amiad filtration systems ltd

Amiad Filtration Systems Ltd.Directors’ Report and Financial Statements 2005

For the year ended December 31, 2005

INDEX

Introduction 3

Products & Market Overview 4

Financial & Operating Highlights 5

Directors, Secretary & Advisers 6

Chairman’s Statement 7

Chief Executive’s Review 8

Directors’ Biographies 10

Directors’ Report 12

Statement on Corporate Governance 15

Independent Auditors’ Report 16

Consolidated Balance Sheets 17

Consolidated Statements of Income 18

Consolidated Statements of Changes in Equity 19

Consolidated Statements of Cash Flows 20

Notes to the Financial Statements 22

In an increasingly crowded world, the need for clean water concerns everyone.

For more than 40 years, Amiad has helped to meet this need bydeveloping a comprehensive line of exceptionally efficientautomatic self-cleaning filters and manual filters for use inindustry, municipalities and irrigation.

Combining creative solutions with practicalapplications, Amiad provides optimal solutionsto more than 60 countries and is exploringfurther global opportunities.

The past year has seen strong performanceand there is a solid platform for growth in2006 and beyond.

Amiad Filtration Systems Ltd. Annual Report 2005 3

IntroductionFor the year ended December 31, 2005

Amiad’s pistonless Filtomat 1000 filter

removes dirt particles as water flows

through its course and fine screens. It is

used across a wide range of applications

including drip irrigation in floriculture

to filtering cooling systems at

petro chemical plants.

4 Annual Report 2005 Amiad Filtration Systems Ltd.

Products & Market OverviewFor the year ended December 31, 2005

Clean water is a scarce resource in increasing demand: around 40 per cent of the world’s population, across 80countries, suffers from water shortages and 1.1 billion people do not have access to safe water.

While the world’s population has doubled since 1950, water consumption has increased six-fold in that time.Industrialisation, increased environmental awareness and tighter regulation are all playing a part in driving theneed for water purification and recycling.

Amiad is at the forefront of innovation in this area and has a strong track record in research and development. Itsfiltration products have a wide range of applications, from improving the quality of drinking water in remoteregions and disaster areas to recycling water used in sophisticated manufacturing processes.

The Company’s core self-cleaning filtration technology is designed to have a small footprint, low maintenanceneeds, reliability, scalability and low energy consumption. Its products can be adapted to a wide range ofapplications for sectors including steel, power, oil and gas, pulp and paper, inaddition to having a variety of applications in the irrigation market.

All this means that Amiad products are in demand worldwide and theCompany now has customers in over 60 countriesacross the Americas, Africa, Europe, Asia andAustralasia. Over 90 per cent of the Company’srevenues are generated outside its base inIsrael.

Amiad’s Hydro-SAF 3000 delivers an efficient, compact

and self-cleaning solution for dealing with different

types of suspended solids, organic and inorganic.

The filter operates hydraulically – dispensing with the

need for a power supply on-site – providing a perfect

solution for agriculture, turf, wastewater filtration and

other applications.

Financial highlights

• Turnover rose 15% to $42.4m (2004: $36.9m)

• Operating income up 75% to $4.9m (2004: $2.8m)

• Pre-tax profit rose 57% to $4.1m (2004: $2.6m)

• Gross margins of 50.2%

• Basic and fully diluted earnings per share up 82% to 20 cents

(2004: 11 cents)

• Final dividend of 7.71 cents per share

• Raised £6.5m before expenses on admission to AIM

Operating highlights

• Strong demand for automatic filters from Mexico, Central

America, Spain and China

• Significant sales growth for irrigation products in Ecuador,

Columbia and Mexico

• Solid sales of new product containing thread filter in US and

France

• Entered into 50% joint venture with Yixing Taixing Environtec

Co Ltd (China)

Inside Amiad’s sophisticated, yet easy to

operate automatic EBS filter. It provides

high flow rates and a large filtration area,

with a self-cleaning mechanism driven by

an electric motor. Its worldwide uses

range from industrial cooling systems to

filtering sea water for lobster tanks.




Directors, Secretary & AdvisersFor the year ended December 31, 2005

Directors, Secretary, Registered Office and Advisers

DirectorsAbraham Heifetz (Non-executive Chairman)Yosef Katz (Chief Executive Officer)Itamar Dov Eder (Chief Financial Officer)Joseph Rokah (Non-executive Director)Mordechai Dabi (Non-executive Director)Michael Rosenberg OBE (Non-executive Director)Nathalie Schwarz (Non-executive Director)

Company SecretaryItamar Dov Eder

Registered and Head OfficeAmiad Filtration Systems Ltd.DN Galil Elyon 112335Israel

Nominated Adviser and BrokerPanmure Gordon (Broking) LimitedMoorgate Hall155 MoorgateLondonEC2M 6XB

Solicitors to the Company as to English lawBerwin Leighton Paisner LLPAdelaide HouseLondon BridgeLondonEC4R 9HA

Solicitors to the Company as to Israeli law Barnea & Co.Amzur House8 Hasadnaot StreetHerzliya Pituach 46728Israel

Auditors and Reporting AccountantsKost Forer Gabbay & Kasierer(a member of Ernst & Young Global)3 Aminadav StreetTel Aviv 67067Israel

BankersBank Hapoalim LtdBranch No. 542Rosh PinaIsrael

United Mizrahi Bank LtdBranch No. 487Kiryat ShmonaIsrael

RegistrarCapita IRG (Offshore) LimitedVictoria ChambersLiberation Square1/3 The EsplanadeSt Helier Jersey, JE4 0FFChannel Islands

This is my first annual report since my appointment as non-executive Chairman in

February 2005 and I would like to start by saying how proud I am to be associated

with such a dynamic company in such an important field.

There are few needs more fundamental than the supply of clean, safe water;

without efficient irrigation, agriculture is an impossibility in large parts of the

world; and, without effective recycling and filtration, the water used in many

industrial applications would be lost or would present environmental problems.

Amiad’s technology addresses these fundamental needs and, with increasing

industrialisation and population growth, the Company’s products are in global

demand. The Company has a presence in over 60 countries enabling us to benefit

from the global demand. It is for all these reasons, I believe Amiad’s future is

strong and it is an exciting time to have taken on this role.

We have seen evidence over the past year of the significant progress made by the Company and the financial results are

gratifying: revenues increased by 15 per cent to $42.4m and profit before tax increased by 57 per cent to $4.1m.

It has been a busy year and a significant one in the Company’s history. On 5 December 2005, Amiad was admitted to

trading on the AIM market at the London Stock Exchange. We raised £6.5m, primarily to develop sales and marketing in

high growth territories such as China, India, Mexico, Africa and Eastern Europe.

Our strategy for the future is to continue this focus on high growth territories, to invest in research and development and

to target new markets of great potential through corporate activities that are being driven by environmental concerns and

increased regulation.

I look forward to working with fellow board members over the coming year on behalf of our shareholders, customers and

workforce. I would also like to take this opportunity to thank the management, employees and all those involved and

associated with Amiad for the tremendous support we have received during 2005.

Abraham HeifetzChairmanJune 9, 2006

Chairman’s Statement

Wine producers in California’s Napa Valley use Amiad’s SAF unit to filter water for a large-scale drip irrigation system.



Chairman Abraham Heifetz



Looking back on the past year, I am pleased to report that Amiad has made

significant progress financially, has taken great steps in the development of its

products and global operations and has invested substantially in its future.

The Company increased its revenues by 15 per cent to $42.4m, and profit before

tax increased by 57 per cent to $4.1m. As the Chairman has outlined in his

statement, we were admitted to trading on AIM in December 2005, raising £6.5m

($11.5m) primarily to develop sales and marketing in high growth territories. If non-

recurring expenses, management fees payable to the shareholders, which were

terminated on our admission to AIM and amortisation of non-tangible assets were

excluded, profit before tax was $5.4m.

Basic and fully diluted earnings per share increased as compared to 2004 by 82

per cent to 20 cents. The gross margin of 50.2 per cent was, as expected, about the same as 2004.

Operating income increased as compared to 2004 by 75 per cent to $4.9m, reflecting the growth in revenues and tight

control over operational expenditure. Net income amounted to $2.9m compared with $1.7m for the previous year.

Net cash balances at December 31 were $7.7m, reflecting the $9.3m net proceeds from the placing on admission to AIM

in December 2005 and after repayment of loans and the reduced use of credit facilities. Cash from operations for the full

year was negative $0.3m compared with a positive $1.8m the previous year. In the first half of 2005, the cash from

operations was negative $2.1m which, as expected, turned to a positive $1.8m in the second half of the year.

The Directors recommended a dividend payment of

approximately 7.71 cents per share be paid on 5 May

2006 to shareholders on the register on 11 April 2006. The

record date for the dividend was 18 April 2006 and the

ex-dividend date was 12 April 2006.

During the year, the Company identified a number of key

market segments that were expected to experience strong

growth due to increasing demand for clean water or higher

environmental standards.

In the industrial and municipal sector, significant progress

was made during the year, with double digit growth year-

on-year. A significant contract was signed in France for the

supply of filters for pre-filtration of membranes. In

September 2005, we secured an order in the US to supply

our new product, the thread filter, which was developed

specifically for pre-filtration and sea water application.

Another breakthrough in this segment was filtration of

ballast water, with the sale of our first commercial system

of this product in Germany and subsequent order for a

system in Korea.

