccum ulate d am or ti sa ti on an d acc umul ate d impairmen t losse s. Impairment of tangible and intangible assets other than goodwill At t he e nd o f eac h rep or tin g pe ri od , th e Gro up re v iew s t he ca rr y ing amo unt s of i t s t an gi ble and i nt ang ib le a ss et s to dete rmi ne w he th er t here is an y in dic a tio n t hat tho se as se t s ha ve s u ered an im pai rm ent los s . If any such ind ic at ion e x i s t s , th e re co v e r a b l e a m o un t of t h e a s s e t is e s t im a t e d in or d e r to d e te r m i n e th e e x te n t of t h e im p a i r m e n t lo s s (i f an y ) . Wh en i t is not p os sib le to es tima te th e recov era ble a mou nt of an i ndi v id ual as s et , t he Gro up es tima tes t he reco ver abl e BATM R&A 2021_Financial Section_3.indd 18 BATM R&A 2021_Financial Section_3.indd 18 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 79 FINANCIAL ST ATEMENTS amount of the cash -generating unit to which the as set belong s. When a reasonable and consistent basis of alloc ation c a n b e i d e n t i  e d , co r p o r a t e a s s e t s ar e a l s o al l o c a t e d to i n d i v i d u a l c a s h - ge n e r a t i n g u n i t s , o r o t h e r w i s e t h e y a re a l l o c a t e d to the sma lle s t gro up of c ash - gener at ing uni t s fo r wh ich a reas on abl e and con sis ten t all oc at ion b asi s can b e ide nti  ed. Intan gible asset s with inde nite usefu l lives and intangi ble assets not yet avail able for use are tested for impa irme nt at leas t annua ll y, and w hen ev er th ere is an in dic at io n tha t the as s et ma y be imp aire d. Re c o v e r ab l e am o u n t is th e hig he r of f ai r va l u e l e s s co s t s to s el l an d v a l ue in us e. In a s s e s s i n g v al u e in us e , th e es ti m a t e d fu tu re c a sh ow s are di scou nted to t heir p rese nt v alue u sing a pre - t ax di scou nt ra te t ha t re e c t s c urre nt mar ket assessments of the time value of mon ey and the risks specic to the asset for which the est imat es of future cash ows hav e not be en ad jus te d. If th e re cov era ble am oun t of an a ss et (or c as h- gen era tin g u ni t) i s e s t ima ted to b e les s th an it s c ar r y ing amo unt , t he ca rr y ing amo unt of the ass et (or c ash - gene rat ing uni t) is reduced to it s recover ab le amoun t . A n im pa irm ent los s is recog nis ed imm edia tel y i n pro t or l os s , unl es s t he rele van t a ss et is c ar ri ed at a rev alu ed a mou nt , in wh ich ca se the imp air men t los s is t reated a s a reva lua tio n dec reas e. Inventory Inv entor ie s a re s t a ted at t he lower of cos t an d n et realis abl e v al ue. Cos t com pr ise s d irec t ma ter ials and , w here app lic ab le direc t labo ur cost s a nd thos e overh ead s tha t hav e b ee n incur red in br in gin g the inve ntor ie s to thei r pres ent loc a tio n an d co ndi ti on . Cos t i s de ter min ed o n t he “ r s t-in -r s t- ou t ” basis . Ne t rea lis ab le v al ue rep res ent s the e s ti mate d sel ling p ri ce les s al l es t ima ted cos t s of comp le ti on an d cos t s to b e inc ur red in ma rke ti ng , s elli ng and d is t ri bu tio n. Financial instruments Financial as set s and nancial liabilities are recognised on the Group’s consolidated s t atements of nancial position wh en th e Gro up be come s a pa r t y to th e cont ra c t ual p rov isi ons of t he in s t rum ent . Trade and other receivables T rad e re cei va bl es a re m easure d a t i ni tia l reco gn it ion at fair va lue, and are s ubs equ ent l y m easu red at a mor ti se d co s t using the eec tive inter est rate method. A ppropriate allowances for es timated irrecoverable amounts are recognised in p ro t or los s w hen th ere is obj ec ti ve ev i den ce t hat t he as se t is i mp aired . T h e a llo wan ce re cog nis ed is mea sure d a s the d i erence b et wee n the a s set ’s c ar r y ing am oun t and t he pre se nt v alue o f e s t ima ted f ut ure c ash  ow s dis coun ted at t he e ec ti ve in teres t rate com pu ted a t ini tia l recog ni t ion . Cash and cash equivalents Cas h an d c ash eq ui va len t s co mpr is e c ash on han d an d de man d de pos it s an d ot her sho r t-ter m h igh l y li quid inv es t me nt s tha t are read il y conv er tib le to a k no wn a mou nt of c ash . Financial assets and investments A ll reg ular w ay p urcha se s or s ale s of n anc ial as s et s a re recog nis ed a nd de recog nis ed o n a tr ade d ate ba sis . Reg ula r way purchas es or sale s are p urch ase s or sa les of nanc ial ass et s tha t require deli ve r y of ass et s wi th in the time fr ame e s t abl ish ed by re gu lat ion o r conv ent io n in th e mar ket pla ce. A ll re cog nis ed nan cia l a ss et s are mea sured sub se que nt ly in th eir e nt iret y a t ei t her amo r t is ed cos t or fai r v alu e, dep end ing on t he c las si c at io n of th e nan cia l as se t s . BATM R&A 2021_Financial Section_3.indd 19 BATM R&A 2021_Financial Section_3.indd 19 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 80 Cla ssi c ati on of  na nci al a ss et s Deb t ins t r ume nt s t hat m ee t the f oll ow ing con di ti ons a re meas ured su bs equ ent l y at am or ti se d cos t : l t he nan cial as se t is he ld wi thi n a busi nes s mod el who se obje c t i ve is to hol d  nan cial as se t s in or der to col lec t cont ra c tu al c ash  ow s; an d l t he con tr ac tual ter ms of th e nan cia l as se t g i ve r ise o n s pe ci e d d ates to c ash o w s tha t are s ol el y pa y men t s of pr inc ipa l and i nteres t on th e pr inc ipa l amo unt o ut s t andi ng. T he maj or it y of n anc ial as s et s a re mea sured s ubs equ ent l y at f air v alu e th roug h pro t or l os s (F V TPL ). Amo r ti se d cos t an d e ec ti ve i nte re st m et hod T he e ec ti ve interes t meth od i s a m et hod of ca lcu lat ing t he a mor t ise d cos t of a d ebt ins tr ume nt a nd of alloc a tin g intere s t in come o ver t he rel ev ant p er io d. F or nan cia l ass et s othe r than pu rchas ed or or ig ina ted cre di t -im pai red na nci al as se t s (i.e. as se t s th at are cred it- imp aired o n ini t ial reco gni t ion), t he e ec ti ve i ntere s t ra te is th e rate t ha t exa c t l y dis coun t s es tima ted f u ture c as h receip t s (inc ludi ng all fee s and poi nt s paid or r ecei ve d that form an inte gr al par t of the eec t i ve interes t rate, tra ns ac tio n cos t s and other p remi ums o r dis coun t s) e xclu ding expe c te d cre di t lo ss es , t hrou gh t he e x pe c te d li fe of the debt instrument , or , where appropriate , a shor ter period, to the gross carr ying amount of the debt instrument on initial recognition. F or pur chase d o r originated credit-impair ed n ancial as set s, a credit-adju sted eect ive int erest rat e is ca lcu late d by dis coun tin g the es tima ted f u ture c ash o ws , in clu ding e xp ec ted cre dit l os se s, to th e amo r t is ed cos t of the d ebt i ns t ru men t on ini t ial re cogn it io n. T he am or tis ed cost of a  nan cia l as se t is t he a mou nt a t wh ich t he nanci al as s et i s mea sured at ini tia l reco gni t ion minu s t he prin cip al repay me nt s , plus the c umu lat i ve amor tis at io n u sing the eec ti ve interes t meth od of a ny dieren ce be t we en th at ini ti al amo unt an d the ma tur i t y am oun t , adjus ted for an y los s allo wan ce. Th e gros s c arr y in g amou nt of a nan cia l as se t is th e am or tis ed co s t of a na nci al as s et be fore a dju s tin g for an y lo ss a llo wan ce. T he cal cula ti on doe s not r eve r t to the gros s basis eve n if the credi t risk of the nanc ial ass et subs eq uen tl y impro ves so tha t th e nan cia l as se t is no l onge r cred it-im pai red. Fina nc ial a s set s a t F V T PL F inan cia l ass et s th at do not me et the cr i ter ia for being me asure d at amor ti se d cos t or F V TOCI are meas ured at F V T PL . F inan cia l a ss et s a t F V TPL are mea sured at fa ir val ue at the en d o f e ach rep or ting p eri od , wi th any f air va lue gai ns or los s es re cog nis ed in p ro t or los s . T he net gai n or los s recog nis ed in p ro t or los s is in clu de d in the ‘ot her gain s an d los s es ’ li ne i tem. Fair v al ue is d eter min ed in t he m anne r des cr ib ed in n ote 36 . Imp ai rme nt of  nan ci al a sse t s T he Group recog ni se s a l os s allo wan ce for exp ec ted credi t los s es on tra de recei va ble s. T he amo unt of exp ec ted cred it los s es is upda ted at each rep or tin g date to re ec t change s in credi t risk sin ce init ial reco gni t ion of the resp ec ti ve nancial i nstr ument. T he Gro up reco gni se s li fet ime EC L for t ra de recei v ab le s. T he e xp ec ted c redi t lo ss es o n th ese  nan cia l as se t s are es t ima ted usin g a provi sio n matr ix b ase d on the Gro up ’s his tori ca l credi t los s ex pe ri ence, ad jus te d for fac tor s tha t are specic to the debtors, general economic conditions and an asses sment of bot h the current as well as the forecas t direc ti on of con di ti ons a t th e repo r t ing d ate, in clu ding t ime v al ue of mo ne y wh ere ap prop ri ate. Li fet im e EC L rep rese nt s the exp ec ted credi t los se s t hat wil l res ult fro m all pos si ble def aul t e ven t s