INVESTORS

Co-CEO’s letter to Elco’s Shareholders

Dear Shareholders,

Before we dive into the details of the many happy and successful moments of 2017, we want to pause and commemorate the passing of the man who had built this great company, shaped it by his own image, and also shaped us - our father, Georg Salkind.

Our father joined his father’s business, a manufacturer of small distribution transformers, in 1955. Since he took over the helm, and through a series of brilliant mergers and acquisitions, he has grown the company and diversified it tremendously over the years, transforming it from a local family business to a global conglomerate.

Our father always felt great responsibility towards his employees and partners, and especially to the public shareholders. He was part of the business until his last day and his legacy will continue to live with us and with the company. May he rest in peace.

In 2017, we have continued to strengthen and grow our company in accordance with our core business strategy:

This strategy is not complete without our financial principles:

In accordance with our strategy, we have continued our M&A efforts, and in April 2017, our subsidiary, Electra Consumer Products Ltd., completed the acquisition of Golan Telecom for 350 million NIS. Golan is one of the major cellular communications providers in Israel, with over 900k subscribers, known for revolutionizing the market by introducing the low cost model.

In October 2017, we completed the acquisition of Globus Max Group, one of Israel’s leading Cineplex chains, for 144 million NIS. This acquisition will be the cornerstone of our new division - Elco Media and Entertainment - a new growth sector with 3 engines: Content & Distribution, Leisure and Cinema.

Our subsidiary Electra Ltd. completed the acquisition of 60% of Megason Electronics & Control (1978) Ltd. for 86.4 million NIS in cash. This acquisition augments Electra’s offerings in the facility management sector. Electra has also acquired the operations of FK Generators & Equipment Ltd. and El-Ram Generators Ltd. for about 52 million NIS. The activity was injected into a new company - F.K. Electra Ltd., strengthening Electra’s ability to provide its customers with all their needs under one umbrella.

During Q1 2017 Elco realized approx. 5% of the shares of Electra Consumer Products Ltd. for about 73 million NIS. During 2017, Elco received dividends from its held companies in the total of 102 million NIS.

Here are some highlights from the strong year our subsidiaries enjoyed:

Electra Ltd.

Electra Consumer Products Ltd.

Electra Consumer Products Ltd.

On September 19, 2017 Elco paid its shareholders a dividend in the sum of 25 million NIS.

We are committed to continue our hard work to create value for you, our shareholders. We want to thank our devoted employees, across the globe, for the fantastic job they are doing and especially our peers here at the management team at Elco’s HQ. We wish you all a great 2018.

Sincerely,

Daniel & Michael Salkind

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AVI  ISRAELI

Co-Chief Executive Officer, Director

Mr. Avraham Israeli has served as Vice President of Business Development of Elco Holdings Ltd since March 24, 2004. He has served with the Company since January 1, 2000. He received his Bachelor degree in law from the Hebrew University of Jerusalem, his MBA from Insead, France.

AVI  ISRAELI

Co-Chief Executive Officer, Director

Mr. Avraham Israeli has served as Vice President of Business Development of Elco Holdings Ltd since March 24, 2004. He has served with the Company since January 1, 2000. He received his Bachelor degree in law from the Hebrew University of Jerusalem, his MBA from Insead, France.

AVI  ISRAELI

Co-Chief Executive Officer, Director

Mr. Avraham Israeli has served as Vice President of Business Development of Elco Holdings Ltd since March 24, 2004. He has served with the Company since January 1, 2000. He received his Bachelor degree in law from the Hebrew University of Jerusalem, his MBA from Insead, France.

AVI  ISRAELI

Co-Chief Executive Officer, Director

Mr. Avraham Israeli has served as Vice President of Business Development of Elco Holdings Ltd since March 24, 2004. He has served with the Company since January 1, 2000. He received his Bachelor degree in law from the Hebrew University of Jerusalem, his MBA from Insead, France.

AVI  ISRAELI

Co-Chief Executive Officer, Director

Mr. Avraham Israeli has served as Vice President of Business Development of Elco Holdings Ltd since March 24, 2004. He has served with the Company since January 1, 2000. He received his Bachelor degree in law from the Hebrew University of Jerusalem, his MBA from Insead, France.