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The Sunday Times October 15, 2006

Tech funds poised for a strong rally
The sector traditionally soars 20% over the winter, and takeover activity may signal a longer-term recovery, says David Budworth

FUND managers are predicting double-digit returns from technology shares over the next six months, as Googles $1.65 billion (890m) takeover of the online video site YouTube has encouraged investors to take a fresh look at the much-maligned sector.
Tech stocks have historically returned an average of 20% between October and March, compared with losses in the summer because of strong spending in the run-up to Christmas.

Analysts believe the takeover, which will turn YouTubes twentysomething founders into multi-millionaires, could kickstart the traditional rally this year.

Some even think we could be at a longer-term turning point, although hundreds of thousands of investors in tech funds who are still nursing losses after the dotcom crash will be forgiven for thinking they have heard it all before.

Tech stocks have lagged the wider market since the bubble burst in 2000. On Friday, the Techmark, which measures the London market dedicated to technology firms such as Amstrad and ARM Holdings, closed at 1,462, down 75% since the peak of 5,743 in March 6, 2000. Its US counterpart, the Nasdaq, has slumped 63% from its peak to about 1,700.

However, things are looking up for a new generation of tech companies, particularly in areas such as broadband and social networking. This was shown by News Corporations $580m swoop on MySpace last year, Yahoos acquisition of photo-sharing site Flickr and its ongoing takeover talks with college site Facebook, and now the Google deal.

Ben Rogoff, manager of the Polar Capital Technology Trust, said: Our analysis of previous tech cycles suggest that the sector is fast-approaching a turning point.

Broadband penetration and the lower cost of bandwidth are the key drivers for a slew of new applications that will allow the sector to deliver the next wave of technology. We believe we are on the cusp of a multi-year period of outperformance driven by superior earnings growth.

He is excited by software companies such as Webex and Salesforce.com.

Mike Bourne, manager of the Finsbury Technology Trust and Close Finsbury EuroTech Trust, takes a venture-capital approach to investing in the technology sector. He backs smaller, unknown businesses, such as Mamut, a Norwegian business software company. He says the opportunities can be mouthwatering, although he accepts the inherent risk.

Bourne said: The technology sector is full of uncertainties, but one constant remains: just when investors start to give up on the sector, it starts to deliver on its promises. Today feels very much like the late 1980s.

Technology was unloved, and only the most committed technology enthusiasts were daring to invest their own money into the sector. History has proved these can be the most rewarding times to invest.

However, other analysts warn that some of the recent deals have overvalued tech companies and that investors should take care.

Jason Britton, manager of the T Bailey Growth fund, said: Watch out for companies that are being backed on the basis of an idea, not the implementation of a proper strategy.

Investors can take comfort from the fact that tech tends to enjoys a rally at this time of year, but they should exercise caution after the spring.

Research by Cowen & Co, a technology-research firm, has found that most of the sectors underperformance over the past 20 years has occurred between March and October.

During the spring and summer months you would have made a typical loss of 1% each year.

Between mid-October and mid-March, however, tech stocks have returned an average of 20%. Over the past six years, when most dismissed technology as a dead duck, the sector has only dropped once in the winter; between October 2000 and March 2001 the Techmark fell 36%.

Over the past 12 months the seasonal trend has reasserted itself. The Techmark rose 21% between October 15, 2005 and March 15 this year, but is down 1% since then.

Alan Torry, manager of the SG Technology fund, feels there are good reasons why the pattern could be repeated this year.

Business spending is weighted to the end of the year as companies rush to spend outstanding budgets, he said.

Consumer spending on items like iPods and games consoles also surges in the run up to Christmas and the Chinese New Year.

The Chinese New Year, which is determined by the lunar and solar calendar, varies from late January to mid February. Like Christmas it is a time for celebration and present giving.

The American economy, the engine of global growth, is expected to slow over the next year, but Hitesh Thakrar, manager of New Star Technology, doesnt believe this will upset the rally.

He said: Although consumer spending on technology is slowing, corporate expenditure is taking up the slack.

The tech giants like Oracle, Cisco and Microsoft are so big now that a slowdown will hardly have an impact.

Research by Morgan Stanley reveals that other sectors tend to outperform in the final months of the year. Bank stocks, for example, have outperformed the market 73% of the time during that period since 1990.

Cyclical sectors such as industrial and consumer stocks also tend to perform well in the winter for similar reasons as tech shares: retail spending picks up in the run up to Christmas and companies are keen to spend money before the end of the financial year.

The easiest way to capture a rally in technology is to buy an exchange-traded fund (ETF).

These track indexes or stockmarket sectors and are bought and sold through a stockbroker like shares.

ETFs are cheap, with no initial charge and a typical annual management fee of less than 0.5%. But you do have to pay dealing charges to buy through a stockbroker.

If ETFs are too specialist, you could consider a technology unit trust. Darius McDermott at Chelsea Financial Services, an adviser, backs SG Technology.

To tap into a rally in banking shares, Morgan Stanley recommends Royal Bank of Scotland.

Alternatively, you could buy a fund which has a large exposure to banks such as Jupiter Financial Opportunities or New Star Global Financial

BVC.LS - BATM ADVANCED COMM (LSE) 

BATM Advanced Communications Limited

Interim Results 2008

BATM Advanced Communications Limited ('BATM' or 'the Company') (LSE: BVC), a leading designer and producer of broadband data and telecoms systems, announces its interim results for the six months ended 30 June 2008.

Half Year Highlights

For all the followers of this thread
And a prosperous one

Ring out the old, ring in the new,
Ring, happy bells, across the snow:
The year is going, let him go;
Ring out the false, ring in the true.
Alfred Lord Tennyson

THE governments money-spinning auction of Britains television airwaves may be scrapped under plans being considered by the communications minister Lord Carter.

Instead of selling slices of spectrum to the highest bidder, Carter is examining proposals to give away spectrum to companies in exchange for a pledge to invest nationally in super-fast broadband access.

The idea is expected to form part of his interim Digital Britain report, due for release on January 26, which will propose a range of measures to prepare the country for the future boom in internet commerce.

Failing to hold an auction would mark a departure for the government, which scooped the jackpot in 2000 when five mobile-phone operators spent a collective 22.5 billion for 20-year licences to carry third-generation (3G) services.

This time it is selling the old UHF band, which currently carries the analogue TV signal that will be switched off in 2012. The so-called digital dividend was expected to raise anything up to 5 billion at auction. Ofcom, the telecoms regulator, has already recruited the Morgan Stanley investment bank to drum up international interest ahead of a sale in 2010.

The new scheme is being promoted by Nesta, the National Endowment for Science, Technology and the Arts. Under its Spectrum for Speed strategy, Jonathan Kestenbaum, Nestas chief executive, argues that giving away licences to the value of 5 billion with strings attached would accelerate the roll-out of broadband to remote and disadvantaged parts of Britain at speeds of up to 100 megabits a second.

The case for this type of deal is compelling, Kestenbaum said. In unprecedented economic times, we have to think imaginatively about how we can invest in big infrastructure projects while not cutting off large swathes of communities from economic and social development. Nesta said the plan could create 600,000 new jobs over the next five years.

Carter will impose a service obligation on broadband operators and mobile firms to provide basic broadband for all, but he has hinted the government would have to play a financial role in launching high-speed networks.

His view conflicts with a report from Francesco Caio, the former Cable & Wireless chief executive, who said it should be the telecoms industry, not government, that stumps up billions for new networks.

By giving away spectrum the government would not reap any income, but nor would it have to contribute to broadband spending later on.

BT has already committed 1.5 billion to replacing some of its copper wires with fibre-optic cables, but that would only cover 40% of the population. Virgin Medias cable network covers roughly half the country.

Ofcoms attempts to redistribute spectrum have been mired in controversy. The regulator is being challenged by mobile firms Vodafone and O2 over plans to take back part of their mobile spectrum and sell it to rival firms so they can launch their own 3G services.

The auction model has been largely discredited, said one source. It was seen as doing more harm than good last time around.

The Digital Britain report will also talk up the prospect of Channel 4 securing its future through a partnership, possibly by merging with rival Five.

In addition, Carter will sketch out regulations forcing internet service providers to collect information on illegal downloaders and pave the way for further consolidation in the regional newspaper industry.

According to the funds most recent factsheet, it also has three per cent invested in FTSE Small Cap, BATM Advanced Communications.

According to the Financial Express database of 56,000 funds, BATM is held by seven funds. It is the biggest holding in Gartmore UK & Irish Smaller Companies as well as Gartmore Smaller Companies PLC. The second biggest holding in Gartmore Growth Opportunities.

It is also in the top ten holdings of
JOHCM UK Growth, Smith & Williamson UK Special Situations, and CF Techinvest Technology.

However BATM has seen its share price tumble 60 per cent since September last year. Rodrigs said: "Ive held BATM for several years because it is one of the leading players in next generation telecom equipment based on IP technology. Basically telecom companies need to rip out their old inefficient ATM equipment to put in IP technology to stay competitive. It enables lower costs which benefits both the telco and the customer."

He added: "BATM had a breakthrough year in 2008 with sales growing circa 60 per cent in the first-half. Unfortunately investors fear the worst due to the macro problems even though the evidence is that BATM has massively outperformed the peer group by comfortably delivering 08 expectations. I took profits at that point so it is no longer my largest holding, and subsequently weve seen some aggressive selling which suggests there might be a forced seller due to redemptions. This looks to be coming to an end leaving the stock looking very attractive with half the market cap in cash leaving the business on c3x p/e underlying."

The dollar dropped to a two-month low on a trade-weighted basis on Thursday as its sharp sell-off gained momentum after the Federal Reserves surprise decision to embark on a quantitative easing approach to monetary policy.

The announcement by the Fed on Wednesday that it would buy $300bn in long-term Treasuries surprised investors, who were expecting the central bank to wait and study the effect of previously announced measures to ease credit conditions.

Lee Hardman, of Bank of Tokyo-Mitsubishi UFJ, said the aggressive expansion of the Feds balance sheet was likely to lead to further losses for the dollar. The dollars decline reflects both its diminished appeal as a store of value and reduced relative yield appeal, he said. The Feds shock-and-awe approach clearly marks it out now as the most aggressive central bank in its response to monetary easing, which should weigh on the dollar.

The dollar, which on Wednesday had its weakest performance against the euro since the creation of the single currency in 1999, fell further on Thursday.

By midday in New York, the dollar had fallen 1.5 per cent to $1.3725 against the euro, lost 1.7 per cent to $1.4555 against the pound, dropped 1.8 per cent to SFr1.1175 against the Swiss franc and eased 2.4 per cent to Y93.70 against the yen.

The dollars losses were most acute against the Norwegian krone. The krone, which was supported by rising oil prices and its growing haven status, rose 3 per cent to a five-month high of NKr6.3201 against the dollar and climbed 1.4 per cent to NKr8.6751 against the euro.

The dollar has attracted haven flows in recent months as investors flocked to the relative safety of the US currency as stock markets tumbled. This deleveraging has made it one of the best-performing currencies so far this year.

However, Neil Mellor, of Bank of New York Mellon, said that while the Feds action meant the dollar no longer possessed the haven appeal it had, currency investors had not necessarily entered a new world.

If we get another sell-off in stocks then we could still see people scramble for the dollar, he said.