Chief Executive’s Review

Municipal

Increasing demand for clean water and higher environmentalstandards worldwide continues to drive growth from the municipalsector for Amiad’s filters.

CEO Yosef Katz


In July, Amiad increased to 50 per cent its stake in Yixing

Taixing Environtec Co. Ltd, a Chinese affiliate, which will

allow us to accelerate sales in the rapidly growing Chinese

market and lower the cost of manufacturing of steel

manual and automatic filters.

On September 1, 2005, the Company acquired the

remaining 50 per cent of the shares in Amiad Australia

from Plastro Irrigation Ltd. (“Plastro”). Accordingly, Amiad

ceased to sell directly to the irrigation market and now

focuses on filtration and water treatment systems for the

municipal and industrial markets. The Company will

continue to sell filters for the irrigation sector via Plastro.

Going forward we should continue to benefit from focusing

on the emerging markets of Central America and India as we

take on new employees and enter into distribution networks.

In the irrigation market, revenue derived from our products

also saw double digit growth, mainly due to two large

projects in the early part of 2005. Amiad achieved

significant penetration into Central America, mainly in

Mexico, and also expanded sales in Ecuador and

Colombia. In Europe, we installed 86 filtration systems in

Spain through our distributor, Mondragon.

In the latter part of 2005, we started to produce and sell

automatic disc filters for the irrigation sector and we

expect to supply these to customers in the coming year.

This is an important addition to the Company’s main

product line of automatic filters.

Looking to the future, global demand for clean water

continues to rise steadily. This is expected to lead to

significant investment in water resource infrastructure over

the long term.

Despite possible seasonal fluctuations in the irrigation

sector during the year, the Company expects a solid

demand for its advanced filtration systems. Our growing

involvement in India, Brazil, China, Eastern Europe, Russia

and the US provides the Company with a good platform for

further growth.

Yosef KatzChief Executive OfficerJune 9, 2006

Industry

Amiad’s automatic, self-cleaning filters are used in a wide range ofapplications in many industries including steel production, powergeneration, oil and gas production and pulp and paper mills.

Irrigation

In the irrigation market Amiad enjoyed double-digit growth in 2005helped by a marked sales expansion in Spain and Central America.



Abraham Heifetz,Non-executive Chairman – aged 68

Mr Heifetz was appointed Non-executive Chairman in February 2005. Prior to joining, Amiad he held key positions in several Israeli banking,industrial and governmental companies including Paz Oil Co and the Union Bank of Israel. He has over 40 years of experience in managingcompanies and was managing director of Israel’s Ministry of Economic & Planning offices. Mr Heifetz holds an MBA from Tel Aviv Universityand a BA in economics from Bar Ilan University.

Yosef Katz, Chief Executive Officer – aged 57

Mr Katz has been managing the Company since 1998 and joined the Board in December 2000. Prior to Amiad he was managing director ofHabonim Industrial Valves for 10 years. He was a director and the chief of the Internal Auditing Committee of the Israeli Institute of Standardsfrom 1990 to 1999. Mr Katz holds a BSc in mechanical engineering from the Technion Israel Institute of Technology in Haifa.

Itamar Dov Eder,Chief Financial Officer – aged 45

Mr Eder joined the Company as chief financial officer in October 2004 and was appointed to the Board in November 2005. Mr Eder has sixteenyears of experience in finance and operations including his position as chief financial officer of Intelligent Information Systems Ltd., a NASDAQquoted Israeli Company, and Surf Communications Solutions Ltd., where he led a $24 million private fundraising. Mr Eder holds an MBA fromthe Hebrew University of Jerusalem and a BA in economics and management from Ruppin Academic Centre.

Joseph Rokah,Non-executive Director – aged 53

Mr Rokah joined the Board in April 2003 and is a senior business initiative adviser in the industrial and commercial sectors including to Israel’sPolice Force and prison authorities. He is the active chairman of 3 kibbutzim, and ex-chairman of PasGon, a Company that specializes inmanufacturing and marketing fibreglass based products. He has an extensive background in agricultural economics, management and banking.He holds an MBA and a BSc in agricultural economics and management.

Directors’ Biographies


Mordechai Dabi, Non-executive Director – aged 68

Mr Dabi joined the Board in January 2002. Mr Dabi is president and chief executive officer of Gaon Agro, part of the B. Gaon Holdings groupof companies. Mr Dabi is also chairman of the Middle East Tube Company and previously held the position of chairman of Hamashbir Holdings(1999) Ltd and Telrad Communication Holdings Ltd.

Michael Rosenberg OBE, Non-executive Director – aged 66

Mr Rosenberg joined the Board in November 2005. Mr Rosenberg spent the first 17 years of his career with the merchant bank SamuelMontagu & Co Ltd and became director of corporate finance in 1972. In 1974 he left to join Allied Investments Ltd, a UK supplier of hospitalmanagement services in the Middle East and developing countries. In 1988 he was a director of Raphael Zorn Hemsley Holdings Ltd (nowNumis Corporation plc) and subsequently became chairman with specific responsibility for corporate finance. He left in 1999 to pursue privateinterests and is currently on the board of a number of listed and private companies including Pilat Media Global plc, Catalyst Media Group Plcand Dori Media Group Ltd. He is also director of the David Paradine Group of companies founded by Sir David Frost and was a co founder ofTV-AM the first commercial breakfast TV channel in the UK. He is a member of the China Britain Business Council and was chairman of theHong Kong Advisory Committee of the DTI.

Nathalie Schwarz, Non-executive Director – aged 35

Ms Schwarz joined the Board in November 2005. Ms Schwarz qualified as a lawyer in 1995 at leading global law firm Clifford Chance whereshe specialised in corporate finance, international mergers and acquisitions, corporate structurings and private equity. In 1998, Ms Schwarzjoined Capital Radio plc as Company Secretary and General Counsel. She was appointed as Executive Director of Strategy and BusinessDevelopment. Whilst at Capital Radio, Ms Schwarz led the group’s acquisition of Border Television, including the Century radio stations, thesale of the Border television business to Granada Media plc, the acquisitions of Beat FM in Scotland, Choice FM in London and Big AM inManchester. She also participated in the digital radio market, licence applications, interactive development, consumer insight, commercialdevelopment, licensing and content exploitation.



The Directors have pleasure in presenting their report together with the audited accounts of the Company and its subsidiaries for the yearended 31 December 2005.

Principal activitiesThe Company was incorporated in Israel in June 1997. On December 5, 2005, the Company’s shares were admitted to trading on the AIMmarket at the London Stock Exchange. Concurrently, the Company completed an initial public offering of its shares – see note 18b on page 34.

The Company is a producer and global supplier of water filters and filtration systems used in the industrial and municipal market and theirrigation market.

The Company specialises in automatic self-cleaning filters that require low maintenance and that can be adapted to provide bespoke solutionsto a wide range of application in industries, in addition to a wide variety of other applications in the irrigation market.

FinancialA financial review of the results for the year is set out on pages 17 to 21.

DividendThe Directors approved a dividend payment of approximately 7.71 cents (USD) per share payable on May 5, 2006, to shareholders on theregister on April 11, 2006 – see note 18e on page 35.

Review of business and future prospectsThe Company’s results for the period and the financial position at 31 December 2005 are considered satisfactory by the Directors. A reviewof the period’s activities and future prospects are contained in the Chairman’s and Chief Executive’s reports set out on pages 7 and 8,respectively.

Share capitalDetails of issued share capital and movements during the year are set out on page 19.

Research and developmentThe Company employs 26 people worldwide in research and development and engineering. It intends to invest 3-5 per cent of sales on R&Don an ongoing basis.

DirectorsThe following Directors held office at the end of the year:

Abraham Heifetz Appointed February 2005

Yosef Katz Appointed December 2000

Itamar Dov Eder Appointed November 2005

Joseph Rokah Appointed April 2003

Mordechai Dabi Appointed January 2002

Michael Rosenberg Appointed November 2005

Nathalie Schwarz Appointed November 2005

Biographical details are set out on pages 10 – 11.

Directors’ Report


Directors’ InterestsAs of December 31, 2005

Percentage of issued shareNumber of Ordinary Shares capital on a fully diluted

Director Number of Ordinary Shares under option basis

Abrwaham Heifetz Nil 154,674 0.79Yosef Katz Nil 232,010 1.19Itamar Dov Eder Nil 77,336 0.4Joseph Rokah1, 3 10,200,000 77,336 52.73Mordechai Dabi2, 3 2,462,304 Nil 12.63Michael Rosenberg Nil Nil NilNatalie Schwarz Nil Nil Nil1 The 10,200,000 Ordinary Shares in which Mr Rokah is interested are registered in the name of Poalim Trust Services Ltd, which holds

10,189,800 Ordinary Shares on trust for A.M. SI Holdings (1997) Ltd, a Company fully controlled by Kubbutz Amiad, and 10,200 OrdinaryShares for Kibbutz Amiad. Mr Rokah is the chairman of the board of directors of Kibbutz Amiad.

2 The 2,462,304 Ordinary Shares in which Mr Dabi is interested are registered in the name of Gaon Agro, of which Mr Dabi is the chiefexecutive officer.

