Elco Ltd.

Presentation for the Capital Market November 2015

 Legal Information
This presentation was prepared by Elco Ltd.
("The Company") as a general presentation about the company.
This presentation does not claim to cover or contain all of the
information that might be relevant to making any decisions regarding
investment in Company securities.
The presentation was prepared to provide a summary and for convenience
purposes, and is not designed to replace the need for a careful review,
and should accordingly be read together with the reports published by
the Company for the public (including the shelf prospectus dated 11.11.2013,
the financial statements published by the Company and the other reports) ,
prior to making any decision regarding investment in Company securities.
Any discrepancy between the specified in this presentation and the
specified in Company reports, the specified in said reports will supersede.
This presentation may include forward looking information as defined in the
Securities Law 5728-1968, including projections, assessments, estimates
and any other information pertaining to future events and issues.
Under certain circumstances, forward looking information can be
identified by the use of such terms as "projected" “probable", "believe",
“may", "estimate", "expect", "plan", "continue", "can", "schedule",
"forecast" and similar phrases and expressions.
Forward looking information in this presentation is based on assessments
and assumptions of Company management as of the date of the
presentation that, despite the Company believes are probable, are still
uncertain and by nature, involves risks, including factors that are not
controlled by the Company, each of which, or a combination of which,
might materially harm the Company's operating results and cause
material difference in operating results than that appearing in the
forward looking information.
All forward looking information pertains solely to the date it refers to.
With the exception of the undertaking to disclose information as required
by the Securities Law that apply to the Company, the Company does not
undertake to update or amend any information included in this presentation,
either as a result of new information, future event or for any other reason.
In addition, it is hereby clarified that the Company's strategic plans and
strategy included in this presentation are accurate as of the date of
publication and can change based on decisions of the Company's board
of directors as will be the case from time to time.
It is hereby emphasized that the presentation may include information that
was not presented in the Company's statements and reports and/or data that
is presented in a manner and/or in characterization and/or in editing and/or in
various segmentation than those presented in past reports and statements.
Furthermore, the presentation might include information borrowed from
external sources that were not independently reviewed by the Company, and
subsequently, the Company is not liable for their accuracy.
The information included in the presentation does not constitute advice,
recommendation, opinion or proposal regarding the feasibility of the
investment and does not come in lieu of an independent review and
personal advisement based on the unique data of each investor.
This presentation does not constitute a proposal or request for proposals
and does not embody some of the proposal or request for proposals,
to acquire Company securities.
Business Card Background
Business
Survey
Financial
Survey
Summary

Shareholders
 Public company listed on the TASE (included in the TA75 Index)
valued at 796 Million NIS* Gershon Salkind Institutions Public

 Operates through subsidiaries in four main segments: Electromechanical and

contracting, multi family housing in the South east US, manufacturing and
Legal Information
production of consumer goods and real estate in Israel and around the world 29%
 Goodwill and leading business status under the Electra brand
 Electra Consumer Goods – assimilation of reorganization and restoring 65%
profitability 6%
 Operations turnover in 2014: 6.8 billion NIS and in 2015 5.9 billion NIS
 Shareholder equity as of 30.9.2015: approximate million NIS
 Company bonds rated A/Stable by S&P Maalot

*As of 22.11.15
Structure of Operations Background
Business
Survey
Financial
Survey
Summary

Elco Ltd 100%

Land in Ramat Hasharon*

59% 60% 53%

Electra Real Estate Electra Consumer Products Electra Ltd

Public company listed on the TASE Public company listed on

Operates in 3 main operation segments:
Specializes in initiating, purchasing,
managing and improving real estate assets
in various geographies.
Recent focus on the acquisition,
management and improvement of housing
groups for rent in the southeast US
Public company listed on TASE
TASE (TA 75 Index)
Operates in Israel and overseas in 4 main
segments:
• Electrical consumer appliances – import,
• Building contractors, infrastructure and
export, manufacturing, marketing, sales
electromechanical systems
and distribution of electrical appliances,
• Facility management
service provision for the appliances
• Initiation and development of real estate
• Retail – operate retail marketing chain
projects
to sell appliances
• Franchises in infrastructure and national
• DIY – operation of ACE-Auto Depot
projects sector
Strategy Background
Business
Survey
Financial
Survey
Summary