Indeed, Marc Chandler, of Brown Brothers Harriman, said the Feds action was not necessarily a game-changer for the dollars strength. Our big macro-view was that the de-leveraging which we believe has been the big driver of the foreign exchange market would fade and be replaced by a return of anticipated growth trajectories [among major economies], he said.

Thus, while the dollar might suffer in the short-term, Mr Chandler said, once markets realised that the aggressive Fed action was likely to deliver a recovery in the US more quickly than for other economies, the currency would rise.

Over the slightly longer term, we continue to believe that the aggressiveness of the US policy response dramatic inventory correction will be rewarded with an earlier recovery than in Europe and Japan, he said.

Investors Chronicle
Emerging markets insulate telecoms sector
15 April 2009 - Written by: Malar Velaigam

Mature telecommunications markets such as the US and UK have slowed in the downturn, leaving telecoms solutions providers to rely on consumer and infrastructure-led growth in emerging markets for insulation. And with 3G finally being rolled out in China this year, and other emerging regions such as Brazil and India still in the implementation phase, demand for investment in infrastructure and new devices in these regions could be sustained.

Emerging economies are still spending on telecoms infrastructure with consumers in some markets, such as India, bypassing traditional fixed line phones and moving directly to wireless networks.

So companies such as billing and operating systems provider Intec Telecom Systems continue to report robust performance, despite the difficult economic climate. Intec, which has operations in Asia Pacific and Central and Latin America, revealed that the six months to March had been the group's "strongest ever first half", with sales expected to be at least 38 per cent higher than last year's 61.3m. And, with three-quarters of revenues collected in US dollars, and most costs incurred in local currencies, favourable currency movements are helping to offset softer demand in Europe and North America.

Traffic control specialist BATM Advanced Communications ( BVC ) and wireless testing group Spirent Communications ( SPT ) are benefiting from similar trends. With almost a third of 2008 orders stemming from Asia and 54 per cent of sales generated in the US, Spirent will gain from currency movements. Meanwhile, BATM's full-year results attributed its 39 per cent sales growth to additional demand from new territories.

But while emerging markets are supporting these telco service providers, mature markets should not be written off. Growing internet usage and demand for more bandwidth should continue to provide sales growth for the sector.

IC VIEW:
Emerging markets infrastructure investment and a growing appetite for new technology around the world have made telecoms a defensive sector in the recession. Shares in Intec Telecoms have risen by 62 per cent since to 47p our buy recommendation (29p, 1 December 2008) and remain a buy. Shares in BATM have fallen 42 per cent since our buy advice (52p, 22 September 2008), but with $53m (36m) cash in the bank and a forward PE of five, the shares are still a buy at 30p. Spirent is fairly priced at 54p.

http://www.investorschronicle.co.uk/Companies/ByEvent/TradingNews/Inbrief/article/20090415/da2ed5b4-29a4-11de-8da9-00144f2af8e8/Will-emerging-markets-insulate-telco-service-providers.jsp

FOXBORO, Mass.--(BUSINESS WIRE)--Telco Systems, a BATM Company (LSE: BVC - News) has announced the expansion of their Fiber-to-the-Home (FTTH) offerings with the introduction of the EdgeGate 242W, an indoor wireless-enabled active Ethernet residential gateway, and an enhanced EdgeGate 483 outdoor CPE gateway with dual 1Gigabit uplinks.

The EdgeGate 242W offers service providers the ability to deliver full triple play services while solving the home owners problem of in-home wiring by using wireless home networking. As a single box solution, the EdgeGate 242W also offers enhanced TV options with support for both IPTV and RF video, advanced routing capabilities and enhanced telephony features like three-way calling, call forward and hold, distinctive ring, and T.38 support for fax over IP.

A built-in bridge and router enable customers to connect their home network either through one of four 10/100Base-T LAN ports or the wireless 802.11b/g access point. Analog phone sets can be connected to one of two FXS POTS ports to provide VoIP using SIP signaling protocol. The EdgeGate 242W supports up to 100Mbps downstream and 100Mbps upstream over bi-directional fixed fiber ports.

Designed for indoor installations, the products fiber optics cable management module can be installed prior to activation of the service, and the active components can be connected when the service is signed. Service activation is completed easily by the end user with no need to send a technician to the customers house.

The EdgeGate 483D is an enhancement to the existing outdoor EdgeGate 483 family which adds dual 1Gigabit fiber uplinks to support ring and chain topologies of multiple units. The EdgeGate 483D offers eight Ethernet ports to support both data and video services for computers and TVs, and two analog voice ports which can connect to two separate telephone lines which are converted to VoIP. This EdgeGate has an unique design that future-proofs the users access connection by supporting either 100Mbps or 1Gbps dual uplinks in the same product, thus allowing the service provider to start deployment with 100M network and upgrade to 1Gigabit without replacing the CPE. The outdoor design provides separate technician access areas from subscriber access areas as well as enhanced cable management.

As Point-to-Point (P2P) Active Ethernet CPE gateways, both products enable providers to offer dedicated bandwidth based on the subscribers individual requirements and offer differential services for residential and business customers in the same area. Active Ethernet also supports a pay-as-you-grow philosophy by allowing new subscribers to be added within a 100km service area at minimal cost.

The Telco Systems EdgeGate product family is part of the Companys field-proven RUS approved Active Ethernet solutions that include fiber aggregation switches to support up to 10Gigabits in a resilient ring or mesh topology in the metro network. These Carrier Ethernet aggregation switches and the field-proven EdgeGate CPE devices are the building blocks to create a complete feature-rich and cost-effective FTTH solution. As standards-based solutions, they create a flexible network topology which is not single-vendor dependent.

We are pleased to offer a complete solution that can be implemented into a customers current network easily, provides higher bandwidth, and opens the door for a wider array of services, stated Irit Gillath, vice president of product line management at Telco Systems. We are already seeing deployment of the EdgeGate 242W in Europe and many US customers who deploy the current EdgeGate 483 are eager to implement resiliency with the new dual uplink option.

Both new EdgeGate products will be available within 60 days.

Price and moving averages

Price and moving averages has closed below its Short term moving average. Short term moving average is currently above mid-term; AND above long term moving averages. From the relationship between price and moving averages; we can see that: This stock is NEUTRAL in short-term; and BULLISH in mid-long term.

Bollinger Bands

BVC.L has closed above bottom band by 9.2%. Bollinger Bands are 42.6% narrower than normal. The narrow width of the bands suggests low volatility as compared to BVC.L's normal range. The bands have been in this narrow range for 5 bars. This is a sign that the market may be about to initiate a new trend.

BVC.LS - BATM ADVANCED COMM (LSE)

It has no UK peer; competes with global giants; has an underlying P/E of around 5x compared to c30x of the UK tech sector and its US competitors; it has millions in the bank; it occupies a lucrative "niche within a niche" and competition between its telecom clients is hotting-up, pointing to increase sales if all this good news is true why doesn't everyone have a piece?

BATM Advanced Communications which has a 124.3m market cap and, despite its shares rallying 41 per cent since hitting a 24p low at the end of Februrary, is still down 32 per cent over the year.

The company sits in the mid-range of the FTSE Small Cap index and, for its size has a disproportionate level of analysts following it and funds that hold it within their top 10 holdings. History could explain some of interest and also the wariness of investors: back in September 2000 BATM shares hit a peak of 765p.

Investegate spoke to Philip Rodrigs, manager of the Investec UK Smaller Companies fund and Arun George, analyst at Noble, who both believe the BATM story.

They, along with the other three analysts who cover BATM, and presumably managers Gartmore and JO Hambro who hold 10 per cent and five per cent stakes respectively, are all singing from the same hymn sheet this is a long-term winner. Meanwhile BATMs chief executive holds a 23 per cent stake.

Funds with BATM in their top ten holdings include:

Gartmore Growth Opportunities has 3.1 per cent of its assets invested in BATM making this its third largest holding.

CF Techinvest Technology has 2.86 of its assets invested in BATM, its fourth largest holding.

Gartmore UK & Irish Smaller Companies has 3.9 per cent of its assets invested in BATM making the company its second largest holding.

Investec UK Smaller Companies has 2.3 per cent of its assets invested in BATM making this its second largest holding.

According to its most recent factsheet, from September 2008, FF&P Smaller Cap UK Equity has 4.79 per cent of its assets invested in BATM and this was its sixth largest holding.

The BATM story is that it is well placed to help telecom giants upgrade their networks to Ethernet, the computer network system used in most offices.

One of the problems faced by the company's management, according to Arun George, is getting the message across to more investors.

Arun George says: "In terms of strong institutional backing it is quite encouraging that JO Hambro and Gartmore have large positions. I have a view that this company will be a long-term winner and they seem to share it.

"Most investors dont understand this company that well. I appreciate it is quite hard getting to grips with this company partly as management struggle to present the more sophisticated aspects of the business in an investor-friendly language."

A recent sales note from Noble outlines the drivers for telecom companies to upgrade their networks: What is driving this growth? Three things: 1) Video, watching You Tube, 2) IPTV, watching Coronation Street, and 3) VOIP, phoning your mates.

One anecdote: at the start of 2008, YouTube traffic in the US equalled the amount of monthly traffic crossing the entire US Internet backbone in 2000. As 2008 draws to a close, YouTube along with Hulu generate more than 2x the amount of traffic crossing the US Internet backbone in 2000.

George said that he stood by his note of 23 March Noble upgraded to Positive from Negative with a 37p target price saying: With strong fundamentals, BATM is well positioned to benefit from the structural shift of telecom infrastructure to Ethernet. Whilst FY09 is expected to be a tough year, BATMs share price already factors in overly bearish scenarios.

Philip Rodrigs said that Telecoms operators were swapping to Ethernet in order to provide their customers with better services. While he noted that the credit crunch

  BVC.LS - BATM ADVANCED COMM (LSE)   

FOXBORO, Mass.Though video management software maker Vigilant is committed to the systems integrator channel, the company is eyeing another route to market as well: A major partnership with a telecommunications company that would make video surveillance part of its commercial service offering.

What we see is that local carriers are looking to differentiate themselves, said Steven Curtis, senior vice president, sales and service, for Telco Systems, Vigilants parent company. Were banking on surveillance as a service. You already have the disaster recovery and storage as a service, the magic of cloud computing. The infrastructure is in place so why not do surveillance, too?

Potential carrier partners would white-label Vigilants solution, so the company would have no brand exposure to the end user market. Some carriers will carve out a portion of their central station to do the monitoring of the video themselves, others might actually contract out the monitoring to a traditional security monitoring operation, Curtis theorized.

Carriers having an advantage because they own the bandwidth, and dont have to charge a margin on it, like traditional security providers do, he said. In addition, carriers already have a client based used to paying them a monthly fee and signing a long-term contract.

The carriers can go in there and lock them in for five years, Curtis said. Theyll also lock them in for voice and data, but with surveillance the customers wont jump to a competitor for five bucks less a month.

But why Vigilant? Shahar Zeevi, newly hired Vigilant corporate sales engineer and with a background at NICE, said its Vigilants back-end that makes the company attractive to the carriers. When you look at the screens, they all look basically the same, Zeevi said of video management software providers. The back-end is what makes Vigilant strong ... we have a solid solution that scales well, that can be used with different bandwidth scenarios, can be used regionally or nationally, and its very easy to drill down into all of the cameras.

Also, Vigilants relationship with Telco Systems, a large networking firm, helps the company understand what carrier-grade means when it comes to reliability.