o ver th e ex pe c te d li fe of a na nci al ins tr umen t . BATM R&A 2021_Financial Section_3.indd 20 BATM R&A 2021_Financial Section_3.indd 20 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 81 FINANCIAL ST ATEMENTS Financial liabilities and equity instruments Cla ssi c ati on a s deb t or eq ui t y Deb t and equi t y inst r ume nt s are c las si e d as e it he r nan cia l liab ili ti es or as equi t y in accordance wi th the subs t an ce of the co nt rac tua l ar range men t s an d the d e ni tio ns of a n anc ial li abi lit y an d an eq ui t y i ns t ru men t. Equity instruments A n e qui t y i ns t r umen t is any con tr ac t t hat e v ide nces a re sidua l intere s t in th e as se t s of an en ti t y a f ter d ed uc t ing a ll of it s l iabi li tie s. Equi t y ins t ru men t s issue d by t he Group are re cogn ise d at t he procee ds recei ved , net of direc t issue cos t s . Financial liabilities A ll na nci al lia bili t ies a re meas ured s ubs equ ent l y at am or ti se d cos t usi ng th e ee c ti ve in teres t m et ho d or at F V TPL . Derivative nancial instruments T he G roup enter s into a va rie t y of d eri v at i ve nan cia l in s tr um ent s to ma nage i t s ex pos ure to f oreig n e xchange rate risk s, including for eign ex change f or ward c ontrac t s and options. Fur ther details o f deri vati ve nanci al inst rument s ar e dis clo se d in no te 36. Der i v ati v es a re ini t iall y re cog nis ed a t f air v al ue at th e date th e der i v at iv e con tr ac t s are e ntered into and are sub se que nt ly remea sured to t heir f air v alu e a t the e nd of eac h re por t ing pe ri od. T he re sul ti ng gain o r l os s is recog ni se d i n p ro t or los s im med iate ly. Bank borrowings Intere s t-bea ri ng ban k loa ns and o verdr af t s are reco rded a t the pro cee ds recei v ed , net of dire c t is su e cos t s . Fi nan ce char ges , in clu ding p remium s pa yab le on s et tl emen t or red emp tio n and di rec t i ss ue cos t s, are a ccounte d for o n an accr ual b asi s in pro t or lo s s accoun t using t he e ec ti ve in teres t m et ho d and are ad de d to the c ar r yi ng amo unt of t he ins t r umen t to th e ex tent t hat t he y are not s et tl ed in t he p er iod i n wh ich t he y ar ise. Provisions Prov isi ons are recog nis ed wh en the Grou p has a pre se nt oblig at ion as a result of a p as t ev ent , and i t is p roba bl e tha t t he G roup wil l be requ ired to set tl e t hat oblig at ion . Pro v isio ns a re mea sure d ba se d o n man ageme nt e s t imate of the exp endi t ure req uired to s et tle t he o bli gat io n at t he co ns olid ated st ate men t s of  nan cial posi ti on da te, an d are dis counte d to pre sen t va lue w he re the e e c t is m ater ial . 4 CriticalAccountingJudgmentsandKeySourcesofEstimationUncertainty Critical judgments in applying the Group’s accounting policies In the p roces s of app l y ing th e G roup ’ s a ccoun tin g p oli cie s , w hi ch are des cr ib ed in note 3, ma nagem ent ha s m ade t he following judgment s that have the mos t s ignicant eect on the amounts r ecognised in the nancial statement s (apar t fro m tho se i nvo l vi ng es tima ti ons , w hic h are dea lt w i th b el ow): Key sources of estimation uncertainty T he ke y a s sump tio ns conce rni ng t he f ut ure, and ot her key so urces of e s t imat io n un cer ta int y a t t he cons oli date d s t atem ent s of n anc ial p osi t ion d ate, t hat hav e a si gni  ca nt r isk of c ausi ng a m ater ial adj us t men t to th e c ar r y ing amo unt s o f as se t s an d liab ili ti es w i thi n the n ex t nan cia l yea r , a re dis cus s ed b elo w. BATM R&A 2021_Financial Section_3.indd 21 BATM R&A 2021_Financial Section_3.indd 21 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 82 Impairment of int angible assets an d goodwill De term inin g whet her goo dw il l is i mpa ired requ ires an es tim at ion of the valu e in u se of the cash gene rat ing uni t s (C GU ) to wh ic h goo d w ill h as b ee n all oc a ted . T he v al ue in use c a lc ula ti on re qu ires t he ent i t y to es t ima te t he f u tu re c ash  ow s of th e CGU and a sui t abl e dis coun t rate i n orde r to ca lcu late pre se nt v alue. Judgm ents with resp ect to deferred t ax assets F or th e p ur pos es of mea sur ing de fer red t ax as s et s ar is ing fro m l os s ca rr y -fo r w ards in di e rent ter ri tor ie s , m anage ment is requ ired to us e con side rab le ju dgm ent i n es t ima tio n of th e c arr ie d for wa rd los s es in w hi ch i t ex pe c t s to b e abl e to ut ili se in t he fo res eeab le f u ture. F or a ddi t ion al in for mat io n in resp ec t of def erre d t ax a ss et s see n ote 1 5. Judgments with respec t to construction contract s The Co mpany ac count s for it s revenue in acc ordance w ith IFRS 1 5 revenue from contract s with customers , which requi res es tim ate s to be ma de for co ntr ac t cos t s an d re ven ue s. Reve nue is reco gni se d u sing the percent age of completion method base d on the rat io of contrac t cost s incurr ed to total es timated contrac t cost s or en gineering comp let io n percen t age. Es tima ti ng tot al di rec t la bo ur cos t s a nd th e eng ine er ing s t a tus i s subj ec ti ve an d req uires t he use of m anage men t ’ s be s t jud gm ent s b as ed o n th e info rma ti on av ai labl e at t hat t im e. Judgments with resp ect to warrant y provi sion Warra nt y prov is ion w as ma de on t he b asi s of man ageme nt ’s es t ima ti on an d on pa s t e xp eri ence. 5 Revenues T he Gro up de ri ve s i t s rev enue f rom co nt rac t s w it h cu s tom er s for t he tr ans fer of goo ds a t a poi nt in t ime a nd se r vi ces and Con s tr uc ti on Cont ra c t s o ver t ime. A n a nal y si s of th e Grou p ’s rev enue s is a s foll ow s: Year ended 31 December 2021 $’000s 2020 $’000s Sales of goods 116,447 101,341 Services 15,837 35,413 Construction contracts 7,754 46,812 140,038 183,566 6 BusinessandGeographicalSegments Business segments Informatio n r epor ted to the chief operating decision mak er (CEO of th e C omp any) for the purposes of r e source allocation and as se s smen t of segm ent pe r f or man ce focus es on th e t y pe s of goods or ser v ice s deli ve red or prov id ed , and in respec t of t w o maj or op era ti ng se gm ent s - Net wor k ing a nd Cyber D i v isio n an d Bio -M edi ca l Di v is ion . T hes e di v isi ons a re th e bas is on wh ich t he Grou p re por t s i t s pr ima r y s eg men t in for ma tio n. T he pr in cip al pro duc t s and s er v ices of eac h of t he se di v is ion s are as follows: Net working and C yb er Di vision mos tly includes the research a nd de velopment, produc tion and marketing of d a t a c o m m u n i c a t i o n pr o d u c t s , s u c h a s N e t w o r k Fu n c t i o n V i r t u a l i s a t i o n ( “ N F V ” ) a n d E d ge Co m p u t i n g ba s e d o n th e G r o u p ’ s NF V o per at ing s ys tem, E dgi li t y O S (fo rm erl y NF V T ime) as we ll a s sup pl y of car ri er e the rn et a nd a cces s s olu t ion s in i t s Network Edg e busi ness. In the C yber unit, the Group provid es network mo nito ring and encr yption so lutions for very high spee d, large area n et wor k s . The Bio - Med ical Di v ision is engaged in the r esearch and devel opmen t, produ c tio n, market ing and dis t r ibu t ion of medi c al prod uc t s, pr ima ril y lab or ator y diag no s ti c equip men t and s teri lis at io n equip men t. BATM R&A 2021_Financial Section_3.indd 22 BATM R&A 2021_Financial Section_3.indd 22 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 83 FINANCIAL ST ATEMENTS A. Segment revenues and segment results Y ear ended 31 December 20 21 Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Revenues from external customers 27,992 112,046 – 140,038 Operating prot 7,844 16,534 – 24,378 Net nance income 555 Prot before tax 24,933 Y ear ended 31 December 20 20 Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Revenues from external customers 54,884 128,682 - 183,566 Operating prot (4,932) 19,165 - 14,233 Net nance expense (934) Prot before tax 13,299 B. Segment assets, liabilities and other information As a t 31 D ece mbe r 2 021 Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Assets 74,951 116,474 1,739 193,164 Liabilities 23,904 40,826 4,300 69,030 Depreciation and amortisation 1,659 3,525 80 5,264 Additions to non-current assets 2,114 7,961 - 10,075 As a t 31 D ece mbe r 2 02 0 Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Assets 73,830 124,398 1,878 200,106 Liabilities 30,955 50,388 – 81,343 Depreciation and amortisation 2,403 2,984 88 5,475 Additions to non-current assets 925 4,672 – 5,597 BATM R&A 2021_Financial Section_3.indd 23 BATM R&A 2021_Financial Section_3.indd 23 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 84 C. Revenue from major products and services T he fol low ing i s an an al y sis of t he G roup ’ s reve nue f rom op er at ion s fro m it s majo r prod uc t s and s er v ice s. Year ended 31 December 2021 $’000s 2020 $’000s Networking and cyber products 15,376 13,552 Software services 12,616 41,332 Distribution of medical products and services 71,832 65,961 Diagnostic products 31,576 22,962 Eco-Med products 8,638 39,759 140,038 183,566 * The decrease