Tadiran Group Ltd.

Investor Presentation • Nov 11, 2020

TADIRAN

Company presentation

September 2020

This presentation was prepared by Tadiran Holdings Ltd. (hereinafter: "the Company" and / or the "Group" and / or "Tadiran") as a general presentation about the Company and is not intended to replace the need to review the Company's full reports to the Securities Authority and the Stock Exchange. Value in Tel Aviv Ltd. including, inter alia, the Company's periodic reports including the Company's periodic report for 2019 and September 30, 2020 and immediate reports (hereinafter: "Company Reports") prior to making a decision regarding investment in the Company's securities.

The information contained in the presentation does not constitute advice,recommendation, opinion regarding investment, does not constitute an offer to invest and / or purchase securities of the Company (and in particular does not constitute an "offer to the public" or "sale to the public" of any kind) and does not replace independent examination and personal advice according to the unique needs of each investor. Such an offer shall be made only in accordance with the provisions of the law, after obtaining the necessary permits from the Securities Authority and the stock exchange.

This presentation includes a summary of the issues described in the context in which they are discussed and not the full information available to the Company in relation to these issues and does not include the full results and financial information of the Company and the notes to them, and / or the Company's business plans and / or the Company's risk factors.

The presentation includes data on international markets, including growth volumes, penetration rates, and sales. It should be emphasized that this data is based on public data and the Company's assessments and does not constitute any facts and / or representations.

This presentation may include forward-looking information as defined in the Securities Law, 1968 (hereinafter: "forward-looking information"), including forecasts, subjective assessments by the Company's management as of the date of publication of the presentation, which although the Company believes are reasonable, which are inherently uncertain, estimates and information regarding future events.

The forward-looking information is solely aimed at the date to which it relates and is uncertain, unpredictable, affected by factors beyond the control of the Company, each of which, or a combination thereof and the realization of which risk factors characterize the Company's activities, may materially impair results. The activities of the Company and cause the actual results to be materially different from the forward-looking information.

Except as an undertaking to disclose information as required by the securities laws applicable to the Company, the Company does not undertake to update or change any information contained in this presentation in order to reflect events and / or circumstances that will apply after the date of its preparation. It is clarified that the Company's plans and strategy included in this presentation are correct as of the date of their publication and may and will change in accordance with the decisions of the Company's Board of Directors from time to time.

Without detracting from the generality of the above, the information contained in the presentation, inter alia, regarding the Company's working principles, expansion of energy activity, growth potential and revenue distribution in the coming years, is forward-looking information based and derived, inter alia, on the Company's goals. The Company's assessments regarding the Company's objectives are based, inter alia, on the Company's assessments regarding trends in the Company's business in particular and trends in the market in which the Company operates in general, as well as the Company's management assessments regarding potential and market trends in Israel and international markets as of this report. These assessments may not materialize and / or materialize significantly differently from the Company's assessments, inter alia, as a result of factors external to the Company and which are not under control, including, inter alia, changes in the economic situation in Israel in general Different from those that the Company's management estimates as of the date of this report, the non-realization of the potential penetration into international markets in general, and in particular those listed above, regulatory changes and the realization of some of the risk factors described in the Company reports, continued potential effects. These assessments may not materialize and / or materialize significantly differently from the Company's assessments, inter alia, as a result of factors external to the Company and which are not under control, including, inter alia, changes in the economic situation in Israel in general and in the market in which the Company operates in particular, development of new and / or different trends from those that the Company's management estimates as of the date of this report, failure to penetrate international markets in general, and in particular those listed above, regulatory changes and the realization of risk factors described in the Company's reports, the continuation of potential effects of the corona crisis and so on.

To the extent that there is a conflict between what is stated in this presentation and what is stated in the Company's reports required by law, what is stated in the Company's reports will prevail.

