![]() Neve Ne’eman Ind. Area4 Ha’harash Street, P.O.B. 73184524075 Hod HasharonIsrael BATM ADVANCED COMMUNICATIONS LTD ANNUAL REPORT AND ACCOUNTS 2021 #### FOR THE YEAR ENDED 31 DECEMBER 2021 # ANNUAL REPORT # AND ACCOUNTS ![]() ANNUAL REPORT & ACCOUNTS 2021 1 STRATEGIC REPORT #### CONTENTS Strategic Report StrategicFramework2 Performance Highlights3 Chairman’s Statement4 ChiefExecutiveOcer’s Review6 Edgility10 Stakeholder Engagement12 ChiefFinancial Ocer’s Review14 Key Performance Indicators17 Business Model18 Sustainability Review19 Risk Management22 Corporate Governance Directors’ Biographies24 Corporate Governance Report26 AuditCommittee Report32 Directors’ Remuneration Report35 Directors’ Report57 Financial Statements Independent Auditor’s Report61 ConsolidatedFinancialStatements65 Notes to the Consolidated Financial Statements70 Other Alternative Measures110 Company Information112 #### BATM isa leader inreal-timetechnologies. We bring high-technology solutions that are innovative, cost-effective and reliable to our chosen global sectors ofbiomedicine and networking. BATM’s global footprint 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 deliverhigh-technologysolutions  That solve complex #### challenges in mission-critical, largescaleapplications #### We build value creation #### strategies  From idea, to scale up, to mass-market #### success  And maximise the long-term value of #### our businesses through organic andinorganic strategies #### And di erentiate through…  Our intellectual property  The world-leading expertise of our #### employees  Innovative, robust, reliable and cost- #### e ective solutions #### While seeking to accelerate #### our growth  By establishing partnerships, #### collaborations and joint ventures tomaximise resources and enhance ourroutes-to-market #### To create value for our #### stakeholders by…  Growing total shareholder returns  Exceeding our customers’ expectations  Motivating our people  Making a positive contribution to our #### communities We serve blue- #### chip customers #### worldwide  Including enterprises, #### governments andinternational agencies #### Strategic Framework #### BATM’s purpose is to deliver high-technology innovations that make #### a signifi cant di erence to the human experience #### With a focuson the globalsectors of…  Bio-medical solutions and  Networking and cyber #### security #### STRATEGIC REPORT 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 STRATEGIC REPORT #### Underlying growth across allbusiness units #### Group revenue Ongoing operations (adj.)\* $132.8m +18.0% (2020: $112.6m) Reported $140.0m -23.7% (2020: $183.6m) #### Gross margin Ongoing operations (adj.)\* 37.8% #### +140bps (2020: 36.4%) Reported 36.5% #### +340bps (2020: 33.1%) #### Gross prot Ongoing operations (adj.)\* $50.2m +22.5% (2020: $41.0m) Reported $51.1m -15.9% (2020: $60.7m) #### Operating prot Ongoing operations (adj.)\* $11.3m +339.5% (2020: $2.6m) Reported $24.4m +71.3% (2020: $14.2m) #### EBITDA Ongoing operations (adj.)\* $15.7m +138.8% (2020: $6.6m) Reported $29.6m +50.4% (2020: $19.7m) #### Cash and nancial #### assets Reported $67.8m +26.9% (2020: $53.4m) #### Sustained growth formolecular diagnostics  Growth in COVID-19 and non- #### COVID-19 solutions #### Launch of Edgility  Won two edge computing #### contracts  Established four new #### partnerships  Over $18m received in #### cyber security contracts \* Adjusted to present the results on an ongoing operations basis by excluding (1) the contribution to both years from NGSoft, a subsidiary that the Group sold in March 2021, (2) the contribution to 2020  amortisation of intangible assets for both years. The term ‘ongoing operations’ in this Strategic Report is   ANNUAL REPORT & ACCOUNTS 2021 3 120 90 60 30 BIO-MEDICAL DIVISION Revenue from ongoing operations (adj.)\* 2020 2021 US$ million 20 15 10 5 NETWORKING AND CYBER 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 delighted to present BATM’s Annual Report 2021. It       BATM has established solid foundations in core technologies – backed by strong intellectual property and patents – that            #### PROGRESS ACROSS THE BUSINESS    created strong demand for diagnostic instruments and   products for other disease areas. We are specialists not just  of infectious diseases. Pathogens such as tuberculosis (TB)  economic consequences, especially inpoorer countries.     backed by the international Stop TB Partnership. We           curable. We are particularly proud of the progress in our  has come tofruition.                      protection. #### STRATEGY     #### Chairman’sStatement Dr. Gideon Chitayat 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 STRATEGIC REPORT  expertise ofour employees.                   be the demands of the future. We amplify our resources through establishing strategic partnerships and are focused on creating shareholder    #### OUTLOOK                       demand formolecular biology and diagnostic technology                                  this year and beyond. STRATEGIC 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-Medical Division Diagnostics        expanded the production capacity of our Adaltis facility in Rome, Italy. COVID-19diagnostic tests   public health authorities in Europe, the Middle East and South East Asia. We also expanded our portfolio of  l      sample collection and lab processing and it is more cost  test is being produced at our Adaltis facility. l         ®            in Europe under the Adaltis brand and produced at Gamidor’s facility in Israel.     speed, accuracy and ease of use. This demonstrates the  together our expertise and IP, and the right partners, to   address complex challenges. Progress in other disease areas Sales of diagnostic products that are not related to      molecular diagnostics test that is able to test for multiple    to commence in the current year. By detecting multiple  patient sample, patients, laboratoriesand healthcare  and gaining important insights more quickly. Ador Diagnostics     #### Chief Executive #### O cer’s Review Dr. Zvi Marom ChiefExecutiveOcer 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 STRATEGIC REPORT                 current year. Work also continued on incorporating the  care settings expected to commence next year.  TB Partnership, an international alliance comprising         TB Partnership.                Organisation. Eco-Med On an underlying basis, to exclude the contribution to                                  completion of these contracts is expected to occur in the   Distribution         #### Networking and Cyber Division Networking  (excluding thecontribution to bothyears from NGSoft)   Edgility – Edge Computing and NFV solutions                          fundamental in enabling Internet of Things technologies.                                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   number of these to translate to orders in 2022.           partnerships to accelerate the adoption and sales of Edgility.  l          l   telecommunications operators inEurope and Latin    launched uSphir solution. l    l                           Network Edge solutions andservices            primarily based on repeat business from existing clients, but  as the preferred supplier by a tier 1 telecommunications        in this unit than at the start of the year, although this partly  2022 due to globalelectronic components shortages. Cyber   department customer. This includes a $10m contract for an                       2022.   of our cyber security solution aimed beyond the defence  Outlook  backlog for ongoing operations than at the same point the              #### Chief Executive Ocer’s Review CONTINUED 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 STRATEGIC REPORT           as normal business practices resume.   increasein orders for solutions inother diseaseareasas public health organisations return focus to routine care.      global supply chain challenges, particularly related to any further shortages of electronics components.            market disrupters. As these technologies transition and    partnerships and disposals.    #### Innovation #### and invention We harness extraordinary technical and entrepreneurial talents to bring leading, disruptive technologies successfully to market, at scale. #### OUR VISION AND VALUES #### Reliability Our customers trust us to deliver mission-critical products. Our products are built for reliability and performance at scale and in challenging conditions. #### Responsibility Our corporate responsibility extends through our focus business areas, to the way we interact with all our stakeholders and our impact on the environment and our communities. #### Investment case Large, global addressable markets BATM operates in the large, global markets of networking, cyber security, diagnostics and other biomedical solutions; and in sub- segments on the verge of disruption. Long-term approach BATM takes a long-term approach to its investments by assessing long-range industry trends and building 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 targetmarkets, 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 vision is tobe leaders in high-technology innovations that make asignicant dierence tothe human experience 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 customers with a simple and easy-to-use platform to deploy, manage and operate multiple virtual services/functions on multiple thousands of edge devices at multiple sites. New services (or sites) can be deployed in a matter of minutes – rather than days – without the need for technical personnel on-site. This smart edge computing platform comprises two components: Edgility OS, a high-performance and small footprint operating system, and Edgility Central, a cloud-based management and orchestration (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 STRATEGIC REPORT 11 #### Case study: CEMEX "We chose Edgility for its superior Management & Orchestration, whichprovides us with an end-to-end toolset to cost-eectively deployandthenmanagethe lifecycleofouredgedevices.Edgilityprovidestheexibility andscalabilitytoexpandandadapttoour 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 operationalcostsandincreaseexibility.Automateddeploymentandsimplemanagementofedgedeviceswerekeyrequirementsduetothelarge 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 enablesCEMEXtoseamlessly upgradetoaexible, automated,andresilientEnterprise WANarchitecture.CEMEX choseEdgilityforits advanced automationandintuitivemanagementcapabilities–allowingCEMEXtocost-eectivelydeploy,maintainandintegratebest-of-breednetwork functions and applications from multiple software providers across its network. #### Case study: e-Qual "We selected Edgility forits distinctive technological superiorityover all thealternatives we examined. Edgilityprovides 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 networkmanagement 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 providese-Qual witha unied,multi-tenantplatformto deployand managemultiple applicationsincludingcomplexconnectivity-based services, such as SD-WAN, for its enterprise customers. Edgility oersa high-performance, smallform factor operatingsystem that isbeing deployedon hundreds ofedge devices ate-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 #### BATM seeks to deliver value to, and build strong, long-term relationships with, its stakeholders     #### Customers Our customers rely on ourtechnology solutions   enabling both BATM and our customers to share  How we engage l  to key customers and key regions l  ISO audit and focused on all aspects of ourcustomer relationships l  and products for our customers l  in our customers’ markets #### Financial Investors        How we engage l  l   l  l  request l  and strategic goals #### 2021 HIGHLIGHTS l  362 new customers won (excluding consumer customers - as opposed to businesses or public bodies - by subsidiaries that serve the public) l  139 customer training programmes conducted, with participation of approximately 230 individuals #### 2021 HIGHLIGHTS l  Approximately 25 shareholder meetings or scheduled calls l  Hosted investor webinars to present FY 2020 and H1 2021 results 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 STRATEGIC REPORT #### Employees Our people are our greatest asset. In order            employees’ priorities and requirements. How we engage l    l   l  l  l  l  #### Communities         businesses andcharities. How we engage l  products in the diagnosis of infectious  l   l  and charitable organisations l   #### 2021 HIGHLIGHTS l  Appointed Prof. Varda Shalev to newly- created 'voice of theworkforce' NED role l  Held‘round table’ discussionsbetween employees and management in the Networking unit, with ndings presented to the Board #### 2021 HIGHLIGHTS l  Arranging quarterly donations of basic food products and toys to disadvantaged families l   Raised $49.5k for charitable causes 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 Moti Nagar, CPA Chief Financial Ocer 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 STRATEGIC 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      ReportedAdjusted\* $m20212020Change20212020Change Revenue140.0183.6(23.7%)132.8112.618.0% Gross margin36.5%33.1%340bps37.8%36.4%140bps Operating prot 24.414.271.3%11.32.6339.5%   amortisation of intangible assets for both years. Bio-Medical Division ReportedAdjusted\* $m20212020Change20212020Change Revenue112.0128.7(12.9%)112.095.217.7% Gross margin36.4%36.3%10bps36.5%34.8%170bps Operating prot 16.519.2(13.7%)17.010.167.4%   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 CyberDivision ReportedAdjusted\* $m20212020Change20212020Change Revenue28.054.9(49.0%)20.717.319.5% Gross margin36.9%25.5%1,140bps45.0%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 STRATEGIC REPORT #### Key Performance Indicators #### The following key performance indicators (“KPIs”) have been selected as the most appropriate measures of strategy execution for the Group. We review our KPIs on an ongoing basis to ensure they remain relevant. #### Revenue from ongoing operations\* $132.8m +18% (2020: $112.6m) Description  billings generated and recognised during the period from alloperations. Why it is a KPI   Performance   #### R&D expenses for ongoing operations\* $8.6m +1% (2020: $8.5m) Description    Why it is a KPI    Performance     #### Cash from operations $8.7m –57% (2020: $20.1m) Description Amount of money theGroupbrings in  and interest payments. Why it is a KPI    Performance Reduction is primarily due to the timing of payments, namely payment being made in   #### EBITDA from ongoing operations\* $15.7m +139% (2020: $6.6m) Description Group earnings before interest, tax, depreciation andamortisation. Why it is a KPI   Performance     margin, particularly due to the greater contribution  The Groupmonitorscertainnon-nancialperformanceindicatorsat anoperationallevel.However,noneof thesearecurrentlyconsideredtobe 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 strategy is powered by our purpose. We bring high-technology solutions that are innovative, cost-eective and reliable, to our chosen global sectors of networking and biomedicine. We build businesses from idea, to scale up, to mass market success, through organic and inorganic strategies. We seek to maximise long-term value through our capital allocation and portfolio management strategies. #### Business Model #### Networking and Cyber #### Division Our business units: l Networking ▲ Edgility ▲ Network Edge l Cyber l The Networking unit services a wide need for access solutions tomobile, cloud andwireline infrastructure markets, with a focus on the network edge. Innovation is focused on edge computing and NetworkFunction Virtualisation (NFV) l In the Cyber unit, BATM provides network monitoring and encryptionsolutions for very high speed, largearea networks #### Revenue model Revenuesaregeneratedfromsolutionsthatcombine integrated hardware and software; and, going forward, increasingly from the sale ofsoftware-only solutions, including on alicence model, todrive high gross margins and annual recurring revenue #### Strategic aim The Networking and Cyber division is focused on becoming the leading provider of edge computing – including Network Function Virtualisation (NFV) – technologies while supplying carrier ethernet and MPLS access solutions for the network edge, and cyber network monitoring and encryption #### Bio-Medical Division Our business units: l Diagnostics l Eco-Med l Distribution l Indiagnostics, BATM developsits own equipment and reagents, witha focus on developing the most advanced molecular biologytechnologies l TheEco-Med unit developsand supplies innovative solutions totreat pathogenic and agricultural waste l BATMalso administers testsand distributes diagnostic equipment andmedical supplies of other leading brands #### Revenue model Revenues are generated from the sale and distribution of consumables and equipment, and from providing equipment service & maintenance #### Strategic aim The Bio-Medical division is focused on becoming a leading provider of molecular diagnostic laboratory reagents and equipment as well as innovative products to treat biological pathogenic waste 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 STRATEGIC REPORT ### Sustainability Review Sustainability is at the heart of our business. Through medical           At the same time, both through our solutions and our   #### People    in corporate functions. In order to recruit and retain the best   to our employees’ priorities and requirements. Engagement 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 WORKFORCEEXECUTIVE 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, Safety & Wellbeing   to, health and safety guidelines at all of our subsidiaries.      