BMIT Technologies plc reports strong interim results | Calamatta Cuschieri

The COVID-19 pandemic has accelerated the pace of change in the way companies in all sectors and regions operate. More specifically, the pandemic has fast-tracked the shift towards a more digital world and has indeed sped up the demand for IT solutions across the globe.

In reality, while the pandemic has hindered a number of sectors which traditionally thrived, technology-oriented businesses have performed particularly well throughout the pandemic, with many experiencing unbudgeted revenue streams over the past couple of months.

Being one of the key players within the local digital sector, BMIT recently reported that following the coronavirus outbreak in Malta, it has experienced an increased uptake in cloud services, connectivity services, as well an increase in demand for managed services.

Moreover, as per latest interim 2021 results, BMIT generated €12.8m in revenues, illustrating an overall improvement of circa €1.1m or 9.4% over the comparable period last year. Indeed, management reported that the main drivers for such growth in revenue is attributable to a greater customers’ demand for cloud services, with this being primarily driven by increased customer technology adoption.

Additionally, BMIT further reported that the pandemic has brought about an increased reliance on connectivity services, especially for the Group’s larger clients, with this also being a key determining factor for the aforementioned growth in revenue.

The half yearly results also reflect a revenue improvement concerning BMIT’s managed services segment which grew substantially by circa 47% on a comparative basis. More positively, this revenue stream is at present recovering from the implications brought about by the pandemic induced restrictions which limited the provision of on premises support by the Group’s technical team on customers’ premises in 2020. To this extent, throughout the first half of the current financial year, a number of customers carried out certain projects which were previously put on hold due to the pandemic related uncertainty.

On the expenditure front, total operating expenditure, which is primarily composed of cost of goods sold and administrative expenses amounted to €8.3m during H1-21 (H1-20: €7.7m). Notwithstanding this increase in operating expenses, which mainly has been initiated through the aforementioned growth in revenue, BMIT registered an overall improvement in operating profit, as the Group’s operating expenditure increased at a slower pace than the growth in revenue registered during H1-21.

Excluding depreciation and amortisation charges, EBITDA improved to €5.7m during H1-21 (H1-20: €5.1m), translating into an EBITDA margin of 44.5% (H1-20: 43.6%). In addition, the Group’s interest expense tapered down to €98k during H1-21, from €116k in the comparable period last year.

In view of the above, the Group reported an improved profit before tax of €4.4m during H1-20, illustrating an overall increase of 13% when compared to the €3.9m recorded last year.

On a positive note, although the pandemic had a major impact on almost every businesses across the globe, this crisis has accelerated many organisations’ focus on attaining business resilience and financial flexibility against similar disruptive episodes, with this creating accelerated demand for cloud and security services.

In this regard, BMIT, being a local technology services provider, reiterated that whilst economic recovery post pandemic, both locally and globally, is yet uncertain and may have an unexpected adverse impact on performance, the Group remains cautiously optimistic for second half of the year.

This article was issued by Andrew Fenech, Research Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.