3 As of March 31, 2006 Mordechai Dabi is not interested in any shares since Gaon Agro sold its entire shareholding, and Josef Rokah is interested in 9,942,751 shares registered in the name of Paolim Trust Services Ltd. 9,932,551 of the shares held by Poalin TrustServices Ltd. are held in trust for A. M. SI Holdings (1997) Ltd, and 10,200 are held in trust for Kibbutz Amiad.

Directors’ remuneration

Name Salary/Fee benefits Pension contribution Total

In USD for the year 2005 2004 2005 2004 2005 2004

Abraham Heifetz 48,000 - - - 48,000 -Yosef Katz* 128,135 123,899 27,237 26,278 155,372 150,177Itamar Dov Eder* 104,806 19,751 21,523 4,206 126,329 23,959Joseph Rokah 4,456 - - - 4,456 -Mordechai Dabi 4,456 - - - 4,456 -Michael Rosenberg 4,456 - - - 4,456 -Nathalie Schwarz 4,456 - - - 4,456 -

* Yosef Katz and Itamar Dov Eder are both also provided with a Company car.

Health, safety and environmental policyThe Company recognises its legal responsibilities to ensure the well being, safety and welfare of its employees and to maintain a safeenvironment for visitors and contractors. The Company has a health and safety policy which is available to all employees. The Company’spolicy is to behave in an environmentally responsible manner, consistent with local legislation and protocols.

Substantial shareholdersAs at June 9, 2006 the Company had been notified of the following interests in 3 per cent or more of the ordinary share capital of the Company:

Name Number of shares % of shares

Poalim Trust Services Ltd. 9,942,571 52.68%Atorka 2,188,942 11.6%Nortrust Nominees Limited 681,400 3.61%

Creditor payment policy and practiceThe Company’s policy is that payments to suppliers are made in accordance with those terms and conditions agreed between the Companyand its suppliers, providing that all trading terms and conditions have been complied with.

Going concernThe Directors have reviewed the latest forecast results and cash flow projections. The Directors have a reasonable expectation that theCompany has adequate resources to continue in operational existence for the foreseeable future. The financial statements have therefore beenprepared on a going concern basis.



Directors’ responsibilitiesThe Israeli Companies Law requires the Directors to prepare financial statements for each financial year which give a true and fair view of thestate of affairs of the Company as at the end of the financial year 2005 pursuant to applicable accounting standards.

AuditorsThe Directors, after receiving the view of the Company’s Audit Committee, have decided to put to the Annual General Meeting a resolutionto appoint Kesselman & Kesselman, a member of PricewaterhouseCoopers International Limited, as the Company's auditors for the financialyear 2006.

By order of the Board

Abraham HeifetzChairman

Yosef KatzChief Executive Officer

Directors’ Report



The Directors recognise the importance of sound corporate governance and intend that the Company will comply with the main provisions ofthe principles of Good Corporate Governance and Code of Best Practice published in July 2005 by the financial reporting counsel (theCombined Code) and the QCA Guidelines insofar as they are appropriate given the Company’s size and stage of development and insofar asis permitted by the Israeli Companies Law, 1999 (The Israeli Act). The Company also intends to comply with the applicable corporategovernance requirements under Israeli law. Further details are set out below. As the Company was only admitted to AIM on 5 December 2005,it did not comply with the main provisions of the Combined Code or the QCA Guidelines throughout 2005.

BoardThe Board includes five non-executive Directors, Abraham Heifetz, Joseph Rokah, Mordechai Dabi, Nathalie Schwarz and Michael Rosenberg,of whom Ms Schwarz and Mr Rosenberg are independent. In addition, the roles of chairman and chief executive have been separated andclearly defined. The Board is responsible for formulating, reviewing and approving the Company’s strategy, budgets and corporate actions.The Company intends to hold board meetings at least four times each financial year and at other times as and when necessary.

Audit Committee Under the Israeli Act, the board of directors of a public Company must appoint an audit committee from among its members, which mustinclude 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 Boardwith formally delegated duties and responsibilities.

The audit committee will have primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance ofthe Company is properly measured and reported on. It receives and reviews reports from the Company’s management and auditors relating to theinterim and annual accounts and the accounting and internal controls systems in use throughout the Company. The audit committee will meet notless than three times in each financial year and will have unrestricted access to the Company’s auditors. Under the Israeli Act, the auditcommittee’s role also include the review and approval of certain related party transactions and the remuneration of directors.

Pursuant to the provisions of the Israeli Act, the functions of the remuneration and nomination committees are carried out by the audit committeeand, therefore, the Company will not have separate remuneration and nomination committees as provided for by the Combined Code. However, itis intended that the functions of a typical remuneration and nomination committees established pursuant to the provisions of the Combined Codewill, insofar as possible under the Israeli Act, be carried out by the audit committee of the Board.

Share DealingsThe Company adopted, with effect from admission to AIM, a model code for directors and employee share dealings which, taking account ofthe fact that the Company is incorporated in Israel, is appropriate for a Company whose securities are traded on AIM and is in accordancewith Rule 21 of the AIM Rules.

External DirectorsThe Israeli Act requires public companies to elect at least two members who qualify as ‘‘external’’ directors under the Israeli Act. At least oneof the external directors must have a ‘‘financial and accounting speciality’’, and the other of the external director(s) must have a ‘‘professionalqualification’’. The conditions and criteria for a director qualifying as having a financial and accounting speciality or a professional qualification(as the case may be) are to be set out in regulations to be adopted under the Israeli Act. The board of directors must, within 90 days of thepromulgation of such regulations, determine the minimum number of directors (if any) who must have financial and accounting speciality inaddition to the external director.

Each external director must meet certain standards of independence at time of his or her appointment and during the two year period prior to suchappointment. Pursuant to such standards, an external director may not have, at a time of his or her appointment and during a period of two years priorto his or her appointment, any affiliation with the company, its controlling persons or any entity which was controlled by the Company or any of itscontrolling persons at the time of his or her appointment or at any time during the two year period immediately prior to his or her appointment.Affiliation includes employment relationships, business and professional relationships on a regular basis, control relationships and service as an officeholder. The term “affiliation” does not include an affiliation resulting from such person being appointmented to serve as a director of the companyduring a period that the Company’s shares are about to be offered for the first time to the public. In addition, a person may not be appointed as anexternal director in his/her other activities or position create or are likely to create a conflict of interest with his/her service as a director.

On 2 March 2006, Michael Rosenberg and Nathalie Schwarz were elected to serve as the Company’s “external” directors at a speciallyconvened extraordinary general meeting.

Statement on Corporate Governance

Independent Auditors’ Report


� Kost Forer Gabbay & Kasierer

� 3 Aminadav St. � Phone: 972-3-6232525

� Tel-Aviv 67067, Israel � Fax: 972-3-5622555

INDEPENDENT AUDITORS' REPORT

To the Shareholders of

AMIAD FILTRATION SYSTEMS LTD.

We have audited the accompanying consolidated balance sheets of Amiad Filtration Systems Ltd. and itssubsidiaries (“the Group”) as of December 31, 2005 and 2004, and the related consolidated statements ofincome, changes in equity and cash flows for each of the years then ended. These consolidated financialstatements are the responsibility of the Group's management. Our responsibility is to express an opinion onthese consolidated financial statements based on our audits.

We did not audit the financial statements of certain subsidiaries, whose assets constitute approximately11% and 10% of total consolidated assets as of December 31, 2005 and 2004, respectively, and whoserevenues constitute approximately 36% and 34% of total consolidated revenues for the years ended December31, 2005 and 2004, respectively. The financial statements of those companies were audited by other auditors,whose reports have been furnished to us, and our opinion, insofar as it relates to amounts included for thosecompanies, is based on the reports of the other auditors.

We conducted our audits in accordance with International Standards on Auditing. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the consolidated financialstatements referred to above, present fairly, in all material respects, the consolidated financial position of theGroup as of December 31, 2005 and 2004, and the consolidated results of operations and cash flows for eachof the years then ended, in accordance with International Financial Reporting Standards.

Tel-Aviv, Israel KOST FORER GABBAY & KASIERERMarch 27, 2006 A Member of Ernst & Young Global


Consolidated Balance Sheets


December 31,

2005 2004

Note U.S. dollars in thousandsASSETS

CURRENT ASSETSCash and cash equivalents 3 7,692 2,004Marketable securities 4 307Trade receivables 4 14,467 11,055Other accounts receivable 5 1,250 1,078Inventories 6 8,210 8,483

Total current assets 31,623 22,927

NON-CURRENT ASSETSLoan to a jointly controlled entity – 256Loans to a related party 8 411 400Severance pay fund 16 558 538Long-term receivables 9 94 228Fixed assets, net 10 2,613 2,544Other assets, net 11 2,618 2,872Deferred taxes d24d 1,128 696

Total non-current assets 7,422 7,534

TOTAL ASSETS 39,045 30,461

LIABILITIES AND EQUITYCURRENT LIABILITIES

Credit from banks and others 12 6,348 5,866Trade payables 13 5,833 6,002Income taxes payable 870 1,509Other accounts payable 14 2,579 2,945

Total current liabilities 15,630 16,322

NON-CURRENT LIABILITIESLiabilities to banks and others 15 3,601 4,319Accrued severance pay 16 519 571Deferred taxes 24d 629 712

Total non-current liabilities 4,749 5,602

TOTAL LIABILITIES 20,379 21,924

CHARGES, CONTINGENT LIABILITIESAND COMMITMENTS 17

EQUITYShare capital 18 2,291 1,497Capital reserves 12,797 1,020Perpetual debenture - 2,871Foreign currency translation reserve 123 39Retained earnings 3,190 2,872

18,401 8,299Minority interest 265 238

TOTAL EQUITY 18,666 8,537

TOTAL LIABILITIES AND EQUITY 39,045 30,461

The accompanying notes are an integral part of the consolidated financial statements.