penalties in relation to health and safety matters.        Anti-bribery & 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  #### Communities    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    #### Environment    #### Sustainability Review CONTINUED 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 STRATEGIC 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-related 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 Task 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 climate-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, management’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 ontheir 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 that, 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 ofprotein that is less vulnerable to the eects of climate change); and, asannounced during 2021, participating in the Great Green Wall 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)BATM isin 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 ### Risk Management #### Principal Risks and Uncertainties    Risk How we manage the riskRisk change Political and economic  There is a risk of harm to the business from political unrest or disruption, particularlyin emerging markets, and from a deterioration ofeconomic conditions. The Group’s operations are dispersed over a number of locations so that should a material adverse political or economic event arise in one location, the Group can continue with its operations elsewhere thereby helping to mitigate the impact on its overall business. a Legal and compliance There is a risk that legal and/ or regulatory requirements are not met, leading to theloss oflicenceto operate, reputational damage or nancial loss. The Group retains very experienced legal advisers of a high calibre for the Company and main subsidiaries in the Group who provide ongoing advice and updates on relevant legal compliance requirements. The Group monitors the regulation that is relevant to its activities and, when needed, makes the necessary adjustments to maintain compliance. \_ Business continuity There are risks to business continuity from specic events, such as natural disasters and pandemics. The Group operates in numerous locations and its manufacturing contractors are also located in multiple locations, which would help to mitigate the impact of a business disaster.In addition, the key employees in the workforce have been positioned such that they are able to work without interruption by working remotely from their homes. The Group also keeps a cash cushion to ensure that unexpected events don’t cause unnecessary indirect adverse eects beyond the direct outcomes. \_ Supply chainA disruption in the supply of key raw materials or services to a manufacturing site could aect the Group’s ability to make and deliver products to customers, leading to interruption in supply, lost revenue and damage to its reputation as a reliable supply partner. This could be resulting from market shortages, disruption due to global events and physical climate-related disruption of upstream supply chains. The Group has established strong supplier relationships and collaborates with multiple vendors globally to broaden the geographical coverage of its access to available components. The Group requests that customers provide long-term committed forecasts and itself provides multi-year forecasts to its contract manufacturers. In addition, where appropriate, it reengineers products to enable them to have replaceable component alternatives. At times when availability of components is constrained, the Group seeks alternative sources and to increase inventory levels of both components and nished goods. 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 STRATEGIC REPORT #### Viability Statement    timeframe for assessment because it is aligned to the     operational positions and contracted capital expenditure.  Risk How we manage the riskRisk change Competition There is a risk that BATM is unable to build and maintain competitive advantage in itsfocus markets. The Group is a leading company in those technological areas in which it operates and aspires to be a dominant player in each such niche. The Group periodically evaluates how to improve its eciency by developing and producing better quality and performance products at more attractive prices – thus giving it an advantage over its competitors. — Customer and partners There is a risk of harm to the Group’s revenues as a result of termination of businessrelationships with material customers or partners and sales agents. The Group maintains ongoing dialogue with its customers and business partners in order to identify ahead of time any potential problems arising on the part ofthe customer and in order to maintain a close relationship with its customers. The Group also does not have a signicant reliance on one or few customers or partners. — Research & Development (R&D) There is a risk that R&D programmesoverrun or do not deliver the expected benets. With respect to its R&D, the Group’s strategy has been to diversify its R&D operations among a variety of teams, internally and externally (through universities and hospitals that carry out clinical tests) and by using dierent R&D funding sources – thus reducing the R&D risk. In addition, any signicant new R&D projects are brought to the Board for consideration. Still, the Group considers certain level of risk as inherent to R&D activity, and views R&D activity as valuable to the Group despite that risk. a Information security (including cybersecurity) There is a risk of information security, data loss and corruption, and physical damageto IT infrastructure. The Group routinely carries out IT evaluations to ensure that its IT systems have the latest cyber security tools and security procedures in place. In addition, BATM and two of its subsidiaries operating in the networking and cyber niches are approved suppliers to the Israeli Ministry of Defense and, as such, are continually monitored by the MoD and must maintain the highest level of cyber security. \_ Foreign Exchange There is a risk that the Group’s currency exposure leads to nancial loss. The Group’s nance department at the corporate level manages the cash and income in such a way as to match each company’s or subsidiaries’ revenues to its expenses and keeps these in the same currency, thereby reducing currency exposure. When this is not possible, the Group uses hedging transactions when needed to protect itself against potential currency risk. However, by its nature, in the Board’s opinion, it is very dicult to hedge against currency uctuations arising from translation in consolidation in a cost-eective manner. \_      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 ### Directors’ Biographies          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 #### CORPORATE 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 CORPORATE 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 ### Corporate Governance Report             company that is traded on the London Stock Exchange and  #### CORPORATE GOVERNANCE FRAMEWORK The Board has delegated the daily operational management     Remuneration, Nomination and Responsible Business. #### THE BOARD                    #### MATTERS RESERVED FOR THE BOARD   areas of decision for, the Board. These include preparation              #### BOARD AND COMMITTEE MEETINGS  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, SID7/84/42/20/00/1 Prof. Varda Shalev, NED8/84/42/20/01/1 Prof. Ari Shamiss, NED \*\* 7/8\*\*4/42/20/01/1 \* 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 CORPORATE GOVERNANCE concerning the state of the business and performance.    present, during the year. #### DIVISION OF RESPONSIBILITIES    The Board has also adopted formal terms of reference      is responsible for making and implementing operational decisions and for making recommendations to the Board. #### INDEPENDENCE   character and judgment and no circumstances or matters (including any business or other relationship) exist that could compromise such independence. The interests of the                #### EFFECTIVENESS & EVALUATION    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            #### INDUCTION                      premises of its main subsidiaries in Israel. #### INFORMATION AND SUPPORT  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 #### BOARD COMMITTEES    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       #### Corporate Governance Report CONTINUED 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 CORPORATE GOVERNANCE                        Responsible Business Committee Members:     l  l   l   l     l   l   l   l                    and discussed by, the Board. #### RELATIONS WITH SHAREHOLDERS AND #### SIGNIFICANT SHAREHOLDERS                  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 #### CULTURE AND CONFLICTS  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.           #### ANNUAL GENERAL MEETING      pandemic and related public health guidance and legislation,     www.batm.com          #### Corporate Governance Report CONTINUED 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 CORPORATE GOVERNANCE Provision Exception and explanation 14 Theresponsibilities of thechair, chief executive, senior independent director, board andcommittees should beclear, set out in writing, agreed by the board and madepublicly available. The IsraeliCompanies Law, whichapplies to theGroup, sets outand denes theresponsibilities and dutiesof the directorsand the CEO.The Group hasnot adopted aseparate formal scheduleof responsibilities for the CEO. 18 All directors should be subject to annual re-election. In accordancewith Israeli law,the Group isrequired to appointat least two independentnon-executive directors (denedas ‘external directors’ within Israelilaw), who mustbe appointed fora minimum ofone three- year term.Mr. Harel Lockerand Prof. VardaShalev are classiedas external directorsand cannot besubject to annualre-election (however, the IsraeliCompanies Law doesprovide grounds forremoving an external director fromoce). All othermembers of theBoard are subjectto annual re-election. 19 Thechair should notremain in post beyond nine years from the date of their rstappointment to theboard. 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 theBoard as IndependentNon-Executive Director andthe Board continues to consider him as independent in character and judgement, and thereare no relationshipsor circumstances thatcould aect his judgement. Hisknowledge of thebusiness and theunderstanding of its variouscomponents, which isbuilt on hisexperience, combined with hisindependence of mind,enables a criticalreview of strategy and operations. In addition, his vast business experience, expertise and knowledge ofdirecting large businessorganisations within Israelis a valuable resourcefor the Boardand the Groupas a whole.As a result,the Board believesthat Dr. Chitayatremaining as Chairmanis in thebest of interests ofthe Group andof shareholders. 21 Aregular externally facilitatedBoard evaluation. Externally facilitatedBoard evaluation isnot common practicein the Israeli corporatebusiness environment. TheGroup continues toconsider methods forimplementing this provision. 34 Theremuneration of non-executive directors shouldbe determined in accordancewith the Articlesof Association or,alternatively, by the board. Compliance withthis provision isnot compatible withIsraeli law asthe fees forthe external directors(as dened underIsraeli law) areset in law. #### COMPLIANCE WITH THE UK CORPORATE 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 Committee Report Dear Shareholder,       #### MEMBERSHIP AND ATTENDANCE  l   l                prior to the announcement of interim or annual results. The     back to the Board. The external auditor communicates                    #### GOVERNANCE AND COMPLIANCE    of Reference adopted by the Board for this committee      #### RESPONSIBILITIES AND ACTIVITIES              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 CORPORATE 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. #### INTERNAL AUDIT, INTERNAL CONTROL AND RISK #### MANAGEMENT            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  #### EXTERNAL AUDITOR AND INDEPENDENCE    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-AUDIT SERVICES                 the external auditors on matters relating to acquisition   independence of the external auditors.        Harel Locker Audit Committee Chairman 13 April 2022 #### Audit Committee Report CONTINUED 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 CORPORATE GOVERNANCE #### REMUNERATION COMMITTEE REPORT Dear Shareholder The Board is pleased to present the Remuneration   design appropriate remuneration packages to attract,                                      #### INTRODUCTION               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           #### DIRECTORS’ REMUNERATION REVIEW FINDINGS #### AND OUR NEW POLICY   practice in Israel and requirements expected by institutional    l   l                ### Directors’ Remuneration Report 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. #### BUSINESS PERFORMANCE AND 2021 INCENTIVE #### OUTCOMES                ongoing operations basis 1          NGSoft and strengthening senior talent in the organisation through recruitment. As a result of the strong performance         performance. #### STAKEHOLDER VIEWS & ENGAGEMENT     Annual General Meeting. Prof. Varda Shalev Remuneration Committee Chair 13 April 2022 #### Directors' Remuneration Report CONTINUED 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 CORPORATE GOVERNANCE #### REMUNERATION POLICY This Remuneration Policy sets out the remuneration policy      the BATM Group.             #### THE REMUNERATION COMMITTEE’S #### RESPONSIBILITIES                  (2)Recommending appropriate remuneration packages                    #### REMUNERATION PHILOSOPHY AND OBJECTIVES                  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  #### CONSIDERATIONS WHEN DETERMINING #### REMUNERATION POLICY 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           #### Directors' Remuneration Report CONTINUED 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 CORPORATE GOVERNANCE #### DIRECTORS’ & OFFICERS' REMUNERATION POLICY #### TABLE             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.   #### Directors' Remuneration Report CONTINUED 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 CORPORATE 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 #### Directors' Remuneration Report CONTINUED Performance targets                         Long Term Incentive Plan (LTIP) Purpose and link to strategy   superior shareholder returns. 