BMIT Technologies p l c : Interim Financial Statements 2023

COMPANY ANNOUNCEMENT

The following is a Company Announcement issued by BMIT Technologies p.l.c ("the Company") pursuant to the Capital Markets Rules as issued by the Malta Financial Services Authority in accordance with the provisions of the Financial Markets Act (Chapter 345 of the Laws of Malta) as they may be amended from time to time.

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In a meeting held earlier today, the Board of Directors of the Company approved the attached Group Interim Unaudited Financial Statements for the six-month period ended 30th June 2023.

The Interim Financial Statements are also available for viewing on the Company's website through the following link:

https://www.bmit.com.mt/wp-content/uploads/2023/08/BMIT-FS-June-23.pdf

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Dr. Francis Galea Salomone LL.D.

Company Secretary

4th August 2023

BMIT Technologies plc, SCM02, Level 2,

SmartCity Malta, SCM1001, Kalkara, Malta

T: [phone] W: bmit.com.mt

BMIT Technologies p.l.c.

Condensed Consolidated

Interim Financial Statements

For the period 1 January 2023 to 30 June 2023

Company Registration Number: C 48299

BMCL: Public

BMIT Technologies p.l.c.

Condensed Consolidated Interim Financial Statements

For the period 1 January 2023 to 30 June 2023

Contents
	Pages
Directors' Report pursuant to Capital Markets Rule 5.75.2	1 - 3
Condensed Consolidated Interim Financial Statements:
Condensed Consolidated Interim Statement of Financial Position	4
Condensed Consolidated Interim Statement of Comprehensive Income	5
Condensed Consolidated Interim Statement of Changes in Equity	6
Condensed Consolidated Interim Statement of Cash Flows	7
Notes to the Condensed Consolidated Interim Financial Statements	8 - 13
Statement pursuant to Capital Markets Rule 5.75.3	14
Independent Auditor's Report on Review of Condensed Consolidated
Interim Financial Information

BMCL: Public

BMIT Technologies p.l.c.

Condensed Consolidated Interim Financial Statements

Directors' Report pursuant to Capital Markets Rule 5.75.2

As at 30 June 2023

This Half-Yearly Report is being published in terms of Chapter 5 of the Capital Markets Rules of the Listing Authority - Malta Financial Services Authority and the Prevention of Financial Markets Abuse Act, 2005. The Half-Yearly Report comprises the reviewed (not audited) condensed consolidated interim financial statements for the six months ended 30 June 2023 prepared in accordance with International Financial Reporting Standards adopted by the EU for interim financial statements (International Accounting Standard 34, 'Interim Financial Reporting'). The condensed consolidated interim financial statements have been reviewed in accordance with the requirements of ISRE 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. The comparative statement of financial position has been extracted from the audited financial statements for the year ended 31 December 2022.

Principal activities

The Group offers its customers a range of data centre and hosting services, public, private and hybrid cloud services and managed IT services - which can be offered at customer premises, hosted at any of BMIT Technologies p.l.c. (BMIT Technologies) subsidiaries' data centres, or integrated with services offered by other services providers - thereby scaling the solutions from the desktop to the data centre and into the cloud.

The Group proudly delivers its services to over 500 corporate customers from various industries including online gaming, financial services, ICT, manufacturing, media, transportation, retail and hospitality. BMIT Technologies Group's scale and range of customers, partnerships with leading technology players and its employees' technology certifications enable it to obtain a proficient understanding of the business, technology and also regulatory requirements, as and where applicable.

Review of financial performance

The directors have the pleasure of reporting the Group's interim results for the six months ended 30 June 2023.