Date of approval March 27, 2006 Avi Hefetz Yossef Katz Itamar EderChairman of the Board of Directors CEO and Director CFO and Director


Consolidated Statements of Income


Year endedDecember 31,

2005 2004

U.S. dollars in thousandsNote (except per share data)

Revenues from sales 19 42,406 36,934Cost of sales 20 21,139 18,376

Gross profit 21,267 18,558

Selling and marketing expenses 21 10,571 9,774General and administrative expenses 22 5,471 5,562Amortization of other assets 11 340 411

16,382 15,747

Operating income 4,885 2,811Financial expenses, net 23 822 249Other income (expenses), net (1) 23

Income before taxes on income 4,062 2,585Taxes on income e24e 1,151 864

Net income 2,911 1,721

Attributable to:Equity holders of the parent 2,943 1,671Minority interest (32) 50

2,911 1,721

Basic and diluted earnings per share (in U.S. dollars) 25 0.20 0.11





Consolidated Statements of Changes in Equity

Consolidated statements of changes in equity

Attributable to equity holders of the parent

Foreign TotalCurrency recognised

Share Capital Perpetual translation Retained Minority Total incomecapital reserves debenture*) reserve earnings Total interest equity (expense)**)

US dollars in thousands

Balance at January 1, 1,497 1,020 2,824 41 1,734 7,116 188 7,304 -2004

Interest on perpetual - - - - (113) (113) - (113) -debenture*)Exchange differences - - 47 - (47) - - - -on perpetual debentureCurrency translation - - - (2) - (2) - (2) (2)differencesDividend - - - - (373) (373) - (373) -Net income - - - - 1,671 1,671 50 1,721 1,671

Balance at 1,497 1,020 2,871 39 2,872 8,299 238 8,537 1,669December 31, 2004

Net proceeds from 545 8,730 - - - 9,275 - 9,275 -issuance of sharesin IPODeferred taxes in - 621 - - - 621 - 621 -respect of IPO costsInterest on perpetual - - - - (81) (81) - (81) -debenture*)Exchange differences - - (196) - 196 - - - -on perpetual debentureConversion of - 2,675 (2,675) - - - - - -perpetual debenture*)Currency translation - - - 84 - 84 - 84 84differencesDividend - - - - (2,804) (2,804) - (2,804) -Dividend to minority - - - - - - (36) (36) -Changes in minority - - - - - - 95 95 -interest upon thesale of investmentin a companyIssuance of bonus 249 (249) - - - - - - -sharesShare-based payment - - - - 64 64 - 64 -Net income - - - - 2,943 2,943 (32) 2,911 2,943

Balance at 2,291 12,797 - 123 3,190 18,401 265 18,666 3,027December 31, 2005

*) See Note 18c.**) Attributable to equity holders of the parent.


Consolidated Statements of Cash Flows



2005 2004U.S. dollars in thousands

Cash flows from operating activities:

Net income 2,911 1,721Adjustments to reconcile net income to net cash provided by

(used in) operating activities (a) (3,220) 92

Net cash provided by (used in) operating activities (309) 1,813

Cash flows from investing activities:

Purchase of fixed assets (1,041) (1,151)Purchase of other assets (44) –Investment grants received 113 128Disposal of (investment in) marketable securities 300 (261)Acquisition of company included according to the proportionate

consolidation method (b) (517) –Increase in cash resulting from transition to full consolidation of a

company previously included according to the proportionateconsolidation method (d) 8 –

Proceeds from sale of fixed assets 41 46Proceeds from the sale of a subsidiary (c) 50 –Long-term loan granted to a related party and others (284) (154)Collection of long-term loan granted to a related party 268 57

Net cash used in investing activities (1,106) (1,335)

Cash flows from financing activities:

Net proceeds from issuance of shares in IPO 9,275 –Dividends paid to the minority interest (36) –Dividends paid to equity holders of the parent (2,804) (373)Interest on perpetual debenture (135) (109)Receipt of long-term loans and other liabilities 1,964 2,911Repayment of long-term loans (1,928) (1,662)Receipt of loans from others – 233Short-term credit from banks, net 840 (1,280)

Net cash provided by (used in) financing activities 7,176 (280)

Effect of exchange rate changes on cash and cash equivalents (73) 19

Increase in cash and cash equivalents 5,688 217Cash and cash equivalents at the beginning of the year 2,004 1,787

Cash and cash equivalents at the end of the year 7,692 2,004

Interest paid 823 490

Income taxes paid 1,643 530




2005 2004U.S. dollars in thousands

(a) Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Income and expenses not involving operating cash flows:

Depreciation and amortization 980 902Share-based payment 64 –Deferred taxes, net 107 (206)Accrued severance pay, net (72) (83)Exchange rate differences on liabilities to banks and other long-term liabilities 61 235Loss on sale of fixed assets and others 66 15Exchange rate differences on loans to related party and others 22 (19)

1,228 844

Changes in operating assets and liabilities:

Increase in trade receivables (3,068) (1,099)Increase in other accounts receivable (59) (77)Decrease (increase) in inventories 167 (2,860)Increase (decrease) in trade payables (392) 1,707)Increase (decrease) in other accounts payable (1,096) 1,577

(4,448) (752)

(3,220) 92

(b) Acquisition of company included according to the proportionate consolidationmethod

Working capital (excluding cash and cash equivalents) (321)Other assets (42)Fixed assets, net (229)Long-term receivables 75

Cash outflow (517)

(c) Proceeds from the sale of a subsidiary

Working capital (excluding cash and cash equivalents) (476)Fixed assets, net 526

Cash inflow 50

(d) Increase in cash resulting from transition to full consolidation of a company previouslyincluded according to the proportionate consolidation method

Working capital deficiency (excluding cash and cash equivalents) 121Fixed assets, net (113)

Cash flow 8




Notes to the Financial Statements


1. General

a. The Company was incorporated in Israel in June 1997. On December 5, 2005, the Company’s shares were admitted to trading onthe AIM, a market operated by the London Stock Exchange. Concurrently, the Company completed an initial public offering (IPO) ofits shares – see Note 18b. The principal shareholders of the Company are Kibbutz Amiad (“the Kibbutz”), through a companycontrolled by the Kibbutz, A.M.S.I. Investments Ltd. (“AMSI”) which owns 54.1% of the Company’s outstanding shares, and GaonAgro Industries Ltd. (“Gaon Agro”) which owns 13% of the Company’s outstanding shares.

b. The Group is a producer and global supplier of water filters and filtration systems used in the industrial & municipal market and theirrigation market.

c. On June 30, 1998, the Company entered into an agreement with the Kibbutz and with the limited partnership, Amiad FiltrationSystems (“the partnership”) in which the Kibbutz is the general partner (“the purchase agreement”) whereby all of the partnership‘sbusiness activities, assets, including goodwill and intellectual property, but excluding property rights (lease rights and/or ownershipto land and buildings) were transferred to the Company in effect as from January 1, 1998 (“the transfer date”). All of thepartnership‘s liabilities were also transferred to the Company as of the transfer date, except for certain guarantees and charges thatremained in the partnership.

The transfer of the above assets and liabilities was carried out at no consideration in accordance with the regulations of the IsraeliEconomy Settlements Regulations (Legislation Amendments) Tax Reliefs Relating to Assistance Arrangements with Farmers, 1990.According to these regulations, for income tax purposes, the cost of transferred assets, the respective accumulated depreciationand their purchase date shall be as in the transferring partnership.

d. Definitions:In these financial statements:

The Company – Amiad Filtration Systems Ltd.

The Group – The Company and its subsidiaries.

Subsidiaries – Companies over which the Company exercises control and whose accounts are consolidated withthose of the Company.

Jointly controlled entities – Companies owned by various entities that has a contractual arrangement for joint control, andwhose accounts are consolidated with those of the Company using the proportionateconsolidation method.

NIS – New Israeli shekels

2. Significant Accounting Policies

a. Basis of preparation: The consolidated financial statements of the Group have been prepared in accordance with International Financial ReportingStandards (“IFRS”).

b. Accounting policies: The accounting policies adopted by the Group for all periods presented are in compliance with the IFRSs that are effective atDecember 31, 2005.

c. Financial statements in U.S. dollars – the functional and presentation currency: The functional and presentation currency of the Company and its subsidiaries (except in Australia and China – see below), is theU.S. dollar. Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date of thetransaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate ofexchange ruling at the balance sheet date. All differences are taken to the consolidated statement of income.


2. Significant Accounting Policies (continued)

The functional currency of the subsidiary in Australia is the Australian dollar (“AUD”). The functional currency of the jointly controlledentity in China is the Chinese RMB. As at the reporting date, the assets and liabilities of these companies are translated into U.S.dollars at the rate of exchange prevailing at the balance sheet date, and income and expenses are translated at weighted averageexchange rates. The exchange rate differences arising on the translation are taken directly to a separate component of equity(“foreign currency translation reserve”).

d. Principles of consolidation: Subsidiaries are consolidated from the date on which control is transferred to the Company and cease to be consolidated from thedate on which control is transferred out of the Company.