in Software services revenue derives mainly from the sale of a Group subsidiary. See note 31 (disposal of subsidiary) for further details. ** 2020 Eco-Med products revenue includes $33m related to an exceptional ventilators project. D. Revenue from major sources Y ear ended 31 December 20 21 Revenues Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Sales of goods 15,376 101,071 – 116,447 Services 7,131 8,706 – 15,837 Construction contracts 5,485 2,269 – 7,754 27,992 112,046 – 140,038 Y ear ended 31 December 20 20 Revenues Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Sales of goods 13,552 87,789 – 101,341 Services 29,272 6,141 – 35,413 Construction contracts 12,060 34,752 – 46,812 54,884 128,682 – 183,566 BATM R&A 2021_Financial Section_3.indd 24 BATM R&A 2021_Financial Section_3.indd 24 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 85 FINANCIAL ST ATEMENTS E. Geographical segments T he G roup o per ate s in t hree pr inci pa l geog ra phi ca l area s: Un ite d St ate s of A m er ic a, I sra el an d Europ e. T he G roup ’ s reve nue from ex te rna l cus tome rs and infor mat io n abou t it s seg me nt ass et s by geogr aphi c al loca ti on are p res ente d by the l oc a tio n of op era ti ons a nd are de t ail ed b elo w: $’000s Revenue from external customers Non-current assets 2021 2020 2021 2020 Area A 107,718 126,791 40,302 36,276 Area B 22,923 47,671 10,304 23,621 Area C 9,397 9,104 4,510 4,685 Total 140,038 183,566 55,116 64,582 7 Costofrevenues Year ended 31 December 2021 $’000s 2020 $’000s Direct costs – Components and subcontractors 74,136 110,244 Changes in inventory 2,942 (8,599) Salaries and related benets 7,330 16,666 Overhead and depreciation 2,726 3,030 Other expenses 1,843 1,515 88,977 122,856 8 Sales and marketing expenses Year ended 31 December 2021 $’000s 2020 $’000s Salaries and related benets 10,220 10,870 Commissions 2,986 4,289 Outside services 491 435 Advertising and sales promotion 941 867 Overhead and depreciation 2,304 2,149 Travelling and other expenses 1,348 1,587 18,290 20,197 BATM R&A 2021_Financial Section_3.indd 25 BATM R&A 2021_Financial Section_3.indd 25 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 86 9 General and administrative expenses Year ended 31 December 2021 $’000s 2020 $’000s Salaries and related benets 5,114 6,148 Professional services() 3,506 4,888 Overhead and depreciation 1,347 1,300 Other expenses 2,276 3,548 12,243 15,884 () Including auditors’ remuneration for audit services 347 281 Amounts payable to Deloitte by the Group undertakings in respect of non-audit services in 2021 were $48 thousand (2020: $19 thousand). In addition, payables in respect of non-audit services to others than the Company’s auditors, for tax and internal audit services in 2021, were $51 thousand and $19 thousand, respectively (2020: $18 thousand and $11 thousand, respectively). 10 Researchanddevelopmentexpenses Year ended 31 December 2021 $’000s 2020 $’000s Salaries and related benets 4,741 3,882 Components and subcontractors 2,863 4,930 Overhead and depreciation 852 938 Other expenses 591 617 Government grants (334) (109) 8,713 10,258 11 Stacosts T he av erage m ont hl y nu mbe r of emp lo yee s in 2021 (incl udin g exec u ti ve d irec tor s) was 1 , 023 (2020: 1 , 1 96 ). Year ended 31 December 2021 $’000s 2020 $’000s Their aggregate remuneration comprised: Wages and salaries 22,233 31,733 Social security costs 3,569 4,242 Other pension costs 1,603 1,591 27,405 37,566 BATM R&A 2021_Financial Section_3.indd 26 BATM R&A 2021_Financial Section_3.indd 26 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 87 FINANCIAL ST ATEMENTS 12 Otheroperatingexpenses(income) Year ended 31 December 2021 $’000s 2020 $’000s Prot from sale of a subsidiary (1) (13,035) – Gain on reduction of holdings in an associated company – ) (602) Amortisation of intangible assets 196 304 ) Other 276 ) 436 ) (12,563) 138 ) (1) See note 31 in relation to the disposal of a subsidiary 13 Finance income Year ended 31 December 2021 $’000s 2020 $’000s Interest on bank deposits 3 94 Gain on derivative nancial instruments – 223 Gain on marketable securities 25 81 Foreign exchange dierences, net 895 – Other interest income 543 422 1,466 820 14 Finance expenses Year ended 31 December 2021 $’000s 2020 $’000s Loss on derivative nancial instruments (44) – Foreign exchange dierences, net – (684) Interest on loans and bank fees (643) (768) Interest on lease liabilities (224) (302) (911) (1,754) BATM R&A 2021_Financial Section_3.indd 27 BATM R&A 2021_Financial Section_3.indd 27 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 88 15 Income tax expenses Year ended 31 December 2021 $’000s 2020 $’000s Current tax (7,027) (3,352) Tax on previous years (11) (2) Deferred tax (note 26) (2,299) 2,311 (9,337) (1,043) Taxation under various laws: Israel T he Comp any i s an “ ind us t ria l comp any ” a s de ne d in th e Isra eli L a w for t he Enco ura gemen t of In dus t r y ( T a xes) 1 9 69. a. T he cor po ra te incom e t ax r ate for t he y ear s 2020 and 202 1 is 23 % b. Encourag ement of Capital Invest ments L aw: a. Th e corp ora te tax ra te for each compan y wit h Prefer red Enter pr is e st at us for the year s 202 0 and 20 21 is 7 .5%. b. Inc lu ding ad di ti onal t a x t ra ck s fo r Pre fer red T e chn olo gi ca l En ter pr ise (t a x r ate of 7 .5% in A re a “A” and t ax r ate of 1 2% in A rea “ O th er ” ) a nd for s pe cial P refer red T e ch nol og ic al Ente rp ri se (t a x rate of 6%). c. Dete rmi ning reli ev es of t he th resh old con di ti ons to enter th e t ra ck of “ Sp eci al Prefer red Ente rp ris e ” rele va nt for hu ge comp anie s en ti tl e (t ax r ates of 5% in A re a “ A” or 8% in th e A rea “ O th er ” ). T he Com pa ny ha s Pre fer re d Ente rp r is e s t at us in area A a nd i t s I sra eli sub sid iar ie s are b ei ng as s es s ed a ccor din g to th e corporate inc ome ta x rate . T he Compa ny and i t s Isr ael i s ubsi diar ie s h ave t a x l os s ca rr y -fo r w ards of $1 31 .9 m illi on for w hic h t he Gro up did no t create d efe rre d ta x as s et s . Acco rding to t he Isr ae li t ax la w th ere is no e xp ir y date to u se su ch lo ss es . T he Comp any t a x as se s smen t s fo r the y ear s up to an d inc lu ding t he 201 6 t ax y ear are co nsid ered a s na l. The United States of America T elco Sys te ms in cur red los se s fo r t ax p ur po ses . In add it ion , in accorda nce w i th U.S . t a x law, T elco Sy s te ms el ec ted to amo r t is e a subs ta nti al pa r t of t he e xces s cos t p aid b y the Com pan y in i t s acq uisi t ion o ver a p eri od of 1 5 y ear s , whi ch has res ul ted in t a x los s c ar r y-f or ward s. Acco rding to US la w, los se s crea ted un til 201 7 ca n be c ar ri ed fo r w ard fo r 20 year s . A s o f 31 D ecem ber 202 1, the tot al ca rr y -fo r w ard los se s o f T e lco Sys te ms a mo unte d to $280.5 milli on of w hic h defe rre d ta x as s et of $3. 1 milli on ha ve be en recog ni se d in resp ec t of such lo ss es to t he ex tent t hat a su c ien t ta xa ble pro t w ill b e av aila ble i n the f ores eea bl e fu tu re. On 22 D ece mbe r 201 7 , a T ax Cut s and Job s Ac t la w was e nac ted (the “ T a x A c t ” ). Th e T ax Ac t cont ains signi  ca nt changes to fed era l cor po rate taxes , i ncl udin g a p erm ane nt re duc tio n of t he co rp or ate t a x ra te fro m 35% to 21 % eec ti ve 1 Janu ar y 201 8 . Other jurisdictions T a xa ti on for o the r jur is dic tio ns th an th ose m ent io ned a bov e is c alc ula ted at t he ra tes pre va ilin g in the re spe c t i ve jur isd ic tio ns. T h e corp or ate inco me t ax r ate for s ubsi diar ie s wi th s ign i ca nt s ale s are: Mol do va is 1 2% , Rom ania i s 1 6% and I t al y is 24%. BATM R&A 2021_Financial Section_3.indd 28 BATM R&A 2021_Financial Section_3.indd 28 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 89 FINANCIAL ST ATEMENTS T he G roup ha s t a x l os s c ar r y -for wa rds of $6 . 2 mi llio n in Europ ean sub sidi ar ies an d t he Grou p di d n ot recog nis e defe rre d t ax a ss et s in respe c t of $ 5. 2 milli on of su ch l os se s. T he in come t a x ex pe nse s for the y ear c an b e reco nci led to t he p ro t pe r th e cons oli date d s t ate men t of pro t o r los s as follows: Year ended 31 December 2021 $’000s 2020 $’000s Prot before tax 24,933 13,299 Tax expense at the Israeli statutory corporate income tax rate of 23% 5,735 3,059 Dierence between equity method measurement basis and cost basis for tax purposes related to disposal of a subsidiary 1,754 – ) Dierences between statutory tax in Israel (23%) and statutory tax rate for subsidiaries abroad 1,449 (339) Tax losses utilised in current period for which no deferred tax assets have been recognised (154) (166) Deferred tax assets recognised (191) (4,072) Write-o of deferred tax assets – ) 1,818 ) Tax on previous years 11 2 ) Other 733 ) 741 ) Tax expenses for the year 9,337 ) 1,043 ) 16 Earningspershare T he c alc ula tio n of th e ba sic an d dil ute d ear nin gs p er sh are is b ase d on t he fo llo wi ng dat a: Year ended 31 December 2021 2020 Earnings for the purposes of basic and diluted earnings per share ($'000s) attributable to Owners of the Company 14,340 9,793 Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share 440,437,960 440,291,783 Eect of dilutive potential ordinary shares: Share options 3,829,714 3,763,448 Weighted average number of ordinary shares for the purposes of calculation of diluted earnings per share 444,267,674 444,055,231 T he numb er of share opt ion s tha t could pote nt iall y dilu te ba sic ear ning s pe r share in the f ut ure, bu t were not incl ude d in th e ca lc ulat io n of dilu te d ear ning s p er sha re be ca use t he y are an ti dilu t iv e for t he y ear , is 2 25 ,0 0 0 (2020: 4 0 0 ,0 0 0). BATM R&A 2021_Financial Section_3.indd 29 BATM R&A 2021_Financial Section_3.indd 29 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 90 17 Financial assets Year ended 31 December 2021 $’000s 2020 $’000s Interest-bearing deposits 158 157 Financial assets at FVTPL 2,274 2,646 2,432 2,803 T he av erage i ntere s t ra te of dep osi t s is 0 .2 5% for 202 1 and 2020. 