Company Registration Number: C48299
Annual Financial Report
31 December 2022
Annual Financial Report - 31 December 2022
Chairman’s message
Chief Executive Officer’s review
2 - 4
Directors’ report
5 - 10
Corporate governance - Statement of compliance
11 - 18
Remuneration report
19 - 22
Company information
Statements of financial position
24 - 25
Statements of comprehensive income
Statements of changes in equity
27 - 28
Statements of cash flows
Notes to the consolidated financial statements
30 - 79
Annual Financial Report - 31 December 2022
Chairman’s message
2022 a year of challenges, successes, and reflections. This happens to be my final message as Chairman of BMIT Technologies. I can only reflect on this time with BMIT Technologies with a great sense of pride. It was a time when global pandemics and economic unrest forced many companies to re-evaluate their strategy, reflect on the changing demands of their clients, innovate and act.
BMIT Technologies was no different. As a company we had to remain focused on sustainable long-term growth, which is achieved through close partnerships with our clients.
Strong relationships are at the heart of BMIT’s success, both within its team and with its customers. They have helped it evolve into trusted advisors for businesses seeking growth and excellence. As a trusted infrastructure partner, BMIT supports its clients on their digital journey, leveraging its strengths and experience to simplify an increasingly complex landscape. In return, customers have rewarded it with their loyalty.
2022 has demonstrated the importance of re-evaluating the business, its positioning and the need to identify future growth opportunities. Despite increasing competitive pressures, its commitment towards being the go-to company, to advise and assist both local and international companies with all their digital requirements, is unwavering.
Consequently, BMIT embarked on a process of transformation. This journey, which will continue in 2023 and beyond, will help it re-align its services and offerings, will distinguish it as the go-to advisory and cybersecurity experts, in addition to its core business.
This innovation is critical because it allows the company to create value for its existing clients whilst attracting new ones. This is essential if it is to continue to grow in an ever-changing technology landscape.
Adding value for its customers is at the core of BMIT’s long-term strategy. By doing so, it boosts customer lifetime value and builds goodwill, increases credibility and presence in the industry.
BMIT has remained resilient in the face of adverse economic conditions. Resiliency does not mean just digging deep into our pockets and weathering the storm. It means sticking together as a team and countering challenges with sustainable action plans, being creative and innovative.
The team at BMIT is the driving force behind its success, consistently delivering results through collaboration, continuous improvement, and a focus on business potential. I am confident that their positive mindset will drive further growth in the future.
I am grateful for the past five years and the opportunity to witness first hand, the journey BMIT is on. I take this opportunity to thank the many clients and business partners for their loyalty and trust, and my fellow Board Members, who have continuously supported us in difficult times, but likewise, celebrated the many successes along the way.
I am convinced that your ability, dedication and commitment will continue to positively impact the business community and deliver sustainable returns to shareholders.
I wish you every success.
Nikhil Patil
Chairman (resigned, September 2022)
Annual Financial Report - 31 December 2022
Chief Executive Officer’s Review
Last year, in my review, I addressed the challenges faced by our company in adapting to a rapidly changing business environment post pandemic. This year, I want to report on the progress we have made and how 2023 will be a year of transformation of our portfolio and our identity.
The pandemic presented new and unique challenges, but we remained steadfast in our commitment to serving our customers. We expanded our product and service offerings and invested in developing our solutions portfolio to further extend our reach. I will touch upon this point further on.
In 2022, a combination of events and market changes posed a serious challenge to our business. Last year, whilst still coming out of the pandemic, we were not immune to the global recession that hit businesses worldwide. The uncertainty and tensions created by the war in Ukraine did not help either as businesses sought to gain some stability. From a technology perspective, the accelerated drive to the Cloud also had an impact on our business. However, despite these hurdles, I am pleased to report that we were able to meet our targets for the year. We have shown our resilience and perseverance time and again. As we move forward, I am confident in our ability to navigate the road ahead and emerge stronger.
Re-evaluating our business
The need to adapt to the above challenges including changes in the market’s dynamics, sometimes unexpected, was a turning point for us last year. To mitigate these challenges, we increased efforts across our customer and support teams, demonstrating resilience as we regained lost ground through new business and diversification of our portfolio. Through this experience, we recognized the importance of re-evaluating our business, our positioning and identifying future growth opportunities.
Technical requirements are more complex now, competition is more aggressive and global, and as our competitors adapt to market pressures, we have no option but to follow suit to ensure BMIT is in the best position to advise and assist our customers with all their digital requirements.