 Core activity- control possession of leading companies in

their fields
 Business focus- creation of expertise in defined
operational segments
Business  Intelligent and responsible growth and development of
Strategy long term business while disposing of assets that have
exhausted their potential
 Strong synergy- as a multiplier of force to create
competitive advantages
 Risk management

 Maintenance of financial soundness- reasonable leverage

ratios and significant equity base
Financial
 Conservative financial management- financial flexibility
Strategy attributed to significant liquidity and unused credit
facility
 Maintenance of strong credit rating
Strategy Implementation
Sale of all holdings in US Reit Landmark Apartment Trust. Projected Net Cash Flow 640 Million NIS
Elco
 Elco North America (100%) –
signing on an agreement to
sale of Real Estate
 Signing on an agreement to
property in Ramat Hasharon
for 135 million NIS*
 Distribution of dividends in the
amount of 10 million NIS in
Q1. Additional distribution in
the amount of 10 million NIS
Q4
 Obtaining bank credit lines in
the amount of 150 million NIS
Electra Ltd.
 Agreement to sell land in
Russian, considerations over
time
 Sale of 25% of Migdal Electra
for a consideration of 302.5
million NIS
 Acquisition of 60% of the
share capital of Tavas Security
and Cleaning Services
 Payment of dividends in the
amount of approximately 64
million NIS (2015)
Background
Business
Survey
Electra Consumer
Products
 Continued streamlining and
return to profitability
 Agreement to acquire 25% of
SZ (Daikin) shares and receipt
of option to purchase the
remaining 25%
 Signing agreement to sell
water bar activity Electra Bar
Financial
Survey
Summary
Electra Real Estate
▪ 2015 – net cash flow from
disposal of assets in the
amount of a 250 million NIS
▪ Exit form operations in
Belgium and Holland
▪ Extension of bank credit lines
▪ 2015- repayment of bank
credit in the amount of US$
24.5 million (98 million NIS)
▪ 2015 – repayment of bonds in
the amount of 166 million NIS
Segmentation of Activity Sectors Background
Business
Survey
Financial
Survey
Summary

Subsidiaries – Investment account in numbers for 30.9.15 (In Millions NIS)

32
130

209 478

1.88 NIS
293 (in billions)

Investment in Electra Ltd

Investment in Elco North America
Investment in Electra Consumer Products
745 Investment in Electra Real Estate
Land in Ramat Hasharon
Investment in Elco Holland
 Electra Ltd. Background
Business
Survey
Financial
Survey
Summary

 Founded in 1945
 Listed on the TASE (TA-75 traded) at a value of 1.75 billion NIS*
 Largest and leading company in Israel in 4 main segments of
operation:
 Contractor for building, infrastructures and
electromechanical systems
 Facility management
 Real estate development
 Franchises in national infrastructure projects
 Backlog on 30.9.2015: 9.5 billion NIS
 Operates in Israel and in 13 countries in Europe and Africa
 Approximately 5000 employees
 Focuses on the Life Cycle of buildings from initiation, through
construction and operation to facility management
 Turnover for 2014: NIS 3.9 billion and 1-9-2015 3.5 billion NIS
 Shareholder equity as of 30.9.2015 - approximately NIS 811
million
 Company bonds rated A+/Stable by S&P Maalot and
A1 by Midroog (Moody's)

*As of 22.11.2015
Midtown, TLV
Electra Ltd- Business Strategy and Background
Business Financial
Summary
Survey Survey
Market Potential

Market Potential (In Billions NIS) Business Strategy

Electra Ltd- Backlog Background
Business
Survey
Financial
Survey
Summary

Development of Backlog (In Millions NIS)

4,178 6,846 8,215 8,701 9,480

2,144
1,828
1,673 380
497
520
1,736

706
832
6,376 6,956
753 6,022
4,404
2,593

2011 2012 2013 2014 2015

Building and Infrastructure Projects in Israel Building and Infrastructure Overseas Services
Electra Ltd- Backlog Background
Business
Survey
Financial
Survey
Summary

Consistent Growth in Operating Results

Segmentation of Income from Sectors of Activity

Income (In Millions NIS)
1-9.2015

4% 3,920
3,514 3,456
2% 2,884
26% 2,529

68% Projects in Israel

Service, maintenance and trade
Projects abroad 2011 2012 2013 2014 2015
Initiation, investment and franchise