18 Tradeandotherreceivables 31 December Trade and other receivables 2021 $’000s 2020 $’000s Trade receivable account 25,451 24,889 Participation in research and development: Government of Israel 90 1,101 VAT authorities 2,226 1,273 Tax authorities 257 126 Construction contracts (see following table) 1,474 5,790 Prepaid expenses 3,634 6,468 Other debtors 1,800 1,820 34,932 41,467 Construction contracts 31 December 2021 $’000s 2020 $’000s Composition: Cumulative costs incurred due to works construction contracts 8,493 ) 15,019 ) In addition - Recognised prots 2,044 ) 1,023 ) Less accounts submitted to project customers (9,063) (10,252) 1,474 ) 5,790 ) T he average credi t per io d t a ken on sa les of go ods is 6 6 day s (202 0 : 5 4 da y s). No interes t is c har ged on th e r ecei v abl es . An allo wa nce ha s be en ma de a t 31 D ece mbe r 202 1 for e s ti mate d ir recov era bl e amo unt s f rom the s al e of go od s of $3 ,49 9 tho us an d (2020: $3 ,556 tho us an d) , in clu ding a lo ss allo wan ce fo r ex pe c ted cre di t lo s se s accord ing to IFR S 9. T he direc tor s consi der th at th e car r y ing am oun t of trad e and ot her recei v ab les ap proxi mate s thei r fair v alu e. A s of 31 De cemb er 2021 , t rad e rece iv ab le a ccoun t in clu des amo unt s of $6 .4 m illi on f or w hic h ma tur i t y date has ex pire d (in clu ding a rece iv ab le in th e a mou nt of $0.9 m illi on tha t is ove rdue by mo re t han a yea r), b ut t he Grou p, b as ed on p as t expe rienc e and on th e cr edit qua lit y of the deb tors and given tha t mo s t of the deb t s hav e been col lected by the da te of the approval of this annual r ep or t , has not made an allowance for doubtf ul debt s since the Company expec t s that thos e deb t s are to be colle c t ibl e. BATM R&A 2021_Financial Section_3.indd 30 BATM R&A 2021_Financial Section_3.indd 30 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 91 FINANCIAL ST ATEMENTS Credit risk T he Group ’ s prin cip al na nci al as set s are c as h and ca sh equi v ale nt s , tr ade an d othe r recei vab le s, deposi t s and inv es t men t s a t fa ir v alu e. T he G roup ’s cred it ri sk is p ri mar il y a t t ri bu t abl e to i t s t ra de rece i vab le s. T h e am oun t s pre se nted in th e cons oli date d s t atem ent s of nan cia l po sit io n are ne t of all owa nces f or cre di t los s . 19 Inventories 31 December 2021 $’000s 2020 $’000s Raw materials 7,125 7,166 Work-in-progress 2,410 3,353 Finished goods 21,416 23,374 30,951 33,893 Dur ing 202 1 , $2. 0 mil lio n of slo w- m ov ing inv ento r y wa s im pai red and ex pe nse d to th e Pro t or Los s a ccoun t (2020: $ 1 .2 million). 20 Property,plantandequipment ($’000s) Land and buildings Plant and equipment Motor vehicles Furniture and ttings Leasehold improvements Total Cost At 1 January 2020 9,735 ) 17,088 ) 1,982 ) 4,181 ) 2,537 ) 35,523 ) Additions 29 ) 2,352 ) 419 ) 351 ) 334 ) 3,485 ) Disposals – ) (271) (323) (35) – ) (629) Eect of translation adjustment 445 ) 565 ) 5 ) 25 ) 121 ) 1,161 ) At 1 January 2021 10,209 ) 19,734 ) 2,083 ) 4,522 ) 2,992 ) 39,540 ) Additions 29 ) 3,477 ) 394 ) 103 ) 2,036 ) 6,039 ) Disposal (11) (265) (229) (77) (29) (611) Disposal of subsidiary – ) (797) – ) – ) (1,197) (1,994) Eect of translation adjustment (519) (621) (115) (88) (86) (1,429) At 31 December 2021 9,708 ) 21,528 ) 2,133 ) 4,460 ) 3,716 ) 41,545 ) BATM R&A 2021_Financial Section_3.indd 31 BATM R&A 2021_Financial Section_3.indd 31 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 92 ($’000s) Land and buildings Plant and equipment Motor vehicles Furniture and ttings Leasehold improvements Total Accumulated depreciation At 1 January 2020 2,392 ) 12,352 ) 1,285 ) 4,007 ) 1,284 ) 21,320 ) Depreciation expense 295 ) 1,002 ) 247 ) 191 ) 290 ) 2,025 ) Disposals – ) (154) (248) (34) – ) (436) Eect of translation adjustment 211 ) 260 ) 3 ) 7 ) 41 ) 522 ) At 1 January 2021 2,898 ) 13,460 ) 1,287 ) 4,171 ) 1,615 ) 23,431 ) Depreciation expense 299 ) 1,332 ) 228 ) 74 ) 116 ) 2,049 ) Disposals – ) (220) (175) (77) – ) (472) Disposal of subsidiary – ) (512) – ) – ) (338) (850) Eect of translation adjustment (232) (301) (86) (71) ) (30) ) (720) ) At 31 December 2021 2,965 ) 13,759 ) 1,254 ) 4,097 ) 1,363 ) 23,438 ) Carrying amount At 31 December 2021 6,743 ) 7,769 ) 879 ) 363 ) 2,353 ) 18,107 ) At 31 December 2020 7,311 ) 6,274 ) 796 ) 351 ) 1,377 ) 16,109 ) 21 Investmentproperty 2021 $’000s 2020 $’000s At 1 January 1,878 ) 1,899 ) Depreciation expense (80) (88) Exchange rate dierences (59) 67 ) At 31 December 1,739 ) 1,878 ) Amounts recognised in the consolidated statements of prot or loss 31 December 2021 $’000s 2020 $’000s Rental income from investment property 24 ) 171 ) Operating expenses related to income from investment property (13) (154) Operating expenses related to investment property which produced no income (134) (34) BATM R&A 2021_Financial Section_3.indd 32 BATM R&A 2021_Financial Section_3.indd 32 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 93 FINANCIAL ST ATEMENTS Additional Information Fai r valu e di sc los ur es f or in ves tme nt pr op er ties m ea sur ed u sin g the c os t mo del Det ails of th e Group ’s fre ehold lan d and buil ding s and infor mat ion abo ut th e fair v alue hier archy as at yea r end are as follows: 31 December 2021 31 December 2020 At amortised cost $’000s Fair value $’000s At amortised cost $’000s Fair value $’000s USA 1,051 1,933 1,099 1,804 Italy 688 1,237 779 1,341 T he fai r va lue in I t al y and t he US A was d eter min ed b as ed on t he mar ket co mpa rab le ap pro ach t hat re ec t s rece nt tra ns ac tio n p r ices for sim ilar prope r t ie s, where the m ar ket r ent al s of all l et t a ble unit s of th e p rop er tie s a re a ss es s ed by referen ce to t he rent al s ac hie ve d in the le t t ab le u ni t s as wel l as ot her let tin g s of s imila r pro pe r t ie s in the nei ghb our ho o d. T he capi t al is at ion rate adop ted is made by re feren ce to th e yiel d rates obs er ved by the valu er s for similar prope r t ie s in the l oc al it y an d adj us ted b as ed o n th e val uer s ’ k n ow led ge of th e fac tor s sp eci  c to the re spe c t i ve p rope r tie s. Aver age mar ket pr ice, t ak ing in to a ccoun t t he di e rence s in l oc at ion an d ind iv i dual f ac tors , su ch as f ront age an d s ize, be t we en the comp ara ble s and the proper t y , was $ 1 , 369 per square metre for t he proper t y in It al y and $1 59 p er square foo t for t he pro per t y in th e USA . 22 Right-of-useassets ($’000s) Plant and equipment Buildings Motor vehicles Total Cost At 1 January 2020 – 11,209 ) 1,163 ) 12,372 ) Additions – 1,301 ) 481 ) 1,782 ) Disposals – – ) (213) (213) Eect of translation adjustment – 330 ) 62 ) 392 ) At 31 December 2020 – 12,840 ) 1,493 ) 14,333 ) Additions 848 1,618 ) 693 ) 3,159 ) Disposals – (495) (365) (860) Disposal of subsidiary – (4,191) (547) (4,738) Eect of translation adjustment – (110) (13) (123) At 31 December 2021 848 9,662 ) 1,261 ) 11,771 ) BATM R&A 2021_Financial Section_3.indd 33 BATM R&A 2021_Financial Section_3.indd 33 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 94 ($’000s) Plant and equipment Buildings Motor vehicles Total Accumulated depreciation At 1 January 2020 – 1,930 ) 497 ) 2,427 ) Charge for the year – 1,950 ) 466 ) 2,416 ) Disposals – – ) (214) (214) Eect of translation adjustment – 58 ) 39 ) 97 ) At 31 December 2020 – 3,938 ) 788 ) 4,726 ) Charge for the year 128 1,706 ) 375 ) 2,209 ) Disposals – (285) (365) (650) Disposal of subsidiary – (896) (175) (1,071) Eect of translation adjustment – (6) (7) (13) At 31 December 2021 128 4,457 ) 616 ) 5,201 ) Carrying amount At 31 December 2021 720 5,205 ) 645 ) 6,570 ) At 31 December 2020 – 8,902 ) 705 ) 9,607 ) The Gr oup leases several as set s including buildings and motor vehicles. T he average lease t er m of buildings and mot or vehi cle s f rom th e imp lem ent a tio n date, 1 J anua r y 201 9, is 7 .7 and 2.5 yea r s, re spe c t i ve ly. T he ma tur i t y an al y sis o f leas e lia bili t ies i s pres en ted in n ote 27 . Am ount s re co gni se d in pr o t or lo s s 2021 $’000s 2020 $’000s Depreciation expense on right-of-use assets 2,209 2,416 Interest expense on lease liabilities 224 302 Expense relating to short-term leases 766 466 At 31 D ece mbe r 2021 , the G roup was commit ted to $0. 