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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 CORPORATE 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 #### Directors' Remuneration Report CONTINUED 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 CORPORATE 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 variableremuneration        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ceholder 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 #### Directors' Remuneration Report CONTINUED                assets or obligations, and that the insurance premium and     #### ILLUSTRATION OF THE APPLICATION OF THE #### POLICY      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  #### SELECTION OF PERFORMANCE MEASURES AND #### TARGETS 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 CORPORATE 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   #### FLEXIBILITY, DISCRETION AND JUDGEMENT    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 ARRANGEMENTS       #### APPROACH TO RECRUITMENT REMUNERATION                  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 #### Directors' Remuneration Report CONTINUED    #### SERVICE CONTRACTS, LETTERS OF APPOINTMENT #### AND POLICY ON PAYMENTS FOR LOSS 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      NameDate of service contractDuration 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 CORPORATE GOVERNANCE #### CHAIR AND EXTERNAL DIRECTORS     only be terminated for cause in special circumstances by       NameDate of appointmentTerm Dr. Gideon Chitayat  Harel Locker  Prof. Varda Shalev  Three years #### EXTERNAL APPOINTMENTS           #### CONSIDERATION OF SHAREHOLDER VIEWS             from time to time (including any updates to shareholders’ remuneration guidelines), is then considered as part of the  implementation. #### CONSIDERATION OF EMPLOYMENT CONDITIONS #### ELSEWHERE IN THE GROUP    employees across the Group. While employees are not formally consulted on the design            DIFFERENCES IN PAY POLICY FOR EXECUTIVE DIRECTORS AND SENIOR EMPLOYEES COMPARED TO EMPLOYEES MORE GENERALLY    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 REPORT ON REMUNERATION  the operation of the Remuneration Policy. #### REMUNERATION COMMITTEE 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 #### Directors' Remuneration Report CONTINUED 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 CORPORATE GOVERNANCE 2021 Salary/Fees $’000 Performance Bonus $’000 Total Remuneration $’000 Executive Directors Zvi Marom, CEO (1) 584438 \* 1,022 Moti Nagar, CFO (2) 317158 \*\* 475 Non-executive Directors Gideon Chitayat56– 56 Harel Locker 58–  58 Varda Shalev 62–  62 Ari Shamiss (3) 57– 57 Single total gure of remuneration (audited)  2020 Salary/Fees $’000 Performance Bonus $’000 Total Remuneration $’000 Executive Directors Zvi Marom, CEO547410957 Moti Nagar, CFO297149446 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 #### Directors' Remuneration Report CONTINUED 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) EBITDA80%$4.3m$8.2m$29.6m80%   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) EBITDA80%$25.8m$29.6m80% 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 CORPORATE 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 awards granted in2021   Share interests 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 Marom96,794,50096,794,500––4,000,00018,886%\* Moti Nagar––––906,2000% Non-Executive Directors Gideon Chitayat3,159,0003,159,000–––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 #### Directors' Remuneration Report CONTINUED TSR performance chart TSR performance      recognised index containing companies of a broadly similar  700 600 500 400 300 200 100 0 Total Shareholder Return (rebased to 100) D ec2011 D ec2012 D ec2013 D ec2014 D ec2015 D ec 2016 D ec 2017 D ec2018 D ec2019 D ec 2020 D ec 2021 BATMA dvanced Communications Ltd FTSE SmallCap Ratio of CEO pay to average full-time employeepay           goods). Relative importance of spend on pay    shareholders. 2021 ($m) 2020 ($m) % change Employee remuneration costs 29.539.9(26.1%) Distribution to shareholders 4.3 –– Prot (EBITDA on reported basis) 29.619.750.4% 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 CORPORATE GOVERNANCE Percentage change in directors’ remuneration and employee pay   Salary/Fee Benets Annual Bonus 202120202021202020212020 Executive Directors Zvi Marom0%0%0%0%0%173% Moti Nagar0%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. Payments for loss of oce and/or payments to former directors (audited)    Statement of shareholdingvoting  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 #### Directors' Remuneration Report CONTINUED Implementation of Policy for FY22 Component of PayImplementation 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 CORPORATE GOVERNANCE ### Directors’ Report #### PRINCIPAL ACTIVITIES                Israel and Europe. #### FINANCIAL STATEMENTS   2021. The results of the year are set out in the consolidated   #### RETURNS TO SHAREHOLDERS 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. #### BUSINESS AND STRATEGIC REVIEW   risks and uncertainties, are set out in the Strategic Report  #### DIRECTORS    l  l  l         l   l  l   #### CORPORATE GOVERNANCE STATEMENT                 #### DIRECTORS’ REMUNERATION AND INTERESTS   #### RULES ABOUT APPOINTMENT AND REPLACEMENT #### OF DIRECTORS    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.        #### AMENDMENT OF ARTICLES  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. #### STATEMENT OF DIRECTORS’ RESPONSIBILITIES                 for assets, liabilities, income and expenses set out in the    #### Directors' Report 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 CORPORATE 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 Chitayat Chairman 13 April 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 #### Consolidated Financial Statements for the year ended 31 December 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. Area 4, Ha’harash Street, P.O.B. 7318 4524075 Hod Hasharon, Israel Opinion We haveauditedtheconsolidatednancialstatementsofBATMAdvancedCommunicationsLtd.anditssubsidiaries(“the Group”)setoutonpages65to109,whichcomprisetheconsolidatedstatementofnancialpositionasat31December 2021,andtheconsolidatedstatementofprotandloss,theconsolidatedstatementofcomprehensiveincome,the consolidatedstatementofchangesinequityandtheconsolidatedstatementofcashowsfortheyearthenended,and notes to the consolidated nancial statements, including a summary of signicant accounting policies. Inouropinion, theaccompanyingconsolidatednancialstatementspresentfairly, inallmaterialrespects,theconsolidated nancialpositionoftheGroupasat31December2021,anditsconsolidatednancialperformanceanditsconsolidated cash ows for the year then ended in accordance with International Financial Reporting Standards (IFRSs). Basis for Opinion WeconductedourauditinaccordancewithInternationalStandardsonAuditing(ISAs).Ourresponsibilitiesunderthose standardsarefurtherdescribedintheAuditor’sResponsibilitiesfortheAuditoftheConsolidatedFinancialStatements sectionofourreport.WeareindependentoftheGroupinaccordancewiththeInternationalEthicsStandardsBoardfor Accountants’ Code of Ethics for Professional Accountants(IESBA Code) ,andwehavefullledourotherethicalresponsibilities inaccordancewiththeIESBACode.Webelievethattheauditevidencewehaveobtainedissucientandappropriateto provide a basis for our opinion. Key Audit Matters Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignicanceinourauditofthe consolidatednancialstatementsofthecurrentperiod.Thesematterswereaddressedinthecontextofourauditof theconsolidated nancialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparate opinion on these matters. #### Independent Auditor’s Report to the Shareholders #### of BATM Advanced Communications Ltd. #### FINANCIAL STATEMENTS 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 audit addressed the key audit matter Impairment of goodwill and other intangible assets AsdetailedinNotes23and24,asat31December2021,the Grouphadgoodwillandotherintangibleassetsof$16,033 thousand. Goodwill and other intangibleassets arise as a result of acquisitionsby theGroup. Managementconductedtheirannual impairmenttesttoassesstherecoverabilityofthegoodwill andconsider whetherthereareindicatorsofimpairmentwith respect to otherintangible assets. In orderto establish whether animpairmentexists,fairvaluelesscoststosellorthevalue inuseisdeterminedandcomparedtothenetbookvalueof cash-generatingunit towhich thegoodwillis allocatedand other intangible assets. Thisdeterminationofanimpairmentishighlysubjectiveas significant judgement isrequired by the management in determiningthecash-generatingunitsandthefairvalueless coststosellorthevalueinuseasappropriate.Thevaluein useisbasedonthecashowforecastmodelforeachcash- generatingunitandrequirestheestimationofvaluationand business assumptions,mostimportantlythediscount rateand growth rate. We focused ourtesting of the impairmentof goodwill and other intangibleassets onthe keyassumptionsmade bythe directors. Our audit procedures included:  Evaluatingwhetherthemodelusedtocalculatethefair valuelesscoststosellandvalueinuseoftheindividual cash-generatingunitscomplieswiththerequirementsof IAS 36: Impairment of Assets.  Using ourinternalvaluationspecialists whenapplicableto assess theappropriatenessofmanagement’sestimations appliedinthediscountratesusedinthevalueinuse calculations.  Challenging management’sassumptions appliedandinputs intherespectivemodelsbycomparingittohistorical information,market researcheswhenavailable,contractual arrangements andapprovedbudgets,searchfor available contradictoryinformation,includingthemacroeconomic impacts resulting from the ongoing COVID-19 pandemic.  Performing stress analysis on key estimates.  Performingdiscussions,whenapplicable,withkey managementaboutnewsignicantclientsandmarkets penetration,new signicantcontracts andbids,certication status of new products. Findings We foundthemodelsand assumptionsappliedinthegoodwill impairmentassessmentstobeappropriate.Weconsidered thedisclosureofthegoodwillandotherintangibleassetsto beappropriate forpurposes ofthe consolidatednancial statements. Other Information Managementisresponsiblefortheotherinformation.The otherinformationcomprisestheinformationincluded inthe annual report,but does notinclude thenancial statements and our auditor’s report thereon. Our opinionon the consolidated nancial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Inconnectionwithourauditoftheconsolidatednancial statements,ourresponsibilityistoreadtheother informationand,indoingso,considerwhethertheother informationismateriallyinconsistentwiththeconsolidated nancialstatements or ourknowledge obtained in the audit orotherwiseappearstobemateriallymisstated.If,based ontheworkwehaveperformed,weconcludethatthereis amaterialmisstatementofthisotherinformation,weare requiredtoreportthatfact.Wehavenothingtoreportin this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Managementisresponsibleforthepreparationandfair presentationoftheconsolidatednancialstatements inaccordancewithIFRSs,andforsuchinternalcontrol asmanagementdeterminesisnecessarytoenablethe preparationofconsolidatednancialstatementsthatarefree from material misstatement, whether due to fraud or error. Inpreparingtheconsolidatednancialstatements, managementisresponsibleforassessingtheGroup’sability tocontinueasagoingconcern,disclosing,asapplicable, mattersrelatedtogoingconcernandusingthegoing 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 STATEMENTS FINANCIALSTATEMENTS concernbasis of accounting unless managementeither intendstoliquidatetheGrouportoceaseoperations,or has no realistic alternative but to do so. Thosechargedwithgovernanceareresponsiblefor overseeing the Group’s nancial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Ourobjectivesaretoobtainreasonableassuranceabout whethertheconsolidatednancialstatementsasawhole are free from material misstatement, whether due to fraud orerror,andtoissueanauditor’sreportthatincludesour opinion. Reasonable assuranceis a high level ofassurance, butisnotaguaranteethatanauditconductedinaccordance withISAs willalwaysdetectamaterialmisstatementwhenit exists. Misstatements can arise from fraudor error and are considered material if, individually or in the aggregate, they couldreasonablybeexpectedtoinuencetheeconomic decisions of users taken on the basis of these consolidated nancial statements. AspartofanauditinaccordancewithISAs,weexercise professionaljudgementandmaintainprofessional skepticism throughout the audit. We also: l Identifyandassesstherisksofmaterialmisstatementof theconsolidatednancialstatements,whetherduetofraud orerror,designandperformauditproceduresresponsive tothoserisks,andobtainauditevidencethatissucient andappropriatetoprovideabasisforouropinion.The riskofnotdetectingamaterialmisstatementresulting fromfraudishigherthanforoneresultingfromerror,as fraudmayinvolvecollusion,forgery,intentionalomissions, misrepresentations, or the override of internal control. l Obtainanunderstandingofinternalcontrolrelevant tothe auditinordertodesign auditproceduresthat areappropriateinthecircumstances, butnot forthe purpose of expressing an opinion on the eectiveness of the Group’s internal control. l Evaluatetheappropriatenessofaccountingpoliciesused and the reasonableness ofaccounting estimates and related disclosures made by management. l Conclude on the appropriateness ofmanagement’s use of thegoingconcernbasisofaccountingand,basedonthe auditevidenceobtained,whetheramaterialuncertainty existsrelatedtoeventsorconditionsthatmaycast signicantdoubtontheGroup’sabilitytocontinueasa goingconcern.Ifweconcludethatamaterialuncertainty exists,wearerequiredtodrawattentioninourauditor’s reporttotherelateddisclosuresintheconsolidated nancial statements or, if such disclosures are inadequate, tomodifyouropinion.Ourconclusionsarebasedonthe auditevidenceobtaineduptothedateofourauditor’s report.However,futureeventsorconditionsmaycause the Group to cease to continue as a going concern. l Evaluatetheoverall presentation,structureandcontent oftheconsolidatednancialstatements,includingthe disclosures,andwhethertheconsolidatednancial statementsrepresenttheunderlyingtransactionsand events in a manner that achieves fair presentation. l Obtainsucient appropriateauditevidenceregarding thenancialinformationoftheentitiesorbusiness activitieswithintheGrouptoexpressanopiniononthe consolidatednancialstatements.Weareresponsiblefor the direction,supervision andperformance ofthe Group audit.Weremainsolelyresponsibleforouraudit opinion. Wecommunicatewiththosechargedwithgovernance regarding,amongothermatters,theplannedscopeand timingoftheauditandsignicantauditndings,including anysignicantdecienciesininternalcontrolthatwe identify during our audit. Wealso provide those charged with governance with a statementthatwehavecompliedwithrelevantethical requirementsregardingindependence,andtocommunicate with them all relationships and other matters that may reasonablybethoughttobearonourindependence,and where applicable, related safeguards. Fromthematterscommunicatedwiththosechargedwith governance,wedeterminethosemattersthatwereof mostsignicanceintheauditoftheconsolidatednancial statements of the current period and are therefore the key auditmatters.Wedescribethesemattersinourauditor’s report unless law or regulation precludes public disclosure about thematter orwhen, inextremelyrarecircumstances, #### Independent Auditor’s Report to the Shareholders #### of BATM 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 wedeterminethatamattershouldnotbecommunicated inourreportbecausetheadverseconsequencesofdoing sowouldreasonablybeexpectedtooutweighthepublic interest benets of such communication. AsrequiredbytheFinancialConductAuthority(FCA) DisclosureGuidanceandTransparencyRule(DTR) 4.1.14R,thesenancialstatementsformpartoftheESEF- preparedAnnualFinancial Report ledontheNational StorageMechanismoftheUKFCAinaccordancewith theESEFRegulatoryTechnicalStandard(‘ESEFRTS’).This auditor’sreportprovidesnoassuranceoverwhetherthe annualnancialreporthasbeenpreparedusingthesingle electronic format specied in the ESEF RTS. Theengagementpartnerontheauditresultinginthis independent auditor’s report is Efrat Binshtok. Brightman Almagor Zohar and Co. Certied Public Accountants A Firm in the Deloitte Global Network 1 Azrieli Center, Tel Aviv Israel 13 April 2022 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 STATEMENTS 20212020 Note US$’000US$’000 Revenues 5, 6140,038183,566 Cost of revenues788,977122,856 Gross prot 51,06160,710 Operating expenses Sales and marketing expenses818,29020,197 General and administrative expenses912,24315,884 Research and development expenses108,71310,258 Other operating expenses (income)12(12,563)138 Total operating expenses 26,683 46,477 Operating prot 24,378 14,233 Finance income131,466820 Finance expenses14(911)(1,754) Prot before tax 24,93313,299 Income tax expenses15(9,337)(1,043) Prot for the year before share of loss of a joint venture and associated companies15,59612,256 Share of loss of a joint venture and associated companies(839)(774) Prot for the year14,75711,482 Attributable to: Owners of the Company 14,3409,793 Non-controlling interests 417 1,689 Prot for the year 14,757 11,482 Prot per share (in cents) basic 16 3.26 2.22 Prot per share (in cents) diluted 16 3.23 2.21 #### Consolidated Statements of Prot or Loss The accompanying notes are an integral part of these nancial statements. for the year ended 31 December BATM R&A 2021\_Financial Section\_3.indd 5 BATM R&A 2021\_Financial Section\_3.indd 5 13/04/2022 13:49 13/04/2022 13:49 ![]() ANNUAL REPORT & ACCOUNTS 2021 66 20212020 US$’000US$’000 Prot for the year14,75711,482 Items that may be reclassied subsequently to prot or loss: Disposal of a foreign operation(522)– Exchange dierences on translating foreign operations(4,880)3,148 9,35514,630 Items that will not be reclassied subsequently to prot or loss: Revaluation of investment–(508) Re-measurement of dened benet obligation16216 162(492) Total comprehensive income for the year 9,517 14,138 Attributable to: Owners of the Company8,97613,560 Non-controlling interests541578 9,51714,138 #### Consolidated Statements of Comprehensive Income The accompanying notes are an integral part of these nancial statements. for the year ended 31 December BATM R&A 2021\_Financial Section\_3.indd 6 BATM R&A 2021\_Financial Section\_3.indd 6 13/04/2022 13:49 13/04/2022 13:49 ![]() ANNUAL REPORT & ACCOUNTS 2021 67 FINANCIAL STATEMENTS 2021 2020 Note US$’000US$’000 Assets Current assets Cash and cash equivalents65,33150,575 Trade and other receivables1834,93241,467 Financial assets172,4322,803 Inventories1930,95133,893 133,646128,738 Non-current assets Property, plant and equipment2018,10716,109 Investment property211,7391,878 Right-of-use assets226,5709,607 Goodwill2311,38516,838 Other intangible assets244,6486,879 Investment in joint venture and associate1212,66713,271 Investments carried at fair value1,0271,027 Deferred tax assets263,3755,759 59,51871,368 Total assets193,164200,106 Equity and liabilities Current liabilities Short-term bank credit271,6345,365 Trade and other payables2747,51953,618 Current maturities of lease liabilities272,1862,244 Tax liabilities6,5483,046 57,88764,273 Non-current liabilities Long-term bank credit271,356675 Long-term liabilities273,8886,416 Long-term lease liabilities275,1088,440 Deferred tax liabilities26170711 Retirement benet obligation34621828 11,14317,070 Total liabilities69,03081,343 Equity Share capital281,3201,320 Share premium account425,840425,686 Reserves(19,849)(14,323) Accumulated decit(279,888)(290,090) Equity attributable to the: Owners of the Company127,423122,593 Non-controlling interests(3,289)(3,830) Total equity124,134118,763 Total equity and liabilities193,164200,106 Thenancialstatementswereapprovedbytheboardofdirectorsandauthorisedon13April2022.Theyweresignedonitsbehalfby: Dr. Z. Marom, CEOM. 