Our efforts in 2022 to expand from an infrastructure solutions provider to a full-suite technology advisor and provider have set us on a strong trajectory. We are confident in our ability to deliver on our plans and continue to be a trusted partner to our customers in 2023.
Our transformation journey
When I wrote about transformation last year, I did so with the understanding that the market was changing and we needed to adapt in order to thrive. I will reiterate that our core business is hugely important to us. We are Malta’s leading and largest provider of colocation and datacentre services, as well as the first cloud services provider on the island.
Using ‘legacy’ to describe our core business is somewhat misleading. It contributes in no small measure to our revenues. It contributes to our strength, and we will continue investing in infrastructure services. At the same time, it is evident that our future cannot rely solely on our legacy; we envision that in the long term, demand for such services will slow down.
If we want to grow and generate value, we must transform and align our offerings and services with the market and what the market needs.
Last year, we took a crucial step in our journey of transformation by laying the foundation for growth. We started by expanding our advisory and solutions business and this yielded benefits in 2022. We also started to focus on cybersecurity and began to define our strategy in this area.
Annual Financial Report - 31 December 2022
Chief Executive Officer’s Review - continued
Why cybersecurity? There are two main reasons. First, cybersecurity is a huge business opportunity, and one that is becoming increasingly important as the world becomes more connected. In a world where technology is becoming increasingly integrated into our daily lives, security is a top priority for individuals and businesses alike. This is why we see this as a key opportunity for BMIT. Our focus on cybersecurity not only presents a new business opportunity, but also opens up the potential for creating new intellectual property for our shareholders.
Second, leveraging our expertise and experience in the field, we aim to deliver a comprehensive cybersecurity offering and services package to our customers. We need to harness this potential and that will be a major focus for us in 2023.
This comprehensive approach to cybersecurity will include the development of new solutions and services, as well as improving our internal processes to ensure that we can deliver the best possible solutions to our customers.
Our transformation journey is about more than just expanding our business. It is about shaping a new future for BMIT. It is about our identity. By protecting and strengthening our core business, whilst embracing new opportunities and technologies, we are positioning ourselves to remain competitive in an ever-changing market. This pursuit goes beyond simply boosting revenue and extends to creating a better future for our stakeholders and customers alike.
We have already seen the positive impacts of our transformation journey, starting with the expansion of our advisory and solutions business. This strategic move helped us recover some of our lost business in 2022.
Agility and efficiency
In 2022, we accomplished our objective of utilizing technology for the benefit of both our customers and internal operations. Our efforts to reduce our carbon footprint paid off as we successfully deployed new technologies at the Ħandaq datacentre and made important investments in solar energy for our internal needs, while also exploring options for compensating for energy consumption at our datacentre facilities.
As part of our continuous effort to become more agile and efficient, we evaluated and improved our internal processes and systems, with a focus on delivering top-notch products, services, and support to our customers. In 2023, we aim to build on these achievements by thoroughly implementing improvements throughout the organization, empowering us to tackle future challenges and maintain our commitment to delivering high-quality solutions to our valued customers.
Financial performance
BMIT Technologies’ performance in 2022 was stable and in line with the objectives we set at the beginning of the year. Revenues were up minimally, impacted by the loss of key customers, reaching €25.8 million, an increase of 2% over 2021 and Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) amounting to €10.7 million. These results incorporate the consolidated results of all the subsidiary companies within the BMIT Technologies Group.
Cost of sales, administration and related costs increased by 1.5% over 2021, to a total of €17.2 million.
Profit before tax amounted to €8.3 million, an increase of 3%.
Annual Financial Report - 31 December 2022
Chief Executive Officer’s Review - continued
Outlook to 2023
Our transformation journey is just beginning, and I am confident in our ability to achieve sustainable growth and success in the years ahead.
Our primary focus is to grow the business and expand the customer base; we have the right strategy in place to achieve this. As the technology industry evolves, we will adapt and transform as a company. We will expand our product portfolio, enhance our marketing efforts to position BMIT as a trusted advisor and enabler of digital technology solutions. We have a wealth of opportunities to tap into, and we will leverage our strengths in tech infrastructure services, expertise in managing complex systems, and our deep understanding of what customers need, to create new value and maximise returns to our shareholders.
In conclusion, I would like to thank all BMIT Technologies’ employees for their dedication and hard work, our Board of Directors for their guidance and support and to all shareholders for their trust and confidence in us.