4 mil lio n fo r sh or t -ter m l eas es (20 20 : $0. 3 mi llio n). Th e to ta l c ash ou t  ow for l eas es a mou nted to $2, 1 7 4 t ho us and ( 2020: $2,428 tho us an d). 23 Goodwill T he G roup tes t s an nuall y goo d wil l fo r im pai rm ent or more fre que nt l y i f t here are i ndi ca ti ons th at go od w ill mig ht be im pai red. T he G roup h as t w o repo r ta ble b usin es s se gm ent s a nd goo d wi ll is as s oci ated w i th CGUs wi t hin t he Bio -M edi ca l seg me nt or CGUs wi thi n the N et wor k ing an d C y b er se gme nt . T he goo dw il l relate d to the B io - Me dic al seg me nt in th e amo unt of $9,4 01 th ous an d (2020: $9 ,478 tho us and ) is all oc ate d to 5 C GUs : Eco -M ed , Diag no s ti c , Dis t r ibu t ion , Dis t ri bu tor and pro v ider of gene ti c s tes t s and A na l y tic al ins tr ume nt s dis t r ibu t ion . The goo d wi ll relate d to the N et wor k ing a nd C yb er s eg men t amo unte d to $1 ,98 4 tho us and ( 2020: $7 ,36 0 th ous an d) . BATM R&A 2021_Financial Section_3.indd 34 BATM R&A 2021_Financial Section_3.indd 34 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 95 FINANCIAL ST ATEMENTS T he goo d wil l is all oc a ted to th e fol low ing CGUs: Eco - Me d: $2,550 t ho us and ( 2020: $2,550 t hou sa nd ) Diag no s ti c: $1 ,0 82 th ous a nd (2020: $1 , 1 7 3 th ous an d) Dis t r ibu t ion: $1 , 1 1 6 th ous an d (2020: $1 , 1 37 th ous an d) Dis t r ibu tor a nd pro v ide r of gene ti c s tes t s : $1 , 073 th ous a nd (2020: $1 , 038 t ho us and ) A nal y ti c al ins tr ume nt s di s tr ib ut io n: $3,5 80 t ho us and ( 2020: $3,5 80 t hou s and ) Net wor k ing : $1 ,98 4 t hou sa nd (2020: $1 ,9 8 4 th ous an d) Sof t ware ser v ice s: $0 th ous an d ( 2020: $5,376 th ous a nd) . R elate d to N GS of t , w hi ch was s old du rin g Q1 2021 . S ee al so note 31 for f ur th er inf or mat ion . T he reco ver abl e am oun t s of t he CGUs are de ter mine d f rom v alu e in us e c alc ula ti ons e xcept fo r th e Di agn os t ic CGU. T h e key as sump tio ns for the va lue in u se ca lcu lat ion s a re t hos e re gard ing the dis coun t r ates , grow t h r ates an d e xp ec ted chan ges to s elli ng p ri ces and direc t cost s durin g t he per io d. Pre- t a x di scou nt rate s of bet w een 1 0 .5% - 1 5.5% h ave been use d. C han ges in s ell ing p ri ces a nd di rec t cos t s a re bas e d on rece nt hi s tor y an d ex p ec ta ti ons of fu t ure ch ange s in th e mar ket . T he Grou p prep ares c ash o w forec a s t s der i ve d fro m the mo s t recen t nan cia l budge t app rove d by man ageme nt an d ex tra pol ates i nde ni te c ash  ow s b as ed on e s t imate d g row th ra tes . F or t he pu rp os es of t his c al cul at ion m anagem ent hav e us ed rev enu e g row th ra tes for t he Ne t wo rk i ng CGU o f 35% , 1 9 % , 35%, 35%, 35% for year s 1 - 5 res pe c t i vel y and 0% th erea f te r , f or th e E co - Med CGU 2 3% for ye ar 1 , 1 0 % for ye ar s 2-5 and 1 % th erea f te r , f or th e D is t ri bu ti on CGU 8% for year 1 , 1 5% for year s 2 -5 and 5 % therea f te r , for the Dis t rib u tor and prov id er of g ene tic s tes t s CGU 8 % for year 1 , 5% for year s 2-5 an d 1 % th ereaf ter , and for th e A n al y ti ca l i ns t ru men t s d is t ri bu tio n CGU 1 3 % fo r y ear 1 , 9% for year s 2-5 and 1 % t here af ter . T he aver age ope rat ing e xp ens es hav e been as su med to grow fo r the Net wor k ing CGU at 39%, 27% , 34% , 24%, 25% for year s 1-5 respe c t i ve l y and t he n as sum ed to rem ain co ns t an t th erea f ter , and for t he Eco - M ed , Dis tr ibu t ion , Di s t ri bu tor and prov i der o f gen eti c s tes t s an d A na l y tic al ins t r ume nt s d is t ri bu tio n CGUs at 5% , 8 % , 8% , 9 % , 9 % fo r yea r s 1 -5 resp ec ti ve ly an d the n as sume d to re main con s t ant t herea f ter . T he av era ge co s t of good s sol d has be en as sum ed to grow for th e Ne t w or ki ng CGU at 6%, (2%), 1 % , 1 3% , 14% fo r yea rs 1 -5 resp ec ti v el y an d t hen assum ed to remai n con s t ant the reaf ter , a nd fo r th e Eco - Me d, D is t ri bu tio n, Dis tr ib uto r and p rov id er of ge net ic s te s t s a nd A n al y tic a l ins t r ume nt s dis trib ut ion CGU s 1 0% , 1 3%, 14 % , 1 4% , 1 4% for years 1-5 respec tiv ely a nd 4% thereaf ter . Th e rates use d above re ec t his to ri ca l rate s ach ie ved a nd e xp ec ted le ve ls for 2022 b ut t hen a re adj us te d for sub se que nt ye ar s. The recoverable amount of the Diagnostic CGU is determined based on fair value, which accordingly no impairment was re quire d. Sensitivity of the recoverable amount to changes in the key assumptions The re co ver able amo unt of the Distribut or and provid er of g enet ics te st s activ it y is hi gher tha n the carr ying amo unt in th e amou nt of $0.9 mil lio n. Re duc ti on of 2% gro w th ra te ta ken into a ccoun t in ca lc ula tin g the v al ue in us e of the a c t i v i t y will result in a decrease of $0.8 million rec overable amount of the ac ti vi t y and no goodw ill impairment will be recorded. Inc rease o f 3% in pre -t a x dis coun t rate t aken in to accoun t in c alc ulat ing t he v alu e in use of t he ac ti v i t y w ill re sul t in a dec rease of $0. 86 mi llio n recove rab le amo unt of th e ac t i v it y and no go od wi ll imp air ment w ill b e recorde d. T he cha nges i n a s s u m p t i o n s f o t h e s e n s i t i v i t y a n a l y s i s w i l l l e a d t o c h a n g e s i n o t h e r as s u m p t i o n s u s e d i n t h e c a l c u l a t i o n o f v a l u e i n u s e . BATM R&A 2021_Financial Section_3.indd 35 BATM R&A 2021_Financial Section_3.indd 35 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 96 2021 $’000s 2020 $’000s Balance at 1 January 16,838 ) 16,804 ) Additions in the year – ) – ) Disposal of a subsidiary () (5,185) (504) Foreign exchange dierence (268) 538 ) Balance at 31 December 11,385 ) 16,838 ) () see note 31. 24 Otherintangibleassets Customer Relationships and Backlog $’000s Technology $’000s Other $’000s Total $’000s Cost At 1 January 2020 16,420 ) 17,180 ) 2,694 ) 36,294 ) Additions() – ) 328 ) – ) 328 ) Disposals – ) – ) – ) – ) Eect of translation adjustments 716 ) 562 ) 142 ) 1,420 ) As at 1 January 2021 17,136 ) 18,070 ) 2,836 ) 38,042 ) Additions() – ) 400 ) 477 ) 877 ) Disposals – ) (1,264) – ) (1,264) Disposal of subsidiary (4,896) (199) (1,554) (6,649) Eect of translation adjustments (535) (451) (54) (1,040) At 31 December 2021 11,705 ) 16,556 ) 1,705 ) 29,966 ) Accumulated amortisation At 1 January 2020 15,818 ) 11,302 ) 2,233 ) 29,353 ) Amortisation expense 154 ) 463 ) 101 ) 718 ) Disposal – ) – ) – ) – ) Eect of translation adjustments 659 ) 328 ) 105 ) 1,092 ) At 1 January 2021 16,631 ) 12,093 ) 2,439 ) 31,163 ) Amortisation expense 43 ) 547 ) 126 ) 716 ) Disposal – ) (106) – ) (106) Disposal of subsidiary (4,504) (91) (1,086) (5,681) Eect of translation adjustments (513) (233) (28) (774) At 31 December 2021 11,657 ) 12,210 ) 1,451 ) 25,318 ) Carrying amount At 31 December 2021 48 ) 4,346 ) 254 ) 4,648 ) At 31 December 2020 505 ) 5,977 ) 397 ) 6,879 ) () Includes capitalised development costs according to IAS 38. BATM R&A 2021_Financial Section_3.indd 36 BATM R&A 2021_Financial Section_3.indd 36 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 97 FINANCIAL ST ATEMENTS 25 Subsidiaries A list of the signicant direct and indirect investments in subsidiaries, including the country of incorporation, and percent of ownership interest as at 31 December 2021 is presented below. Subsidiary Principal activity Country of incorporation Ownership interest Date of acquisition Entity A Telecommunication United States of America 100% April 2000 Entity B Distribution Romania 100% June 2007 Entity C Eco-Med Hungary 75% February 2008 Entity D Distribution Moldova 51% July 2008 Entity E Diagnostics Italy 100% February 2009 Entity F Diagnostics Italy 100% November 2009 Entity G Cyber Israel 67% April 2012 Entity H Distribution Hungary 100% January 2016 Entity I Distribution Israel 100% January 2017 26 Deferred tax Deferred tax assets T he fol low ing a re d efe rre d ta x as s et s re cogn ise d by t he G roup an d mov eme nt s t here on dur in g t he c ur rent an d pr ior repo r t ing p er io d (see a lso n ote 1 5). Retirement benet obligations $’000s Losses carried forward $’000s Other() $’000s Total $’000s At 1 January 2020 36 ) 3,168 ) 30 ) 3,234 ) Change for the period (36) 2,415 ) (29) 2,350 ) Eect of translation adjustments – ) 176 ) (1) 175 ) At 1 January 2021 – ) 5,759 ) – ) 5,759 ) Change for the period – ) (2,280) – ) (2,280) Eect of translation adjustments – ) (104) – ) (104) At 31 December 2021 – ) 3,375 ) – ) 3,375 ) T he Com pan y in cur red t ax los s es i n cer t ain jur is dic tio ns , to whi ch defe rre d t a x as s et s relate, to t he e x tent t ha t i t is ex pe c te d t ha t f u ture t ax ab le pro t wi ll be av aila bl e a nd ca n be ut ili se d a gain s t th em. T he de fer red t ax as s et s we re analy sed based on forecasted operations and exis ting ag reements and backlog. T he Co mpany expec t s that tax able pro t s w ill b e av ail abl e, as a res ul t of an in creas ing de mand , ne w pro duc t s an d ex pan sio n to new m ar ket s . BATM R&A 2021_Financial Section_3.indd 37 BATM R&A 2021_Financial Section_3.indd 37 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 98 Deferred tax liabilities Intangible assets $’000s Tangible assets and other $’000s Total $’000s At 1 January 2020 98 ) 528 ) 626 ) Change for the period (15) 54 ) 39 ) Eect of translation adjustments 7 ) 39 ) 46 ) At 1 January 2021 90 ) 621 ) 711 ) Change for the period (16) 35 ) 19 ) Eect of translation adjustments (1) (19) (20) Disposal of a subsidiary – ) (540) (540) At 31 December 2021 73 ) 97 ) 170 ) The following are unrecognised taxable temporary dierences associated with investments and interests: Taxable temporary dierences in relation to investments in subsidiaries for which deferred tax liabilities have not been recognised amount to: $12,873 thousand as of 31 December 2021 (31 December 2020: $15,386 thousand). 