Intercompany balances and transactions, including profits from inter-company transactions not yet realized outside the Group, havebeen eliminated upon consolidation.

The financial statements of the subsidiaries are prepared for the same reporting periods as the parent company, using consistentaccounting policies.

The financial statements were consolidated with those of the following subsidiaries:

– Filtration Ltd., wholly-owned and controlled by the Company, is registered in Israel and engaged in the manufacture andmarketing of automatic water filters (“Filtration”).

– Amiad U.S.A. Inc., an 82%-owned subsidiary, is registered in the State of California, U.S.A. and is engaged in the sale of theCompany's products and other irrigation products in the U.S., Canada and Mexico.

– Filtration and Control Systems Pte Ltd., wholly-owned and controlled by the Company, is registered in Singapore and isengaged in the marketing and distribution of the Company‘s products in East Asia, except China.

– Amiad France S.A.R.L., a 66%-owned subsidiary, is registered in France and engaged in the marketing and distribution of theCompany’s products in France.

– Amiad Filtration Solutions Ltd., wholly-owned and controlled by the Company, is registered in Israel from January 2005 andoperates a sales office in Germany.

– Amiad Australia Pty Ltd. (“Amiad Australia”) – wholly-owned and controlled by the Company commencing from September 1,2005 (see Note 7a). From October 1, 2003 until August 31, 2005, Amiad Australia‘s financial statements were consolidated bythe proportionate consolidation method. The Company is engaged in the marketing and distribution of filtration and irrigationproducts to the agricultural, industrial and municipal markets in the Australian region.

In June 2004, Amiad Australia and unrelated parties active in the Australian irrigation market established a jointly controlledcompany (50%), Plastro Asia Pacific Pty Ltd. (“PAP”), which is engaged in the manufacture and marketing of agriculturalirrigation products.

The agreement between Amiad Australia and the other shareholders provided Amiad Australia with potential voting rights thatare currently exercisable. Based on an assessment of these potential voting rights, together with its existing voting power,Amiad had determined in accordance with IAS 27, “Consolidated and Separate Financial Statements,” that it controlled PAPand accordingly the accounts of PAP were consolidated in these financial statements.

e. Jointly controlled entity: The jointly controlled entity is included in the consolidated financial statements using the proportionate consolidation method. Underthis method, the Company combines its share of the assets, liabilities, revenues and expenses of the jointly controlled entity withsimilar line items in the consolidated financial statements.

f. Cash equivalents: The Company considers all highly liquid investments purchased with original maturities of three months or less to be cashequivalents.





g. Short-term marketable securities: Marketable securities held for trading are stated at quoted market prices at balance sheet date. Changes in their value are includedin financial expenses, net in the statement of income.

h. Trade receivables: Trade receivables are recognized and carried at original invoice amount, less an allowance for doubtful accounts. The allowance fordoubtful accounts is principally determined in respect of specific debts whose collection, in the opinion of the Company‘smanagement, is doubtful.

i. Inventories: Inventories are stated at the lower of cost and net realizable value. Cost is determined as follows:

Raw materials, auxiliary materials and packing materials – using the “first-in, first-out” method.

Work in progress – on the basis of average cost including materials, labour and other direct and indirect manufacturing costs.

Finished products – on the basis of average cost including materials, labour and other direct and indirect manufacturing costs.

Purchased products – using the “first-in, first-out” method.

j. Fixed assets: Fixed assets are stated at cost net of accumulated depreciation and investment grants. Expenditures for improvements andupgrading are added to cost. The Company evaluates in each reporting period the necessity to record an impairment loss (see l.below).

Depreciation is calculated by the straight-line method over the estimated useful lives, as follows:

%

Machinery and equipment 6 – 20 (mainly 10%)

Office furniture and equipment, computers and peripheral equipment 7 – 33 (mainly 33%)

Motor vehicles 15 – 20 (mainly 15%)

Leasehold improvements Over the term of the lease

k. Other assets: Other assets comprise know-how, customer relationships, non-competition agreements and goodwill. Most of these assets wereacquired in connection with the acquisition of Filtration Ltd. in a business combination in 2000. The fair value of these assets (otherthan goodwill) was based on an independent valuation. Following initial recognition, the cost model is applied to these assets.

The periods of amortization of these assets are as follows:

Know-how – amortized over a period of 10 years, using the straight-line method.

Customer relationships – amortized over the estimated lives of the customer relationship (10 years), taking into account the scopeof sales to acquired customers.

Non-competition agreements – were amortized over a period of 2-4 years, using the straight-line method.

Goodwill on acquisition is measured at cost being the excess of the cost of the business combination over the fair value of netassets acquired. Goodwill is not amortized commencing from January 1, 2002, and is measured at cost less any accumulatedimpairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicatethat the carrying value may be impaired.



l. Recoverable amount of non-current assets: The carrying values of non-current assets are reviewed for impairment when events or changes in circumstances indicate thecarrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimatedrecoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount isthe higher of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to theirpresent value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determinedfor the cash-generating unit to which the asset belongs.

m. Share-based payment transactions: Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions,whereby employees render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is measured by reference to the fair value at the grant date using an option-pricing model(see Note 18d).

The cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which theperformance conditions are fulfilled, ending on the date the options vest. The cumulative expense, recognized at each reporting dateuntil the vesting date, reflects the extent to which the vesting period has expired and the Company’s best estimate of the numberof equity instruments that will ultimately vest. No expense is recognized for amounts that do not ultimately vest.

n. Deferred income taxes: The Company provides for deferred income taxes using the liability method of accounting. Under the liability method, deferred taxesare recognized for temporary differences between the tax basis of assets and liabilities and their carrying amounts for financialreporting purposes. Deferred taxes are measured based on enacted tax rates that will be in effect in the year in which thedifferences are expected to reverse. Deferred tax assets in respect of carryforward losses and other temporary deductibledifferences are recognized to the extent that it is probable that they will be utilized.

Taxes that would apply in the event of the distribution of earnings by investees as dividends have not been taken into account incomputing deferred taxes, when the distribution of dividend does not involve an additional tax liability or when the Company is ableto control the distribution of dividends that will cause an additional tax liability.

o. Revenue recognition: Revenues from product sales are recognized upon delivery to the customer and, in certain circumstances, after customer acceptance.

p. Exchange rates and linkage basis: Monetary assets and liabilities, denominated in currencies other then U.S. dollar, are translated using exchange rates in effect atbalance sheet date.

Monetary assets and liabilities linked to the Israeli Consumer Price Index (“CPI”) are presented according to the relevant index foreach linked asset or liability.

Exchange differences are recorded in the statements of income.

Below are data about the exchange rates of certain currencies in relation to the U.S. dollar and data regarding the CPI:

As of 1 Euro 1 AUD 1 NIS CPI

U.S. dollars

December 31, 2005 0.845 1.363 0.217 110.00 December 31, 2004 0.733 1.283 0.232 107.44 December 31, 2003 0.791 1.330 0.228 106.16

q. Basic and diluted earnings per share: Basic earnings per share are computed by dividing net income attributable to ordinary equity holders of the parent (after deductinginterest on perpetual debenture) by the weighted average number of Ordinary shares outstanding during the period, adjustedretrospectively for a share split and issuance of bonus shares. Diluted earnings per share are computed based on the above plusthe effect of dilutive securities (options).





r. Fair value of financial instruments: The carrying amounts of cash and cash equivalents, trade receivables and other accounts receivable, credit from banks, trade andother accounts payables approximate their fair value due to the short-term maturity of such instruments. The fair value of long-termliabilities for banks and others also approximates carrying value, as these liabilities bear interest at variable rates.

s. Government grants: Royalty-bearing grants from the Government of Israel for funding approved research projects and for participation in exportmarketing expenses are recognised at the time the Company is entitled to such grants. Such grants are recorded as a liability whenrepayment is probable.

Non-royalty-bearing grants from the Government of Israel for purchases of fixed assets, in accordance with the Law for theEncouragement of Capital Investments, 1959 were deducted from the respective purchased assets.

3. Cash and cash equivalents

December 31,

2005 2004

U.S. dollars in thousands

U.S. dollars 2,502 1,825Pound sterling 3,642 –Euro 578 –Chinese RMB 571 –Other 399 179

7,692 2,004

4. Trade receivables

December 31,

2005 2004


Open accounts 14,368 10,796Checks receivable 471 531

14,839 11,327Less – allowance for doubtful accounts (372) (272)

14,467 11,055

5. Other accounts receivable

December 31,

2005 2004


Government authorities 243 435Prepaid expenses 133 131Advances to suppliers 158 115Investment grants receivable 82 82Current maturities of long-term loans to related party (see Note 8) 39 59Employees 53 45Other 542 211

1,250 1,078


6. Inventories

Raw materials, auxiliary materials and packing materials 2,264 2,480Work in progress 2,110 2,578Finished products 2,958 2,731Purchased products 878 694

8,210 8,483

7. Interest in jointly controlled entities

a. The Company had a 50% interest in Amiad Australia, from October 1, 2003 until August 31, 2005. On September 1, 2005, theCompany signed an agreement with Plastro Irrigation Ltd. (“Plastro”), which held until the said date 50% of the shares of AmiadAustralia. According to the agreement, Amiad Australia transferred to Plastro all of its shares in PAP and, in consideration, Plastrotransferred to the Company all of its shares in Amiad Australia. After implementation of the agreement, the Company owns 100%of the shares of Amiad Australia. The fair value of the shares received in Amiad Australia approximated the carrying value of thePAP shares that were transferred.

