BMIT Technologies plc - Interim Results
On 7 August 2020, BMIT Technologies plc published its condensed interim financial statements for the six-month period ended 30 June 2020.
Performance Overview
During the first six months of 2020, revenues increased by 4.9% to €11.7 million (H1 2019: €11.2 million) on the back of the strong growth registered in cloud (+47%) and connectivity services (+13%). On the other hand, COVID-19 impacted negatively the demand for managed services due to the restrictions in the provision of on-premise support services to customers and in the finalisation of certain hardware and software deals. In this respect, BMIT noted that these managed service lines are expected to improve in the next months although the volume of business may not reach the same levels as recorded in the 2019 financial year. BMIT further explained that as all sports activities were stopped, many of its customers operating in the online sports betting segment were also negatively impacted. However, other customers operating in other segments of remote gaming experienced only a temporary slow-down in business and managed to recover well in the aftermath of the outbreak of the pandemic.
Operating costs increased in line with the growth in business as these edged 4.7% higher to €7.74 million (H1 2019: €7.39 million). As a result, the operating profit margin remained virtually unchanged at 33.9% compared to €33.8% recorded in the first half of 2019. Similarly, EBITDA remained stable at €5.1 million translating into an EBITDA margin of 43.6%.
Meanwhile, net finance costs increased to €0.12 million (H1 2019: €0.06 million) reflecting the new bank borrowings taken on for the acquisition of the data centre located in Handaq which were partly offset by the drop in the amount of lease liabilities.
Overall, BMIT reported a 4.5% increase in pre-tax profits to €3.88 million compared to €3.71 million in H1 2019. After taking into account tax charges amounting to €1.34 million, the net profit generated by BMIT in the first six months of 2020 amounted to €2.54 million (H1 2019: €2.34 million) which, in turn, translates into an annualised return on average equity of 54.3%.
The condensed Statement of Financial Position as at 30 June 2020 compared to the corresponding figures as at the end of 2019 shows that net assets contracted by 16.4% to €9.47 million (31 December 2019: €11.3 million) largely reflecting the substantial increases in total borrowings (including lease liabilities) to €7.18 million (31 December 2019: €4.64 million) as well as trade and other payables (+€0.88 million to €7.11 million). Total assets also grew by 10.5% to €25.5 million reflecting higher amounts in property, plant and equipment (+€4.03 million to €10.5 million) as well as trade and other receivables (+€1.27 million to €4.42 million) which were partly offset by the reduction in cash balances to €3.59 million compared to €5.35 million as at the end of 2019. The drop in the cash balances also include the payment of a dividend for the 2019 financial year which amounted to €4.4 million.
Outlook
In their commentary, the Directors of BMIT explained that following the outbreak of COVID-19, the company implemented various measures aimed at ensuring continuity of service and at the mitigation of the potential negative impact on business including requests received from customers for some reduction or termination of services, as well as more flexible payment terms. In such cases, BMIT adopted a flexible approach to support its customers, and also in the interest of medium to longer term business relationships.
BMIT also noted that it is experiencing a longer sales cycle when compared to the situation pre-COVID-19 as many businesses are delaying or postponing investment decisions. Although future growth may be challenged by potential new COVID-19 outbreaks and slower economic growth, BMIT is nonetheless actively pursuing new growth initiatives aimed at delivering value and sustainable returns to its shareholders.