Its a five-9s type mindset, said Curtis. When you look at tuning the network, we have the networking equipment to be able to look at each surveillance stream, thats what large enterprises and carriers are expecting to see.

Vigilant is hoping to announce its first major carrier partnership in the near future.

BATM COMMUNICATIONS (BVC)

  BVC.LS - BATM ADVANCED COMM (LSE)   

Dr Zvi Marom, Chief Executive of BATM said:

"The year ended 31 December 2009 has demonstrated the resilience of BATM's
technologies and business model. Despite challenging market conditions, BATM has
achieved modest revenue growth and strong cash flow whilst continuing to invest
in technologies and sales channels to strengthen our market position. BATM has
successfully established its medical division during 2009 and we expect this
division to grow substantially over the coming years.

"We continue to implement our strategic plan in 2010 of investing in
technologies and sales channels: we are seeing a high level of customer activity
in our direct channels (in particular in the US) and expansion of indirect sales
channels should also help to grow overall revenues. We believe that 2010 will
bring to fruition a number of exciting projects including innovative product
releases across all our business lines.

"Accordingly, despite the continuing uncertainty in the global telecoms market
that will result in a higher sales mix of the medical division during 2010, we
have begun the year with a healthy pipeline and remain cautiously optimistic for
the coming year."

Chairman's Statement

I am pleased to report on a year which has delivered record revenues despite
challenging market conditions and seen the strengthening of BATM's business in
every aspect. During 2009 BATM has released market leading cellular backhauling
technology, broadened its Medical division and focused on reducing its cost base
and strengthening its cash flow. Working capital management has been improved
with $66.8 million of liquid investments at the year end (2008: $57.3 million).

BATM has used its strong cash position to acquire real estate at opportunistic
prices in the U.S and Israel which will replace rented properties currently used
by BATM in the course of 2010 and 2011. The Company also intends to utilise
some of its accumulated cash at the year end to distribute a significantly
increased final dividend.

During the year the Company maintained its long held policy of working with
minimum risk customers and short credit terms.

On the basis of these results, the Board is in a position to recommend the
payment of a final dividend of 1.35 pence per share (2008: 0.69 pence), which
includes a special payment of 0.55 pence per share as a return to shareholders
of the excess cash generated by the business.

Financial Performance

Revenues grew modestly in 2009, despite difficult market conditions, to reach a
new high of $135.4 million (2008: $134.5 million). There was a significant
underlying change in sales mix with Telecom sales totalling $105.7m (2008:
$116.1m) mainly as a result of lower revenues in a challenging US market, and
Medical sales totalling $29.7m (2008: $18.4m).

The gross profit margin has decreased to 42.6% (2008: 45.6%) primarily due to
this change in the sales mix. In comparison to H2 2008 the gross profit margin
has increased from 41.4% due to slight increases in profitability both in the
Telecoms and Medical sectors. In the Telecoms sector this is primarily due to
favourable Euro - US dollar exchange rates in the last part of 2009, whilst in
the Medical sector this is primarily due to efficiency programs.

Total sales and marketing expenses were $13.6 million (2008: $13.9 million), a
decrease of 2.2% on the previous year. We have succeeded in reducing these
costs by increasing the proportion of revenues through indirect sales channels
with existing customers, which typically incur lower direct expense, and
optimisation programmes. As a percentage of revenue, sales and marketing
expenses were 10.0% (2008: 10.0%).

General and administrative expenses were $9.4 million (2008: $8.4 million)
representing 6.9% of revenue, compared with 6.2% in 2008. This increase is
primarily related to the effects of full year operations for the new medical
sector businesses. We continue our integration of these new businesses into our
group structure in order to reduce this overhead.

R&D expenses in 2009 were $11.8 million (2008: $12.8 million), a decrease of
7.8%. The decrease is largely a result of the depreciation of the Israeli Shekel
against the US dollar, but also reflects our increased R&D in new fields offset
by efficiency programmes in BATM's traditional R&D units.

Operating profit was $16.4million (2008: $23.6 million) after amortization of
intangible assets totalling $4.0 million (2008: $2.6 million), which has
increased due to our acquisitions both in 2009 and 2008, and certain one-off
exceptional items. Other operating expenses therefore include a one-off
write-down of the leases and leasehold improvements in two US properties of $1.2
million, following a strategic decision to relocate to a purchased property in
Foxboro, and an impairment of $1.3 million of goodwill in relation to Vigilant.
Adjusted operating profit, adding back these items, was $23.0 million (2008:
$26.2 million).

Net finance income was $2.0 million (2008: $0.1 million). This figure primarily
consists of $2.6 million of interest income, as well as $1.3 million of gains on
forward contracts and debt forgiveness, which has been offset by $1.5 million of
foreign exchange losses.

Net profit after tax attributable to equity holders of the parent amounted to
$20.5 million (2008: $24.2 million), resulting in a basic profit per share of
5.11c (2008: 6.19c)

Our balance sheet remains strong with effective liquidity of $66.8 million
(2008: $57.3 million). This is after a dividend payment of $4.6 million, and an
investment of $13.5million in fixed assets (see below).

Intangible assets have increased to $23.3 million (2008: $18.9 million), and
Goodwill has increased to $11.3million (2008: $9.4 million). This increase is
primarily due to the purchase of ISE and other businesses, offset by
amortisation of intangibles and goodwill impairment totalling $5.3 million.

Property, plant and equipment has increased by $11.8 million from 31 December
2008 to $21.9 million as at 31 December 2009. During the year BATM took
advantage of low real estate prices to purchase two offices located in Foxboro,
Massachusetts and Hod Hasharon, Israel. These investments cost a total of
$9.7million.

Total liabilities have increased by $14.7million from 31 December 2008 to $46.3
million as at 31 December 2009. This increase is primarily due to $6.7 million
of liabilities assumed on the acquisition of ISE, and $4.5 million mortgage
drawn for the purchase of the building in Hod Hasharon, Israel.

Sales and Marketing

During 2009 we have focused on strengthening and expanding our indirect sales
channels. We have succeeded in increasing these channels and believe that this
will help us grow our revenues in 2010. In our direct sales channels, customer
activity is very high, in particular in the US.

Research and Development and New Products

Over the past year we have developed a new generation of cellular back-haul
Ethernet products. These switches contain cutting edge technology to facilitate
linking cellular masts to provider networks, including extremely accurate time
synchronisation. These products provide solutions to the new infrastructure
required to support the ever increasing number of IP enabled smart phones.

In 2010 we have an aggressive development programme for increasing our network
management platform to upgrade it into a very high end servicing platform. We
believe that these platforms will become increasingly important in the future as
the services supplied over service providers' networks grow and become
increasingly sophisticated. Over the course of the year we will release a
complete solution including a 40G platform.

BATM Medical

During the course of 2009, BATM continued its strategic investments into the
Medical sector. In December 2009, BATM purchased the intellectual property and
certain assets of a clinical chemistry and immunology diagnostics company for
approximately EUR2 million. The operations of the business were purchased from
bankruptcy proceedings and are based mainly in Italy. We expect these assets to
significantly strengthen the product range and know how in the Group's current
operations in the clinical chemistry field.

Towards the end of 2009 the BATM Medical Group showcased two new innovative
products, the Miura One, a niche clinical chemistry analyser for small
laboratories, and the Integrated Shredder Steriliser ("ISS"). The ISS is a
machine that dramatically reduces the environmental impact and cost associated
with the disposal of medical waste. Orders have been received for both products
and BATM is gearing up production in 2010.

During 2010 we expect to continue our cost reduction program in the Medical
Division in order to increase the gross profit margin, realise synergies across
the division and begin to see revenues from OEM agreements signed over the past
year in this sector.

Investments

During the first quarter of 2009 BATM strengthened its local presence in the
Telecoms business in Israel by purchasing the trade and assets of a local
company and integrating it into our existing local structure.

Our strategic investments during the year included the investment in the medical
segment described above, as well as the acquisition of a controlling interest in
ISE in February 2009 as previously reported.

Dividend

The Board is of the opinion that, in light of the Company's profitability, it
should continue its dividend distribution policy. Accordingly, it has proposed,
subject to shareholder consent, a final dividend for 2009 of 1.35 pence per
share (2009: 0.69p), which includes a special payment of 0.55 pence per share as
a return to shareholders of the excess cash generated by the business. In making
this decision the Board has carefully considered the likely future capital
requirements of the business and believes that the Company should have fully
adequate cash resources to meet these requirements. The Board does not envisage
recommending an interim dividend in the coming year.
Prospects

Despite the continuing uncertainty in the global economy we have begun 2010 with
a healthy pipeline of business across the Group. In the coming year BATM should
begin to benefit from the impact of the release of our complete solution in the
telecoms sector, replacing declining business in some of our legacy product
lines. In the medical sector we believe that we will see significant growth from
new channels and synergies. Accordingly we remain cautiously optimistic for the
coming year.




Peter Sheldon
Chairman
08 February 2010

+--------------------------------------+----------------+-----------+
| | Year ended 31 |
| | December |
+--------------------------------------+----------------------------+
| | 2009 | 2008 |
+--------------------------------------+----------------+-----------+
| | US$ in thousands |
+--------------------------------------+----------------------------+
| | |
+--------------------------------------+----------------------------+
| Revenues | 135,395 | 134,462 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Cost of revenues | 77,671 | 73,157 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Gross profit | 57,724 | 61,305 |
+--------------------------------------+----------------+-----------+
| | --------- | --------- |
+--------------------------------------+----------------+-----------+
| Operating expenses | | |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Sales and marketing expenses | 13,591 | 13,948 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| General and administrative | 9,407 | 8,376 |
| expenses | | |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Research and development expenses | 11,763 | 12,829 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Other operating expenses | 6,529 | 2,597 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Total operating expenses | 41,290 | 37,750 |
+--------------------------------------+----------------+-----------+
| | --------- | --------- |
+--------------------------------------+----------------+-----------+
| Operating profit | 16,434 | 23,555 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Investment revenue | 2,562 | 2,453 |
+--------------------------------------+----------------+-----------+
| Gains (losses) on financial | 1,260 | (4,340) |
| instruments | | |
+--------------------------------------+----------------+-----------+
| Foreign exchange differences | (1,452) | 2,512 |
+--------------------------------------+----------------+-----------+
| Finance cost | (356) | (480) |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Profit before tax | 18,448 | 23,700 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Tax benefit | 867 | 454 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Profit for the year | 19,315 | 24,154 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Attributable to: | | |
+--------------------------------------+----------------+-----------+
| Owners of the Company | 20,517 | 24,205 |
+--------------------------------------+----------------+-----------+
| Non-controlling interests | (1,202) | (51) |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Income for the year | 19,315 | 24,154 |
+--------------------------------------+----------------+-----------+
| | | |
+--------------------------------------+----------------+-----------+
| Earnings per share (in cents) basic | 5.11 | 6.19 |
+--------------------------------------+----------------+-----------+
| Earnings per share (in cents) | 5.08 | 6.15 |
| diluted | | |
+--------------------------------------+----------------+-----------+

