Final Results

BATM Advanced Communications Ld
15 March 2006


For immediate release                                    15 Mar, 2006


        BATM Advanced Communications Limited - 2005 preliminary results

BATM Advanced Communications Limited ('BATM' or 'the Company'), (LSE: BVC), a
leading designer and producer of broadband data and telecoms systems, announces
final results for the year ended 31 December 2005.


                                                 2005               2004             2003

Revenues                                         $56.5m             $41.2m           $37.1m
Gross Profit                                     $22.0m             $17.5m           $11.6m
Pre-tax profit / (loss) before goodwill
amortization and other non-recurring expenses*


                                                 $ 1.4m             $(2.6)m          $(10.1)m
Loss per share                                   (0.75)c            (3.29)c          (5.21)c


 (*) Excluding amortization of goodwill, partial write-down of an investment and
costs associated with the early termination of a US premises lease agreement 
($4.1m in 2005 and $9.9m in 2004)

Highlights

•         Revenue growth of 37% over 2004 (2004 growth of 11% over 2003)

•         Return to Operating Profitability. Pre-tax profit before goodwill
          amortization and other non-recurring expenses of $1.4m (loss of $2.6m 
          in 2004)

•         Strong cash position of $48.0m, including short and long-term liquid
          investments, and no borrowings ($47.1m at 30 June 2005, $50.7m at 
          31 December 2004)

•         Gross profit margin of 39% compared with 42.5%  in 2004

•         Major strategic partnerships consolidated and extended

•         Long-term contracts secured strengthening the Group's growth prospects



Dr Zvi Marom, Chief Executive of BATM, said:

The hard work of the last few years and our focus on building a sustainable
platform of growth for the Company has been borne out by these results.  BATM
has secured some notable contract wins in a highly competitive market and we
have strengthened our relationships with major strategic partners.

I am confident that we are at the beginning of a period of significant renewed
growth.

For further information please contact:                                15 March              Thereafter

BATM Advanced Communications Limited
Dr Zvi Marom, Chief Executive                                    020 7831 3113         00972 9 866 2525
Ofer Bar-Ner, Chief Financial Officer                            020 7831 3113         00972 9 866 2525

Dresdner Kleinwort Wasserstein
James Rudd                                                       020 7623 8000         020 7623 8000

Shore Capital
Graham Shore                                                     020 7408 4090         020 7408 4090

Global Equity IR
Amira Bardichev                                                  079 5620 6270         079 5620 6270


Chairman's Statement

Review of the Year

I am delighted to report on a year that has more than justified my statement
last year that '...2005 will prove to be the year in which the Company
demonstrates that it has returned to a pattern of growth and profitability'.

In the first half of the year we generated a substantial sales increase of 34%.
We did even better in the second half, achieving an increase of 39%, making the
increase 37% for the full year.  Although this significant increase was gained
at the cost of a small decrease in our gross margins, mainly in the US, our
continued tight control of costs has resulted in the virtual elimination of
annual operating losses.

These results have been achieved with little or no benefit from the recent
important long-term contracts that the Company has gained with major industry
players and which we confidently expect will provide further impetus to our
future growth.

During the year we also reached the end of the heavy cost of goodwill
amortization arising from our acquisition of Telco Systems in 2000 and this too
has benefited our final results.

Financial Performance

Turnover for the period was $56,514,000 (2004: $41,218,000), an increase of
37.1% compared with 2004. Turnover for the second half of 2005 was $30,337,000
(2004: $21,757,000), an increase of 39.4%. This increase in the second half is
mostly due to growth in our business with our strategic partners and VOIP based
products including the new offerings from our Integral Access (now renamed Telco
North (Boston)) operation which was acquired in July 2005.

Gross profit was $21,984,000 (2004: $17,540,000), representing an increase of
25.3% and a gross profit margin of 39% of turnover (2004: 42.5%). As a result of
new extended agreements with US carriers, we have experienced a decline in the
profitability of our legacy business in the US. Since these agreements establish
fixed pricing for the next few years, our focus will be to improve profitability
in 2006 by reducing the costs of some of our legacy products and by generating
further growth in revenues from new products and maintenance agreements during
the course of 2006.

R&D expenses in this period were $9,675,000 (2004: $9,909,000), representing a
decrease of 2.4%. We have continued our strategy of increasing investment in IP
based products and reducing investment in TDM based and legacy products.

Sales and Marketing expenses totaled $9,505,000 (2004: $8,984,000), representing
an increase of 5.8%. As a percentage of sales, Sales and marketing expenses were
16.8% (2004: 21.8%). General and administrative expenses were $2,908,000 (2004:
$3,394,000). Overall Sales, marketing and administration expenses have decreased
from 30.0% of sales in 2004 to 22.0% in 2005.

Goodwill amortization was $2,713,000 (2004: $9,898,000). The majority of these
expenses relate to the acquisition of Telco Systems which was finally fully
amortized during H1 2005. It also includes the amortization of goodwill
resulting from the acquisition of Integral Access.

Finance income was $1,459,000 (2004: $1,702,000).  This decrease is primarily as
a result of reductions in the value of our marketable securities acquired as
part of the sale of Eldor shares in 2004.