In addition, the parties agreed that the securities and guarantees that the Company extended to PAP, and the securities andguarantees that Plastro extended to Amiad Australia will be cancelled by no later than February 2006. As of the date the financialstatements were approved, the securities and guarantees of both parties have not yet been cancelled. Each of the parties agreedto indemnify the other party in respect of claims that are based on the holdings of the other party in the shares that were sold inthe framework of the transaction.

The share of the assets, liabilities, revenues and expenses of Amiad Australia, which were included in the consolidated financialstatements under the proportionate consolidation method, are as follows:

2005(1) 2004


Current assets – 2,913Non-current assets – 685

– 3,598

Current liabilities – (2,815)Non-current liabilities – (780)

– (3,595)

Revenues 3,203 4,879Cost of revenues (2,002) (2,599)General and administrative expenses (1,716) (2,418)Financial expenses, net (38) (37)Other expenses, net (6) (105)

Loss before taxes on income (559) (280)Taxes on income – deferred taxes 93 85

Net loss (466) (195)

(1) Revenues and expenses are for the eight months ended August 31, 2005. Subsequent to that date, the accounts of Amiad Australia are fully consolidated.




7. Interest in jointly controlled entities (continued)

b. In July 2005, the Company, through its subsidiary in Singapore, purchased a 50% interest in Taixing Yaixing Envirotec Co. Ltd.(“Taixing”), a company registered in China, for a total consideration of $1.4 million.

The share of the assets, liabilities, revenues and expenses of Taixing, which are included in the consolidated financial statementsunder the proportionate consolidation method, are as follows:

2005

U.S. dollarsin thousands

Current assets 2,299Non-current assets 286

2,585

Current liabilities 857

857

Revenues 1,104Cost of revenues (654)General and administrative expenses (151)Financial income, net 6Other income, net 1

Income before taxes on income 306Taxes on income 84

Net income 222

8. Loans to a related party

December 31,

2005 2004


Balance 450 459Less – current maturities 39 59

411 400

The loans to Amiad Filtration Systems -Limited Partnership (“the partnership”), in which the Kibbutz is the general partner, are linkedto the Israeli CPI and bear annual interest at the rate of 5.5%. The maturity dates of the loans are between 2006 and 2008.

9. Long-term receivables

December 31,

2005 2004


Loan to foreign customer (1) – 75Customers in Israel (2) 94 49Prepaid expenses – 42Loans to others – 62

94 228

(1) A loan of $75 thousand given by the Company in September 2000 to Taixing, see Note 7(b). (2) The receivables are due over a period ending in 2008.


10. Fixed Assets

Computers OfficeMachinery and furniture

and peripheral and Motor Leaseholdequipment equipment equipment vehicles improvements Total


Cost: (1)

Balance as of January 1, 2004 9,141 873 1,875 384 114 12,387Additions during the year 613 91 115 227 23 1,069Disposals during the year (104) – – (26) – (130)

Balance as of December 31,2004 9,650 964 1,990 585 137 13,326

Additions during the year 436 80 82 325 4 927Additions from new subsidiaries 259 34 20 119 211 643Disposals during the year (3) (3) (5) (156) – (168)Disposal of subsidiary (443) (98) (35) – (39) (615)


Depreciation:Balance as of January 1, 2004 7,819 830 1,387 225 98 10,359Additions during the year 285 34 118 49 5 491Disposals during the year (54) – – (14) – (68)


Additions during the year 345 47 119 63 13 587Additions from new subsidiaries 186 17 17 51 30 301Disposals during the year (2) (3) (5) (72) – (82)Disposal of subsidiary (40) (25) (16) – (8) (89)


Depreciated cost as ofDecember 31, 2005 1,360 77 432 569 175 2,613

Depreciated cost as ofDecember 31, 2004 1,600 100 485 325 34 2,544

(1) Net of investment grants amounting to $3,705 thousand (2004 – $3,592 thousand) which the Company and a subsidiary receivedby virtue of the Law for the Encouragement of Capital Investments, 1959 – see Note 17b.

(2) As for charges, see Note 17a.




11. Other assets, net

Customer Non-Know-how relationships competition Goodwill Total


Amortised cost as of January 1, 2004 1,933 622 43 685 3,283Amortization during the year (254) (114) (43) – (411)

Amortized cost as of December 31, 2004 1,679 508 – 685 2,872Additions during the year 86 – – – 86Amortization during the year (254) (86) – – (340)

Amortized cost as of December 31, 2005 1,511 422 – 685 2,618

12. Short-term credit from banks and others

a. Composition:Weighted

average

interest December 31,

*)rate*) 2005 2004

% U.S. dollars in thousands

In U.S. dollars 6.4 3,977 2,887Denominated in NIS 5.1 446 1,043Denominated in Australian dollars 7.4 61 275

4,484 4,205Current maturities of long-term loans from banks and others 1,864 1,661

6,348 5,866

*) The credit bears interest at variable rates. The interest rates are as of December 31, 2005.

b. As for charges, see Note 17a.

13. Trade payables

December 31,

2005 2004


Open accounts 5,592 5,848Notes payable 241 154

5,833 6,002


14. Other accounts payable

December 31,

2005 2004


Liabilities to employees and other liabilities for wages and salaries*) 930 852Commissions and other accrued expenses 474 507Provision for settlement of claims 118 411Liabilities to related parties 432 589Customer advances 52 149Provision for Government grants**) 300 300Other 273 137

2,579 2,945

393 359

*) Including accrued vacation pay**) See Note 17b

15. Liabilities to banks and others

a. Composition:Weighted

average

interest December 31,

*)rate*) 2005 2004

% U.S. dollars in thousands

In U.S. dollars 6.3 4,436 4,727Denominated in Euro 4.1 420 634Denominated in Australian dollars 6.4 58 558Denominated in NIS, linked to the Israeli CPI 6.2 551 61

5,465 5,980Less – current maturities 1,864 1,661

3,601 4,319

*) The loans bear interest at variable rates. The interest rates are as of December 31, 2005.

b. Maturities subsequent to the balance sheet date:December 31,

2005 2004


First year – current maturities 1,864 1,661Second year 1,665 1,328Third year 1,172 1,230Fourth year 598 881Fifth year and thereafter 166 880

5,465 5,980




15. Liabilities to banks and others (continued)

c. Financial covenants: Pursuant to agreements with banks, in respect of loans the balance of which as of December 31, 2005 amounted to approximately$6,554 thousand, the Company undertook to meet certain financial covenants, relating principally to minimum shareholders’ equity,including shareholders loans, of not less than $6.4 million. Further, if the Company incurs a loss from operations from the beginningof the year up to the end of a certain quarter or if the amount of its equity is below $6.4 million, the Company shall defer the paymentto related parties (the Kibbutz and Gaon Agro) in respect of that quarter. As of December 31, 2005, the Company is complying withthe financial covenants.

The Israeli subsidiary, Filtration Ltd. received loans from banks, whose balance as of December 31, 2005, amounted toapproximately $1,999 thousand. According to the loan agreements, Filtration undertook to maintain certain financial covenantsrelating to a minimum shareholders’ equity of $930 thousand, linked to the Israeli CPI, and to receive the banks’ consent for effectingany procedures toward a merger. As of December 31, 2005, Filtration is complying with the financial covenants.

d. As for charges, see Note 17a.

16. Accrued severance pay, net

a. CompositionDecember 31,

2005 2004


Accrued severance pay 519 571Less – severance pay fund 558 538

Total net liability (asset) (39) 33

b. The liabilities for severance pay shown in the financial statements reflect the Group’s entire liabilities to supplement compensation tohired employees in Israel while maintaining the continuity of their rights from the date of commencement of work at the partnership’splant (see Note 1c), in excess of amounts deposited in their respect in insurance companies and pension funds. The liability wascomputed in accordance with the Severance Pay Law and labour agreements on the basis of the employees’ most recent salaries. Theamounts accumulated with insurance companies and pension funds are not under the control and management of the Company and,therefore, those amounts and the respective liabilities for which they have been deposited are not reflected in the balance sheet.

Amounts deposited with the severance pay fund include accrued profits and may be withdrawn only after fulfillment of theobligations under the labour agreements and Severance Pay Law.

c. There are no liabilities for severance pay obligations with respect to members of Kibbutz Amiad or with respect to candidates forkibbutz membership employed at the Company’s plant. This is based on a legal opinion which the Company has received accordingto which an employee-employer relationship does not exist between the Company and members of Kibbutz Amiad or candidatesfor membership employed at the Company’s plant.


17. Charges, contingent liabilities and commitments

a. Charges: 1. As collateral for liabilities to banks, a fixed charge was recorded on all of the machinery, equipment, share capital and goodwill

of the Group’s companies and a floating charge was recorded on all of the Group’s assets.

The balances of secured liabilities to banks as of December 31, 2005 are as follows:


Current liabilities 3,119Long-term liabilities (including current maturities) 5,371Performance guarantees 5,346

8,536

2 The subsidiary in the U.S. has credit from banks in the amount of $1.3 million. This credit is secured by a first priority lien onaccount receivables and inventories.