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 20201,320425,477(18,070)(512)(299,391)108,824(4,408)104,416 Prot for the year––––9,7939,7931,68911,482 Re-measurement of dened benet obligation––––1616–16 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 theyear –– 4,259 – 9,30113,560578 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 20211,320425,686(13,811)(512)(290,090)122,593(3,830)118,763 Prot for the year––––14,34014,34041714,757 Disposal of a foreign operation––(522)––(522)-(522) Re-measurement of dened benet obligation––––162162–162 Exchange dierences on translating foreign operations––(5,004)––(5,004)124(4,880) Total comprehensive income for theyear –– (5,526) – 14,5028,976541 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 20211,320425,840(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 STATEMENTS 2021 2020 Note US$’000US$’000 Net cash from operating activities 30 5,59218,459 Investing activities Interest received3101 Proceeds on disposal of property, plant and equipment1839 Proceeds on disposal of deposits3153,122 Proceeds on disposal of nancial assets carried at fair value through prot and loss402761 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 subsidiary3118,662– Net cash from (used in) investing activities15,069(5,481) Financing activities Lease payment22(2,174)(2,428) Bank loan repayment27(13,252)(13,852) Bank loan received2710,43112,980 Proceed on exercise of shares5851 Net cash used in nancing activities (4,937)(3,249) Net increase in cash and cash equivalents 15,7249,729 Cash and cash equivalents at the beginning of the year 50,57540,584 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 year65,33150,575 #### 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 BATMAdvancedCommunicationsLtd.(“theCompany”)isacompanyincorporatedinIsraelundertheIsraeliCompanies Law.TheaddressoftheregisteredoceisPOB7318,NaveNe’emanInd.Area4,Ha’harashStreet,4524075Hod Hasharon,Israel.TheCompanyanditssubsidiaries(“theGroup”)areengagedintheresearchanddevelopment, productionandmarketingofdatacommunicationproductsinthefieldofmetropolitanareanetworksandofbio- medical products, primarily laboratory diagnostics and eco-med equipment. The Bio-Medical division alsodistributes productsofthirdparties. #### 2 Adoption of new and revised International Financial Reporting Standards (IFRSs) Amendments to IAS 1 – Classication of Liabilities as Current or Non-current TheamendmentstoIAS1aectonlythepresentationofliabilitiesascurrentornon-currentinthestatementofnancial positionandnottheamountortimingofrecognitionofanyasset,liability,incomeorexpenses,ortheinformation disclosed about those items. Theamendmentsclarifythattheclassicationofliabilitiesascurrentornon-currentisbasedonrightsthatarein existence at the end ofthe reporting period, specify that classication is unaected by expectations about whether an entitywillexercise itsrightto defersettlementofaliability,explainthatrightsarein existenceifcovenantsarecomplied with at theendofthe reportingperiod,and introduceadenitionof ‘settlement’to makeclear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. Theamendmentswillbeappliedretrospectivelyforannualperiodsbeginningonorafter1January2023,withearly application permitted. #### 3 SignicantAccountingPolicies Statement of compliance The consolidatednancialstatements havebeenpreparedinaccordancewithInternationalFinancialReporting Standards (IFRS Standards) as issued by the International Accounting Standards Board (IASB). Basis of preparation Theconsolidatednancialstatementshavebeenpreparedonthehistoricalcostbasisexceptforcertainproperties and nancial instruments that are measured at revalued amounts orfair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransaction betweenmarketparticipantsatthemeasurementdate,regardlessofwhetherthatpriceisdirectlyobservableor estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of theasset or liability if market participants would takethose characteristics into account when pricingthe asset orliability at themeasurement date. Fair value for measurementand/ordisclosurepurposes in these consolidated nancial statements is determined onsuch abasis, exceptfor share-based payment transactions thatarewithinthescopeofIFRS 2,leasingtransactionsthatarewithinthescopeofIFRS16,andmeasurementsthat have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36. In addition, for nancial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs tothe fair value measurements are observable and the signicance of the inputs to the fair value measurement in its entirety, which are described as follows: 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 STATEMENTS l Level1inputsarequotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilitiesthattheentitycan access at the measurement date; l Level2inputsareinputs,otherthanquotedpricesincludedwithinLevel1,thatareobservablefortheassetor liability, either directly or indirectly; and l Level 3 inputs are unobservable inputs for the asset or liability. The principal accounting policies are set out below. Basis of consolidation The consolidated nancial statements incorporate the nancialstatements of the Company and entities controlled by the Company and its subsidiaries. Control is achievedwhenthe Company has powerover theinvestee is exposed,or hasrights,tovariablereturnsfromitsinvolvementwiththeinvesteeandhastheabilitytouseitspowertoaectits returns. TheCompanyreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethatthereare changes to one or more of the three elements of control listed above. ConsolidationofasubsidiarybeginswhentheCompanyobtainscontroloverthesubsidiaryandceaseswhenthe Companylosescontrolofthesubsidiary.Specically,incomeandexpensesofasubsidiaryacquiredordisposedof duringthe year are includedinthe consolidatedstatement ofprot orloss andothercomprehensive incomefromthe date the Company gains control until the date when the Company ceases to control the subsidiary. Protor lossandeachcomponentofothercomprehensiveincomeareattributedtotheownersoftheCompanyandto the non-controllinginterests. Total comprehensive income of subsidiaries is attributed tothe owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a decit balance. When necessary, adjustments are made to the nancial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. Allintragroupassetsandliabilities,equity,income,expensesandcashowsrelatingtotransactionsbetweenmembers of the Group are eliminated in full on consolidation. Investments in associates and joint ventures An associate isan entity over which the Group hassignicant inuence. Signicant inuence isthe power toparticipate in the nancial and operating policy decisions of the investee but without control or joint control over those policies. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the netassetsofthejointarrangement.Jointcontrolisthecontractuallyagreedsharingofcontrolofanarrangement,which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. An investment inan associate or a joint venture is accounted forusingthe equity method from thedateon which the investeebecomesanassociateora jointventure.Onacquisition oftheinvestmentinan associate orajointventure, anyexcessofthecostoftheinvestmentovertheGroup’sshareofthenetfairvalueoftheidentiableassetsand liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in prot or loss in the period in which the investment is acquired. TherequirementsofIAS36areappliedtodeterminewhetheritisnecessarytorecogniseanyimpairmentlosswith respecttotheGroup’sinvestmentinanassociateorajointventure.Whennecessary,theentirecarryingamountof 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 investment (including goodwill) istested for impairment in accordance with IAS36 Impairment of Assetsas asingle asset bycomparing its recoverable amount (higher of value inuse and fair value less costs ofdisposal) with its carrying amount.Anyimpairmentlossrecognisedformspartofthecarryingamountoftheinvestment.Anyreversalofthat impairment loss is recognisedin accordance withIAS36to theextentthat therecoverable amount of theinvestment subsequently increases. WhentheGroupreducesitsownershipinterestinanassociateorajointventure,butcontinuestousetheequity method, the Group reclassies to prot or loss the proportion of the gainor loss that had previouslybeen recognised inother comprehensive income relating tothatreduction inownership interest ifthatgain orlosswouldbe reclassied to prot or loss on the disposal of the related assets or liabilities. Changes in the Group’s ownership interests in existing subsidiaries ChangesintheGroup’sownershipinterestsinsubsidiariesthatdonotresultintheGrouplosingcontroloverthe subsidiariesareaccountedforasequitytransactions.ThecarryingamountsoftheGroup’sinterestsandthenon- controllinginterestsareadjustedtoreectthechangesintheirrelativeinterestsinthesubsidiaries.Anydierence betweentheamountby whichthenon-controllinginterests are adjustedandthe fairvalueofthe considerationpaidor received is recognised directly in equity and attributed to owners of the Company. Business combinations Acquisitions of businessesare accounted forusingthe acquisition method. The consideration transferred in abusiness combinationismeasuredatfairvalue,whichiscalculatedasthesumoftheacquisition-datefairvaluesoftheassets transferred by the Group, liabilities incurred by theGroup to the former owners of the acquireeand the equity interests issuedbytheGroupinexchangeforcontroloftheacquiree.Acquisition-relatedcostsaregenerallyrecognisedinprot or loss as incurred. Goodwillismeasuredastheexcessofthesumoftheconsiderationtransferred,theamountofanynon-controlling interestsintheacquiree,andthefairvalueoftheacquirer’s previouslyheldequityinterestintheacquiree(ifany)overthe netofthe acquisition-dateamounts oftheidentiableassets acquiredandtheliabilitiesassumed.If,afterreassessment, the net oftheacquisition-dateamounts oftheidentiable assetsacquiredand liabilities assumed exceedsthe sumof the considerationtransferred,theamountof anynon-controllinginterests inthe acquiree andthe fairvalue ofthe acquirer’s previouslyheldinterestintheacquiree(ifany),theexcessisrecognisedimmediatelyinprotorlossasabargainpurchase gain. Non-controlling intereststhatare present ownership interestsandentitletheirholdersto aproportionate share ofthe entity’snetassetsintheeventofliquidationmaybeinitiallymeasuredeitheratfairvalueoratthenon-controllinginterests’ proportionateshareoftherecognisedamountsoftheacquiree’sidentiablenetassets.Thechoiceofmeasurement basis is made on a transaction-by-transaction basis. Goodwill Goodwillarisingonanacquisitionofabusinessiscarriedatcostasestablishedatthedateofacquisitionofthe business less accumulated impairment losses, if any.Goodwill is not amortised but is reviewed for impairment at least annually.For the purposes of impairment testing, goodwill is allocated toeach of the Group’s cash-generating units (or groups of cash-generating units) that isexpected to benet from the synergies of thecombination. Acash-generating unittowhichgoodwillhasbeenallocatedistestedforimpairmentannually,ormorefrequentlywhenthereisan indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount,the impairmentlossisallocatedrst toreducethecarryingamountofanygoodwill allocatedto theunitand thentotheotherassetsoftheunitproratabasedonthecarryingamountofeachassetintheunit.Anyimpairment lossforgoodwillisrecogniseddirectlyinprotorloss.Animpairmentlossrecognisedforgoodwillisnotreversedin subsequent periods. 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 STATEMENTS Ondisposalofanoperatingunit,theattributableamountofgoodwillisincludedin thedeterminationoftheprotor loss on disposal. Revenue recognition The Group recognises revenue from the following major sources: l Saleofgoods–Communicationproducts, bio-medicalproductssuchaslaboratorydiagnosticsand sterilisation eco-med products l Renderingof services– Relatedmainly tosoftwareservicessuchastrainingandtechnicalsupport,laboratoryservice and maintenance related products sold l Construction contracts RevenueismeasuredbasedontheconsiderationtowhichtheGroupexpectstobeentitledinacontractwitha customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer. Sale of goods For sales of goods, revenue is recognised when control of the goods has transferred, being when the goods have been shippedtothecustomer’sspeciclocation(delivery).Followingdelivery,thecustomerhasfulldiscretionoverthe manner ofdistribution and price to sellthegoods, has the primary responsibility when onselling the goodsandbears the risks of obsolescence and loss in relation to the goods. A receivable isrecognised by theGroupwhen the goodsaredeliveredto the customer as thisrepresents the pointin timeatwhichtherighttoconsiderationbecomesunconditional,asonlythepassageoftimeisrequiredbeforepayment is due. Rendering of services The Group provides a service of installation of various software products for specialised business operations. Such services are recognised asa performance obligation satised over time. Revenue is recognised for these installationservicesbasedonthestageofcompletionofthecontract.Themanagementhaveassessedthatthe stageofcompletiondeterminedastheproportionofthetotaltimeexpectedtoinstallthathaselapsedattheend ofthereportingperiodisanappropriatemeasureofprogresstowardscompletesatisfactionoftheseperformance obligations under IFRS 15. Construction contracts Where the outcome of a construction contract can be estimated reliably, revenueand costs arerecognisedover time by reference to the stageof completion of the contract activity at the date of the consolidatedstatements of nancial position.Thisisnormallymeasuredbytheproportionthatcontractcostsincurredforworkperformedtodatebear totheestimatedtotalcontractcostsexceptwherethiswouldnotberepresentativeofthestageofcompletionor engineering completion. The management consider that this inputmethod is an appropriate measure ofthe progress towardscompletesatisfaction ofthese performanceobligationsunder IFRS 15.Variations incontract work, claimsand incentive payments are included to the extent that they have been agreed with the customer. Wheretheoutcomeofaconstructioncontractcannotbeestimatedreliably,contractrevenueisrecognisedtothe extentofcontractcosts incurred that itisprobablewillberecoverable.Contract costsarerecognised asexpenses in the period in which they are incurred. 