Other expenses in 2005 of $1,378,000 include the partial write-down of one of
the company's investments and the costs associated with the early termination of
the lease agreement of one of our premises in the US. In 2004 other income of
$423,000 included the gain on the sale of Eldor shares.

Pro forma profit after taxes, excluding the effect of the amortization of
goodwill and other non-recurring expenses, was $1,168,000 (2004: loss
$2,883,000). Actual loss after taxes, including the effect of goodwill
amortization and other non-recurring expenses, amounted to $2,929,000 (2004:
Loss $12,781,000), resulting in a loss per share of 0.75 cents (2004: Loss 3.29
cents).

Our balance sheet remains strong with cash (including short-term and long- term
liquid investments) of $48.0m (2004: $50.7m) at the period end.  Our cash
position is slightly lower than in 2004 mainly due to an increase in inventory
to support the significant growth in sales. We continue to exercise a
conservative cash investment strategy, maintaining most balances in bank
deposits.

Sales and Marketing

Our OEM business and VOIP offerings continued to be our major growth drivers in
2005. In the OEM segment we managed to both expand existing relationships, as
announced in November 2005, as well as securing new relationships, as announced
in February 2006. We expect this trend to continue during 2006. We also expect
our investment in the Advanced TCA standard as well as our position as the world
leader in Quality Of service of modern Triple IP networks to improve our chances
of winning new customers as well as expanding our relationships with existing
customers.

Our VOIP business has continued to grow for both the residential and corporate
markets. We experienced significant sequential growth in the residential market
as our customers continued to roll out their services. The integration of
Integral Access' product offerings has improved our solution for business needs
and forged a new relationship with an important customer, Time Warner Telecom.
We expect to see further progress upon the introduction of our SIP based
Integrated Access Devices that will appear in the market in the second half of
2006.

We will also focus this year on expanding our business in the Far-East. As part
of this initiative, we opened a branch in Singapore with a reputable locally
residing executive to launch our presence in this region. We believe that there
is significant opportunity for our IP based products in this area. We are
looking to establish relationships with local carriers as well as cooperation
with other vendors in the region.

Research and Development and New Products

We have expanded our line of IP based product and launched the T-Marc. TELEPHONY
(R) magazine (www.itmag.com) granted a 2005 Product of the Year Award to the
company's T-Marc product line, a family of extremely cost effective and compact
intelligent Ethernet demarcation and service delivery customer premises
equipment (CPE) devices. Greg Galitzine, editorial director of INTERNET
TELEPHONY magazine,.said:

'The challenge for carriers in delivering quality intelligent data and voice
services over an Ethernet-based network is ensuring they meet a performance
level that enterprises are used to and demand, Carriers can conquer this
challenge by gaining control at the network edge, and T-Marc is one of the first
intelligent demarcation devices to market.'

This product complements our T-Metro which was released earlier in 2005.

In addition to our stand-alone advanced devices, we continue to develop IP based
blades and cards for the Advanced TCA standard. This development is partly
funded by some of our business partners. It will allow us to present a
comprehensive solution of communication blades for this standard in 2006-2008.
This standard, Advanced Telecommunication Computing Architecture, is gaining
considerable traction both with telecom vendors and telecom service providers.

In VOIP we continue to improve the performance and costs of our CPE gateways. In
January 2006, we launched the Access211N, a next-generation SIP-based VoIP
gateway for broadband Internet telephone service. Through integrated routing
capabilities, unique traffic shaping, and its implementation of advanced quality
of service (QoS) standards, service providers and the end user enjoy superior
voice quality and reduced cost since the need for an external router is
eliminated.

Investment

In July 2005, we purchased certain assets and liabilities of Integral Access
Inc., headquartered in Chelmsford, Massachusetts. We have completed the
integration of this product line into Telco Systems' offerings.

Prospects

The recovery, which started in 2004 and accelerated during 2005, has continued
further into the beginning of 2006.  The agreements that have been signed with
major partners and our substantial recent long-term project tender wins support
our conviction that we have embarked on a period of substantial growth.

I am confident that 2006 will be a year when BATM will demonstrate that it has
become a significant player in our industry.

Peter Sheldon
Chairman
15 March 2006


                       BATM ADVANCED COMMUNICATIONS LTD.
                     CONSOLIDATED PROFIT AND LOSS ACCOUNTS




                                                                      Year ended December 31,
                                                                     2005                2004
                                                                         US$ in thousands,
                                                                       (except per share data)

Sales                                                              56,514               41,218

Cost of sales                                                      34,530            (*)23,678

Gross profit                                                       21,984               17,540


Operating expenses

Research and development expenses, net                              9,675                9,909
Sales and marketing expenses                                        9,505             (*)8,984
General and administrative expenses                                 2,908                3,394
Amortization of goodwill                                            2,713                9,898
Total operating expenses                                           24,801               32,185

Operating loss                                                     (2,817)             (14,645)

Finance income, net                                                 1,459                1,702
Other income (expenses), net                                       (1,378)                 423

Loss before tax                                                    (2,736)             (12,520)