+--------------------------------------+----------------+-------------+
| | Year ended 31 |
| | December |
+--------------------------------------+------------------------------+
| | 2009 | 2008 |
+--------------------------------------+----------------+-------------+
| | US$ in thousands |
+--------------------------------------+------------------------------+
| | Unaudited | Unaudited |
+--------------------------------------+----------------+-------------+
| | | |
+--------------------------------------+----------------+-------------+
| Profit for the year | 19,315 | 24,154 |
+--------------------------------------+----------------+-------------+
| Exchange differences on translating | 2,669 | (6,111) |
| foreign operations | | |
+--------------------------------------+----------------+-------------+
| Total Comprehensive Income of the | 21,984 | 18,043 |
| year | | |
+--------------------------------------+----------------+-------------+
| Attributable to: | | |
+--------------------------------------+----------------+-------------+
| Owners of the Company | 22,562 | 18,220 |
+--------------------------------------+----------------+-------------+
| Non-controlling interest | (578) | (177) |
+--------------------------------------+----------------+-------------+


BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED BALANCE SHEETS

+---------------------------------------+------------------+-----------------+
| | 31 December | 31 December |
+---------------------------------------+------------------+-----------------+
| | 2 0 0 9 | 2 0 0 8 |
+---------------------------------------+------------------+-----------------+
| | US$ in thousands |
+---------------------------------------+------------------------------------+
| | | |
+---------------------------------------+------------------+-----------------+
| Non-current assets | | |
+---------------------------------------+------------------+-----------------+
| | | |
| Goodwill | 11,345 | 9,418 |
+---------------------------------------+------------------+-----------------+
| Other intangible assets | 23,323 | 18,937 |
| Property, plant and equipment | 21,911 | 10,041 |
| Held to maturity investments | 4,347 | 5,468 |
| Deferred tax assets | 4,848 | 3,531 |
+---------------------------------------+------------------+-----------------+
| | 65,774 | 47,395 |
+---------------------------------------+------------------+-----------------+
| | | |
+---------------------------------------+------------------+-----------------+
| Current assets | | |
+---------------------------------------+------------------+-----------------+
| Inventories | 22,040 | 20,984 |
+---------------------------------------+------------------+-----------------+
| Investments | 34,332 | 21,086 |
+---------------------------------------+------------------+-----------------+
| Trade and other receivables | 31,171 | 29,192 |
+---------------------------------------+------------------+-----------------+
| Cash and cash equivalents | 28,095 | 30,737 |
+---------------------------------------+------------------+-----------------+
| | 115,638 | 101,999 |
+---------------------------------------+------------------+-----------------+
| | | |
+---------------------------------------+------------------+-----------------+
| Total assets | 181,412 | 149,394 |
+---------------------------------------+------------------+-----------------+
| | | |
| Current liabilities | | |
| Short-term bank credit | 6,139 | 3,632 |
| Trade and other payables | 21,624 | 20,283 |
| Provisions | 3,505 | 2,181 |
| | 31,268 | 26,096 |
+---------------------------------------+------------------+-----------------+
| Net current assets | 84,370 | 75,903 |
+---------------------------------------+------------------+-----------------+
| | | |
+---------------------------------------+------------------+-----------------+
| Non-current liabilities | | |
| Long-term liabilities | 14,219 | 4,599 |
+---------------------------------------+------------------+-----------------+
| Retirement benefit obligation | 875 | 926 |
| | 15,094 | 5,525 |
| | ______ | ______ |
| Total liabilities | 46,362 | 31,621 |
| | | |
+---------------------------------------+------------------+-----------------+
| Net assets | 135,050 | 117,773 |
+---------------------------------------+------------------+-----------------+
| | | |
+---------------------------------------+------------------+-----------------+
| Equity | | |
+---------------------------------------+------------------+-----------------+
| Share capital | 1,214 | 1,210 |
+---------------------------------------+------------------+-----------------+
| Share premium account | 405,961 | 404,928 |
+---------------------------------------+------------------+-----------------+
| Foreign currency translation reserve | (3,229) | (6,060) |
| and other reserves | | |
+---------------------------------------+------------------+-----------------+
| Accumulated Deficit | (270,808) | (286,764) |
+---------------------------------------+------------------+-----------------+
| Equity attributable to: | | |
+---------------------------------------+------------------+-----------------+
| Owners of the Company | 133,138 | 113,314 |
+---------------------------------------+------------------+-----------------+
| Non-controlling interest | 1,912 | 4,459 |
+---------------------------------------+------------------+-----------------+
| Total equity | 135,050 | 117,773 |
+---------------------------------------+------------------+-----------------+

BATM ADVANCED COMMUNICATIONS LTD.

CONSOLIDATED STATEMENT OF CASH FLOWS


+----------------------------------------+-------------+--------------+
| | Year ended 31 December |
+----------------------------------------+----------------------------+
| | | |
+----------------------------------------+-------------+--------------+
| | 2 0 0 9 | 2 0 0 8 |
+----------------------------------------+-------------+--------------+
| | |
+----------------------------------------+----------------------------+
| | US$ in thousands |
+----------------------------------------+----------------------------+
| | | |
+----------------------------------------+-------------+--------------+
| | | |
+----------------------------------------+-------------+--------------+
| | | |
+----------------------------------------+-------------+--------------+
| Net cash from operating activities | 20,234 | 9,094 |
| (Appendix A) | | |
+----------------------------------------+-------------+--------------+
| | ---------- | ---------- |
+----------------------------------------+-------------+--------------+
| Investing activities | | |
+----------------------------------------+-------------+--------------+
| | | |
| Interest received | 1,461 | 1,363 |
| Proceeds on disposal of held to | 3,233 | 1,472 |
| maturity investments | | |
| Proceeds on disposal of financial | 18,433 | 13,608 |
| assets carried at fair value through | 30,453 | 17,908 |
| profit and loss | | |
| Proceeds on disposal of deposits | | |
+----------------------------------------+-------------+--------------+
| Purchases of property, plant and | (13,583) | (1,154) |
| equipment | 61 | - |
| Proceeds on disposal of property, | (361) | - |
| plant and equipment | (2,967) | - |
| Purchases of intangible assets | - | (1,050) |
| Purchases of activity | | |
| Purchases of held to maturity | (15,450) | (21,574) |
| investments | (47,335) | (14,000) |
| Purchases of financial assets carried | | |
| at fair value through profit and loss | | |
| Purchases of deposits | | |
+----------------------------------------+-------------+--------------+
| Investment in a company | - | (280) |
+----------------------------------------+-------------+--------------+
| Acquisition of subsidiaries (Appendix | 132 | (7,239) |
| B) | | |
+----------------------------------------+-------------+--------------+
| Net cash used in investing activities | (25,923) | (10,946) |
+----------------------------------------+-------------+--------------+
| | ---------- | ---------- |
+----------------------------------------+-------------+--------------+
| Financing activities | | |
+----------------------------------------+-------------+--------------+
| | | |
+----------------------------------------+-------------+--------------+
| Dividend payment | (4,561) | (3,936) |
+----------------------------------------+-------------+--------------+
| Increase (decrease) in short-term bank | 1,468 | (1,549) |
| credit | | |
+----------------------------------------+-------------+--------------+
| Bank loan received | 3,000 | - |
+----------------------------------------+-------------+--------------+
| Bank loan repayment | (59) | - |
+----------------------------------------+-------------+--------------+
| Proceeds on issue of shares | 378 | 3,515 |
+----------------------------------------+-------------+--------------+
| Net cash from (used in) financing | 226 | (1,970) |
| activities | | |
+----------------------------------------+-------------+--------------+
| | ---------- | ----------- |
+----------------------------------------+-------------+--------------+
| | | |
+----------------------------------------+-------------+--------------+
| Decrease in cash and cash equivalents | (5,463) | (3,822) |
+----------------------------------------+-------------+--------------+
| | | |
+----------------------------------------+-------------+--------------+
| Cash and cash equivalents at the | | |
| beginning of the year | 30,737 | 35,809 |
+----------------------------------------+-------------+--------------+
| | | |
+----------------------------------------+-------------+--------------+
| Effects of exchange rate changes on | | |
| the balance of cash held in foreign | 2,821 | (1,250) |
| currencies | | |
+----------------------------------------+-------------+--------------+
| Cash and cash equivalents at the end | 28,095 | 30,737 |
| of the year | | |
+----------------------------------------+-------------+--------------+
| | | |
+----------------------------------------+-------------+--------------+


BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS

APPENDIX A
RECONCILIATION OF OPERATING PROFIT FOR THE PERIOD TO NET CASH
FROM OPERATING ACTIVITIES
+----------------------------------------------+----------+-----------+
| | Year ended 31 |
| | December |
+----------------------------------------------+----------------------+
| | 2 0 0 9 | 2 0 0 8 |
+----------------------------------------------+----------+-----------+
| | US$ in thousands |
+----------------------------------------------+----------------------+
| | | |
+----------------------------------------------+----------+-----------+
| Operating profit from continuing operations | 16,434 | 23,555 |
| Adjustments for: | | |
+----------------------------------------------+----------+-----------+
| Amortization of intangible assets and | 5,355 | 2,597 |
| goodwill | | |
+----------------------------------------------+----------+-----------+
| Depreciation of property, plant and | 2,865 | 2,401 |
| equipment | | |
+----------------------------------------------+----------+-----------+
| Stock options granted to employees | 659 | 791 |
+----------------------------------------------+----------+-----------+
| Increase (decrease) in retirement benefit | (65) | 154 |
| obligation | | |
+----------------------------------------------+----------+-----------+
| Increase (decrease) in provisions | 575 | (313) |
| | | |
+----------------------------------------------+----------+-----------+
| Operating cash flow before movements in | 25,823 | 29,185 |
| working capital | | |
+----------------------------------------------+----------+-----------+
| Increase in Inventory | (310) | (4,080) |
+----------------------------------------------+----------+-----------+
| Decrease (increase) in receivables | (2,186) | 3,965 |
+----------------------------------------------+----------+-----------+
| Decrease in payables | (3,180) | (18,709) |
+----------------------------------------------+----------+-----------+
| Cash generated by operations | 20,147 | 10,361 |
+----------------------------------------------+----------+-----------+
| Income tax paid | (173) | (844) |
| | | |
+----------------------------------------------+----------+-----------+
| Income tax received | 557 | - |
| | | |
+----------------------------------------------+----------+-----------+
| Interest paid | (297) | (423) |
+----------------------------------------------+----------+-----------+
| Net cash from operating activities | 20,234 | 9,094 |
+----------------------------------------------+----------+-----------+

APPENDIX B
ACQUISITION OF SUBSIDIARIES
+----------------------------------------------+---------+----------+
| | Year ended 31 |
| | December |
+----------------------------------------------+--------------------+
| |2 0 0 9 | 2 0 0 8 |
+----------------------------------------------+---------+----------+
| | US$ in thousands |
+----------------------------------------------+--------------------+
| | | |
+----------------------------------------------+---------+----------+
| Net assets acquired | | |
+----------------------------------------------+---------+----------+
| Property, plant and equipment | 1,432 | 2,727 |
+----------------------------------------------+---------+----------+
| Inventory | 205 | 4,436 |
+----------------------------------------------+---------+----------+
| Trade and other receivables | 446 | 6,008 |
+----------------------------------------------+---------+----------+
| Trade and other payables | (2,387) | (14,310) |
| Short-term bank credit | (2,823) | (5,091) |
| Retirement benefit obligation | - | (437) |
| Long term payables | (3,044) | (1,117) |
+----------------------------------------------+---------+----------+
| Provisions | - | (178) |
+----------------------------------------------+---------+----------+
| Non controlling interest | 1,183 | (3,678) |
+----------------------------------------------+---------+----------+
| | (4,988) | (11,640) |
+----------------------------------------------+---------+----------+
| Goodwill | 1,231 | 11,519 |
+----------------------------------------------+---------+----------+
| Intangible assets | 3,625 | 9,772 |
+----------------------------------------------+---------+----------+
| Total consideration | (132) | 9,651 |
+----------------------------------------------+---------+----------+
| Less-consideration recorded as liability | - | (2,412) |
+----------------------------------------------+---------+----------+
| Total cash consideration | (132) | 7,239 |
+----------------------------------------------+---------+----------+