EBITDA (In Millions NIS) Net Profit (In Millions NIS)

* Including a gain of $ 55 Million NIS from Selling the Devis Activity in Belgiam
258
228 154
205
192 127
168 117 109
96

2011 2012 2013 2014 2015 2011 2012 *2013 2014 2015
 Electra Ltd- Backlog Background
Business
Survey
Financial
Survey
Summary

 In October 2015, LAT engaged in an agreement to sell all of

its issued capital for a gross cash consideration in the
amount of US$ 1.9 billion
 Free cash flow (net from tax payments) expected for Elco
North America (which holds approximately 37.3% of LAT) is
640 million NIS.
 Since the start of investment in housing groups and to the
signing of the agreement to sell LAT, operations generated
aggregate profits in the amount of 480 million NIS.
 Said cumulative profits reflect for Elco an IRR return at an
average annual rate of approximately 23%
 Following the transaction, Elco North America remains with
operations in housing group including a managed portfolio of
approximately 5,700 residential units

Arboleda
 Electra Consumer Products Background
Business
Survey
Financial
Survey
Summary

 The largest and leading group in Israel with 70 years of

operations in air conditioning, home appliances and home
improvement and maintenance products.
 Listed on the TASE at a value of 592 million NIS*.
 Import, marketing and sale of leading international brands.
 Operates in Israel, Europe, Africa and South America.
 Expert of products manufactured in the Company plant in Miele Gallery

Israel.
 Approximately 100 branches across the country
 Employs 2700 people.
 Turnover in 2014: approximately 2.7 billion NIS and 1-9.2015:
approximately 2 billion NIS
 Total shareholder equity as of 20.9.2015: approximately 436
million NIS

*As of 22.11.2015 Shekem Elecktric

Electra Consumer Products Background
Business Financial
Summary
Survey Survey
Competitive Advantages

 Electra – one of the strongest, most recognized brands in Israel

 Clear market leader in electrical appliances, ,air conditioners and climate control
Brand
 Dominant products in a wide range of segments
 70 years of operation

Presence and  Over 2000 points of sale (direct and indirect)

national  Prominent presence in shopping centers, commercial areas,
coverage
high demand areas and city centers

 Largest player in climate solutions in Israel

Strength
 Leading importer and distributor of home electrical appliances

Control of the  Diverse and significant activity along the value chain
Value Chain  Manufacturing, import, marketing, distribution and service
Electra Consumer Products Background
Business Financial
Summary
Survey Survey
Competitive Advantages
Increase in activity turnover on the one hand and implementation of
reorganization on the other is expected to improve operational efficacy and profitability rates*

Segmentation of Income Sectors of Activity 1-9.2015 Income (Millions NIS)

2,782 2,669
21% 2,489
1,987 2,075
37%

Electrical consumer products

42% Retail
Do It Yourself 2011 2012 2013 2014 2015

Net Profit (Millions NIS) Gross Profit (Millions NIS)

54 762
688 705
39 35 39
588
480
2011 2012 2013 2014 2015
-66**

* Forward looking information

** After provision for reorganization in the amount of NIS 42 million (before tax) 2011 2012 2013 2014 2015
Electra Real Estate Background
Business
Survey
Financial
Survey
Summary

 The company was founded in 1972

 Listed on the TASE at a value of 219 million NIS(1)
 Specializes in contracting, acquisition, management and
betterment of income-yielding property and in real estate
ventures in India, Israel and Canada
 The income-yielding portfolio is spread over several countries in
Western Europe and North America
 Total income-yielding property in the filed of approximately 181.7
thousand square meters(2)
 Average occupancy rate is approximately 86%, long-term rent
 6 active projects in Israel, Canada and India
 Implementation of business focus plan and strengthening of
financial soundness and flexibility
 Annual volume of NOI amounts to approximately 92 million
NIS(3)
 Value of income-generating property at a volume of
approximately 1.2 billion NIS(4)
 Total shareholder equity as of 30.9.2015: 357 million NIS.
 Company is rated Baa2 by Midroog and BBB by S&P Maalot