27 Financialandotherliabilities Trade and other payables 31 December 2021 $’000s 2020 $’000s Trade creditors 20,701 22,373 Salary accruals 7,195 8,511 VAT and other tax 4,336 3,515 Dividend payables 4,300 – Provision – 2,059 Other creditors and accruals 10,987 17,160 47,519 53,618 Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases was 59 days (2020: 58 days). The directors consider that the carrying amount of trade payables approximates to their fair value. Long - ter m ban k cr edi t 31 December 2021 $’000s 2020 $’000s Long-term bank credit 1,356 675 1,356 675 BATM R&A 2021_Financial Section_3.indd 38 BATM R&A 2021_Financial Section_3.indd 38 13/04/2022 13:49 13/04/2022 13:49 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 99 FINANCIAL ST ATEMENTS Long-term liabilities 31 December 2021 $’000s 2020 $’000s Liability to the oce of the chief scientist 2,685 3,269 Government institutions and other 1,203 3,147 3,888 6,416 Chan ges i n n anc ia l li abi li tie s wh er e the c ash  ow s i n re spe c t the reo f ar e cla s si ed a s to n an ci ng ac ti v it ie s 2021 Open balance $’000s Cash ow from (used in) nance activities, net $’000s Foreign exchange dierences $’000s Close balance $’000s Short term 5,365 (3,565) (166) 1,634 Long term 675 744 ) (63) 1,356 6,040 (2,821) (229) 2,990 2020 Open balance $’000s Cash ow used in nance activities, net $’000s Foreign exchange dierences $’000s Close balance $’000s Short term 5,915 (830) 280 ) 5,365 Long term 762 (42) (45) 675 6,677 (872) 235 ) 6,040 Di scl osu re r eq uir ed by I FR S 16 31/12/2021 31/12/2020 $’000s $’000s Maturity analysis Year 1 2,186 2,244 Year 2 1,682 2,116 Year 3 1,240 1,489 Year 4 1,047 1,082 Year 5 741 1,006 Onwards 398 2,747 7,294 10,684 BATM R&A 2021_Financial Section_3.indd 39 BATM R&A 2021_Financial Section_3.indd 39 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 100 28 Sharecapital Ordinary shares of NIS 0.01 each (number of shares) 2021 2020 Authorised: 1,000,000,000 1,000,000,000 Issued and fully paid: 440,534,124 440,434,124 The Company has one class of ordinary shares which carry no right to xed income. During the year, 100,000 options were exercised by an employee (see also note 33). During 2020, 155,050 options were exercised by 20 employees. 29 Dividendsandbuyback On 14 December 2021, the shareholders approved the distribution of a dividend of 0.74 pence (sterling) per ordinary share, amounting to a total payout of $4.3 million. The amount was fully paid during the rst quarter of 2022. For information about the Company buyback programme, see note 37 – Post balance sheet events. 30 Notetothecashowstatement Year ended 31 December 2021 $’000s 2020 $’000s Operating prot from operations 24,378 ) 14,233 ) Adjustments for: Amortisation of intangible assets 716 ) 718 ) Depreciation of property, plant and equipment and investment property 4,548 ) 4,757 ) Capital loss (gain) of property, plant and equipment (229) 31 ) Prot from sale of a subsidiary (13,035) – ) Capital gain on reduce of holdings in associated company – ) (602) Stock options granted to employees 96 ) 158 ) Increase (decrease) in retirement benet obligation (10) 96 ) Increase (decrease) in provisions (1,803) 2,114 ) Operating cash ow before movements in working capital 14,661 21,505 ) Decrease (increase) in inventories 3,031 ) (11,198) Decrease (increase) in receivables (2,052) 916 ) Increase (decrease) in payables (5,352) 7,111 ) Eects of exchange rate changes on the balance sheet (1,616) 1,729 ) Cash from operations 8,672 ) 20,063 ) Income taxes paid (2,383) (637) Income taxes received – ) 3 ) Interest paid (697) (970) Net cash from operating activities 5,592 ) 18,459 ) BATM R&A 2021_Financial Section_3.indd 40 BATM R&A 2021_Financial Section_3.indd 40 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 101 FINANCIAL ST ATEMENTS 31 Disposalofsubsidiary O n 1 9 March 202 1 , the Group entered into a sale agre eme nt to d isp ose of NG Sof t Ltd. (“ N GS of t (to A z tek T ech nol og ies (1 98 4) L td., a prov i der of IC T cl oud s er v ice s in Is rae l an d a po r t fol io com pan y of SK Y Fun d (t he “ B u yer ” ). NG Sof t is a sof t w are an d dig it a l ser v ice s comp an y tha t pro vi de s creat i ve di gi t al an d tec hno log y s olu ti ons . NGSof t 2021 US$ in thousands Net assets disposed Property, plant and equipment 1,144 ) Right of use 3,667 ) Other intangible assets 968 ) Net working capital 73 ) Lease liability (3,764) Current tax liability (584) Deferred tax liability (540) Goodwill 5,185 ) Net assets disposed of 6,149 ) Disposal of a foreign operation translation reserve (522) Gain on disposal 13,035 ) Total consideration 18,662 ) Net cash inow arising on disposal: Consideration received in cash and cash equivalents, net 20,903 ) Cash and cash equivalents disposed (2,241) 18,662 ) 32 Guaranteesandliens T he Gro up pro v ide d fro m tim e to ti me ba nk g uara nte es du e to ad va nce s fro m cus to mer s . T he Comp any re gis tered s eve ral l ien s in fa vou r of ba nk s . 33 Share-basedpayments Equ it y - se t tl ed sh ar e opt ion sc he me In November 2021, the Company approved a Share Incentive Plan (hereinafter: “the 2021 Plan”), under which the Company can grant options or restricted share units or allot shares (including restricted shares), according to the procedures, terms and conditions specied in the Share Incentive Plan. Options granted prior to the 2021 Plan are subject to the BATM R&A 2021_Financial Section_3.indd 41 BATM R&A 2021_Financial Section_3.indd 41 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 102 terms and conditions under which they were granted. As of the balance sheet date, the Company had not made any grants under the 2021 Plan. Details of the share options outstanding during the year are as follows: 2021 2020 Number of share options Weighted average exercise price (in GBP) Number of share options Weighted average exercise price (in GBP) Outstanding at beginning of year 5,756,200 0.2867 5,575,395 0.2613 Granted during the year 225,000 1.0502 400,000 0.6385 Forfeited during the year (250,000) 0.5976 (64,145) 0.3701 Exercise during the year (100,000) 0.4340 (155,050) 0.2475 Outstanding at the end of the year 5,631,200 0.3008 5,756,200 0.2867 Exercisable at the end of the year 5,247,867 0.2505 3,056,200 0.2360 The outstanding options at 31 December 2021 had a weighted average exercise price of 0.3008 GBP, and a weighted average remaining contractual life of 6.3 years. On 21 February 2021, 225,000 options were granted for an estimated fair value of $200 thousand which were calculated according to the Black-Scholes model. On 21 May, 2020, 400,000 options were granted for an estimated fair value of $249 thousand which were calculated according to the Black-Scholes model. The inputs into the Black-Scholes model for the options granted are as follows: 2021 2020 Weighted average share price (GBP) 1.05 0.92 Weighted average exercise price (GBP) 1.05 0.64 Expected volatility 82% 67% Expected life 3 3 Risk-free rate 1.3% 1.3% Expected dividends 0% 0% E xp ec ted v ola ti lit y w as determ ine d b y c alc ula tin g t he his tor ic a l vo lat ili t y of the Comp any ’ s sh are p ri ce ov er the prev iou s 3 year s. T he ex pe c te d life use d in the mod el has be en adju s ted , bas ed on manage men t ’ s bes t es t ima te, for the ee c t s of non-trans ferabilit y , exercise res tric t ions and behavioural considerations. T he G roup reco gn ise d to ta l e xp ens es of $96 t ho us and an d $1 5 8 t ho us and rela ted to e qui t y- se t t led sha re -b as ed pa ym ent t ra ns ac tio ns in 2021 and 2020, respe c t i vel y. 34 Retirementbenetobligation Dened contribution plans The Group operates dened contribu tion r etirement benet schemes for all qualif y ing e mployees in Israel. T he asset s of t he sch eme s are hel d s epa rate l y f rom tho se of th e G roup in f un ds u nde r t he co nt rol o f t ru s tee s. Whe re t here are employees who leave the schemes prior to ves ting fully in the contribu tions, the contribu tions payable by the G roup are redu ced b y th e amo unt of fo r feite d con tr ibu t ion s. BATM R&A 2021_Financial Section_3.indd 42 BATM R&A 2021_Financial Section_3.indd 42 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 103 FINANCIAL ST ATEMENTS T ot al e xp en se s rela ted to the con tr ib ut ion retirem ent bene t sche mes are: $ 453 thous a nd in the y ear 2021 (2020: $ 1 ,112 t h o u s a n d ) . T he empl oy ees of th e Group ’ s s ubsi diar ie s in t he Un ite d Sta tes are memb er s of a s t a te -m anage d reti remen t bene  t sch eme op era ted by th e gover nm ent of the Uni tes St ate s. T he subs idia r y contr ibu te s a spe ci e d percent a ge of pay roll cos t s to t he reti remen t bene t sch eme to f un d the bene t s. Th e o nl y oblig at ion of the Group wi th respe c t to t he reti remen t be ne t s che me is to m ake th e spe ci e d cont r ibu ti ons . Dened benet plans The Group operates dened benet schemes for qualif ying employees of the Company and i t s subsidi ar ies in Israel and i n It al y. In Israe l this sc hem e prov ide s sev era nce pay pro v isio n as require d by Israel i law. U nde r the plan s , the empl oye es are en ti t led to p os t-em pl oy men t b ene  t s e qui v ale nt to year s of s er v ice m ult ip lie d by 8. 