BATM ADVANCED COMMUNICATIONS LTD
CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| | | Share | | | |Attributable | | |
| | Share |Premium |Translation | Other |Accumulated |to owners of | Non- | Total |
| |capital |Account | reserve |reserves | Deficit | the parent |controlling | equity |
| | | | | | | | interest | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| | US $ in thousands |
+-----------------+-------------------------------------------------------------------------------------------------+
| | | | | | | | | |
| As at | | | | | | | | |
| 1 January | 1,186 | 400,646 | (29) | - | (307,033) | 94,770 | 958 | 95,728 |
| 2008 | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Exercise of | | | | | | | | |
| share based | 20 | 2,583 | | | | 2,603 | - | 2,603 |
| options by | | | | | | | | |
| employees | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Recognition | | | | | | | | |
| of | | 791 | | | | 791 | - | 791 |
| share-based | | | | | | | | |
| payments | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Share based | | | | | | | | |
| purchase of | 4 | 908 | | | | 912 | - | 912 |
| Vigilant | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Purchase of | | | | | | | | |
| non- | | | (46) | | | (46) | - | (46) |
| controlling | | | | | | | | |
| interest | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Non-controlling | | | | | | | | |
| interest | | | | | | - | 3,678 | 3,678 |
| acquired | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| | | | | | | | | |
| Dividend | | | | | (3,936) | (3,936) | - | (3,936) |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Other | | | | | | | | |
| comprehensive | | | (5,985) | | 24,205 | 18,220 | (177) | 18,043 |
| income | - | - | | - | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| As at 31 | | | | | | | | |
| December 2008 | | | | | | | | |
| | 1,210 | 404,928 | (6,060) | - | (286,764) | 113,314 | 4,459 | 117,773 |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Exercise of | | | | | | | | |
| share based | | | | | | | | |
| options by | 4 | 374 | | | | 378 | - | 378 |
| employees | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Recognition | | | | | | | | |
| of | | 659 | | | | 659 | - | 659 |
| share-based | | | | | | | | |
| payments | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Purchase of | | | | | | | | |
| non- | | | | | | - | (1,183) | (1,183) |
| controlling | | | | | | | | |
| interest | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Non-controlling | | | | | | | | |
| interest | | | | 786 | | 786 | (786) | - |
| acquired | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| | | | | | | | | |
| Dividend | | | | | (4,561) | (4,561) | - | (4,561) |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| Other | | | | | | | | |
| comprehensive | - | - | 2,045 | - | 20,517 | 22,562 | (578) | 21,984 |
| income | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+
| | | | | | | | | |
| As at 31 | | | | | | | | |
| December 2009 | 1,214 | 405,961 | (4,015) | 786 | (270,808) | 133,138 | 1,912 | 135,050 |
| | | | | | | | | |
+-----------------+---------+---------+-------------+----------+-------------+--------------+-------------+---------+






BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE FINANCIAL STATEMENTS

Note 1 - General

The preliminary results for the year ended 31 December 2009 and the comparative
2008 information are presented in accordance with International Financial
Reporting Standards ("IFRS").


Note 2 - Profit per share

Earning per share is based on the weighted average number of shares in issue for
the year of 401,579,099 (2008: 396,222,088). The number used for the calculation
of the diluted earning per share for the year (which includes the effect of
dilutive stock option plans) is 403,939,818 shares (2008: 398,679,591).


Note 3 - Business Segment

+--------------+-------------------------+----------+----------+
| Year ended 31 December 2 0 0 9 |
+--------------------------------------------------------------+
| | | | |
| | Telecommunications | | Total |
| | | Medical | |
+--------------+-------------------------+----------+----------+
| US$ in thousands |
+--------------------------------------------------------------+
| | | | |
+--------------+-------------------------+----------+----------+
| Revenues | 105,702 | 29,693 | 135,395 |
+--------------+-------------------------+----------+----------+
| | | | |
+--------------+-------------------------+----------+----------+
| Operating | 24,664 | (1,701) | 22,963 |
| profit | | | |
| (loss), | | | |
| before other | | | |
| operating | | | |
| expenses | | | |
+--------------+-------------------------+----------+----------+
| | | | |
+--------------+-------------------------+----------+----------+
| Assets | 144,553 | 36,859 | 181,412 |
+--------------+-------------------------+----------+----------+
| | | | |
+--------------+-------------------------+----------+----------+
| Year ended 31 December 2 0 0 8 |
+--------------------------------------------------------------+
| | | | |
| | Telecommunications | | Total |
| | | Medical | |
+--------------+-------------------------+----------+----------+
| US$ in thousands |
+--------------------------------------------------------------+
| | | | |
+--------------+-------------------------+----------+----------+
| Revenues | 116,053 | 18,409 | 134,462 |
+--------------+-------------------------+----------+----------+
| | | | |
+--------------+-------------------------+----------+----------+
| Operating | 25,600 | 552 | 26,152 |
| profit, | | | |
| before other | | | |
| operating | | | |
| expenses | | | |
+--------------+-------------------------+----------+----------+
| | | | |
+--------------+-------------------------+----------+----------+
| Assets | 124,728 | 24,666 | 149,394 |
+--------------+-------------------------+----------+----------+

BATM hit by weak US market

Shares in BATM slumped more than 15 per cent after the telecoms equipment maker reported unexpectedly slow growth in its key US market and a downbeat outlook for the coming year.

Investors disappointment that Israel-based group had seen profits eroded by slowing growth at its telecoms division and a greater reliance on its medical division overcame news of a special dividend of 0.55p to shareholders.

Some analysts were also disappointed that news of $3m of operating losses at its surveillance unit only emerged at a morning investor meeting. Shares in the group closed down 8.5p at 45p.

Earnings for the year were below expectations. Revenues to December 31 rose 0.7 per cent to $135.4m mainly on a favourable euro-dollar exchange rate. However, pre-tax profits fell from $23.7m to $18.5m as its lower-margin medical systems business offset weak growth at its telecoms business. Earnings per share fell from 6.15 cents to 5.08 cents.

Sales at the telecom business fell from $116.1m to $105.7m while medical sales rose to $29.7m ($18.4m).

Jonathan Imlah, analyst at Altium Securities, downgraded his rating to sell from hold as two out of three divisions were loss-making and were likely to remain so in 2010.

With the core telecoms division predicted to be flat, the expected upturn in fortunes for BATM is likely to be materially slower than we had previously anticipated, he said.

Zvi Marom, chief executive of BATM, said earnings for 2010 would see a greater contribution from its medical division while the telecoms market was uncertain. We have begun the year with a healthy pipeline and remain cautiously optimistic for the coming year, he added.

The dividend nearly doubled to 1.35p per share, which included the one-off distribution, after it improved working capital and continued to generate cash.

Interim Management Statement

BATM Advanced Communications Limited ("BATM" or the "Company") (LSE: BVC),
a leading designer and producer of Carrier Ethernet and Metropolitan Telecom
Systems, is today issuing its Interim Management Statement for the period from 1
January 2010 to 30 April 2010.

Current trading update
Total revenues in the first four months of 2010 were $ 36.0 million, compared
with $38.9 million in the equivalent period in 2009. The decrease is due to a
significant decline of revenues during the period from a major OEM channel in
the Telecom division, as compared to those in the equivalent period in 2009.
This has been somewhat offset by growth in other areas.
During these four months the sales mix was 63% from the Telecoms division and
37% from the Medical division. During April 2010, total revenues for the month
were equal to those in April 2009, despite continuing weakness in the
aforementioned OEM customer and substantial weakness in European economies.
The gross margin has decreased by 7% during the first four months of 2010 when
compared to the same period in 2009, due to the change in the sales mix, caused
by the reduced revenues from the major OEM customer. The gross margin in the
Medical division has increased above the margin in 2009, a trend which we expect
to continue.
Financial position

The Company's balance sheet remains very strong and at the end of April the
effective cash balance stood at $64.5 million, a decrease of $2.3 million
compared to the position at 31 December 2009, largely due to erosion of Euro
denominated balances.
Board Developments
As reported in the Annual Report for 2009 both Ms Ariella Zochovitsky and Mr
Koti Gavish will complete the second of their three year terms, the maximum term
prescribed by Israeli law, in September 2010. In addition Dr. Dan Kaznelson has
announced his decision to step down immediately prior to the forthcoming Annual
General Meeting.
At the AGM the Board will be proposing the appointment of three new
non-executives:
- Roger Lacey, Senior Vice President, Strategy and Planning, 3M with 11 years
experience in the 3M Telecoms division;
- Professor Gideon Chitayat, currently Chairman of Delta Galil Industries and
Honigman. Professor Chitayat has served as a director for Teva Pharmaceutical
Industries and Bank Hapoalim among others; and
- Amos Shani, serial entrepreneur with experience in the Telecoms sector,
former Division Engineering Manager for Intel, Israel.
Full resumes of the proposed new appointees will be made available ahead of the
Annual General Meeting. The Board believes that these strong candidates will
make an important contribution to the continued success of BATM.

Outlook

Despite the disappointing start to the year, due almost
exclusively to the low orders from our major OEM customer, from April onwards we
have begun to see positive signs in our business. High customer activity in the
US reported earlier in the year has started to convert into orders and we have
signed two licensing agreements with new customers, including an agreement
reported in April 2010 with a leading semi-conductor manufacturer, to license
some of our mobile backhaul technology. Revenues from the licensing will begin
in mid 2011 and are initially expected to be in the region of several US$
million. Management also sees positive prospects with important new customers.
Due to the substantial impact of the OEM customer decline coupled with the
weakness of the Euro, we currently expect to be broadly break-even for the first
six months. For the year as a whole, management are encouraged by the recent
positive signs in the business, and remain cautiously optimistic that BATM will
meet its revenue targets for the full year. The sales mix to date is expected to
continue and management expects that the profitability in the second half of the
year will be similar to that of the second half of 2009.

RNS Number : 7832Q
BATM Advanced Communications Ld
10 August 2010

BATM Advanced Communications Limited
Interim Results 2010

BATM Advanced Communications Limited ("BATM" or "the Company") (LSE: BVC), a
leading designer and producer of broadband data and telecoms systems and medical
laboratory systems, announces its interim results for the six months ended 30
June 2010.

Half Year Highlights

+------------------------+---------------+------------+------------+
| Six months ended 30 | 2010 (H1) | 2009 (H1) | Change % |
| June | | | |
+------------------------+---------------+------------+------------+
| Revenue | $55.3m | $69.0m | (19.9%) |
+------------------------+---------------+------------+------------+
| Gross profit | $19.8m | $30.0m | (34.0%) |
+------------------------+---------------+------------+------------+
| EBITDA | $2.1m | $14.2m | (85.2%) |
+------------------------+---------------+------------+------------+
| Income / (loss) per | (0.21)c | 3.35c | (106.2%) |
| share | | | |
+------------------------+---------------+------------+------------+

Highlights
- Revenues of $55.3m
- Strong Balance sheet with $62.8m in liquid investments (Dec 09: $66.8m)
- Net profit close to break-even
- Dividends totalling $8.1 million paid on July 26 2010
- Completion of office consolidation in US and Israel into offices purchased
in 2009

Dr Zvi Marom, Chief Executive of BATM said:

"Despite the decline in Telecom division revenues, primarily from one OEM
customer, BATM has strengthened its core technological offering and is
developing other sales channels to leverage these new, market leading products.
Even though the results of this process will not be immediate, BATM is confident
that replacement revenues will be found and several new customers will join the
users of our IP line.