3 As for charges with respect to grants received under the Law for the Encouragement of Capital Investments, 1959, see b(1) below.

b. Contingent liabilities: 1. According to the purchase agreement (see Note 1c), the Company agreed to indemnify the partnership and the Kibbutz for any

claim filed against them in connection with the transferred activity up to the date of transfer. This liability does not pertain totax liabilities that may apply to the Kibbutz in respect of the partnership’s operation, including the transfer of its assets to theCompany and in respect of payments claimed from the Kibbutz due to claims as to the existence of employee-employerrelationships between the Company and the Kibbutz members employed by the Company.

Further, the Company has undertaken to assume all of the liabilities in connection with investment grants that the partnershipreceived from the State of Israel up to the date of transfer under the Law for the Encouragement of Capital Investments, 1959.

The receipt of grants by the partnership, as above, and the receipt of other grants by the Company, is conditional upon thefulfilment of the conditions of the letters of approval. In the event of failure to comply with the conditions of the approval, theamount of the grants may be required to be refunded, including interest and linkage differences from the date of receipt. Ascollateral for the fulfillment of the conditions relating to the receipt of investment grants, the Company recorded floating chargeson all of its assets in favour of the State of Israel. The Company's management believes that as of the date of the approval ofthe financial statements, the Company is meeting the conditions of the letters of approval.

2 The Group is contingently liable in respect of performance guarantees provided by banks to customers in the amount of $46thousand at December 31, 2005.

3 The Company and a subsidiary participate in programs sponsored by the Israeli Government for the support of research anddevelopment activities. The Company and its subsidiary obtained grants from the Office of the Chief Scientist in the IsraeliMinistry of Industry, Trade and Labor (“the OCS”).

The Company and the subsidiary are obligated to pay royalties to the OCS amounting to 2% of the sales of the products andother related revenues generated from such projects, up to an amount equal to 100% of grants received, linked to the exchangerate of the U.S. dollar.

The Israeli Government awarded a subsidiary grants for participation in foreign marketing expenses, for which the subsidiaryis obligated to pay royalties at the rate of 3% of the increase in export sales in relation to the base year, up to the amount ofthe grants received, linked to the U.S. dollar.

As of December 31, 2005, the Company and the subsidiary had recorded a liability for grants received in the amount of $300thousand. The Company and the subsidiary have an outstanding contingent obligation to pay royalties in the amount of $197thousand, in respect of projects for which there is a reasonable assurance that part or all of the grants received will not berepaid. The Company and the subsidiary will record this obligation as a liability if facts and circumstances would require theCompany and the subsidiary to revise upwards their estimates of future sales.

4. On March 3, 2006, subsequent to the balance sheet date, a claim was filed against the subsidiary in Australia, Amiad AustraliaPty Ltd. for damages allegedly caused by, among others, breach of agreements in prior years. The claim does not specifymandatory damages. At this early stage, management and on its legal advisors cannot presently predict the outcome of the claim.




17. Charges, contingent liabilities and commitments (continued)

c. Commitments: 1 The Group has lease agreements in respect of motor vehicles which terminate between 2006 and 2007. The estimated annual

lease payments are $178 thousand.

2. According to a lease agreement between the Company and the Kibbutz, the Company pays the Kibbutz $32.5 thousand permonth for the rental of its offices and plant. The rent is reviewed every three years (see also Note 26c).

Certain subsidiaries have lease contracts for various periods with estimated monthly lease payments of $27.5 thousand.

3 As for other commitments with Kibbutz Amiad, see Note 26.

18. Shareholders’ equity

a. Composition of share capital:

December 31, 2005 December 31, 2004

Issued and Issued andAuthorized outstanding Authorized outstanding

Number of shares Number of shares

Ordinary shares of NIS 1 par value each – – 10,000,000 5,743,527

Ordinary shares of NIS 0.5 par value each 20,000,000 18,872,723 – –

b. On November 27, 2005, the Company affected a split of the Company’s share capital such that each Ordinary Share 1 was splitinto 2 Ordinary shares of NIS 0.5 par value each. In addition, the Company approved a distribution of 2,339,704 Ordinary shares asbonus shares to any party that was a shareholder in the Company on November 24, 2005. Subsequent to the split and bonus shares,immediately before the IPO (see below), the number of outstanding shares was 13,826,758.

On December 5, 2005, the Company issued 5,045,965 Ordinary shares in an IPO. Concurrently, the Company’s Ordinary shares wereadmitted to trading on the AIM in London. The net proceeds from the issuance of the shares (after costs of $2,023 thousand) was$9,275 thousand.

c. Perpetual debenture: The perpetual debenture, which was denominated in NIS in the amount of NIS 12,370 thousand bore annual interest at the rate of4%, payable on a quarterly basis. The debenture was converted into capital reserves of the Company on December 5, 2005 with noissuance of Ordinary shares (see also Note 26c).

d. Share options: On August 12, 2005, the Company granted to three senior employees, the chairman of the board of Directors and to Kibbutz Amiadoptions to purchase 386,682, 154,674 and 77,336 Ordinary Shares, respectively (as adjusted for the share split and bonus shares).The options to the senior employees were granted in the framework of the Company’s option plan that was submitted to the IsraeliTax Authorities, in accordance with the provisions of Section 102 to the Israeli Income Tax Ordinance and the remaining optionswere granted under the provisions of section 3(i) of the Income Tax Ordinance. The options vest over a period of four years (exceptin the case of the CEO where the period is two years) and have an exercise price of $ 1.53 per share. The options will be held duringthe vesting period by a trustee and will be released in accordance with the terms of the option plan. Unexercised options expire 10years after date of grant. No options are exercisable as of December 31, 2005.

The weighted average fair value of the options as at the grant date is was $0.49 per share, and was estimated using a binomialoption pricing model based on the following data and assumptions: Share price – $1.53; exercise price – $1.53, expected validity– 38.4%; risk-free interest rate –4.4%, expected dividends – 0% and expected average life of options 4 years. The expenserecognized in the year ended December 31, 2005 is $64 thousand.


18. Shareholders’ equity (continued)

e. Dividends: The Company’s board of Directors has adopted a dividend policy, pursuant to which the Company, subject to future performanceand funding requirements, will distribute annual dividends of up to 50% of the net income in the calendar year.

On August 31, November 9 and November 23, 2005, the Company distributed dividends to its shareholders in the amounts ofNIS 2,150 thousand, NIS 10 million and NIS 760 thousand, respectively (total $2,804 thousand).

On March 27, 2006, the Company’s Board of Directors resolved to distribute dividends to its shareholders in the amount of $1,455thousand.

19. Revenues from sales

Sales by customer location:


2005 2004


North America 10,517 9,775Europe 11,090 8,279Australia 6,281 5,153East Asia 6,889 5,336Israel 3,459 4,604South America 2,478 2,701Africa 1,692 1,086

42,406 36,934

20. Cost of sales

Materials consumed 7,793 7,618Subcontractors 3,280 3,832Salaries and related benfits 3,158 3,352Manpower services provided by Kibbutz Amiad 1,151 1,114Depreciation and amortization 303 300Rent and maintenance 470 622Other manufacturing expenses 1,319 1,301

Total manufacturing expenses 17,474 18,139

Decrease (increase) in inventories of work in progress 433 (929)Decrease (increase) in inventories of finished products 19 (1,284)

Total changes in inventories 452 (2,213)

Cost of purchased products 3,213 2,450

Total 21,139 18,376




21. Selling and marketing expenses

Sales by customer location:


2005 2004


Salaries and related benefits 3,505 2,621Distribution, commissions and maintenance of sales offices 1,872 2,122Delivery, packing, release, and insurance 1,263 1,207Advertising 1,222 1,008Foreign travel 864 867Motor vehicle maintenance 395 470Manpower services by Kibbutz Amiad 412 419Other 1,038 1,060

10,571 9,774

22. General and administrative expenses

Salaries and related benefits 2,486 2,494Manpower services provided by Kibbutz Amiad 203 187Management fees to Kibbutz Amiad 346 427Professional fees 294 436Office expenses 257 261Doubtful accounts and bad debts 153 119Telephone and communication 195 224Depreciation and amortization 143 226Rent 261 282Other 1,133 906

5,471 5,562

23. Financial expenses, net

Interest expense 722 490Other (mostly exchange rate differences) 100 (241)

822 249

24. Taxes on income

a. Tax laws applicable to the Group companies:1. Companies in Israel:

Income Tax (Inflationary Adjustments) Law, 1985:

According to the law, the results for tax purposes are measured based on the changes in the Israeli CPI. The Company is taxedunder this law.

The Law for the Encouragement of Capital Investments, 1959:

In the context of the purchase agreement (as discussed in Note 1c), the partnership transferred to the Company all of the rightsand obligations relating to two investment plans of the partnership which have been granted status as an “approved enterprise”under the Law for the Encouragement of Capital Investments, 1959 and which are entitled to grants and tax benefits. By virtueof this status, the Company is entitled to tax reductions on taxable income derived from the approved enterprises.


24. Taxes on income (continued)

The main benefit which relates to income derived from the approved enterprises is a tax exemption during the first two yearsand a reduced tax rate of 25%, instead of the statutory tax rate, during the following five years. The benefit period begins in theyear in which taxable income is first earned, and is limited to 12 years from the year that the approved enterprise beganoperations, or 14 years from the year in which the approval was granted, whichever is earlier. The Company is also eligible foraccelerated deprecation on assets used by the approved enterprises.