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 Whenitis probablethattotalcontractcostswillexceedtotalcontractrevenue,theexpected lossisrecognisedasan expense immediately. Leases The Group as a lessee Atinceptionofthecontract,theGroupassesseswhetheranarrangementisaleaseorcontainsalease.TheGroup recognisesaright-of-useassetandacorrespondingleaseliabilitywithrespecttoallleasearrangementsinwhichitisthe lessee, except for assets leased for aperiod of less than 12 months,and also to lease ofassets with low economic value. Theleaseliabilityisinitiallymeasuredatthepresent valueofthelease paymentsthatarenotpaidatthecommencement date,discountedbyusingtherateimplicitinthelease.Ifthisratecannotbereadilydetermined,thelesseeusesits incrementalborrowing rate. The lease liability is subsequently measured at amortised cost using the eective interest method. Theright-of-use assetscomprise theinitialmeasurement ofthecorrespondinglease liability,plus anylease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. Right-of-useassetsaresubsequentlymeasured at costlessaccumulateddepreciation andimpairmentlosses, andare depreciatedovertheshorterperiodofleasetermandusefullifeoftheunderlyingasset.Ifaleasetransfersownershipof the underlying asset or the cost of the right-of-use asset reects that the Group expects to exercise a purchase option, therelatedright-of-useassetisdepreciatedovertheusefullifeoftheunderlyingasset.Thedepreciationstartsatthe commencement date of the lease. TheGroup appliesIAS36todeterminewhetheraright-of-useasset isimpairedandaccounts foranyidentied impairment loss. As a practical expedient, IFRS 16 permitsa lessee not to separate non-lease components, and instead accountfor any lease and associated non-lease components as a single arrangement. The Group has used this practical expedient. Foreign currencies TheindividualnancialstatementsofeachGroupcompanyarepreparedinthecurrencyoftheprimaryeconomic environment inwhich it operates(its functionalcurrency). Forthe purposeof theconsolidated nancialstatements, the results and nancial position of each Groupcompany are expressed in the USdollar, which is the presentation currency for the consolidated nancial statements. Inpreparingthenancialstatementoftheindividualcompanies,transactionsincurrenciesotherthantheentity’s functionalcurrency (foreigncurrencies) arerecordedatthe ratesof exchangeprevailingonthe datesof thetransactions. Attheendofeachreportingperiod,monetaryassetsandliabilitiesthataredenominatedinforeigncurrenciesare retranslatedattheratesprevailing atthatdate. Non-monetaryitemscarried atfairvaluethat aredenominatedin foreign currenciesaretranslated atthe ratesprevailingatthedate whenthefairvaluewas determined.Non-monetaryitemsthat are measured in terms of historical cost in a foreign currency are not retranslated. Exchangedierencesarisingonthesettlementofmonetaryitems,andontheretranslationofmonetaryitems,are included in prot or loss for the period. For thepurpose of presentingconsolidated nancialstatements, theassets and liabilitiesof theGroup’s foreign operations(operationsinforeigncurrencies)aretranslatedatexchangeratesprevailingattheendofeachreporting period.Incomeandexpenseitemsaretranslatedattheaverageexchangeratesfortheperiod,unlessexchangerates uctuatesignicantlyduring thatperiod, inwhich casethe exchangerates atthe dateof transactionsare 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 STATEMENTS dierences arising, ifany, arerecognised in othercomprehensive incomeand accumulated inequity (attributedto non- controllinginterestsasappropriate)withintheGroup’stranslationreserve.Suchtranslationreservesarereclassied from equity to prot or loss in the period in which the foreign operation is disposed. Goodwill andfairvalue adjustmentsarisingon theacquisitionofa foreignoperationare treatedasassets andliabilities of theforeignoperation andtranslated atthe closingrate.Exchange dierencesarising arerecognisedin other comprehensive income and accumulated in equity. Government grants Government grants areassistance from governmentinthe formoftransfers ofresources toan entityin return forpast or future compliance with certain conditions relating to the operating activities of the entity. Forgivable loans are loans where the lender (Israeli Chief Scientist Ocer (ISO)) undertakes to waive repayment under certainprescribedconditions.Inacasewhereagovernmentgranttakestheformofaforgivableloan,aliabilityis recognised in regards to this loan at fair value, basedon estimations of future cash ows related to the relevant grant. TheGrouppolicy todesignatedsuch loansasnancialliabilitiesmeasuredatamortisedcost according toIFRS9. The dierence between the liability and proceeds are recognised in the research and development expenses. Employee benets Retirement benet costs and termination benets Paymentstodenedcontributionretirementbenetplansarerecognisedasanexpensewhenemployeeshave rendered service entitling them to the contributions. Fordenedbenetretirementplans,thecostofprovidingbenetsisdeterminedusingtheprojectedunitcredit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement,comprisingactuarialgainsandlosses,theeectofthechangestotheassetceiling(ifapplicable) andthereturnonplanassets(excludinginterest),isreectedimmediatelyinthestatementofnancialpositionwith achargeorcreditrecognisedinothercomprehensiveincomeintheperiodinwhichtheyoccur.Remeasurement recognisedinothercomprehensiveincomeisreectedimmediatelyinretainedearningsandwillnotbereclassied toprotorloss.Pastservicecostisrecognisedinprotorlossintheperiodofaplanamendment.Netinterestis calculatedbyapplyingthediscountrateatthebeginningoftheperiodtothenetdenedbenetliabilityorasset. Dened benet costs are categorised as follows: l servicecost(includingcurrentservicecost,pastservicecost,aswellasgainsandlossesoncurtailmentsandsettlements); l net interest expense or income; and l remeasurement. TheGrouppresentsthersttwocomponentsofdenedbenetcostsinprotorlossunderemployeebenets expense. Curtailment gains and losses are accounted for as past service costs. The retirement benet obligation recognised in the consolidated statement of nancial position represents the actual decitorsurplusintheGroup’sdenedbenetplans.Anysurplusresultingfromthiscalculationislimitedtothepresent value of any economic benets available in the form of refundsfrom the plansor reductions in futurecontributions to the plans. Aliability fora termination benetisrecognised atthe earlier ofwhen theentitycannolongerwithdrawthe oer ofthe termination benet and when the entity recognises any related restructuring costs. 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 Short-term and other long-term employee benets A liabilityis recognised forbenets accruingto employees inrespect of wagesand salaries,annual leaveand sickleave in the period therelated serviceis renderedat the undiscountedamount ofthe benetsexpected to bepaid inexchange for that service. Liabilitiesrecognisedinrespectofshort-termemployeebenetsaremeasuredattheundiscountedamountofthe benets expected to be paid in exchange for the related service. Liabilitiesrecognisedinrespect ofotherlong-termemployeebenetsaremeasuredatthepresentvalueoftheestimated futurecash outowsexpectedto bemadebythe Groupinrespect ofservicesprovided byemployeesupto thereporting date. Share-based payments arrangements Share-based payment transactions of the Company Equity-settledshare-basedpaymentstoemployeesandothersprovidingsimilarservicesaremeasuredatthefair value ofthe equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 33. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basisoverthevestingperiod,basedontheGroup’sestimateofequityinstrumentsthatwilleventuallyvest,witha corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revisionof the original estimates, if any, is recognisedin prot orlosssuch thatthecumulativeexpensereects therevised estimate,with acorrespondingadjustment totheshare premiumreserve. Taxation The income tax expense represents the sum of the tax currently payable and deferred tax. Currenttax Thetaxcurrentlypayableisbasedontaxableprotforthe year.Taxableprotdiersfromprotbeforetaxasreportedin theconsolidatedstatementofprotorlossbecauseitexcludesitemsofincomeorexpensethataretaxableordeductible inotheryearsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxis calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax Deferredtaxisrecognisedontemporarydierencesbetweenthecarryingamountsofassetsandliabilitiesinthe consolidated nancial statements and the corresponding tax bases used in the computation of taxable prot. Deferred taxliabilities aregenerally recognisedforalltaxable temporarydierences. Deferred tax assets aregenerally recognised foralldeductibletemporarydierencestotheextentthatitisprobablethattaxableprotswillbeavailableagainst which thosedeductibletemporarydierencescanbeutilised.Such deferredtaxassetsand liabilities arenot recognised if the temporary dierence arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that aects neither the taxable prot nor the accounting prot. Deferredtaxliabilitiesarerecognisedfortaxabletemporarydierencesassociatedwithinvestmentsinsubsidiaries andassociates, and interests in joint ventures, except where theGroup is able to control the reversal ofthe temporary dierenceand itisprobablethatthe temporarydierencewill not reverse intheforeseeable future. Deferred tax assets arisingfromdeductibletemporarydierencesassociatedwithsuchinvestmentsandinterestsareonlyrecognisedto theextentthatitisprobablethattherewillbesucienttaxableprotsagainstwhichtoutilisethebenetsofthe temporary dierences and they are expected to reverse in the foreseeable future. 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 STATEMENTS Thecarryingamount of deferredtax assets isreviewedattheendofeach reportingperiodandreduced tothe extent thatitisnolongerprobablethatsucienttaxableprotswillbeavailabletoallowallorpartoftheassettoberecovered. Deferredtaxliabilitiesandassetsaremeasuredatthetaxratesthatareexpectedtoapplyintheperiodinwhichthe liabilityissettledortheassetrealised, basedon tax rates(and taxlaws)thathave beenenactedorsubstantivelyenacted bythe endof thereporting period. The measurementof deferredtaxliabilities andassets reectsthe tax consequences that would follow fromthe mannerinwhichthe Groupexpects,atthe end ofthe reporting period,to recoverorsettle the carrying amount of its assets and liabilities. Current and deferred tax for the year Current and deferred tax are recognised in prot or loss, except when they relate to items that are recognised in other comprehensiveincomeordirectlyinequity,inwhichcase,thecurrentanddeferredtaxarealsorecognisedinother comprehensiveincomeordirectlyinequityrespectively.Wherecurrenttaxordeferredtaxarisesfromtheinitial accounting for a business combination, the tax eect is included in the accounting for the business combination. Investment Property Investmentpropertiesarepropertiesheldtoearnrentalsand/orforcapitalappreciation.Investmentpropertiesare measured initially at cost, including transaction costs. SubsequenttoinitialrecognitiontheGroup’spropertyinterestsheldunderoperatingleasestoearnrentalsorfor capital appreciation purposes are accounted for as investment properties and are measured using the cost model. Depreciationischargedsoastowriteothecostofassets,overtheirestimatedusefullives,usingthestraight-line method, between 27-33 years. Transfersfromowner-occupiedpropertytoinvestmentpropertyaremadewhentheCompanyendsowner-occupation. Property, plant and equipment Landandbuildingsheldforuseintheproductionorsupplyofgoodsorservices,orforadministrativepurposes,are statedintheconsolidatedstatementsofnancialpositiononahistoricalcostbasis,beingthehistoricalcostatthe date of acquisition, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Properties in the course of construction for production, administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Freeholdlandisnotdepreciated.Fixturesandequipmentarestatedatcostlessaccumulateddepreciationandany recognised impairment loss. Depreciation is charged so as to write o the cost of assets, other than land over their estimated useful lives, using the straight-line method, on the following bases: Buildings3%-6% Plant and equipment10%-33% Motor vehicles15%-25% Furniture and ttings6%-15% Leasehold Improvements6%-20% 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 Thegainorlossarisingonthedisposalorretirementofanassetisdeterminedasthedierencebetweenthesales proceeds and the carrying amount of the asset and is recognised in other income or expense. Research and development expenditure Internally-generated intangible assets - research anddevelopment expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred. Aninternally-generatedintangibleassetarisingfromdevelopment(orfromthedevelopmentphaseofaninternal project) is recognised if, and only if, all of the following have been demonstrated: l the technical feasibility of completing the intangible asset so that it will be available for use or sale; l the intention to complete the intangible asset and use or sell it; l the ability to use or sell the intangible asset; l how the intangible asset will generate probable future economic benets; l the availability ofadequate technical, nancial and other resources tocomplete the development and to use or sell the intangible asset; and l the ability to measure reliably the expenditure attributable to the intangible asset during its development. Theamountinitiallyrecognisedforinternally-generatedintangibleassetsisthesumoftheexpenditureincurredfromthe datewhentheintangibleassetrstmeetstherecognitioncriterialistedabove.Wherenointernally-generatedintangible asset can be recognised, development expenditure is recognised in prot or loss in the period in which it is incurred. Acquired intangible assets Acquired intangible assets are measured initially at purchase cost and are amortised on a straight-line basis over their estimated useful lives. Intangibleassetsacquiredina businesscombination andrecognisedseparately fromgoodwill areinitiallyrecognised at their fair value at the acquisition date (which is regarded as their cost). Amortisationischargedsoastowriteothecostofassetsovertheirestimatedusefullives,usingthestraight-line method, on the following bases: Customer relationships and backlog10%-12.5% Technology14%-20% Other10% Subsequenttoinitialrecognition,intangibleassetsarereportedatcostlessaccumulatedamortisationandaccumulated impairment losses. Impairment of tangible and intangible assets other than goodwill Attheendofeachreportingperiod,theGroupreviewsthecarryingamountsofitstangibleandintangibleassetsto determinewhetherthereisanyindicationthatthoseassetshavesueredanimpairmentloss.Ifanysuchindication exists, therecoverable amountof the assetis estimated inorder to determinethe extentof the impairmentloss(ifany). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable 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 STATEMENTS amountofthecash-generatingunittowhichtheassetbelongs.Whenareasonableandconsistentbasisofallocation canbeidentied,corporateassetsarealsoallocatedtoindividualcash-generatingunits,orotherwisetheyareallocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identied. Intangibleassets with indenite useful lives andintangible assets not yetavailable forusearetestedforimpairment at least annually,and whenever there is an indication that the asset may be impaired. Recoverableamount isthehigherof fairvalue less costs to selland valueinuse.In assessing valuein use,theestimated futurecashowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreectscurrentmarket assessments of thetime valueof money and therisks specic tothe asset forwhich theestimates of futurecash ows have not been adjusted. Iftherecoverableamountofanasset(orcash-generatingunit)isestimatedtobelessthanitscarryingamount,the carryingamountoftheasset(orcash-generatingunit)isreducedtoitsrecoverableamount.Animpairmentlossis recognisedimmediatelyinprotorloss,unlesstherelevantassetiscarriedatarevaluedamount,inwhichcasethe impairment loss is treated as a revaluation decrease. Inventory Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Costcomprisesdirectmaterialsand,where applicable direct labour costsand those overheadsthathavebeen incurred inbringingthe inventoriesto theirpresent locationandcondition.Costisdeterminedonthe“rst-in-rst-out” basis.Netrealisablevaluerepresents theestimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Financial instruments FinancialassetsandnancialliabilitiesarerecognisedontheGroup’sconsolidatedstatementsofnancialposition when the Group becomes a party to the contractual provisions of the instrument. Trade and other receivables Tradereceivablesaremeasuredatinitialrecognitionatfairvalue,andaresubsequentlymeasuredatamortisedcost usingtheeectiveinterestrate method. Appropriate allowancesfor estimated irrecoverable amounts are recognised in protorlosswhenthereisobjectiveevidence thattheassetis impaired. The allowance recognisedismeasured as thedierencebetweentheasset’scarryingamountandthepresentvalueof estimatedfuturecashowsdiscounted at the eective interest rate computed at initial recognition. Cash and cash equivalents Cashandcashequivalentscomprisecashonhandanddemanddepositsandothershort-termhighlyliquidinvestments that are readily convertible to a known amount of cash. Financial assets and investments All regular way purchases or sales of nancial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales arepurchases orsales of nancial assetsthat require deliveryof assets within the time frame established by regulation or convention in the marketplace. Allrecognisednancialassetsaremeasuredsubsequentlyintheirentiretyateitheramortisedcostorfairvalue, depending on the classication of the nancial assets. 