1) As of 22.11.2015
2) The company's share on 30.8.2015 in total area, including the Company's share in assets of investee companies;
not including parking area
3) Data on 30.9.2015, company's relative share including relative share in investee assets
4) Details in this slide do not include information on assets whose control was delivered to the bank or assets
200 Public Square, Cleveland
whose investment was deleted
Electra Real Estate-Reinforcement of Background
Business Financial
Summary
Survey Survey
Financial Soundness and Flexibility

Development of Net Solo Debt (Millions NIS)

1,170 828 627 504 476 309

Proforma

595

346
138
69
200
575 534 110
482 435
276
199

31.12.2012 31.12.2013 31.12.2014 30.9.2015 1.1.2016* 31.12.2016**

Bond Solo Bank Debt less cash

* Sources: Flow primarily from disposal of assets that were received after the balance sheet date and use of the bank credit frame;
uses: loan clearance timetable and current needs
** Sources: 50% of projected cash flow of the company and use of bank credit frame; uses: loan clearance timetable and current needs
 Electra Real Estate - Sample Properties Background
Business
Survey
Financial
Survey
Summary

SOHO, Poleg Electra city, TLV PBEL City, Chennai IBM HQ, Ehningen
Hornbach, Berlin

Redfern, Montreal Midtown, TLV PBEL City, Hyderabad 200 PS, Cleveland
Elco – NAV Analysis Background Background
Business
Survey
Financial
Survey
Summary

Value
(Elco Share, Millions NIS)

Investment in Electra Ltd.* 936.5

Investment in Electra Consumer Products * 356.9
Investment in Electra Real Estate * 125.9

Land in Ramat Hasharon ** 130.0

Investment in Elco North America ** 745.0

Investment in Elco Holland ** 32

Net Dolo Debt *** )1,086(

NAV 1,240

Market value of the company on 22.11.2015: approximately 796 million NIS

* Based on market value on 22.11.2015

** Investment account in Elco books on 20.9.2015
*** net solo debt in Elco books on 30.9.2015
Financial Soundness Background Background
Business
Survey
Financial
Survey
Summary

Completion of projected liquidity processes to facilitate strengthening of financial soundness

Net Solo Debt (Millions NIS) LTV**

1,086 47%

20%

316

30.9.2015 Proforma* - LAT transaction 30.9.2015 Proforma* - LAT transaction

and disposal of land in Ramat and disposal of land in Ramat
Hasharon Hasharon

* Forward looking information

** LTV rate – net solo financial debt partial value holdings
(market value of Elco holdings in public subsidiaries on 22.11.15 plus private holdings
that were recorded in accordance with the investment account in the books on 30.9.15)
Extension of Bond Duration and Background
Business Financial
Summary
Survey Survey
Increased Liquidity

In recent years, the company has implemented financial moves that have resulted in an extension of the bond duration,
reduced financial expenses, improved financial flexibility and improved rating

Solo Debt Clearance Schedule before implementation of the moves

(31.12.12, Millions NIS)

291 30.9.15 31.12.12

265
231
198 Approximately Approximately
Bond Duration
4.95 2.6
114
Financing Approximately Approximately
expenses annual 50M NIS 65M NIS
Year 1 Year 2 Year 3 Year 4 Year 5

Unused credit
165M -
lines

Solo Debt Clearance Schedule after implementation of the moves

Rating A A-
(30.9.15, Millions NIS)

205 186
79 106 106 106 106 102 97 56

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10-12
Debt Reduction on Group Level Background
Business
Survey
Financial
Survey
Summary

Recent years have witness a significant decline in the volume of net debt
of the Company and its subsidiaries to Israeli banks and institutions

Elco and Subsidiaries – net debt status to Israeli banks and institutions (Millions NIS)

3,574
3,456

2,919
2,520 2,458

1,688

31.12.11 31.12.12 31.12.13 31.12.14 30.9.15 *Proforma – LAT

transaction and
disposal of land in
Ramat Hasharon

*
Summary – Why Elco? Background
Business
Survey
Financial
Survey
Summary

Strong brand – leader in real estate, contracting and consumer product sectors

Financial flexibility and soundness, diverse sources of flow

Dozens of years of experience in the areas of operation

Size advantage as well as other discernible advantages

Direct holding of portfolios, no 'layers'

Significant potential for value floating

Significant and synergetic portfolio

Emphasis on operational efficacy

Business focus and specialization

Meticulous risk management