Turnover for the period was $26,177,000 (H1 2004: $19,461,000), an increase of 34% compared with last year. This increase is primarily related to increased demand for our new VOIP products and our successful OEM relationships, particularly with Nokia and Alcatel.

Gross profit margin was 42.3% of turnover (H1 2004: 42.8%).

Despite the increase in turnover, selling, general and administrative expenses remained at broadly the same level and totaled $6,203,000 (H1 2004: $6,130,000) and as a percentage of turnover represented 24% (H1 2004: 31%).

We have maintained a significant investment in Research and Development (R&D). Gross R&D in this period was $5,159,000 (H1 2004: $5,300,000) a decrease of 2.7%. After contributions from the Israeli Chief Scientist and from the European Community, net research and development expenditure was $4,774,000 (H1 2004: $4,960,000).

Pro forma operating profit, before goodwill amortization, amounted to $91,000 (H1 2004: loss $2,753,000), Operating loss after goodwill amortization was $2,384,000 (H1 2004: loss $7,702,000). Amortization on goodwill on our acquisitions has formed a significant cost since 2000. the final tranche of $2,475,000 has been written off in this period and there will be no further costs on our acquisitions to date to be borne moving forward.

Financial income was $689,000 (H1 2004: $890,000). This decrease is primarily as a result of reductions in value of our marketable securities.

Pro forma profit after taxes and minorities, excluding the effect of the amortization of goodwill, was $781,000 (H1 2004: loss $1,969,000), resulting in an income per share of 0.20 cents (H1 2004: loss 0.51 cents). Actual loss after taxes, including the effect of goodwill amortization, amounted to $1,694,000 (H1 2004: Loss $6,918,000), resulting in a loss per share of 0.44 cents (H1 2004: Loss 1.78 cents).

Our balance sheet remains strong with cash of $47.1m (H1 2004: $49.5m) at the period's end. The principal reason for the reduction in our cash position is due to an increase in inventory to support the growth in sales. We continue to exercise a conservative treasury strategy, maintaining most balances in bank deposits.

We have experienced significant growth in both our OEM business as well as our VOIP initiative. Overall these segments of our business, which are up 300% over the same period last year, are the drivers behind our growth. Our relationships with our 2 OEM partners have continued to expand during the period. We expect to win additional business from these channels during the second half of this year. These new contracts will have a positive impact on our business from 2006 onward.

We will continue to focus in the second half on expanding our relationships with our existing partners as well as finding new potential partners. We will also target direct customers with our new Ethernet and VOIP offerings.

We continue to expand our line of Ethernet based products to allow delivery of both IP and TDM traffic over Ethernet transport. This expansion of our portfolio is driven by specific requirements from our major channels. The investment will allow us to strengthen our position as a player in the Ethernet access space.

We are adding circuit emulation support to our Ethernet switches to allow both fixed and mobile operators to backhaul TDM as well as IP based traffic over Ethernet links. These capabilities will be available both on branded and non-branded products.

In addition we are expanding our residential termination devices to support delivery of Ethernet and TDM services to business users over Ethernet links.

We will launch a line of Ethernet based bridges in the second half of the year to allow transport of Ethernet services over copper pairs. This market is driven by the demand for Ethernet services and the lack of fiber in the access.

We also continue to expand our VOIP offerings with new products for residential and business customers.

In July 2005, we purchased certain assets and liabilities of Integral Access Inc., headquartered in Chelmsford, Massachusetts. We are integrating this business into our US based subsidiary as quickly as possible and expect an early profitable return on our modest investment.

We expect the trend of the first half to continue into the second half and to report a significantly improved performance for the year as a whole.