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 Classication of nancial assets Debt instruments that meet the following conditions are measured subsequently at amortised cost: l thenancialassetisheldwithinabusinessmodelwhoseobjectiveistoholdnancialassetsinordertocollect contractual cash ows; and l thecontractualtermsofthenancialassetgiveriseonspecieddatestocashowsthataresolelypaymentsof principal and interest on the principal amount outstanding. The majority of nancial assets are measured subsequently at fair value through prot or loss (FVTPL). Amortised cost and eective interest method Theeectiveinterestmethodisamethodofcalculatingtheamortisedcostofadebtinstrumentandofallocating interest income over the relevant period. Fornancialassetsotherthanpurchasedororiginatedcredit-impairednancialassets(i.e.assetsthatarecredit- impairedoninitialrecognition),theeectiveinterestrateistheratethatexactlydiscountsestimatedfuturecash receipts (including allfees andpoints paid or received that form anintegral partof the eective interestrate, transactioncostsandotherpremiumsordiscounts)excludingexpectedcreditlosses,throughtheexpectedlifeof the debt instrument, or, where appropriate, a shorterperiod, to the gross carrying amount of the debt instrument on initialrecognition.For purchased ororiginatedcredit-impaired nancialassets, acredit-adjusted eective interest rate is calculated by discounting the estimated future cash ows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition. Theamortisedcostofanancialassetistheamountatwhichthenancialassetismeasuredatinitialrecognition minusthe principal repayments, plus thecumulative amortisationusing the eective interest method ofany dierence between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a nancial asset is the amortised cost of a nancial asset before adjusting for any loss allowance. The calculation does not revertto the gross basis even if the credit risk of the nancial asset subsequently improves so that the nancial asset is no longer credit-impaired. Financial assets at FVTPL Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. FinancialassetsatFVTPLaremeasuredatfairvalueattheendofeachreportingperiod,withanyfairvaluegainsor lossesrecognisedinprotorloss.Thenetgainorlossrecognisedinprotorlossisincludedinthe‘othergainsand losses’ line item. Fair value is determined in the manner described in note 36. Impairment of nancial assets The Group recognises aloss allowance for expected credit losses on trade receivables. The amount of expected credit lossesisupdatedateachreportingdatetoreectchangesincreditrisksinceinitialrecognitionoftherespective nancial instrument. TheGrouprecogniseslifetimeECLfortradereceivables.Theexpectedcreditlossesonthesenancialassetsare estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specictothedebtors,generaleconomicconditionsandanassessmentofboththecurrentaswellastheforecast direction of conditions at the reporting date, including time value of money where appropriate. LifetimeECLrepresentstheexpectedcreditlossesthatwillresultfromallpossibledefaulteventsovertheexpected life of a nancial instrument. 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 STATEMENTS Financial liabilities and equity instruments Classication as debt or equity Debt andequity instruments areclassied aseithernancialliabilities oras equity in accordance with the substance of the contractual arrangements and the denitions of a nancial liability and an equity instrument. Equity instruments An equity instrumentisanycontract thatevidencesaresidualinterestintheassetsofanentityafter deductingallof itsliabilities. Equity instruments issued bythe Group arerecognised atthe proceeds received, netofdirect issue costs. Financial liabilities All nancial liabilities are measured subsequently at amortised cost using the eective interest method or at FVTPL. Derivative nancial instruments TheGroupentersintoavarietyofderivativenancialinstrumentstomanageitsexposuretoforeignexchangerate risks, includingforeign exchange forward contracts andoptions. Further details of derivative nancial instruments are disclosed in note 36. Derivativesareinitiallyrecognisedatfairvalueatthedatethederivativecontractsareenteredintoandaresubsequently remeasuredtotheirfairvalue attheendofeach reportingperiod.Theresultinggainor lossisrecognised in protor loss immediately. Bank borrowings Interest-bearingbankloansandoverdraftsarerecordedattheproceedsreceived,netofdirectissuecosts.Finance charges,includingpremiumspayableonsettlementorredemptionanddirectissuecosts,areaccountedforonan accrual basis in prot or loss account using the eective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Provisions ProvisionsarerecognisedwhentheGrouphasapresentobligationasaresultofapastevent,anditisprobable thattheGroupwillberequiredtosettlethatobligation.Provisionsaremeasuredbasedonmanagementestimateof theexpenditurerequiredtosettletheobligationattheconsolidatedstatementsofnancialpositiondate,andare discounted to present value where the eect is material. #### 4 CriticalAccountingJudgmentsandKeySourcesofEstimationUncertainty Critical judgments in applying the Group’s accounting policies Intheprocessofapplyingthe Group’s accounting policies, whicharedescribedinnote3,managementhas madethe followingjudgments thathave themost signicant eect onthe amounts recognisedin thenancial statements(apart from those involving estimations, which are dealt with below): Key sources of estimation uncertainty Thekeyassumptionsconcerningthefuture,andotherkeysourcesofestimationuncertaintyattheconsolidated statementsofnancialpositiondate,thathaveasignicantriskofcausingamaterialadjustmenttothecarrying amounts of assets and liabilities within the next nancial year, are discussed below. 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 Impairmentof intangible assets and goodwill Determining whether goodwill isimpaired requires an estimation of the value inuse of the cash generating units (CGU) to which goodwill has been allocated. The value inuse calculation requires theentity to estimate the future cash ows of the CGU and a suitable discount rate in order to calculate present value. Judgments with respect todeferred tax assets Forthepurposesofmeasuringdeferredtaxassetsarisingfromlosscarry-forwardsindierentterritories,management isrequiredtouseconsiderablejudgmentinestimationofthecarriedforwardlossesinwhichitexpectstobeableto utilise in the foreseeable future. For additional information in respect of deferred tax assets see note 15. Judgments with respect to construction contracts TheCompanyaccountsforitsrevenueinaccordancewithIFRS15revenuefromcontractswithcustomers,which requiresestimatestobemadeforcontractcostsandrevenues.Revenueisrecognisedusingthepercentageof completionmethodbasedontheratioofcontractcostsincurredtototalestimatedcontractcostsorengineering completionpercentage.Estimatingtotaldirect labourcosts andtheengineeringstatusissubjectiveandrequiresthe use of management’s best judgments based on the information available at that time. Judgments with respect to warranty provision Warranty provision was made on the basis of management’s estimation and on past experience. #### 5 Revenues The Group derives its revenue from contracts with customers for the transfer of goods at a point in time and services and Construction Contracts over time. An analysis of the Group’s revenues is as follows: Year ended 31 December 2021 $’000s 2020 $’000s Sales of goods116,447101,341 Services15,83735,413 Construction contracts7,75446,812 140,038183,566 #### 6 BusinessandGeographicalSegments Business segments Information reported to the chief operating decision maker (CEO ofthe Company) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided, and in respect of two major operating segments - Networking and Cyber Division and Bio-Medical Division. These divisions are the basis onwhichtheGroupreportsitsprimarysegmentinformation.Theprincipalproductsandservicesofeachofthesedivisions areasfollows:NetworkingandCyberDivisionmostlyincludestheresearchanddevelopment,productionandmarketingof datacommunicationproducts,suchasNetwork Function Virtualisation (“NFV”)andEdgeComputingbasedontheGroup’s NFVoperatingsystem,EdgilityOS(formerlyNFVTime)aswellassupplyofcarrierethernetandaccesssolutionsinits Network Edge business. Inthe Cyber unit, theGroupprovides network monitoringandencryption solutionsfor very high speed, large areanetworks. The Bio-Medical Division is engaged in the research and development, production, marketing and distribution of medical products, primarily laboratory diagnostic equipment and sterilisation equipment. 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 STATEMENTS A.Segment revenues and segment results Year ended 31 December 2021 Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Revenues from external customers27,992112,046–140,038 Operating prot7,84416,534–24,378 Net nance income555 Prot before tax24,933 Year ended 31 December 2020 Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Revenues from external customers54,884128,682 - 183,566 Operating prot(4,932)19,165 - 14,233 Net nance expense(934) Prot before tax13,299 B.Segment assets, liabilities and other information As at 31 December 2021 Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Assets74,951116,4741,739193,164 Liabilities23,90440,8264,30069,030 Depreciation and amortisation1,6593,525805,264 Additions to non-current assets2,1147,961 - 10,075 As at 31 December 2020 Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Assets73,830124,3981,878200,106 Liabilities30,95550,388–81,343 Depreciation and amortisation2,4032,984885,475 Additions to non-current assets9254,672–5,597 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 The following is an analysis of the Group’s revenue from operations from its major products and services. Year ended 31 December 2021 $’000s 2020 $’000s Networking and cyber products15,37613,552 Software services\*12,61641,332 Distribution of medical products and services71,83265,961 Diagnostic products31,57622,962 Eco-Med products\*\*8,63839,759 140,038183,566 \* The decreasein Softwareservices revenuederives mainlyfrom thesale of aGroup subsidiary.See note31 (disposalof subsidiary)for further details. \*\* 2020 Eco-Med products revenue includes $33m related to an exceptional ventilators project. D.Revenue from major sources Year ended 31 December 2021 Revenues Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Sales of goods15,376101,071–116,447 Services7,1318,706–15,837 Construction contracts5,4852,269–7,754 27,992112,046 – 140,038 Year ended 31 December 2020 Revenues Networking and Cyber $’000s Bio-Medical $’000s Unallocated $’000s Total $’000s Sales of goods13,55287,789–101,341 Services29,2726,141–35,413 Construction contracts12,06034,752–46,812 54,884128,682 – 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 STATEMENTS E.Geographical segments TheGroupoperatesinthreeprincipalgeographicalareas:UnitedStatesofAmerica,IsraelandEurope.TheGroup’s revenue from external customers and information aboutits segment assets by geographical location arepresentedby the location of operations and are detailed below: $’000s Revenue from external customers Non-current assets 2021202020212020 Area A107,718126,79140,30236,276 Area B22,92347,67110,30423,621 Area C9,3979,1044,5104,685 Total 140,038183,56655,11664,582 #### 7 Costofrevenues Year ended 31 December 2021 $’000s 2020 $’000s Direct costs – Components andsubcontractors74,136110,244 Changes in inventory2,942(8,599) Salaries and related benets7,33016,666 Overhead and depreciation2,7263,030 Other expenses1,8431,515 88,977122,856 #### 8 Sales and marketing expenses Year ended 31 December 2021 $’000s 2020 $’000s Salaries and related benets10,22010,870 Commissions2,9864,289 Outside services491435 Advertising and sales promotion941867 Overhead and depreciation2,3042,149 Travelling and other expenses1,3481,587 18,29020,197 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ts5,1146,148 Professional services(\*)3,5064,888 Overhead and depreciation1,3471,300 Other expenses2,2763,548 12,24315,884 (\*) Including auditors’ remuneration for audit services 347281 Amounts payableto Deloitteby theGroup undertakingsin respect ofnon-audit servicesin 2021were $48thousand (2020: $19thousand).Inaddition,payablesinrespectofnon-auditservicestoothersthantheCompany’sauditors,fortaxand internalaudit servicesin 2021,were $51thousand and$19 thousand,respectively (2020:$18thousand and$11 thousand, respectively). #### 10 Researchanddevelopmentexpenses Year ended 31 December 2021 $’000s 2020 $’000s Salaries and related benets4,7413,882 Components and subcontractors2,8634,930 Overhead and depreciation852938 Other expenses591617 Government grants(334)(109) 8,71310,258 #### 11 Stacosts The average monthly number of employees in 2021 (including executive directors) was 1,023 (2020: 1,196). Year ended 31 December 2021 $’000s 2020 $’000s Their aggregate remuneration comprised: Wages and salaries22,23331,733 Social security costs3,5694,242 Other pension costs1,6031,591 27,40537,566 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 STATEMENTS #### 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 assets196304 ) Other276 ) 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 deposits394 Gain on derivative nancial instruments–223 Gain on marketable securities2581 Foreign exchange dierences, net895– Other interest income543422 1,466820 #### 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 The Company is an “industrial company” as dened in the Israeli Law for the Encouragement of Industry (Taxes) 1969. a.The corporate income tax rate for the years 2020 and 2021 is 23% b.Encouragement of Capital Investments Law: a.The corporate tax rate for each company with Preferred Enterprise status for the years 2020 and 2021 is7.5%. b.Includingadditionaltax tracks for PreferredTechnological Enterprise(tax rateof7.5%in Area “A” andtaxrate of 12% in Area “Other”) and for special Preferred Technological Enterprise (tax rate of 6%). c.Determiningrelievesofthethresholdconditionstoenterthetrackof“SpecialPreferredEnterprise”relevant for huge companies entitle (tax rates of 5% in Area “A” or 8% in the Area “Other”). The Company has Preferred Enterprise status inarea A and its Israelisubsidiaries are being assessed according to the corporate income tax rate. TheCompanyanditsIsraelisubsidiarieshavetaxlosscarry-forwardsof$131.9millionforwhichtheGroupdidnot create deferred tax assets. According to the Israeli tax law there is no expiry date to use such losses. The Company tax assessments for the years up to and including the 2016 tax year are considered as nal. The United States of America TelcoSystemsincurredlossesfortaxpurposes.Inaddition,inaccordancewithU.S.taxlaw,TelcoSystemselectedto amortiseasubstantialpart oftheexcesscostpaidbytheCompanyinitsacquisitionoveraperiodof15years,which hasresultedintaxlosscarry-forwards.AccordingtoUSlaw,lossescreateduntil2017canbecarriedforwardfor20 years.Asof31December2021,thetotalcarry-forwardlossesofTelcoSystemsamountedto$280.5millionofwhich deferred tax asset of $3.1 million have been recognised in respect of such losses to the extent that a sucient taxable prot will be available in the foreseeable future. On 22December2017, aTax Cuts andJobsActlaw wasenacted (the “TaxAct”).The Tax Act contains signicant changes tofederalcorporatetaxes,includingapermanentreductionofthecorporatetaxratefrom35%to21%eective1 January 2018. Other jurisdictions Taxationforotherjurisdictionsthanthosementionedaboveiscalculatedattheratesprevailingintherespective jurisdictions. The corporate income tax rate for subsidiaries with signicant sales are: Moldova is 12%, Romania is 16% and Italy 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 STATEMENTS TheGrouphastaxlosscarry-forwardsof$6.2millioninEuropeansubsidiariesandtheGroupdidnotrecognise deferred tax assets in respect of $5.2 million of such losses. Theincometaxexpensesfortheyearcanbereconciledtotheprotpertheconsolidatedstatementofprotorloss as follows: Year ended 31 December 2021 $’000s 2020 $’000s Prot before tax 24,93313,299 Tax expense at the Israeli statutory corporate income tax rate of 23%5,7353,059 Dierencebetweenequitymethodmeasurementbasisandcostbasisfor tax purposes related to disposal of a subsidiary 1,754– ) Dierences betweenstatutorytaxin Israel(23%)andstatutory taxratefor subsidiaries abroad 1,449(339) Taxlossesutilisedincurrentperiodforwhichnodeferredtax assetshave been recognised (154)(166) Deferred tax assets recognised(191)(4,072) Write-o of deferred tax assets– ) 1,818 ) Tax on previous years11 2 ) Other733 ) 741 ) Tax expenses for the year 9,337 ) 1,043 ) #### 16 Earningspershare The calculation of the basic and diluted earnings per share is based on the following data: Year ended 31 December 20212020 Earnings for the purposes of basic and diluted earnings per share ($'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 440,437,960440,291,783 Eect of dilutive potential ordinary shares: Share options3,829,7143,763,448 Weighted average number of ordinary shares for the purposes of calculation of diluted earnings per share 444,267,674 444,055,231 The number of share options that could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share because they are antidilutive for the year, is 225,000 (2020: 400,000). 