"BATM's Medical division has grown by 50% (more than half of it due to organic
growth) on the same period last year and the progress that this division
continues to make both in revenues and profitability, as well as in
technological innovation, continues to highlight the importance of the division
to our business model. We expect that in 2011 all parameters of the division
will improve and we expect to sign significant contracts.

"Despite the slow start to the year, the second half is expected to be
substantially stronger than the first half."


For further information please contact: 10 Aug
Thereafter

BATM Advanced Communications Limited
Dr Zvi Marom, Chief Executive 00 972 9 866 2525
00 972 9 866 2525
Ofer Bar-Ner, Chief Financial Officer 00 1 34 7218 2431
00 1 34 7218 2431
Alon Zieve, Director of Finance 00 972 52 600 6902
00 972 52 600 6902

Singer Capital Markets
Shaun Dobson 020 3205 7626
020 3205 7626

Shore Capital
Pascal Keane 020 7408 4090
020 7408 4090

Threadneedle Communications
Josh Royston / Graham Herring 020 7653 9850
020 7653 9850


Chairman's Statement

Financial Review

Revenues for the first half of 2010 fell by $13.7 million to $55.3 million. This
was comprised of Telecoms division revenue of $35.7 million (2009: $55.9
million) and Medical division revenue of $19.6 million (2009: $13.1 million), an
increase of 50%. The decrease in the Telecoms division was primarily due to a
significant decline of revenues during the period from a major OEM channel, as
compared to those in the equivalent period in 2009.

The gross profit margin has decreased from 43.5% in H1 2009 to 35.8% in line
with the interim management statement released in May. The decrease is primarily
due to the change in sales mix but has also been adversely affected by the
substantial decrease in the Euro / US Dollar exchange rate. This has been
slightly offset by an increase in the gross margin in the Medical division.

Sales and marketing expenses in the first half of 2010 were $7.2m (H1 2009:
$6.7m) - an increase of 7% over the same period last year. The increase is
mainly due to the expansion of our laboratory diagnostics offering. As a
percentage of revenue, sales and marketing expenses were 13.0% (H1 2009: 9.7%).

General and administrative expenses in the first half of 2010 were $4.8m (H1
2009: $4.5m). These costs have similarly increased due to the expansion of our
laboratory diagnostics offering. This increase has been slightly offset by
consolidation of our operations in both the United States and Israel into
centralized sites during the middle of the first half of 2010, and associated
cost savings. As a percentage of revenue, general and administrative expenses
were 8.6% (H1 2009: 6.6%).

Net R&D expense in the first half of 2010 was $6.5m (H1 2009: $5.8m), an
increase of 12%. This increase is again primarily associated with the expansion
of our laboratory diagnostics offering and expanded R&D department working on
immunology diagnostic products.

The operating loss in the first half of 2010 was $1.4m (H1 2009: profit of
$10.8m). The decrease is mainly as a result of the decrease in revenues and
lower gross profit margins. Our surveillance operations generated a loss of $1
million in the first half of the year. In addition this loss is after increased
operating expenses of $1 million associated with the expansion of our medical
diagnostic offering and $0.8 million of non-recurring restructuring costs from
the consolidation of US operations

EBITDA has decreased to $2.1 million from $14.2 million in H1 2009.

Net finance income in the first half of 2010 was $1.0m (H1 2009: $2.9m). The
decrease is largely due to a decrease in income from foreign exchange gains and
associated hedges on USD balances, from $2.2 million in 2009 to $0.6 million in
2010.

Tax expenses of $1.2 million includes $0.7 million tax on dividends of $8.1
million part of which were from profits from the approved enterprise scheme and
therefore incur tax on distribution, and an exceptional tax expense in Italy.

Net loss after tax in the first half of 2010 amounted to $1.5m (H1 2009: profit
of $12.9m), resulting in a basic loss per share of 0.21 cents (H1 2009: profit
of 3.35 cents).

Our balance sheet remains strong with effective liquidity of $62.8m. This has
decreased by $4.0m from $66.8m as at 31 December 2009. This decrease is
primarily due to erosion of our Euro denominated cash by the strengthening of
the US Dollar. Period end cash is comprised as follows: cash and deposits up to
three months duration of $30.2m; short-term cash deposits up to one year of
$29.6m; $3.0m is held in investments including $1.0m in triple A bank notes
falling due at the end of 2010; and $2.0m in bonds that announced early
repayment and were paid on 15 July 2010. As the dominant economic environment
has been Euro denominated, the majority of the Company's liquid assets are held
in this currency.

Business Review

Telecoms Division
This first half of the year has been marked by a significant decrease of
revenues to a major OEM customer and an operating loss of $1 million generated
by our surveillance business. As a result of the declining OEM market management
has put an increased focus on the development of direct sales and alternative
complimentary OEM channels. Management has also identified areas in which costs
can be reduced in those parts of the division that have suffered.

In the first half of 2010 BATM released two niche packet backhaul products
including both a cell site gateway and 10G multi-service aggregation switch.
Orders were received for both products on release, and we expect demand to grow
into next year. BATM intends to release its unique service management solution
towards the end of the year. Several requests from major customers for pilots
have been received and a few important customers were selected for field trials.
The combination of these products gives service providers the ability to migrate
cost effectively their wireless networks to 3G and 4G without having to replace
their core networks. This new product suite, as well as planned future
offerings, puts BATM in an excellent position to increase its direct sales to
service providers under its Telco Systems brand in the coming years.

During H1 2010 we consolidated operations both in the United States and Israel
into two new offices purchased in the second half of 2009, capitalizing on
unique opportunities in the real estate market. This move will reduce the
operational overheads in both locations and cost savings will be realised in the
second half of this year. In addition we have taken steps to reduce the cost
base of parts of the division associated with weaker product lines. These cost
savings should reduce operating expenses by approximately $1 million per annum.
Our surveillance operations generated an operational loss of $1 million and
changes to personnel and the business model have been made in order to bring the
business into operational balance by the end of 2010.

As part of the strategic progress described above, BATM attained important
achievements in the first half of the year. As reported earlier in the year a
licensing agreement was signed with a major chip manufacturer and our
relationship with a relatively new tier two OEM customer has shown very positive
signs. These developments are expected to yield revenues of several million US
dollars from 2011 onwards. Management believes that despite the difficulties
that have faced the Telecom Division due to the decline in its major OEM
business there are good prospects of a return to growth.

Medical Division
During the first half of 2010 the Medical Division has made exceptional
progress. Revenues have grown by 50% compared with the same period in 2009, of
which approximately half was organic growth, and the gross margins are steadily
increasing. Gross margins in the division are expected to approach the
mid-twenty percent later this year and will continue to rise as marketing of
reagents with the machines ramps up towards the end of this year. The growth has
been driven by new sales channels in all of our small-mid laboratory businesses
both in the sterilization and diagnostics offerings. Channels have been
developed in BRIC countries as well as in the Middle East and Europe. BATM has
put great emphasis on emerging markets and believes that it can further enhance
its position in these markets this year.

The Medical division has unveiled a highly innovative new product in our
sterilization line that offers an extremely cost effective medical waste
disposal solution to medical centres. BATM expects to register several patents
on this IP and a backlog of orders for this product has already been generated
for 2011. The Research and Development department of the diagnostic line are
currently developing solutions that are designed to increase the speed and cost
effectiveness of clinical chemistry tests.

In the second half of the year we will continue to consolidate our Medical
businesses which we believe will lead to modest cost savings and increased sales
synergies.

Prospects
Despite the disappointing start to the year, due almost exclusively to the low
orders from our major OEM customer, from April onwards we have begun to see
positive signs in our business. We have signed two licensing agreements with new
customers, including an agreement reported in April 2010 with a leading
semi-conductor manufacturer, to license some of our mobile backhaul technology.
Backlog orders have been received for our new Metro devices and deliveries will
start in H2. Revenues from the licensing will begin in mid 2011 and are
initially expected to be in the region of several US$ million. There have also
been strong orders in the Medical division at the start of H2.
We expect to see the upwards trend continue in the second half of 2010.
Management is encouraged by the positive signs in the business at the end of H1
and beginning of H2. The sales mix to date is expected to continue and
management expects that revenues for the full year will reach in the region of
$120 million and that profitability in the second half of the year, as
previously reported in the Interim Management Statement, will be in line with
that of the second half of 2009.


Peter Sheldon
Chairman

10 August 2010
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED INCOME STATEMENTS
+--------------------------------------+--------------+--------------+
| | Six months ended 30 |
| | June |
+--------------------------------------+-----------------------------+
| | | 2 0 0 9 |
| | 2 0 1 0 | |
+--------------------------------------+--------------+--------------+
| | US$ in thousands |
+--------------------------------------+-----------------------------+
| | Unaudited | Unaudited |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Revenues | 55,285 | 68,995 |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Cost of revenues | 35,487 | 39,012 |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Gross profit | 19,798 | 29,983 |
+--------------------------------------+--------------+--------------+
| | --------- | --------- |
+--------------------------------------+--------------+--------------+
| Operating expenses | | |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Sales and marketing expenses | 7,212 | 6,716 |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| General and administrative | 4,781 | 4,524 |
| expenses | | |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Research and development expenses | 6,522 | 5,842 |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Other operating expenses | 2,656 | 2,080 |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Total operating expenses | 21,171 | 19,162 |
+--------------------------------------+--------------+--------------+
| | --------- | --------- |
+--------------------------------------+--------------+--------------+
| Operating (loss) profit | (1,373) | 10,821 |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Investment revenue | 818 | 806 |
+--------------------------------------+--------------+--------------+
| Gains (losses) on financial | (1,122) | 1,057 |
| instruments | | |
+--------------------------------------+--------------+--------------+
| Foreign exchange differences | 1,711 | 1,158 |
+--------------------------------------+--------------+--------------+
| Finance cost | (372) | (160) |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Profit / (loss) before tax | (338) | 13,682 |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Tax | (1,194) | (800) |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Profit / (loss) for the period | (1,532) | 12,882 |
| | | |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Attributable to: | | |
+--------------------------------------+--------------+--------------+
| Owners of the Company | (867) | 13,451 |
+--------------------------------------+--------------+--------------+
| Non-controlling interests | (665) | (569) |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Income / (loss) for the period | (1,532) | 12,882 |
+--------------------------------------+--------------+--------------+
| | | |
+--------------------------------------+--------------+--------------+
| Earnings / (loss) per share (in | (0.21) | 3.35 |
| cents) basic | | |
+--------------------------------------+--------------+--------------+
| Earnings / (loss) per share (in | (0.21) | 3.34 |
| cents) diluted | | |
+--------------------------------------+--------------+--------------+
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
+--------------------------------------+------------+-----------+
| | Six months ended 30 |
| | June 30, |
+--------------------------------------+------------------------+
| | | 2 0 0 9 |
| | 2 0 1 0 | |
+--------------------------------------+------------+-----------+
| | US$ in thousands |
+--------------------------------------+------------------------+
| | Unaudited | Unaudited |
+--------------------------------------+------------+-----------+
| | | |
+--------------------------------------+------------+-----------+
| Profit / (loss) for the period | (1,532) | 12,882 |
+--------------------------------------+------------+-----------+
| Exchange differences on translating | (10,994) | 1,352 |
| foreign operations | | |
+--------------------------------------+------------+-----------+
| Total Comprehensive Income (loss) of | (12,526) | 14,234 |
| the Period | | |
+--------------------------------------+------------+-----------+
| Attributable to: | | |
+--------------------------------------+------------+-----------+
| Owners of the Company | (12,144) | 14,610 |
+--------------------------------------+------------+-----------+
| Non-controlling interests | (382) | (376) |
+--------------------------------------+------------+-----------+
| | (12,526) | 14,234 |
+--------------------------------------+------------+-----------+
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