Tax                                                                  (193)                (142)

Loss after tax                                                     (2,929)             (12,662)

Company's share in results of associated company                        -                 (119)

Loss for the year                                                  (2,929)             (12,781)

Loss per share (in cents)                                           (0.75)               (3.29)


(*)Reclassified


                       BATM ADVANCED COMMUNICATIONS LTD.
                          CONSOLIDATED BALANCE SHEETS

                                                                           December 31,
                                                                      2 0 0 5           2 0 0 4
                                                                       US$ in thousands

Non-current assets

Goodwill                                                                1,678             2,475
Property, plant and equipment                                          10,477            10,587
Investment in companies                                                 3,388             3,688
Long-term investments                                                   8,635             3,098

Total fixed assets                                                     24,178            19,848

Current assets
Inventories                                                            10,445             7,425
Short term investments                                                 20,856            46,478
Trade and other receivables                                            10,794             9,779
Cash and cash equivalents                                              18,477             1,153
                                                                       60,572            64,835

Total assets                                                           84,750            84,683

Current liabilities
  Trade and other payables                                             15,331            13,223

Net current assets                                                     45,241            51,612

Non-current liabilities
Liability for employee termination benefits, net                          372               376
Other long-term Liabilities                                               760                 -

                                                                        1,132               376

Total liabilities                                                      16,463            13,599

Net assets                                                             68,287            71,084

Equity
Share capital                                                           1,178             1,177
Share premium account                                                 397,680           397,549
Foreign currency translation adjustment                                    16                16
Deficit                                                              (330,587)         (327,658)

Total equity                                                           68,287            71,084




                       BATM ADVANCED COMMUNICATIONS LTD.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                      Year ended December 31,
                                                                  2 0 0 5            2 0 0 4
                                                                     US$ in thousands

Net cash used in operating activities  (Appendix A)                (2,092)            (1,924)

Investing activities
Proceeds from (investment in) short term investments              (12,110)             1,040
Investment in long term investments                                (8,423)                 -

Proceeds from long term investments                                40,959                  -
Repayment of loan from associated company                               -                477
Purchases of property, plant and equipment                           (692)            (1,767)
Acquisition of subsidiary (Appendix B)                               (200)                 -
Net cash from (used in) investing activities                       19,534               (250)

Financing activities
Repayment of  bank loan                                              (250)                 -
Exercise of share based options by employees                          132                  9
Net cash  from (used in) financing activities                        (118)                 9

Increase (decrease) in cash and cash equivalents                   17,324             (2,165)

Cash and cash equivalents at the beginning of the year              1,153              3,318

Cash and cash equivalents at the end of the year                   18,477              1,153



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


A.     RECONCILIATION OF NET LOSS FOR THE YEAR TO NET CASH
USED IN OPERATING ACTIVITIES

                                                           Consolidated
                                                       Year ended December 31,
                                                      2 0 0 5          2 0 0 4
                                                        US$ in thousands

Loss for the year                                      (2,929)         (12,781)
Group's share in loss of associated company                 -              119
Write-down of  an investment                              300                -
Amortization of goodwill                                2,713            9,898
Depreciation of property, plant and equipment           1,245            1,408
Increase (decrease) in liability of employee
termination benefits, net
                                                           (4)              17
Gain from selling an Investment in associated  company

                                                            -             (410)
Loss(gain) from marketable securities                      49              (27)
Interest incurred on investments                         (390)          (1,627)
Operating cash flow before movements in working
capital
                                                          984           (3,403)
Decrease (increase) in inventories                     (2,283)             258
Increase in receivables                                  (366)          (1,456)
Increase (decrease) in payables                          (427)           2,677

Net cash used in operating activities                  (2,092)          (1,924)


B.   ACQUISITION OF SUBSIDIARY

                                                      Consolidated
                                                 Year ended December 31,
                                                    2 0 0 5         2 0 0 4
                                                        US$ in thousands


Net assets acquired
Property, plant and equipment                          443                -
Inventories                                            737                -
Trade and other receivables                            649                -

Trade and other payables                            (2,535)               -
Bank loan                                             (250)               -
Other long-term  liabilities                          (760)               -

                                                    (1,716)               -
Goodwill                                             1,916                -

Goodwill
Total consideration                                    200                -
                                                     


                       BATM ADVANCED COMMUNICATIONS LTD.
                       NOTES TO THE FINANCIAL STATEMENTS

1.  Loss per share for the years ended 31 December 2005 and 31 December 2004 are
calculated using an average 388,578,761 shares in issue in 2005 and an average
388,486,036 shares in issue in 2004.

2.  Reconciliation of movements in shareholders' funds

                                                               Foreign 
                                                              currency
                                           Share premium   translation
                          Share capital          account    adjustment       Deficit          Total
                                US$'000          US$'000       US$'000       US$'000        US$'000
                                                                               
As at January 1, 2005             1,177           397,549           16      (327,658)        71,084

Exercise of share based
options by
Employees                             1                131                                      132
Loss for the year                     -                  -           -        (2,929)        (2,929)

As at December 31, 2005           1,178            397,680          16      (330,587)        68,287





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