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 deposits158157 Financial assets at FVTPL2,2742,646 2,4322,803 The average interest rate of deposits is 0.25% for 2021 and 2020. #### 18 Tradeandotherreceivables 31 December Trade andother receivables 2021 $’000s 2020 $’000s Trade receivable account25,45124,889 Participation in research and development: Government of Israel901,101 VAT authorities2,2261,273 Tax authorities257126 Construction contracts (see following table)1,4745,790 Prepaid expenses3,6346,468 Other debtors1,8001,820 34,93241,467 Construction contracts 31 December 2021 $’000s 2020 $’000s Composition: Cumulative costs incurred due to works construction contracts8,493 ) 15,019 ) In addition - Recognised prots2,044 ) 1,023 ) Less accounts submitted to project customers(9,063)(10,252) 1,474 ) 5,790 ) The average creditperiodtakenonsales ofgoods is66days (2020:54days).No interest ischarged onthe receivables.An allowancehasbeenmadeat31 December2021forestimatedirrecoverableamounts fromthesaleofgoodsof$3,499 thousand(2020:$3,556thousand),includingalossallowanceforexpectedcreditlossesaccordingto IFRS9.Thedirectors consider that the carrying amount of trade and other receivables approximates their fair value. Asof 31 December 2021, trade receivable account includesamounts of $6.4 million for which maturitydatehasexpired (includingareceivableinthe amountof$0.9 millionthatisoverduebymore thanayear),buttheGroup, basedonpast experience andon the creditquality ofthedebtorsandgiventhat most ofthedebts have beencollected bythe dateof the approval of this annual report, has not made anallowance for doubtful debts sincethe Company expects that those debts are to be collectible. 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 STATEMENTS Credit risk TheGroup’sprincipalnancialassetsarecashandcashequivalents,tradeandotherreceivables, deposits and investmentsatfairvalue.TheGroup’screditriskisprimarilyattributabletoitstradereceivables.Theamountspresented in the consolidated statements of nancial position are net of allowances for credit loss. #### 19 Inventories 31 December 2021 $’000s 2020 $’000s Raw materials7,1257,166 Work-in-progress2,4103,353 Finished goods21,41623,374 30,95133,893 During2021,$2.0millionofslow-movinginventorywasimpairedandexpensedtotheProtorLossaccount(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 20209,735 ) 17,088 ) 1,982 ) 4,181 ) 2,537 ) 35,523 ) Additions29 ) 2,352 ) 419 ) 351 ) 334 ) 3,485 ) Disposals– ) (271)(323)(35)– ) (629) Eectoftranslationadjustment445 ) 565 ) 5 ) 25 ) 121 ) 1,161 ) At 1 January 2021 10,209 ) 19,734 ) 2,083 ) 4,522 ) 2,992 ) 39,540 ) Additions29 ) 3,477 ) 394 ) 103 ) 2,036 ) 6,039 ) Disposal(11)(265)(229)(77)(29)(611) Disposal of subsidiary– ) (797)– ) – ) (1,197)(1,994) Eectoftranslationadjustment(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 20202,392 ) 12,352 ) 1,285 ) 4,007 ) 1,284 ) 21,320 ) Depreciation expense295 ) 1,002 ) 247 ) 191 ) 290 ) 2,025 ) Disposals– ) (154)(248)(34)– ) (436) Eectoftranslationadjustment211 ) 260 ) 3 ) 7 ) 41 ) 522 ) At 1 January 2021 2,898 ) 13,460 ) 1,287 ) 4,171 ) 1,615 ) 23,431 ) Depreciation expense299 ) 1,332 ) 228 ) 74 ) 116 ) 2,049 ) Disposals– ) (220)(175)(77)– ) (472) Disposal of subsidiary– ) (512)– ) – ) (338)(850) Eectoftranslationadjustment(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 January1,878 ) 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 property24 ) 171 ) Operating expenses related to income from investment property(13)(154) Operatingexpensesrelatedtoinvestmentpropertywhichproducednoincome (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 STATEMENTS Additional Information Fair value disclosures for investment properties measured using the cost model Details of the Group’s freehold land and buildings and information about the fair value hierarchy as at year end are as follows: 31 December 202131 December 2020 At amortised cost $’000s Fair value $’000s At amortised cost $’000s Fair value $’000s USA1,0511,9331,0991,804 Italy  6881,237  7791,341 ThefairvalueinItalyandtheUSAwasdeterminedbasedonthemarketcomparableapproachthatreectsrecent transactionprices forsimilar properties, where themarket rentalsof alllettable units ofthepropertiesareassessed by referencetotherentalsachievedinthelettableunitsaswellasotherlettingsofsimilarpropertiesintheneighbourhood. The capitalisation rate adopted is made byreference tothe yield rates observed by the valuers for similar properties in the locality and adjusted based on the valuers’ knowledge of the factors specic to the respective properties. Averagemarketprice,takinginto account thedierences inlocationandindividualfactors,suchasfrontageand size, between thecomparablesand the property, was $1,369 per square metre forthe propertyin Italy and$159per square foot for the property in the USA. #### 22 Right-of-useassets ($’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 ) Additions8481,618 ) 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 8489,662 ) 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 year128 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 1284,457 ) 616 ) 5,201 ) Carrying amount At 31 December 2021 7205,205 ) 645 ) 6,570 ) At 31 December 2020 – 8,902 ) 705 ) 9,607 ) The Group leasesseveralassetsincludingbuildings andmotorvehicles.Theaveragelease termofbuildingsand motor vehicles from the implementation date, 1 January 2019, is 7.7 and 2.5 years, respectively. The maturity analysis of lease liabilities is presented in note 27. Amounts recognised in prot or loss 2021 $’000s 2020 $’000s Depreciation expense on right-of-use assets2,2092,416 Interest expense on lease liabilities224302 Expense relating to short-term leases766466 At31December2021, theGroupwas committedto$0.4millionforshort-termleases (2020:$0.3million).Thetotalcash outow for leases amounted to $2,174 thousand (2020: $2,428 thousand). #### 23 Goodwill TheGrouptestsannuallygoodwillforimpairmentormorefrequentlyifthereareindicationsthatgoodwillmight beimpaired.TheGrouphastworeportablebusinesssegmentsandgoodwillisassociatedwithCGUswithinthe Bio-MedicalsegmentorCGUswithintheNetworkingandCybersegment.ThegoodwillrelatedtotheBio-Medical segmentintheamountof$9,401thousand(2020:$9,478thousand)isallocatedto5CGUs:Eco-Med,Diagnostic, Distribution, Distributor and provider of genetics tests and Analytical instruments distribution. The goodwill related to the Networking and Cyber segment amounted to $1,984 thousand (2020: $7,360 thousand). 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 STATEMENTS The goodwill is allocated to the following CGUs: Eco-Med: $2,550 thousand (2020: $2,550 thousand) Diagnostic: $1,082 thousand (2020: $1,173 thousand) Distribution: $1,116 thousand (2020: $1,137 thousand) Distributor and provider of genetics tests: $1,073 thousand (2020: $1,038 thousand) Analytical instruments distribution: $3,580 thousand (2020: $3,580 thousand) Networking: $1,984 thousand (2020: $1,984 thousand) Softwareservices:$0thousand (2020: $5,376 thousand). Relatedto NGSoft, whichwassoldduring Q1 2021. Seealso note 31 for further information. TherecoverableamountsoftheCGUsaredeterminedfromvalueinusecalculationsexceptfortheDiagnosticCGU.The keyassumptionsforthevalueinusecalculationsarethoseregardingthediscountrates,growthratesandexpected changestosellingpricesand direct costs duringtheperiod.Pre-taxdiscountratesof between 10.5%- 15.5%have been used. Changes in selling prices and direct costs are based on recent history and expectationsof future changes in the market. The Group prepares cash ow forecasts derived from the most recent nancial budget approved by management and extrapolates indenite cash ows based on estimated growth rates. For the purposes of this calculation management haveusedrevenuegrowthratesfortheNetworkingCGUof35%,19%,35%,35%,35%foryears1-5respectivelyand 0%thereafter, forthe Eco-MedCGU 23%foryear1,10%foryears 2-5and1%thereafter, forthe DistributionCGU 8% for year 1, 15% for years 2-5 and 5% thereafter, for the Distributor and provider of geneticstests CGU8% for year 1, 5% foryears2-5and1%thereafter,andfortheAnalyticalinstrumentsdistributionCGU13%foryear1,9%foryears2-5 and 1% thereafter. The average operating expenses have been assumed to grow for the Networking CGU at 39%, 27%, 34%, 24%, 25% for years 1-5 respectively and then assumed to remain constant thereafter, andfor the Eco-Med, Distribution, Distributor andproviderofgeneticstestsandAnalyticalinstrumentsdistributionCGUsat5%,8%,8%,9%,9%foryears1-5 respectivelyandthenassumedtoremainconstantthereafter.Theaveragecostofgoodssoldhasbeenassumedto grow fortheNetworkingCGUat 6%,(2%), 1%,13%,14%foryears 1-5respectivelyandthen assumedtoremainconstant thereafter,andfortheEco-Med,Distribution,DistributorandproviderofgeneticstestsandAnalyticalinstruments distribution CGUs 10%, 13%, 14%, 14%, 14% for years 1-5respectively and 4% thereafter. The rates used above reect historical rates achieved and expected levels for 2022 but then are adjusted for subsequent years. TherecoverableamountoftheDiagnosticCGUisdeterminedbasedonfairvalue,whichaccordinglynoimpairment was required. Sensitivity of the recoverable amount to changes in the key assumptions The recoverableamountofthe Distributor andprovider of genetics tests activity is higher than thecarrying amount in the amount of $0.9 million. Reduction of 2% growth rate taken into account in calculating the value in use of the activity will result in a decrease of$0.8 million recoverable amount of the activity and no goodwill impairment will be recorded. Increaseof3%inpre-taxdiscountratetakenintoaccountincalculatingthevalueinuseoftheactivitywillresultina decrease of $0.86 million recoverable amount of the activity and no goodwill impairment will be recorded. The changes inassumptionsfothesensitivityanalysiswillleadtochangesinotherassumptionsusedinthecalculationofvalueinuse. 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 adjustments716 ) 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 expense154 ) 463 ) 101 ) 718 ) Disposal– ) – ) – ) – ) Eect of translation adjustments659 ) 328 ) 105 ) 1,092 ) At 1 January 2021 16,631 ) 12,093 ) 2,439 ) 31,163 ) Amortisation expense43 ) 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 STATEMENTS #### 25 Subsidiaries A listof thesignicant directand indirectinvestments in subsidiaries,including thecountry ofincorporation, andpercent of ownership interest as at 31 December 2021 is presented below. Subsidiary Principal activity Country of incorporation Ownership interest Date of acquisition Entity ATelecommunicationUnited States of America100%April 2000 Entity BDistributionRomania100%June 2007 Entity CEco-MedHungary75%February 2008 Entity DDistributionMoldova51%July 2008 Entity EDiagnosticsItaly100%February 2009 Entity FDiagnosticsItaly100%November 2009 Entity GCyberIsrael67%April 2012 Entity HDistributionHungary100%January 2016 Entity IDistributionIsrael100%January 2017 #### 26 Deferred tax Deferred tax assets Thefollowingare deferredtaxassetsrecognisedbytheGroupandmovementsthereonduring thecurrentandprior reporting period (see also note 15). 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 ) TheCompanyincurredtaxlossesincertainjurisdictions,towhichdeferredtaxassetsrelate,totheextentthatitis expectedthatfuturetaxableprotwillbeavailableandcanbeutilisedagainstthem.Thedeferredtaxassetswere analysedbasedonforecastedoperationsandexistingagreementsandbacklog.TheCompanyexpectsthattaxable prots will be available, as a result of an increasing demand, new products and expansion to new markets. 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 adjustments7 ) 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: Taxabletemporarydierencesinrelationtoinvestmentsinsubsidiariesforwhichdeferredtaxliabilities havenotbeen 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 creditors20,70122,373 Salary accruals7,1958,511 VAT and other tax4,3363,515 Dividend payables4,300– Provision–2,059 Other creditors and accruals10,98717,160 47,51953,618 Tradecreditorsandaccrualsprincipallycompriseamountsoutstandingfortradepurchasesandongoingcosts.The averagecreditperiodtakenfortradepurchaseswas59days(2020:58days).Thedirectorsconsiderthatthecarrying amount of trade payables approximates to their fair value. Long-term bank credit 31 December 2021 $’000s 2020 $’000s Long-term bank credit1,356675 1,356675 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 STATEMENTS Long-term liabilities 31 December 2021 $’000s 2020 $’000s Liability to the oce of the chief scientist2,6853,269 Government institutions and other1,2033,147 3,8886,416 Changes in nancial liabilities where the cash ows in respect thereof are classied as to nancing activities 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 675744 ) (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 Disclosure required by IFRS 16 31/12/202131/12/2020 $’000s$’000s Maturity analysis Year 12,1862,244 Year 21,6822,116 Year 31,2401,489 Year 41,0471,082 Year 57411,006 Onwards3982,747 7,29410,684 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) 20212020 Authorised: 1,000,000,0001,000,000,000 Issued and fully paid: 440,534,124440,434,124 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 On14December2021,theshareholdersapprovedthedistributionofadividendof0.74pence(sterling)perordinary 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 $’000s Operating prot from operations 24,378 ) 14,233 ) Adjustments for: Amortisation of intangible assets716 ) 718 ) Depreciation of property, plant and equipment and investment property4,548 ) 4,757 ) Capital loss (gain) of property, plant and equipment(229)31 ) Prot from sale of a subsidiary (13,035) – ) Capital gain on reduce of holdings in associated company– ) (602) Stock options granted to employees96 ) 158 ) Increase (decrease) in retirement benet obligation(10)96 ) Increase (decrease) in provisions(1,803)2,114 ) Operating cash ow before movements in working capital 14,66121,505 ) Decrease (increase) in inventories3,031 ) (11,198) Decrease (increase) in receivables(2,052)916 ) Increase (decrease) in payables(5,352)7,111 ) Eects of exchange rate changes on the balance sheet(1,616)1,729 ) Cash from operations 8,672 ) 20,063 ) Income taxes paid(2,383)(637) Income taxes received– ) 3 ) Interest paid(697)(970) Net cash from operating activities 5,592 ) 18,459 ) BATM R&A 2021\_Financial Section\_3.indd 40 BATM R&A 2021\_Financial Section\_3.indd 40 13/04/2022 13:50 13/04/2022 13:50 ![]() #### Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 101 FINANCIAL STATEMENTS #### 31 Disposalofsubsidiary On 19 March 2021, the Group entered into a sale agreement todispose of NGSoft Ltd. (“NGSoft (toAztek Technologies (1984)Ltd.,aproviderofICTcloudservicesinIsraelandaportfoliocompanyofSKYFund(the“Buyer”).NGSoftisa software and digital services company that provides creative digital and technology solutions. NGSoft 2021 US$ in thousands Net assets disposed Property, plant and equipment1,144 ) Right of use3,667 ) Other intangible assets968 ) Net working capital73 ) Lease liability(3,764) Current tax liability(584) Deferred tax liability(540) Goodwill5,185 ) Net assets disposed of 6,149 ) Disposal of a foreign operation translation reserve(522) Gain on disposal 13,035 ) Total consideration18,662 ) Net cash inow arising on disposal: Consideration received in cash and cash equivalents, net20,903 ) Cash and cash equivalents disposed(2,241) 18,662 ) #### 32 Guaranteesandliens The Group provided from time to time bank guarantees due to advances from customers. The Company registered several liens in favour of banks. #### 33 Share-basedpayments Equity-settled share option scheme InNovember2021,theCompanyapprovedaShareIncentivePlan(hereinafter:“the2021Plan”),underwhichtheCompany cangrantoptionsorrestrictedshareunitsorallotshares(includingrestrictedshares),accordingtotheprocedures, termsandconditionsspeciedintheShareIncentivePlan.Optionsgrantedpriortothe2021Planaresubjecttothe 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 termsandconditionsunderwhichtheyweregranted.Asofthebalancesheetdate,theCompanyhadnotmadeany grants under the 2021 Plan. Details of the share options outstanding during the year are as follows: 20212020 Number of share options Weighted average exercise price (in GBP) Number of share options Weighted average exercise price (in GBP) Outstanding at beginning of year5,756,2000.28675,575,3950.2613 Granted during the year225,0001.0502400,0000.6385 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 5,631,2000.30085,756,2000.2867 Exercisable at the end of the year 5,247,8670.25053,056,2000.2360 Theoutstandingoptionsat31December2021hadaweightedaverageexercisepriceof0.3008GBP,andaweighted averageremaining contractuallifeof 6.3years.On21February 2021,225,000optionswere grantedforan estimatedfair value of $200 thousand which were calculatedaccording to the Black-Scholes model. On21 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: 20212020 Weighted average share price (GBP)1.050.92 Weighted average exercise price (GBP)1.050.64 Expected volatility82%67% Expected life33 Risk-free rate1.3%1.3% Expected dividends0%0% Expectedvolatilitywas determinedbycalculatingthehistoricalvolatilityof theCompany’ssharepriceoverthe previous 3 years. The expected life used in the model has been adjusted, based on management’s best estimate, for the eects of non-transferability, exerciserestrictions and behaviouralconsiderations. TheGrouprecognisedtotalexpensesof$96thousandand$158thousandrelatedtoequity-settledshare-based payment transactions in 2021 and 2020, respectively. #### 34 Retirementbenetobligation Dened contribution plans The Groupoperates denedcontribution retirementbenet schemes forall qualifying employees inIsrael.The assets oftheschemesareheldseparatelyfromthoseoftheGroupinfundsunderthecontroloftrustees.Wherethereare employeeswholeavetheschemespriortovestingfullyin thecontributions,thecontributionspayablebytheGroup are reduced by the amount of forfeited contributions. 