On the outset, revenue grew from €12.65 million in 2022 to €14.84 million. This movement is equivalent to €2.19 million, an increase of 17.3% YoY. This growth in revenue was driven by:

• a growth of 74% YoY in the resale of hardware and software licenses;
• a growth of 40% YoY in cloud services; and
• a growth of 27% YoY in managed IT services

This 17.3% increase in revenue reflects the Group's focus on growth areas of hybrid IT, cloud and managed IT services. Despite a changing market context, with increasing competitive and technological challenges, the Group has been successful in attracting new business in these targeted areas. These efforts are aligned with our strategy to extend our reach, introduce new value-add solutions, and offer new technologies to both existing and new clients. The reported figures also include a higher element of revenue recognition in the cloud and licenses categories, attributable to an increasing number of customers opting for annual commitments, resulting in higher revenues reported for the period.

However, profit levels for the first six months of the year did not increase at the same rate of revenue. This is primarily due to the differing profit margins associated with different product lines. Further information on this matter will be provided in the outlook section of these statements but, in summary, the lower profit margins derived from cloud and managed services when compared to data centre services, account for this variance. Cloud services operate on a distinct cost and pricing model compared to data centre services and although BMIT Technologies remains the local leader in the data centre business, in recent years it has been witnessing a shift from data centre services to cloud services. While data centre services require a higher capital outlay, they also offer healthier margins and longer-term commitments, typically spanning over one year. On the other hand, cloud services operate on a subscription-based pricing model with a much lower upfront investment or none at all.

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BMCL: Public

BMIT Technologies p.l.c.

Condensed Consolidated Interim Financial Statements

Directors' Report pursuant to Capital Markets Rule 5.75.2

As at 30 June 2023

Additionally, the cloud market faces intense competition, with numerous global players offering similar services, leading to pricing pressure and potential margin erosion.

In fact, the YoY growth in revenue of €2.19 million was almost eroded completely by a similar increase in cost of sales of €2.09 million, resulting in a Gross Profit of €6.13 million compared to €6.03 million in the prior year.

Administrative expenses increased by 10% from €1.69 million to €1.86 million, mainly due to staff costs, consultancy fees, and costs incurred in the maintenance of the infrastructure including the systems used for the Group's operations. General inflation impacted most of the operating costs and even payroll.

Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to €5.20 million compared to €5.38 million in the prior year. EBITDA margins went down from 42.54% to 35.02%.

	Six months	Six months
	ended	ended
	30 June 2023	30 June 2022
	€'000	€'000
Revenue	14,837	12,647
Cost of sales	(8,712)	(6,619)
Administrative expenses	(1,861)	(1,685)
Add back depreciation and amortisation charges	932	1,038
EBITDA	5,196	5,381
EBITDA margins	35.02%	42.54%

The recorded Profit before tax was €4.16 million compared to €4.22 million for the same period last year. Earnings per share were constant at 1c3.

Review of financial position

As at 30 June 2023, the Group's total assets amounted to €23 million (31 Dec 2022: €25.5 million), of

which €16 million (31 Dec 2022: €16.6 million) were non-current in nature.

Total liabilities as at 30 June 2023 were €14.3 million (31 Dec 2022: €14.4 million), of which €6.1 million

(31 Dec 2022: €6.5 million) were non-current. The Group retained the same level of borrowings. A portion of borrowings has been classified as current, given that capital repayments are expected to be effected within the coming twelve months.

The current ratio of the Group as at end of June 2023 was 0.84 compared to 1.12 as at end of the prior year. The fall in the current ratio is mainly due to the decrease in cash, partly because of the payment of dividend during the first six months of the year. Although at the end of June 2023, current liabilities exceeded current assets by €1.3 million, the Group still enjoys a healthy liquidity position. The Group envisages that a significant level of earnings will be generated throughout the forthcoming year, which will enable the Group to manage effectively its forecasted cash flows and liquidity needs.

The equity position of the Group stood at €8.7 million, down from €11.1 million as at 31 December 2022. The decrease of €2.4 million is the difference between the profits recorded for the six month period of €2.6 million and the net dividend paid of €5 million. Naturally, retained earnings are expected to improve with the Group's recorded profits for the coming six months of the year.

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BMCL: Public