+-------------------------------+-----------------------+----------------------+----------------------+
| | 30 June | 30 June | 31 December |
+-------------------------------+-----------------------+----------------------+----------------------+
| | 2 0 1 0 | 2 0 0 9 | 2 0 0 9 |
+-------------------------------+-----------------------+----------------------+----------------------+
| | US$ in thousands |
+-------------------------------+---------------------------------------------------------------------+
| | Unaudited | Unaudited | Audited |
+-------------------------------+-----------------------+----------------------+----------------------+
| Non-current assets | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| | | | |
| Goodwill | 11,060 | 12,345 | 11,345 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Other intangible assets | 20,546 | 26,794 | 23,323 |
| Property, plant and equipment | 22,106 | 12,956 | 21,911 |
| Held to maturity investments | - | 5,871 | 4,347 |
| Deferred tax asset | 4,678 | 2,065 | 4,848 |
+-------------------------------+-----------------------+----------------------+----------------------+
| | 58,390 | 60,031 | 65,774 |
+-------------------------------+-----------------------+----------------------+----------------------+
| | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| Current assets | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| Inventories | 19,792 | 17,392 | 22,040 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Investments | 32,622 | 35,093 | 34,332 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Trade and other receivables | 25,920 | 36,985 | 31,171 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Cash and cash equivalents | 30,173 | 28,117 | 28,095 |
+-------------------------------+-----------------------+----------------------+----------------------+
| | 108,507 | 117,587 | 115,638 |
+-------------------------------+-----------------------+----------------------+----------------------+
| | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| Total assets | 166,897 | 177,618 | 181,412 |
+-------------------------------+-----------------------+----------------------+----------------------+
| | | | |
| Current liabilities | | | |
| Short-term bank credit | 5,875 | 6,477 | 6,139 |
| Trade and other payables | 28,969 | 32,023 | 21,624 |
| Provisions | 3,806 | 2,818 | 3,505 |
| | 38,650 | 41,318 | 31,268 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Net current assets | 69,857 | 76,269 | 84,370 |
+-------------------------------+-----------------------+----------------------+----------------------+
| | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| Non-current liabilities | | | |
| Long-term payables | 12,755 | 7,546 | 14,219 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Retirement benefit obligation | 793 | 983 | 875 |
| | 13,548 | 8,529 | 15,094 |
| Total liabilities | 52,198 | 49,847 | 46,362 |
| | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| Net assets | 114,699 | 127,771 | 135,050 |
+-------------------------------+-----------------------+----------------------+----------------------+
| | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| Equity | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| Share capital | 1,214 | 1,212 | 1,214 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Share premium account | 406,263 | 405,465 | 405,961 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Foreign currency translation | | | |
| reserve and other reserves | (14,673) | (5,115) | (3,229) |
+-------------------------------+-----------------------+----------------------+----------------------+
| Accumulated Deficit | (279,802) | (277,874) | (270,808) |
+-------------------------------+-----------------------+----------------------+----------------------+
| Equity attributable to equity | | | |
| holders of the: | | | |
+-------------------------------+-----------------------+----------------------+----------------------+
| Owners of the Company | 113,002 | 123,688 | 133,138 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Non-controlling interest | 1,697 | 4,083 | 1,912 |
+-------------------------------+-----------------------+----------------------+----------------------+
| Total equity | 114,699 | 127,771 | 135,050 |
+-------------------------------+-----------------------+----------------------+----------------------+

BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


Six month ended on 30 June 2010

+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| | | Share | | | | | | |
| | Share |Premium |Translation | Other |Accumulated |Attributable |Non-Controlling | Total |
| |Capital |Account | reserve |reserve | Deficit |to owners of | Interests | equity |
| | | | | | | the Company | | |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| | US$ in thousands |
+---------------+-----------------------------------------------------------------------------------------------------+
| As at 1 | | | | | | | | |
| January | | | | | | | | |
| 2010 | 1,214 | 405,961 | (4,015) | 786 | (270,808) | 133,138 | 1,912 | 135,050 |
| | | | | | | | | |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| | | | | | | | | |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| Exercise | | | | | | | | |
| of share | | | | | | | | |
| based | | | | | | | | |
| options | - | 83 | | | | 83 | - | 83 |
| by | | | | | | | | |
| employees | | | | | | | | |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| Recognition | | | | | | | | |
| of | | | | | | | | |
| share-based | | 219 | | | | 219 | - | 219 |
| payments | | | | | | | | |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| Purchase | | | | | | | | |
| of non- | | | | | | | | |
| controlling | | | | (167) | | (167) | 167 | - |
| interest | | | | | | | | |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| Proposed | | | | | | | | |
| Dividend | | | | | (8,127) | (8,127) | - | (8,127) |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| Comprehensive | | | | | | | | |
| loss for the | | | (11,277) | | (867) | (12,144) | (382) | (12,526) |
| period | - | - | | | | | | |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
| As at 30 | | | | | | | | |
| June | | | | | | | | |
| 2010 | 1,214 | 406,263 | (15,292) | 619 | (279,802) | 113,002 | 1,697 | 114,699 |
| (unaudited) | | | | | | | | |
+---------------+---------+---------+-------------+---------+-------------+--------------+-----------------+----------+
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (cont.)

+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| Six month ended on 30 June 2009 | |
| | |
+------------------------------------------------------------+----------------------------------------------------------+
| | | Share | | | |Attributable | | |
| | Share |Premium |Translation | Other | Accumulated |to Owners of |Non-Controlling | Total |
| |Capital |Account | reserve |reserves | Deficit | the Company | Interests | equity |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| | US$ in thousands |
+---------------+-------------------------------------------------------------------------------------------------------+
| As at 1 | | | | | | | | |
| January | | | | | | | | |
| 2009 | 1,210 | 404,928 | (6,060) | - | (286,764) | 113,314 | 4,459 | 117,773 |
| | | | | | | | | |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| | | | | | | | | |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| Exercise | | | | | | | | |
| of share | | | | | | | | |
| based | | | | | | | | |
| options | 2 | 139 | | | | 141 | - | 141 |
| by | | | | | | | | |
| employees | | | | | | | | |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| Recognition | | | | | | | | |
| of | | | | | | | | |
| share-based | | 398 | | | | 398 | - | 398 |
| payments | | | | | | | | |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| Purchase | | | | | | | | |
| of non- | | | | | | | | |
| controlling | | | | (214) | | (214) | - | (214) |
| interest | | | | | | | | |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| Proposed | | | | | | | | |
| Dividend | | | | | (4,561) | (4,561) | - | (4,561) |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| Comprehensive | | | | - | | 14,610 | | |
| income for | | | 1,159 | | 13,451 | | ( 376) | 14,234 |
| the period | | - | | | | | | |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+
| As at 30 | | | | | | | | |
| June | | | | | | | | |
| 2009 | 1,212 | 405,465 | (4,901) | (214) | (277,874) | 123,688 | 4,083 | 127,771 |
| (unaudited) | | | | | | | | |
+---------------+---------+---------+-------------+----------+--------------+--------------+-----------------+----------+


BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS


+----------------------------------------+---------------+---------------+
| | Six months ended 30 June |
+----------------------------------------+-------------------------------+
| | | |
+----------------------------------------+---------------+---------------+
| | 2 0 1 0 | 2 0 0 9 |
+----------------------------------------+---------------+---------------+
| | |
+----------------------------------------+-------------------------------+
| | US$ in thousands |
+----------------------------------------+-------------------------------+
| | | |
+----------------------------------------+---------------+---------------+
| | Unaudited | Unaudited |
+----------------------------------------+---------------+---------------+
| | | |
+----------------------------------------+---------------+---------------+
| Net cash from operating activities | 7,208 | 15,943 |
| (Appendix A) | | |
+----------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+----------------------------------------+---------------+---------------+
| Investing activities | | |
+----------------------------------------+---------------+---------------+
| | | |
| Interest received | 570 | 736 |
| Proceeds on disposal of held to | 1,183 | 1,050 |
| maturity investments | | |
| Proceeds on disposal of financial | 13,108 | 18,095 |
| assets carried at fair value through | 21,805 | 10,000 |
| profit and loss | | |
| Proceeds on disposal of deposits | | |
+----------------------------------------+---------------+---------------+
| Purchases of property, plant and | (1,881) | (2,407) |
| equipment | | |
| Purchases of financial assets carried | (16,672) | (14,991) |
| at fair value through profit and loss | (19,328) | (27,953) |
| Purchases of deposits | | |
+----------------------------------------+---------------+---------------+
| Investment in other business | (959) | (4,440) |
| combinations | | |
+----------------------------------------+---------------+---------------+
| Acquisition of subsidiaries (Appendix | - | 183 |
| B) | | |
+----------------------------------------+---------------+---------------+
| Net cash used in investing activities | (2,174) | (19,727) |
+----------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+----------------------------------------+---------------+---------------+
| Financing activities | | |
+----------------------------------------+---------------+---------------+
| | | |
+----------------------------------------+---------------+---------------+
| Increase (decrease) in short-term bank | (1,779) | 191 |
| credit | | |
+----------------------------------------+---------------+---------------+
| Bank loan received | 1,500 | - |
+----------------------------------------+---------------+---------------+
| Bank loan repayment | (462) | - |
+----------------------------------------+---------------+---------------+
| Proceeds on issue of shares | 83 | 141 |
+----------------------------------------+---------------+---------------+
| Net cash from (used in) financing | (658) | 332 |
| activities | | |
+----------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+----------------------------------------+---------------+---------------+
| Increase (decrease) in cash and cash | 4,376 | (3,452) |
| equivalents | | |
+----------------------------------------+---------------+---------------+
| | | |
+----------------------------------------+---------------+---------------+
| Cash and cash equivalents at the | | |
| beginning of the period | 28,095 | 30,737 |
+----------------------------------------+---------------+---------------+
| | | |
+----------------------------------------+---------------+---------------+
| Effects of exchange rate changes on | | |
| the balance of cash held in foreign | (2,298) | 832 |
| currencies | | |
+----------------------------------------+---------------+---------------+
| | | |
+----------------------------------------+---------------+---------------+
| Cash and cash equivalents at the end | 30,173 | 28,117 |
| of the period | | |
+----------------------------------------+---------------+---------------+
| | | |
+----------------------------------------+---------------+---------------+
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS

