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BATM – March 2017 announcement of “delay in revenue” (& profit warning) for 2016!?!...

By Steve Moore | Friday 3 March 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Earlier this week, BATM Advanced Communications (BVC) announced “an update on trading for the year ended 31 December 2016”. This includes notice of “certain expected revenue streams falling outside of the period”. And this hasn’t been announced until March 2017?!?

The “delay in revenue” is attributed to “the timing of the closing of some significant tenders in the Telecom business” and “the delivery of a contract in the Cyber business moving from 2016 to 2017… due to the counterparty being late in integrating their services which meant BATM completing the supply of its goods and services in Q1 2017 instead of Q4 2016”. Er, why has this only been announced on 1st March 2017 then?!? What about timely disclosure of material information requirements?

The impact is material – with now expected revenue “of slightly more than $90m” being some $14 million short of the prior expectations of broker to the company finnCap. The company seeks to mitigate that it “is expected to report that its adjusted operating profit improved in the second half such that it expects to be profitable at this level for the period” - but this still looks to mean a material downgrade on prior $0.8 million adjusted pre-tax profit expectations.

The announcement further adds that “the group remains optimistic in its outlook due to the visibility of revenues from contracts already signed as well as growth in the bio-medical division”, but the noted delays and tardiness of announcement don’t inspire confidence.

As such, it is no surprise to see the shares heading lower on the back of it and, at least until there is some consistently positive delivery which sees trust regained, I’ll be avoiding.

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