33% o f n al s ala r y on eit he r at t a inme nt of a re tirem ent age of 67 ( men) an d 65 (wome n) o r re dund anc y. No o th er p os t-re tirem ent bene  t s a re prov i ded to t he se em plo ye es . In It al y ea ch emp loy ee is en ti tl ed to hav e a s ev era nce pa y men t a s soo n as th ey en d e mpl oy me nt und er one of t he conditions speci ed below except those who decide to choose priv ate insurance during the employment. Principal con di ti on s to rel eas e t he li abi li t y are: 1 . F ul l ret ire men t age 2. A cc umu lat io n of mi nim al w or k ing yea rs 3. T er m ina ti on of emp loy m ent b y th e empl oy er 4. D eat h of em plo ye e 5. Occ ur rence of e mpl oye e ’s di sa bil it y. T he mos t recent ac tu ari al valuat io ns of pla n a ss et s an d the prese nt value of t he dene d b en e t obli gat io n w ere carr ie d ou t at 1 6 Jan uar y 2022 by A le xey T ra k shi nsk y, F IL A A on b ehal f of Eli or Weis sber g Ltd ., a m emb er of th e Ins t i tu te of Ac tuar ie s regard ing th e emp loy ee s in Isra el. T he pre se nt va lue of t he de ne d ben e t , obl iga tio n, t he rela ted cu rren t ser v ice cos t and pas t ser vi ce cos t were meas ured using the projec ted unit cred it met ho d. The discou nt rate was base d on hig h qua li t y co rp ora te bo nds . T he pr in cip al as su mpt ion s use d for t he p ur pos es of t he a c t uar ial v alu at ion s were as f oll ow s: 2021 2020 Discount rate(s) 2.15% 2.10% Expected rate(s) of salary increase 1-4% 1-4% Expected ination rate 2.56% 1.40% Employee turnover rate 8% 8% A mou nt s re cogn ise d in com preh ensi v e inco me in re spe c t of t he se d en ed b ene  t plan s are as fo llo w s: Service cost: 2021 $’000s 2020 $’000s Current service cost 193 215 Net interest expenses 11 12 Components of dened benet costs recognised in prot or loss 204 227 BATM R&A 2021_Financial Section_3.indd 43 BATM R&A 2021_Financial Section_3.indd 43 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 104 Re-measurement on the net dened benet liability: 2021 $’000s 2020 $’000s Return on plan assets (excluding amounts included in net interest expense) 80 4 )) Actuarial gains and losses arising from changes in nancial assumptions 15 2 ) Actuarial gains and losses arising from other 67 (21) Components of dened benet costs recognised in other comprehensive 162 (15) The amount included in the c onsolidated statement s of nancial position ar ising from the entit y ’s obligation in respec t of it s de ned b en e t pla ns is a s foll ow s: 2021 $’000s 2020 $’000s Present value of funded dened benet obligation 2,044 2,574 Fair value of plan assets (1,423) (1,746) Net liability 621 828 Mov eme nt s in t he p res ent v alu e of th e de ne d ben e t ob lig at ion in t he c ur rent p er iod w ere as fo llo w s: 2021 $’000s 2020 $’000s Opening dened benet obligation 2,574 ) 2,445 ) Current service cost 193 ) 215 ) Interest cost 37 ) 41 ) Remeasurement (gains)/losses arising from changes in nancial assumptions (75) 19 ) Benets paid (552) (247) Disposal of a subsidiary (76) – ) Exchange rate dierences (57) 101 ) Closing dened benet obligation 2,044 ) 2,574 ) BATM R&A 2021_Financial Section_3.indd 44 BATM R&A 2021_Financial Section_3.indd 44 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 105 FINANCIAL ST ATEMENTS Movements in the present value of the plan assets in the current period were as follows: 2021 $’000s 2020 $’000s Opening fair value of plan assets 1,746 ) 1,730 ) Interest income 26 ) 28 ) Remeasurements gains/(losses) return on plan assets (excluding amounts included in net interest expense) 88 ) 4 ) Contributions from the employer 52 ) 51 ) Benets paid (449) (190) Disposal of a subsidiary ( 7 1 ) – ) Exchange rate dierences 31 ) 123 ) Closing fair value of plan assets 1,423 )) 1,746 ) 35 Relatedpartytransactions Remuneration of key management personnel 2021 $’000s 2020 $’000s Short- and long-term employee benets 1,912 2,378 Shared-based payment – 84 1,912 2,462 T ran sa c tion s wi th as s oci ate d comp anie s Dur ing t he y ear , t he Gro up pro v ide d va ri ous s er v ices to a n as so cia ted com pa ny for a n amo unt o f $ 1 , 1 62 t hou sa nd. 36 FinancialInstruments ( a) Capital risk m anagement Manage men t ’ s p oli c y is to maint ain a s t rong capi t al bas e in order to pres er ve the abili t y of the G roup to con tin ue ope rat ing so t hat i t ma y pro v ide a re tur n on ca pi t al to i t s sh areho ld er s, b en e t s to o the r ho lde rs o f intere s t s i n th e Gro up suc h as cre di t prov i der s an d emp loy ee s of th e Gro up, an d sus t a in f ut ure de vel opm ent o f th e busi nes s . Mana gemen t of the G roup mo ni tor s retu rn on c ap it al d en ed as t he tot al am oun t of e qui t y a t t r ibu t abl e to t he sha reho lde rs of t he Grou p and a lso t he a moun t of di v id end s dis t r ibu ted to t he ord inar y sh areh old er s. T he G roup ’s mana gemen t re vi ew s t he cap i ta l s t ru c t ure o n a p er iod ic b asi s. A s a par t of this rev ie w t he ma nagem ent consi der s t he cos t of ca pi t al an d th e ri sk s a s so ciate d w it h ea ch cl as s of c api t al . Ba se d on ma nagem ent ’s recom men dat ion s , t he Grou p w ill ba lan ce i t s ove ral l c api t al s t ru c t ure t hrou gh th e p ay me nt of d i vi den ds . T he Gro up ’s ove rall s tra teg y rema ins un cha nged f rom 20 0 6. (b) Signicant accounting policies Details of the signi cant accounting policies and me thods adopted, including t he criteria for recognition, t he basis of meas ureme nt an d t he b asis o n w hich incom e an d ex pe nse s are re cog nis ed, in resp ec t of ea ch cl as s of n anc ial a ss et , nan cia l liab ili t y and e qui t y i ns t ru men t are dis cl ose d in n ote 3 to th e nan cia l s t atem ent s. BATM R&A 2021_Financial Section_3.indd 45 BATM R&A 2021_Financial Section_3.indd 45 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 106 (c) Categories of nancial instruments 2021 $’000s Financial assets Cash and cash equivalents 65,331 Fair value through prot or loss 2,935 Fair value through OCI 524 Receivables 28,815 Financial liabilities At amortised cost 56,142 Fair value through prot or loss 47 2020 $’000s Financial assets Cash and cash equivalents 50,575 Fair value through prot or loss 3,306 Fair value through OCI 524 Receivables 40,068 Financial liabilities At amortised cost 57,353 Fair value through prot or loss – * Cash and cash equivalents comprises $2.4 million deposits up to three months and $62.9 million cash (2020: $11.6 million deposits up to three months and $39.0 million cash). The majority of the assets included in fair value through prot or loss section measurements are level 1 fair value measurements, dened as those derived from quoted prices (unadjusted) in active markets for identical assets. (d) Financial risk management objectives The Group’s Finance function provides services to the business, coordinates access to domestic and international nancial markets, monitors and manages the nancial risks relating to the operations of the Group through internal risk reports that analyse exposure by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash ow interest rate risk. The Group seeks to minimise the eects of these risks by using derivatives only for economic hedging and does not apply hedge accounting. The use of nancial 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 nancial derivatives and non- derivative nancial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. BATM R&A 2021_Financial Section_3.indd 46 BATM R&A 2021_Financial Section_3.indd 46 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 107 FINANCIAL ST ATEMENTS (e) Market risk The Group’s activities expose it primarily to the nancial 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 nancial instruments to manage its exposure to interest rate and foreign currency risk, including: structured deposits, call options and forward foreign exchange contracts to hedge the exchange rate risk, which derive mostly from existing monetary assets and liabilities. There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk. (f) Foreign currency risk management T he Group unde r t a kes cer t ai n t ra ns ac tio ns deno mina ted in foreign cur renc ies , hence ex po sures to e xchan ge