Christian Sammut
Chief Executive Officer
Annual Financial Report - 31 December 2022
Directors’ report
The Directors present their annual financial report for the year ended 31 December 2022.
Principal activities
The BMIT Technologies Group, made up of BMIT Technologies p.l.c. (BMIT Technologies), BM IT Limited, BM Support Services Limited and Bellnet Limited (together 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. 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.
Business review
A review of the business of the Group during the year under review, events which took place since the end of the accounting period and an indication of likely future developments are given in the Chief Executive Officer’s Review on pages 2 to 4.
Review of financial performance
The Group recorded a stable performance for the year ended 31 December 2022.
The revenue generated by the Group for the year under review was €25.8 million compared to €25.3 million in the previous year. This is equivalent to an increase of 2% over the previous year. Revenue growth was mainly recorded in the sale of hardware and software licenses (27% YoY) and in the provision of managed services (7% YoY). Revenue from cloud services was in line with prior year whilst there was a marginal decline of 1.8% in revenue from the datacentre business.
Cost of sales and administrative expenses, (including depreciation and amortisation of leased assets but excluding finance costs), amounted to €17.2 million (2021: €16.9 million). This marginal increase was mainly due to an increase in cost of sales supporting the growth in the sale of hardware and software as mentioned above. Administrative expenses and payroll costs were kept at similar levels as prior year.
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) was consistent with that recorded in 2021 and amounted to €10.7 million. EBITDA margins were also maintained constant at 42%.
Profit before Tax improved slightly from €8.1 million in 2021 to €8.3 million in 2022, resulting in an earnings per share of €0.026 (2021: €0.025).
Financial position
During 2022, the Group maintained its assets base in line with that of the previous year. In fact, total assets held by the Group amounted to €25.5 million (2021: €25.5 million), of which €8.9 million (2021: €7.7 million) were current assets in nature. These mainly consisted of cash and cash equivalents of €6.3 million (2021: €5.8 million). Non-current assets amounted to €16.6 million compared to €17.8 million in 2021, with the most material asset being property, plant and equipment valued at €9.1 million (2021: €10.0 million).
Annual Financial Report - 31 December 2022
Directors’ report – continued
Financial position – continued
Total liabilities as at 31 December 2022 were €14.4 million (2021: €14.7 million) of which €8.0 million (2021: €8.0 million) were current.
In 2022, the Group preserved its strong liquidity base and closed the year with a cash balance of €6.3 million (2021: €5.8 million). During 2022, a net dividend of €5.1 million was paid to the Company’s shareholders.
The Directors recommend that at the forthcoming Annual General Meeting, the shareholders approve the payment of a net dividend of €0.02456 per share (after tax), resulting in a net dividend payment of €5 million.
Our principal risks and uncertainties
Security and resilience
The Group’s commercial success continues to be dependent upon the resilience of its data centres and IT systems.  Our infrastructure and systems face a variety of risks that could cause significant interruptions to the delivery of services, potentially resulting in substantial financial loss and reputational damage that could harm future revenue.  The Group manages this risk by having significantly invested in the resiliency of its key infrastructure and systems, including cyber security, wherever this is possible and feasible.  Furthermore, the Group employs robust control frameworks like ISO27001, along with documented processes and procedures, that prioritise prevention. Monthly and annual business continuity tests also support these efforts.
Customer data processing
The Group processes personal data of its significant client base on a daily basis.  The Group recognises the importance of complying with data privacy regulations, including GDPR, and aims to assure its customers that their shared data is secure and handled appropriately.  Failure to abide by all relevant data protection and privacy laws could result in reputational damage for the Group as well as regulatory consequences and penalties.  To mitigate against this risk, the Group upholds strict organizational and technical measures.  This framework defines roles and responsibilities of employees who have access to personal data, offers ongoing training and awareness to employees and implements monitoring, reporting and controls to ensure compliance with applicable legislative requirements.
The Group faces competition from local and international providers of similar and competing products and services. Leading international cloud providers, coupled with the growth in the demand for cloud-based services in the local market, could potentially attract current or prospective customers away from the Group and impede its projected growth. It may become necessary to respond to these moves, which could negatively impact the projected growth of the Group.
Ability to grow
The Group operates in a highly developed, fiercely competitive market, with market pressures on pricing, the availability of substitute technologies and talent acquisition and retention.  The Group strives to maintain its ability to grow revenues