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 STATEMENTS Totalexpensesrelatedtothecontributionretirementbenetschemesare:$453thousandintheyear2021(2020: $1,112thousand). TheemployeesoftheGroup’ssubsidiariesintheUnitedStatesaremembersofastate-managedretirementbenet scheme operated by the government of the Unites States. The subsidiary contributes aspecied percentage of payroll coststotheretirementbenetschemetofundthebenets.TheonlyobligationoftheGroupwithrespecttothe retirement benet scheme is to make the specied contributions. Dened benet plans TheGroupoperatesdenedbenetschemesforqualifyingemployeesoftheCompanyanditssubsidiariesinIsrael and in Italy. InIsraelthisschemeprovidesseverancepayprovisionasrequiredbyIsraelilaw.Undertheplans,theemployees areentitledtopost-employmentbenetsequivalenttoyearsofservicemultipliedby8.33%ofnalsalaryoneither attainmentofaretirementageof67(men)and65(women)orredundancy.Nootherpost-retirementbenetsare provided to these employees. InItalyeachemployeeisentitledtohaveaseverancepaymentassoonastheyendemploymentunderoneofthe conditionsspeciedbelowexceptthosewhodecidetochooseprivateinsuranceduringtheemployment.Principal conditions to release the liability are: 1. Full retirement age 2. Accumulation of minimal workingyears3. Termination of employment by the employer 4. Death of employee 5. Occurrence of employee’s disability. Themost recent actuarial valuations ofplanassetsandthe present value ofthe denedbenetobligationwere carried outat16January2022byAlexeyTrakshinsky,FILAAonbehalfofEliorWeissbergLtd.,amemberoftheInstituteof ActuariesregardingtheemployeesinIsrael.Thepresentvalueofthedenedbenet,obligation,therelatedcurrent service cost and past servicecost weremeasured using the projected unit credit method. The discount rate was based on high quality corporate bonds. The principal assumptions used for the purposes of the actuarial valuations were as follows: 20212020 Discount rate(s)2.15%2.10% Expected rate(s) of salary increase1-4%1-4% Expected ination rate2.56%1.40% Employee turnover rate8%8% Amounts recognised in comprehensive income in respect of these dened benet plans are as follows: Service cost: 2021 $’000s 2020 $’000s Current service cost193215 Net interest expenses1112 Components of dened benet costs recognised in prot or loss 204227 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 assumptions15 2 ) Actuarial gains andlosses arising fromother 67(21) Components of dened benet costs recognised in other comprehensive 162 (15) The amountincludedin theconsolidatedstatementsofnancial positionarisingfromthe entity’sobligation inrespect of its dened benet plans is as follows: 2021 $’000s 2020 $’000s Present value of funded dened benet obligation2,0442,574 Fair value of plan assets(1,423)(1,746) Net liability 621828 Movements in the present value of the dened benet obligation in the current period were as follows: 2021 $’000s 2020 $’000s Opening dened benet obligation2,574 ) 2,445 ) Current service cost193 ) 215 ) Interest cost37 ) 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 STATEMENTS 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 assets1,746 ) 1,730 ) Interest income26 ) 28 ) Remeasurements gains/(losses) return on plan assets (excluding amounts included in net interest expense) 88 ) 4 ) Contributions from the employer52 ) 51 ) Benets paid(449)(190) Disposal of a subsidiary ( 7 1 ) – ) Exchange rate dierences31 ) 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ts1,9122,378 Shared-based payment–84 1,9122,462 Transactions with associated companies During the year, the Group provided various services to an associated company for an amount of $1,162 thousand. #### 36 FinancialInstruments (a)Capital risk management Management’spolicyistomaintainastrongcapitalbaseinordertopreservetheabilityoftheGrouptocontinue operatingsothatitmayprovideareturnoncapitaltoitsshareholders,benetstootherholdersofinterestsintheGroup suchascreditprovidersandemployeesoftheGroup,andsustainfuturedevelopmentofthebusiness.Management oftheGroupmonitorsreturnoncapitaldenedasthetotalamountof equity attributableto theshareholdersofthe Group and also the amount of dividends distributed to the ordinary shareholders. TheGroup’smanagementreviewsthecapitalstructureonaperiodicbasis.Asapartofthisreviewthemanagement considersthecostofcapitalandtherisksassociatedwitheachclassofcapital.Basedonmanagement’s recommendations, theGroup willbalance itsoverall capitalstructure throughthe paymentof dividends. TheGroup’s overall strategy remains unchanged from 2006. (b)Signicant accounting policies Detailsofthesignicantaccountingpoliciesandmethodsadopted,including thecriteriaforrecognition,thebasisof measurement and the basis on whichincome and expenses are recognised,in respect of each class of nancial asset, nancial liability and equity instrument are disclosed in note 3 to the nancial statements. 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 loss2,935 Fair value through OCI524 Receivables28,815 Financial liabilities At amortised cost56,142 Fair value through prot or loss47 2020 $’000s Financial assets Cash and cash equivalents\*50,575 Fair value through prot or loss3,306 Fair value through OCI524 Receivables40,068 Financial liabilities At amortised cost57,353 Fair value through prot or loss– \*Cash and cashequivalents comprises $2.4 million depositsup to three monthsand $62.9 millioncash (2020: $11.6 milliondeposits up tothree months and $39.0 million cash). Themajorityoftheassetsincludedinfairvaluethroughprotorlosssectionmeasurementsarelevel1fairvalue measurements, dened as those derived from quoted prices (unadjusted) in active markets for identical assets. (d)Financial risk management objectives TheGroup’sFinancefunctionprovidesservicestothebusiness,coordinatesaccesstodomesticandinternational nancial markets, monitors and manages the nancialrisks relating to the operations of theGroup through internal risk reports that analyse exposureby degree and magnitude of risks.These risks includemarket risk (including currencyrisk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash ow interest rate risk. TheGroup seeksto minimisetheeects ofthese risksbyusingderivatives onlyfor economichedginganddoes notapply hedgeaccounting. Theuseofnancial derivativesisgovernedby theGroup’spoliciesapproved bytheboardof directors, which provideprinciplesonforeignexchangerisk,interestraterisk,credit risk,theuseofnancialderivativesandnon- derivativenancialinstruments,andtheinvestmentofexcessliquidity.Compliancewithpoliciesandexposurelimitsis 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 STATEMENTS (e)Market risk TheGroup’sactivitiesexposeitprimarilytothenancialrisksofchangesinforeigncurrencyexchangerates(refertosection f)andinterestrates(refertosectiong).TheGroupentersintoavarietyofderivativenancialinstrumentstomanage itsexposuretointerestrateandforeigncurrencyrisk,including:structureddeposits,calloptionsandforwardforeign exchange contracts to hedge the exchange rate risk, which derive mostly from existing monetary assets and liabilities. TherehasbeennochangetotheGroup’sexposuretomarketrisksorthemannerinwhichitmanagesandmeasures the risk. (f) Foreign currency risk management TheGroupundertakescertaintransactionsdenominatedinforeigncurrencies,henceexposurestoexchangerate uctuationsarise.Exchange rateexposuresaremanagedwithinapprovedpolicyparametersutilisingforward foreign exchange contracts. The Company does not implement hedge accounting. ThecarryingamountoftheGroup’sforeigncurrencydenominatedmonetaryassetsandmonetaryliabilitiesatthe reporting date is as follows: Liabilities Assets 2021 $’000s 2020 $’000s 2021 $’000s 2020 $’000s NIS9,65014,87326,40021,034 EUR24,33226,55933,21232,680 RON4,8264,30011,7118,871 MDL2,7371,9833,8623,532 GBP3883233,764441 Other2,2404,8102,0671,019 Foreign currency sensitivity The Group is mainly exposed to EUR, NIS, GBP, RON and MDL. ThefollowingtabledetailstheGroup’ssensitivitytoa10%changeinUSDagainsttherespectiveforeigncurrencies in2021.The10%istherateusedwhenreportingforeigncurrencyriskinternallytokeymanagementpersonneland represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis of the Group’s exposure toforeigncurrency riskat thereporting datehas been determined basedonthe change takingplace atthebeginning ofthe nancialyear andheld constant throughout thereportingperiod.Apositivenumberindicates an increase in prot or loss and other equity where the USD weakens against the respective currency. If the USD were to strengthen by the same percentage against the respective currency there would be a similar but reverse impact on the prot or loss and equity as presented in the tables below. 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 Impact1,724417 EUR Impact396(151) GBP Impact36229 Equity 2021 $’000s 2020 $’000s NIS Impact(49)199 ) EUR Impact492 ) 763 ) MDL Impact112 ) 155 ) GBP Impact(24)(17) RON Impact689 ) 457 ) Other currencies Impact(17)(379) The Group’s main exposure derives from its cash, receivables and payables at year end.. TheCompanyengagesinnancialinstrumentscontractssuchasforwardcontracts,callandputoptionsandstructured instruments in order to manage foreign currencies exposure as needed. Duringtheyear,theCompanyengagedinthreenancialinstruments,whichresultedin$44thousandrecordedas nance expenses (2020: ve nancial instruments, which resulted in $223 thousand recorded as nance income). (g) Interest rate risk management TheGroupisexposedtointerestrateriskbecauseentitiesintheGroupmayborrowfundsatbothxedandoating interestrates.TheriskismanagedbytheGroupbymaintaininganappropriatemixbetweenxedandoatingrate borrowings.TheGroup’sexposuretointerestrateonnancialassetsandnancialliabilitiesaredetailedinthefollowing table (refer to section h). The exposure to oating rate loans is not material. (h)Liquidity risk management TheGroupmanagesliquidityriskbymaintainingadequatereserves,bankingfacilitiesandreserveborrowingfacilities, by continuously monitoringforecast andactual cashows, andby matching thematurity prolesof nancialassets and liabilities. BATM R&A 2021\_Financial Section\_3.indd 48 BATM R&A 2021\_Financial Section\_3.indd 48 13/04/2022 13:50 13/04/2022 13:50 ![]() #### Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 ANNUAL REPORT & ACCOUNTS 2021 109 FINANCIAL STATEMENTS Financial liabilities Weighted average eective interest rate 0-3 months 3 months to 1 year1-5 years Total %$’000s$’000s$’000s$’000s 31 December 2021 Non-interest bearing–42,6464504,69247,788 Bank loans interest bearing (\*) 4.205521,0821,3562,990 Lease liabilities2.055461,6405,1087,294 43,7443,17211,15658,072 31 December 2020 Non-interest bearing–47,6954056,32554,425 Bank loans interest bearing (\*) 3.127364,6296756,040 Lease liabilities2.925611,6838,44010,684 48,9926,71715,44071,149 (\*) 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 banks aremeasured atamortisedcost using the eective interestmethod. The dierence between the fair value of the loans and their book value is not signicant. (j)Fair value of nancial instruments carried at amortised cost ThefairvalueofthenancialinstrumentsoftheGroupcarriedatamortisedcostisnotconsideredtobematerially dierent from the stated amortised cost. #### 37 Postbalancesheetevents (a)InJanuary2022,theGroupanditspartnersinAdorinvestedanadditionalamountof$10m,ofwhichtheGroup contributed$4m. Following thisadditional investment, theGroup’sshareholdingin Adoris 37.21% (comparedwith 36.7% in December 2020). (b)On 17March 2022,the Groupreceivedshareholder approval forasharebuybackprogramme.As atthedateofthis report, the Group had purchased 200,000 ordinary shares. BATM R&A 2021\_Financial Section\_3.indd 49 BATM R&A 2021\_Financial Section\_3.indd 49 13/04/2022 13:50 13/04/2022 13:50 ![]() ANNUAL REPORT & ACCOUNTS 2021 110 #### OtherAlternativeMeasures #### Incomestatementadjustments TheGrouphasmadereferenceintheannualreporttoanumberofadjustmentsregarding(1)thecontributiontobothyears fromNGSoft,asubsidiarythattheGroupsoldinMarch2021;(2)thecontributionto2020fromasignicantcontractforthe supplyofventilators;and(3) adjustmentsrelated tothe amortisationof intangibleassets. Theseadjustments areoutlinedbelow: Year ended 31 December 2021 (Unaudited) Reported results Adjustments to exclude NGSoft and ventilator contract Amortisation of intangible assets Adjusted results (ongoing operations) US$ thousands Revenues140,038 7,262–132,776 Gross prot51,061 1,235(414) 50,240 Gross margin (%)36.5%17.0%–37.8% Sales and marketing expenses18,290   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t24,37813,727(674) 11,325 EBITDA29,64213,956– 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 Revenues183,56670,997 - 112,569 Gross prot60,71020,105(414)41,019 Gross margin (%)33.1%28.3% - 36.4% Sales and marketing expenses20,1973,304 - 16,893 General and administrative expenses 15,8842,680 - 13,204 Research and development expenses 10,2581,747 - 8,511 Other operating expenses (income) 138159145(166) Operating prot14,23312,215(559)2,577 EBITDA19,70813,140 - 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 STATEMENTS #### EBITDAmeasurement The Group uses EBITDA as a performance measure, which is calculated as follows: Reported Year ended 31 December Adjusted Year ended 31 December 2021 (Unaudited) 2020 (Unaudited) 2021 (Unaudited) 2020 (Unaudited) Operating prot24,37814,23311,3252,577 Amortisation of Intangible assets716718–– Depreciation4,5484,7574,3613,991 EBITDA29,64219,70815,6866,568 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 #### Registered Office P.O.B. 7318 , Neve Ne’eman Ind. Area, 4 Ha’harash Street, 4524075 Hod Hasharon, Israel #### Company Number 520042813 – Registered in Israel #### Company Secretary Mr. Yair Livneh #### Auditors Deloitte Israel & Co. 1 Azriely Center, Tel-Aviv, Israel #### Financial Adviser & Stockbroker Shore Capital Cassini House, 57 St James's Street, London SW1A 1LD, UK #### Legal Counsel in UK FladgateLLP 16 Great Queen Street, London WC2B 5DG, UK #### Bankers Bank Hapoalim 4 Hatzoran, Netanya, Israel Bank Leumi 7 Menahem Begin Street, Ramat-Gan, Israel #### Registrar Link Group 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL, UK #### Financial PR Consultants Luther Pendragon 48 Gracechurch Street, London EC3V 0EJ, UK 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. Area4 Ha’harash Street, P.O.B. 73184524075 Hod HasharonIsrael BATM ADVANCED COMMUNICATIONS LTD ANNUAL REPORT AND ACCOUNTS 2021 #### FOR THE YEAR ENDED 31 DECEMBER 2021 # ANNUAL REPORT # AND ACCOUNTS