APPENDIX A
RECONCILIATION OF OPERATING PROFIT (LOSS) FOR THE PERIOD TO NET CASH
FROM OPERATING ACTIVITIES
+----------------------------------------------+-----------+-----------+
| | Six months ended |
| | 30 June |
+----------------------------------------------+-----------------------+
| | 2 0 1 0 | 2 0 0 9 |
+----------------------------------------------+-----------+-----------+
| | US$ in thousands |
+----------------------------------------------+-----------------------+
| |Unaudited |Unaudited |
+----------------------------------------------+-----------+-----------+
| | | |
+----------------------------------------------+-----------+-----------+
| Operating (loss) profit from continuing | (1,373) | 10,821 |
| operations | | |
| Adjustments for: | | |
+----------------------------------------------+-----------+-----------+
| Amortization of intangible assets | 1,890 | 2,080 |
+----------------------------------------------+-----------+-----------+
| Depreciation of property, plant and | 1,299 | 1,309 |
| equipment | | |
+----------------------------------------------+-----------+-----------+
| Stock options granted to employees | 219 | 398 |
+----------------------------------------------+-----------+-----------+
| Increase (decrease) in retirement benefit | (82) | 62 |
| obligation | | |
+----------------------------------------------+-----------+-----------+
| Increase (decrease) in provisions | 14 | (13) |
| | | |
+----------------------------------------------+-----------+-----------+
| Operating cash flow before movements in | 1,967 | 14,657 |
| working capital | | |
+----------------------------------------------+-----------+-----------+
| Decrease in Inventory | 1,906 | 3,953 |
+----------------------------------------------+-----------+-----------+
| Decrease (Increase) in receivables | 4,112 | (7,844) |
+----------------------------------------------+-----------+-----------+
| Increase (decrease) in payables | (236) | 5,446 |
+----------------------------------------------+-----------+-----------+
| Cash generated by operations | 7,749 | 16,212 |
+----------------------------------------------+-----------+-----------+
| Income taxes paid | (169) | (109) |
| | | |
+----------------------------------------------+-----------+-----------+
| Interest paid | (372) | (160) |
+----------------------------------------------+-----------+-----------+
| Net cash from operating activities | 7,208 | 15,943 |
+----------------------------------------------+-----------+-----------+

APPENDIX B
ACQUISITION OF SUBSIDIARIES
+--------------------------------------------------------+----------+-----------+
| | Six months ended |
| | 30 June |
+--------------------------------------------------------+----------------------+
| | 2 0 0 9 |
+--------------------------------------------------------+----------------------+
| | US$ in thousands |
+--------------------------------------------------------+----------------------+
| | |Unaudited |
+--------------------------------------------------------+----------+-----------+
| Net assets acquired | | |
+--------------------------------------------------------+----------+-----------+
| Property, plant and equipment | | 1,359 |
+--------------------------------------------------------+----------+-----------+
| Inventory | | 205 |
+--------------------------------------------------------+----------+-----------+
| Trade and other receivables | | 446 |
+--------------------------------------------------------+----------+-----------+
| Trade and other payables | | (2,374) |
| Short-term bank credit | | (2,641) |
+--------------------------------------------------------+----------+-----------+
| Long-term payables | | (3,149) |
+--------------------------------------------------------+----------+-----------+
| Non-controlling Interest | | ____- |
+--------------------------------------------------------+----------+-----------+
| | | (6,154) |
+--------------------------------------------------------+----------+-----------+
| Intangible assets | | 5,971 |
+--------------------------------------------------------+----------+-----------+
| Total consideration | | (183) |
+--------------------------------------------------------+----------+-----------+
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - General

The unaudited results for the six months ended 30th June 2010 have been prepared
in accordance with International Financial Reporting Standards (IFRS) set out in
the Annual Report and Financial Statements for the year ended 31 December 2009.
The unaudited results for the six months ended 30th June 2009 were prepared on
the same basis.
During the period the following standards came into effect:
Improvements to IFRSs 2009 Improvements to IFRSs 2009


Note 2 - Profit (loss) per share

Profit (loss) per share is based on the weighted average number of shares in
issue for the period of 402,393,379 (H1 2009: 401,171,587). The number used for
the calculation of the diluted profit per share for H1 2010 (which includes the
effect of dilutive stock option plans) is 403,894,193 shares (H1 2009:
402,239,043).


Note 3 - Acquisition of Subsidiaries

During June 2010 the Group acquired the trade and assets of an Israeli Telecoms
software services provider called Balora Ltd ("Balora") for a consideration of
$0.8 million.

As of the authorization of these financial statements, the Purchase Price
Allocation ("PPA") of Balora had not been completed. The allocation used for
these financial statements represent management best estimates.


Note 4 - Segments

Business Segment

+-----------------+-+------------------+------------+---------------+
| Six months ended 30 June 2010 |
+-------------------------------------------------------------------+
| | | | |
| |Telecommunications | | Total |
| | | Medical | |
+-----------------+--------------------+------------+---------------+
| US$ in thousands |
+-------------------------------------------------------------------+
| | | | |
+-------------------+------------------+------------+---------------+
| Revenues | 35,648 | 19,637 | 55,285 |
+-------------------+------------------+------------+---------------+
| | | | |
+-------------------+------------------+------------+---------------+
| Operating profit | 1,775 | (492) | 1,283 |
| (loss)* | | | |
+-------------------+------------------+------------+---------------+
| | | | | |
+-----------------+-+------------------+------------+---------------+

* Excluding other operating expenses


BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Segments (Cont.)

+------------------+--------------------+------------+----------+
| Six months ended 30 June 2 0 0 9 |
+---------------------------------------------------------------+
| | | | |
| |Telecommunications | | Total |
| | | Medical | |
+------------------+--------------------+------------+----------+
| US$ in thousands |
+---------------------------------------------------------------+
| | | | |
+------------------+--------------------+------------+----------+
| Revenues | 55,915 | 13,080 | 68,995 |
+------------------+--------------------+------------+----------+
| | | | |
+------------------+--------------------+------------+----------+
| Operating profit | 13,158 | (257) | 12,901 |
| (loss)* | | | |
+------------------+--------------------+------------+----------+

* Excluding other operating expenses

Note 5- Events during the period

During the period there was a significant decrease in revenues from a major OEM
customer.

Note 6- Events after the balance sheet date

Dividend
A dividend of GBP 1.35 per share, totalling GBP 5,408 thousand ($8,127
thousand), was declared on 8 February 2010 and paid on 26 July 2010.

re - now owns its own real estate

Steps needed to prevent bulletin-board misuse -- August 13 2010 19:18

Online investor bulletin boards occasionally provide me with some snippets of useful information but I always take pains to validate this information from more reputable sources before I trust it. ................

Turning to my own trades not influenced by bulletin boards I have been monitoring price swings in BATM Advanced Communications (ticker symbol: BVC) for several weeks.

BATM is a leading producer of broadband and telecoms system components. It also has a rapidly growing medical diagnostic division. But it has given investors a painful time in 2010. Its shares fell sharply in February after it stated that revenues had weakened due to the loss of a key customer.

As our price chart shows, the shares fell further in May in response to an interim management statement that repeated Februarys warning.

This caught my attention because it was old news which I assumed had been reflected in the share price since February. Mays statement also noted that the revenue trend was improving in spite of the loss of that key customer. Investors ignored this positive news.

Prices fell, yet again, last Tuesday morning in response to a poorly received first-half earnings statement. The company reported a small loss.

Given that the stock market is usually forward-looking, I could not help but wonder how many times the shares could sell-off on the same bad news.

It seems the downturn came to an end at 8:06am six minutes after the markets opened. Prices fell about 15 per cent and then began to recover. The briefness of the sell-off plus the length of time that the bad news had been in the market led me to conclude that all the nervous money was finally shaken out. I decided to pounce at what I believed to be a bargain basement price.

I do not think it much of a gamble. Tuesdays report also contained a healthy dollop of good news. Revenues in BATMs medical division are 50 per cent ahead of last year and growth shows no sign of slowing. Medical profit margins are low in this financial year because the company is spending heavily to exploit its opportunity. But margins should improve in 2011 in line with rising revenues.

BATMs troubled telecoms division also reported good news. Orders were quickly received for two new products, while a third major product is undergoing trials, so the company expects division revenues to rise sharply in 2011.

Robin Speakman of Shore Capital provides the cherry on the cake. BATM has valuable real estate holdings on its books. He estimates that their value equates to about 10p per share. Few investors are aware of this. The companys cash and near cash is worth another 10p per share. But the current share price is only 24.25p. At this price, its like buying a cash pile with a high potential telecoms supplier and a booming medical testing division thrown in for free.

Stock market historian David Schwartz is an active short-term trader, writing about his own trades and strategies

David Schwartz buys for his portfolio

13 September 2010 -- BATM Advanced Communications Limited

Interim Management Statement

BATM Advanced Communications Limited ("BATM" or the "Company") (LSE: BVC),
a leading designer and producer of broadband data and telecoms systems and
medical laboratory systems, is today issuing its Interim Management Statement
for the period from 1 July 2010 to 31 August 2010.

Current trading update
Total revenues in the first two months of the second half of 2010 were $ 18.6
million, compared with $19.1 million in the equivalent period in 2009. Revenues
for the period are broadly inline with those of the equivalent period in 2009
and also with management's expectations.
During these two months the sales mix was 68% from the Telecoms division and 32%
from the Medical division as compared to 75% and 25% in the second half of 2009
and 65% and 35% in the first half of 2010.
The gross margin has slightly increased during the first two months of the
second half of 2010 over the first half of 2010.

Financial position

The Company's balance sheet remains very strong and at the end of August
the effective cash balance stood at $53.4 million, a decrease of $9.4 million
compared to the position at 30 June 2010, largely due to the Dividend payment in
July amounted to $8.8 million and a slightly increase in inventory balances.

BATM sales fall amid lost Nokia business

By Courtney Weaver -- Last updated: September 14 2010 02:57

BATM Advanced Communications faces falling revenues over the next two years as it struggles to rebuild its telecoms unit after losing much of its business with Nokia.

The Israel-based telecoms equipment manufacturer said that revenues in July and August had fallen to $18.6m, compared with $19.1m for the same period last year, and predicted sales at the telecoms division would remain flat for the next 18 months.

To combat the loss in revenue, the group has come to rely on its less lucrative medical division that produces both laboratory diagnostic tools and equipment used to destroy medical waste. While last year the medical unit represented just 25 per cent of total sales, it now represents 32 per cent. By 2013, the split between the two divisions could be 50-50, said Jon Fletcher, an analyst at Altium Securities.

The share of the lower-margin medical division increasing means less profitability, he said, predicting that it would take 18 to 24 months for BATM to find a source of revenue to replace its business with Nokia.

The Finnish company was forced to reduce its business with BATM earlier this year as it lost out market share to Chinese competitors, a problem also faced by Alcatel and Huawei, two of BATMs other manufacturing partners.

According to BATM, the loss of the partnership led to a $16.7m drop in revenues between the first half of 2009 and the first half of 2010.

Outlook for the telecoms division improved slightly over the past two months thanks to increased business from US telecoms operators. Clients such as Verizon and AT&T have boosted their bandwidth capacity following the release of the iPhone4 and growing popularity for other smartphones, a service that BATM provides.

The company changed its management team in June to work out a new strategy for its telecoms division and is working on alternative sources of revenues, including a new licensing agreement with a top chip designer and finding ways to sell directly to companies .

Shares in BATM, which have fallen 42 per cent over the past 12 months, on Monday fell p to 24p.

BVC.LS - Batm Advanced Communications Ltd (LSE)