rate uc tua tio ns ar ise. E xcha nge r ate ex po sures are man aged w it hin ap pro ved p olic y par ame ter s ut ili sing for wa rd fo reig n exchang e contrac t s. T he Comp any d oe s not im ple men t he dge accou nti ng. The carr ying amount of t he Group’s foreign currenc y denominated monet ar y ass et s and monetar y liabilities at t he repo r t ing d ate is as f oll ow s: Liabilities Assets 2021 $’000s 2020 $’000s 2021 $’000s 2020 $’000s NIS 9,650 14,873 26,400 21,034 EUR 24,332 26,559 33,212 32,680 RON 4,826 4,300 11,711 8,871 MDL 2,737 1,983 3,862 3,532 GBP 388 323 3,764 441 Other 2,240 4,810 2,067 1,019 Foreign currency sensitivity T he Gro up is ma inl y e xp ose d to EUR , N IS , GBP , RO N an d MDL . T he foll ow ing t abl e d et ail s t he Gro up ’s se nsi ti v i t y to a 10% c hange in USD agai ns t th e re spe c t i ve fore ign cu rren cie s in 202 1 . T h e 1 0 % is the ra te use d wh en repo r t ing fo reign c urre nc y risk in ter nall y to key man ageme nt pe rs onn el an d repres en t s man ageme nt ’s as se ss men t of the p os sibl e cha nge in foreig n exch ange ra tes . Th e sen si ti v i t y an al y sis of t he Grou p ’s expo sure to f oreig n cur renc y risk at the re po r t ing date h as been deter mine d base d o n t he change tak in g p lace at the be gi nnin g of th e  nan cial yea r a nd hel d co ns t an t t hroug ho u t t he repo r t ing pe ri od. A pos it i ve numb er ind ic ates an inc reas e in pro t o r los s an d oth er eq ui t y w he re the USD w eaken s agai ns t t he resp ec ti v e cur renc y. If the USD w ere to s tren g t he n by th e sa me p ercent age ag ain s t th e resp ec ti ve c ur renc y the re wou ld be a si mila r bu t reve rs e imp ac t on the p ro t or l os s and e qui t y as pre sen ted in t he t ab le s bel ow. BATM R&A 2021_Financial Section_3.indd 47 BATM R&A 2021_Financial Section_3.indd 47 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 108 Prot or loss 2021 $’000s 2020 $’000s NIS Impact 1,724 417 EUR Impact 396 (151) GBP Impact 362 29 Equity 2021 $’000s 2020 $’000s NIS Impact (49) 199 ) EUR Impact 492 ) 763 ) MDL Impact 112 ) 155 ) GBP Impact (24) (17) RON Impact 689 ) 457 ) Other currencies Impact (17) (379) T he Gro up ’s ma in ex po sure de ri v es f rom i t s c ash , recei v ab les a nd p ay abl es a t year e nd.. The Company engages in nancial ins trument s contrac t s such as for ward contrac t s , call and put options and st ruc tured ins t r umen t s in o rder to ma nage fo reig n cur renc ies e xp os ure as ne ed ed. Dur ing t he ye ar , th e Compa ny en gage d in th ree na nci al ins tr ume nt s , w hic h resul ted i n $4 4 th ous a nd reco rded a s nan ce ex pe nse s (2020:  ve n anc ial in s tr um ent s, w hic h resu lte d in $22 3 th ous an d reco rded a s na nce in come). (g ) Interest rate risk mana gement T he Gro up is e x pos ed to interes t rate r isk bec au se e nti t ies in th e Grou p may bor row f un ds at b ot h xe d and oa tin g intere s t r ates . T h e ri sk is mana ged b y t he G roup by m aint a ining an a ppro pr iate mix bet we en  xed an d o at ing rate bor row ing s . T he G roup ’ s ex po sure to in teres t r ate o n nan cia l as se t s a nd n anc ial li abil it ie s are de t ail ed in t he f oll ow ing ta ble (refer to s ec tio n h). The e xp os ure to oa ti ng ra te loa ns is n ot ma ter ial. (h) Liquidi t y risk management The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash ows, and by matching the maturity proles of nancial assets and liabilities. BATM R&A 2021_Financial Section_3.indd 48 BATM R&A 2021_Financial Section_3.indd 48 13/04/2022 13:50 13/04/2022 13:50 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 109 FINANCIAL ST ATEMENTS Financial liabilities Weighted average eective interest rate 0-3 months 3 months to 1 year 1-5 years Total % $’000s $’000s $’000s $’000s 31 December 2021 Non-interest bearing – 42,646 450 4,692 47,788 Bank loans interest bearing () 4.20 552 1,082 1,356 2,990 Lease liabilities 2.05 546 1,640 5,108 7,294 43,744 3,172 11,156 58,072 31 December 2020 Non-interest bearing – 47,695 405 6,325 54,425 Bank loans interest bearing () 3.12 736 4,629 675 6,040 Lease liabilities 2.92 561 1,683 8,440 10,684 48,992 6,717 15,440 71,149 () Part of the bank loans are linked to a x rate plus Euribor. The future bank loan interest to be paid is $128 thousand. (i) Finance liabilities Loans from bank s are me asure d at am or ti se d cos t using the eec t i ve interes t m et ho d. The die rence bet ween the fair va lue of t he l oan s and t hei r bo ok v alu e is not s ign i ca nt . (j) Fair value of nancial instruments carried at amortised cost T he f air v al ue of the nan cia l in s tr um ent s of t he G roup ca rr ie d at amor t ise d cos t is n ot con sid ered to be m ater ial l y di eren t fro m the s ta ted am or ti se d cos t . 37 Postbalancesheetevents (a ) In Janu ar y 2022 , t he Grou p a nd it s pa r tne rs in Ado r i nve s ted an add it ion al amou nt of $1 0 m, of whi ch the Gro up contributed $4m. Following this additional investment, the Group’s share holding in Ador is 3 7 .21 % ( compared wi th 36.7% in De cemb er 2020). (b) On 1 7 M arch 2 02 2, the Group recei ve d s hareh ol der approv al for a s hare bu y ba ck prog ram me. A s at th e da te o f t his repo r t , t he G roup h ad pu rchas ed 20 0 ,0 0 0 o rdina r y share s. BATM R&A 2021_Financial Section_3.indd 49 BATM R&A 2021_Financial Section_3.indd 49 13/04/2022 13:50 13/04/2022 13:50 ANNUAL REPORT & ACCOUNTS 2021 110 OtherAlternativeMeasures Incomestatementadjustments The Group has made reference in the annual report to a number of adjustments regarding (1) the contribution to both years from NGSoft, a subsidiary that the Group sold in March 2021; (2) the contribution to 2020 from a signicant contract for the supply of ventilators; and (3) adjustments related to the amortisation of intangible assets. These adjustments are outlined below: Year ended 31 December 2021 (Unaudited) Reported results Adjustments to exclude NGSoft and ventilator contract Amortisation of intangible assets Adjusted results (ongoing operations) US$ thousands Revenues 140,038 7,262 – 132,776 Gross prot 51,061 1,235 (414) 50,240 Gross margin (%) 36.5% 17.0% – 37.8% Sales and marketing expenses 18,290 144 – 18,146 General and administrative expenses 12,243 358 – 11,885 Research and development expenses 8,713 – 106 8,607 Other operating expenses (income) (12,563) (12,994) 154 277 Operating prot 24,378 13,727 (674) 11,325 EBITDA 29,642 13,956 – 15,686 Year ended 31 December 2020 (Unaudited) Reported results Adjustments to exclude NGSoft and ventilator contract Amortisation of intangible assets Adjusted results (ongoing operations) US$ thousands Revenues 183,566 70,997 - 112,569 Gross prot 60,710 20,105 (414) 41,019 Gross margin (%) 33.1% 28.3% - 36.4% Sales and marketing expenses 20,197 3,304 - 16,893 General and administrative expenses 15,884 2,680 - 13,204 Research and development expenses 10,258 1,747 - 8,511 Other operating expenses (income) 138 159 145 (166) Operating prot 14,233 12,215 (559) 2,577 EBITDA 19,708 13,140 - 6,568 The above does not form part of the audited nancial statements. BATM R&A 2021_Financial Section_3.indd 50 BATM R&A 2021_Financial Section_3.indd 50 13/04/2022 13:50 13/04/2022 13:50 ANNUAL REPORT & ACCOUNTS 2021 111 FINANCIAL ST ATEMENTS EBITDAmeasurement T he Gro up us es EB IT DA as a p er for man ce mea sure, w hic h is c alc ula ted as f oll ow s: Repo r ted Y e ar en de d 31 De ce mb er Adjus ted Y e ar en de d 31 De ce mb er 2021 (Unaudited) 2020 (Unaudited) 2021 (Unaudited) 2020 (Unaudited) Op era tin g pro t 24,378 14,233 11,325 2,577 Amortisation of Intangible assets 716 718 – – Depreciation 4,548 4,757 4,361 3,991 EBITDA 29,642 19,708 15,686 6,568 The above does not form part of the audited nancial statements. BATM R&A 2021_Financial Section_3.indd 51 BATM R&A 2021_Financial Section_3.indd 51 13/04/2022 13:50 13/04/2022 13:50 ANNUAL REPORT & ACCOUNTS 2021 112 CompanyInformation Reg is ter e d O f f ic e P .O. B . 7 3 18 , Ne ve Ne ’em an Ind . A rea, 4 H a’ ha ras h Stre et , 4524075 Hod H asha ron , Isra el Comp any Number 5 2 0 0 4 2 8 13 – Re gi s tered i n Isra el Comp any S ecr et ar y Mr . Yair Liv ne h Au di tor s Del oit t e Is rael & C o. 1 A z ri el y Center , T el - Av iv, Isra el Fin ancial Ad v is er & S to ck br ok er Sho re Ca pit al Cas si ni Ho use, 57 St Jam es' s Stre et , Lond on S W1A 1 LD, UK Leg al Counsel in U K Fladgate LLP 1 6 Grea t Qu een S tre et , Lond on WC 2B 5DG , UK Ba nker s Bank Hapoalim 4 Hat zor an , Netanya , Israel Bank Leumi 7 Mena hem B eg in St ree t , Ramat-Gan, Israel Reg i st r ar Link Group 1 0 t h F loo r , Cent ral S qua re, 29 Welling ton St ree t , Lee ds L S1 4DL , UK Fin ancial PR C on sul t an t s Luth er P end rago n 4 8 Gr ace churc h Stre et , Lond on EC 3 V 0EJ , UK BATM R&A 2021_Financial Section_3.indd 52 BATM R&A 2021_Financial Section_3.indd 52 13/04/2022 13:50 13/04/2022 13:50 Neve Ne’eman Ind. Area 4 Ha’harash Street, P.O.B. 7318 4524075 Hod Hasharon Israel BATM ADVANCED COMMUNICATIONS LTD ANNUAL REPORT AND ACCOUNTS 2021 FOR THE Y EA R E N DE D 3 1 DE CE M B E R 2 02 1 ANNU AL R EPOR T AND A C C O UNTS

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