In the event of distributions of dividends out of income deriving from an approved enterprise, which was tax exempt, theCompany shall be liable to pay tax at the rate of 25% on the distributed earnings. The Company recorded a liability in 2005 inthe amount of $ 106 thousand due to a dividend distribution from tax exempt income.

Dividend distributions derived from an approved enterprise are subject to 15% withholding tax.

The benefit period for the first program ended in 2002. The benefit period for the second program will end in 2009. The Companyhas an additional approved program for which it commenced to make its investments.

The above benefits are conditional upon the fulfillment of the conditions stipulated by the law, regulations published thereunderand the letters of approval for the specific investments in the approved enterprises. In the event of failure to comply with theseconditions, the benefits may be cancelled and the amounts of the benefits refunded, including interest. Management believesthat the Company is meeting the aforementioned conditions.

The Law for the Encouragement of Industry (Taxation), 1969:

The Company is an “industrial company” as defined by this law. According to this status and by virtue of regulations published,the Company is entitled to a deduction for accelerated depreciation on equipment used in industrial activity, as determined inthe regulations effective under the Inflationary Law.

In addition, the law allows the Company to deduct the IPO costs as an expense for tax purposes over a period of three years.Accordingly, the Company recorded a tax benefit of $216 thousand.

Pursuant to regulations prescribed by force of Amendment 147 to the Income Tax Ordinance, the Group is entitled to deductas a depreciation expense the entire depreciated cost balance of equipment, used in hotels, which was acquired in the periodfrom July 1, 2005 through September 30, 2006 in a manner that equipment that was acquired in 2005 shall be fully depreciatedin 2006 and equipment that was acquired in 2006 shall be fully depreciated in 2007.

Effective July 1, 2005, the Company invested in equipment in the amount of $218 thousand.

2. Foreign subsidiaries:

Subsidiaries which are incorporated outside Israel are taxed according to the tax laws in their countries of residence.

b. Tax rates applicable to the income of the companies: 1. Companies in Israel:

Until December 31, 2003, the regular tax rate applicable to income of companies (which are not entitled to benefits due to an“approved enterprise”, as described above) was 36%. In June 2004, an amendment to the Income Tax Ordinance (No. 140 andTemporary Provision), 2004 and in July 2005, another amendment (No. 147), 2005, were passed by the “Knesset” (Israeliparliament), which determine, among other things, that the corporate tax rate is to be gradually reduced to the following taxrates: 2004 – 35%, 2005 – 34%, 2006 – 31%, 2007 – 29%, 2008 – 27%, 2009 – 26% and 2010 and thereafter – 25%.

2. Foreign subsidiaries:

U.S. 37%Australia 30%Singapore 20%China 27%

c. Tax assessments: The Company received final tax assessments through 2003 and Filtration through 2001. The foreign subsidiaries have not receivedfinal tax assessments since their incorporation.





d. Deferred tax assets (liabilities):December 31,

2005 2004


Depreciable assets (629) (712)Temporary differences in recognition of income and expenses 708 275Unrealized gains on inventories 419 421

498 (16)

1. Deferred tax balances are measured using the enacted tax rates expected to be in effect when the differences are expected toreverse and are presented in the balance sheet as follows:

December 31,

2005 2004


Assets 1,127 696Liabilities (629) 712

498 (16)

2. The change in deferred taxes, net:

Balance at the beginning of the year (16) (222)Amounts recorded in equity 621 –Amounts recorded in the statement of income (107) 206

Balance at the end of the year 498 (16)

e. Taxes on income included in the statements of income:

Current taxes 1,208 1,126Deferred taxes 107 (206)Taxes in respect of dividend distribution (see a.1 above) 106 –Taxes in respect of previous years (270) (56)

1,151 864



f. Effective tax:The difference between the tax on income computed at the statutory tax rate and the tax expense recorded in the statements ofincome is explained as follows:


2005 2004


Income before taxes on income 4,062 2,585

Israeli statutory tax rate 34% 35%

Tas at statutory tax rate 1,381 905

Increase (decrease) in taxes on income due to:

Taxes in respect of dividend distribution 106 –Reduced tax rates on approved enterprises (113) (89)Differences in tax rates and measurement basis for subsidiaries 27 (18)Taxes in respect of previous years (270) (56)Non-deductible expenses and other differences 20 122

1,151 864

25. Earnings per share

As described in Note 18b, in November 2005, the Company effected a split of the Company’s share capital, and distributed bonus sharesto the shareholders.

The earnings per share presented in these financial statements have been adjusted retrospectively to reflect the share split and thebonus shares.


2005 2004


Weighted average number of Ordinary shares outstanding (in thousands)

Number of shares in the beginning of the year 5,743 5,743Effect of split and bonus shares 8,084 8,084Effect of issuance of shares in IPO 420 –

Number of shares used for calculation of earnings per share 14,247 13,827


Net income attributable to equity holders of the parent 2,943 1,671Less – interest on perpetual debenture (81) (113)

2,862 1,558

Basic and diluted earnings per share (in U.S. dollars)*) 0.20 0.11

*) Basic and diluted earnings per share are presented in the same amount, since the effect of share options is immaterial.




26. Transactions and balances with related parties

a. Transactions with related parties:Year ended

December 31,

2005 2004


Expenses (income):

Manpower services – Kibbutz members 1,952 1,720Management fees to the Kibbutz 346 427Lease fees to the Kibbutz 350 324Maintenance fees to the Kibbutz 142 191Financial income from the Kibbutz (22) (26)Financial income from jointly-controlled entity (11) (15)Consulting fees to Gaon Agro 39 56

b. Pursuant to various agreements, the Kibbutz provided the Company with manpower and management services, use of land andbuildings, utilities and maintenance services. In addition, Gaon Agro provided the Company with various consulting services. Theservices provided were charged according to fees and rates as determined in the agreements. These agreements were in effect forperiods of up to 10 years with automatic renewal.

These agreements were subject to cancellation, change or renewal upon the initial public offering of the Company’s securities - seec. below.

c. The following agreements, dated November 24, 2005 between the Company and its shareholders, amend or terminate therespective agreements as described in b above:

Addendum to a sublease agreement between the Company, Kibbutz Amiad and Amiad Filtration System LLP. According to theaddendum, the monthly rent is $32 thousand. The rent is reviewed every 3 years. The term of the sublease is 10 years with anoption to extend until December 31, 2022.

Termination agreements dated November 24, 2005. It was agreed that the management agreements with the Kibbutz, theindemnification agreements with the Kibbutz in the event of dissolution, the consulting agreements with Gaon Agro and theinvestment agreement with Gaon Agro will be cancelled upon the completion of the Company’s IPO. In addition, the perpetualdebenture that the Company issued to Gaon Agro was converted into capital reserves and, therefore, the interest payment inrespect thereof has ceased. (see Note 18(c)).

Addendum to a manpower agreement dated November 24, 2005 between the Company and Kibbutz Amiad pursuant to which theKibbutz agrees to provide the Company with manpower services. The term of the agreement is 10 years commencing on October1, 2005. The agreement is automatically renewable for additional periods of 10 years each, unless either party notifies the other ofits intention not to renew the term of the agreements six months prior to the end of the agreement. The Kibbutz may terminate theagreement by a six month written notice at any time. Upon termination, all personnel supplied by the Kibbutz, may becomeemployees of the Company. The cost of the manpower services under the agreement will be paid monthly based on a formula whichvaries depending on the number of workers and the function each worker undertakes at the Company.

Addendum to a service agreement dated November 24, 2005 between the Company and Kibbutz Amiad pursuant to which theKibbutz agrees to provide the Company with various services including utilities, maintenance, etc. The term of the agreement is 10years commencing on October 1, 2005. The agreement is automatically renewable for additional periods of 10 years each, unlesseither party notifies the other of its intention not to renew the term of the agreements six month prior to the end of the agreement.In accordance with the addendum, the cost of services was updated from $12 thousand per month to $16 thousand per month.


26. Transactions and balances with related parties (continued)

d. Compensation of key management personnel of the Group

December 31,

2005 2004


Short-term employee benefits 647 520Share-based payments 64 –

Total compensation of key management personnel 711 520

e. Balances with related parties:


2005 2004


Long-term investments and receivables:

Loan to a jointly-controlled entity – 256Long-term loan to a related party (including current maturities) 450 459

Current liabilities:Loans from others – 249Other accounts payable – related parties 432 589

27. Financial instruments

Credit risks:Cash and cash equivalents are deposited with recognized high quality banks and, therefore, the Company’s management believes therelated credit risk is negligible.

The Group’s revenues are derived from a large number of diversified customers located in the U.S., Australia, South America, East Asia,countries of the European Union, Israel, Africa and other countries throughout the world.

The Group performs ongoing credit evaluations of its customers and includes specific allowances for doubtful accounts which, inmanagement's estimate, adequately reflects the underlying loss of debts whose collection is doubtful.

AMIAD FILTRATION SYSTEMS LtdD.N. Galil Elyon 1, 12335, Israel Phone: +972-4-690-9500 Fax: +972-4-690-9391 email: [email protected] www.amiad.com

amiad filtration systems ltd

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