Board committees

Audit committee
Under the Israeli Act, the board of directors of a public company must appoint an audit committee from among its members, which must include at least three directors. The number of members of the audit committee must be no fewer than three directors, including the two "external directors" which every Israeli public company is required to have. The Company has established an audit committee of the Board comprising Mordechai Dabi, Nathalie Schwartz and Michael Rosenberg with formally delegated duties and responsibilities. The chairman of the audit committee is Mordechai Dabi.

The audit committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. It receives and reviews reports from the Company's management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The audit committee adheres to detailed terms of reference, which are available for inspection upon request. The audit committee is given unrestricted access to the Company's auditors. Under the Israeli Act, the audit committee's role also includes the review and approval of certain related party transactions and the remuneration of directors.

There have been 6 meetings of the audit committee in 2006, held on 10.1.2006, 2.3.2006, 23.3.2006, 15.6.2006, 31.8.2006 and 20.12.2006. All of the 3 committee members attended these meetings.

Pursuant to the provisions of the Israeli Act, the functions of the remuneration and nomination committees are carried out by the audit committee and, therefore, the Company does not have separate remuneration and nomination committees as provided for by the Combined Code. However, the functions of typical remuneration and nomination committees established pursuant to the provisions of the Combined Code are, insofar as is possible under the Israeli Act, carried out by the audit committee of the Board.

Internal Audit
Under the Israeli Act, the board of directors of a public company must appoint an internal auditor proposed by the audit committee. The role of the internal auditor is to examine whether such public company's actions comply with the law, integrity and orderly business procedure. The internal auditor Must not be an interested party or office holder, or a relative of any interested party or office holder, or a member or representative of the Company's external auditor. The Israeli Act defines the term "interested party" for such purposes so as to include a person who holds five per cent or more of the Company's outstanding share capital or voting rights, a person who has the right to appoint one or more directors or the general manager or any person who serves as a director or as the general manager.

The company's internal auditor is a certified accountant, nominated by the audit committee and approved by the Board. The internal auditor is invited to attend every meeting of the audit committee.