Our vision

3

"Impact health and life quality through air care and improved living space, introducing innovative and environment friendly solutions"

• Company Summary
• Financial data
• Strategic plan 2020-2025

With a strong brand, Tadiran is leading the industry

Tadiran is the leading air conditioning company in Israel Seen continuous growth in market share in recent years, achieving approx. 40% of total market share in 2019

Industry leader for service and main distribution channels

Strong financial results

19% increase in revenues in the last five years, with strong net profit and strong cash flow Average six-year dividend yield of 4.0% Achieved an upward trend in debt rating to A1 Stable, rated by Midroog (Moody's subsidiary)

An Israeli super brand on an international scale 60 years of activity in Israel Featured on Superbrands 3 years in a row A well-known brand in the world with an emphasis on Europe

Tadiran - 60 years of activity in israel and globally

1962

Establishment of Tadiran

1983

Opened manufacturing facility in Afula, Northern Israel

2017

Tadiran becomes part of Tel Aviv-125 Index

2019

Launched marketing campaign with Hollywood actor Morgan Freeman

2002

Carrier purchases Tadiran and starts export activities

2010

Mr. Moshe Mamrud becomes largest shareholder via acquisition from Carrier

2020

Publicly launched global growth strategy

Commerce Large product portfolio in air conditioning

Tadiran Brand

Leading quality brand in air conditioning with technological superiority

Service Department Leading high quality comprehensive service department

Air Treatment Assets, knowledge and partnerships in the field of removal of harmful gases, treatment of infections, bacteria and viruses, etc.

Development and production

Efficient production plant. R&D department with rich international experience

Supply chain

A complex logistical system of import, production, storage and distribution under dynamic market conditions

Tadiran's Core Assets

Air conditioning

market in israel

Residential air conditioners

			Sep Real, Taxas NEW York, Your the will be the land 120 80 123 12 1
TORHIRA 1 8 min 17	TOBHIBA EVER PA	TOSHIBA HALL PA

2,200 Market size (NIS in millions)

AHUs, blowers packages VRF Chillers

Total market volume is approx. NIS 2.9 billion

245 Market size (NIS in millions)

240 Market size (NIS in millions)

180 Market size (NIS in millions)

Source: Company's estimations

Market size of approx. NIS 2.2 billion.

Penetration rate of approx. 95% - among the highest in the world.

High barriers to entry: strong brand, business relationships with a leading supplier, compliance with stringent energy regulations, production development capabilities and logistics.

The market is based on approx. 70% replacement and 15% additions, a figure that indicates stability in demand over time. The remaining 15% is from construction starts.

About 70% of sales are made through professional channels (installers, wholesalers, projects and institutions), the rest from retail stores.

The market has shown a consistent growth trend supported by improved living standards and global warming.

Inverter technology accounts for only about 13.4% of the market in units sold, but about 18.6% in financial terms. We expect this to be a growth engine for years to come.

Source: Company's estimations

The market size in Israel is approx. NIS 700 million a year and is growing at an annual rate of about 2-3%.

The market is affected, among other things, by developments in the infrastructure industry.

VRF - market size is approx. NIS 245 million with 3% annual growth. Primarily populated by Korean, Chinese and Japanese brands.

Chillers - market size is approx. NIS 180 million with 2% annual growth. Relatively few players in the market.

AHUs - market size is approx. NIS 150 million with 4% annual growth. The market consists of 3 segments: commercial-lightweight, commercial-heavy and industrial-heavy AHUs.

Packages - market size is approx. NIS 50 million with 4% annual growth.

Blowers - market size is approx. NIS 40 million with 7% annual growth.

Source: Company's estimations

As part of the ESCO project, energy consumption systems (lighting and thermal) in the hospital are replaced with more efficient systems. The company receives consideration of 80% of the savings until the end of 2033.

As part of the project, energy efficiency solutions are expected to be installed in 9 hospitals throughout Israel.

Total expected expenses are estimated at NIS 102 million (approximately NIS 21 million in respect of installation costs and approximately NIS 81 million in respect of maintenance and other expenses).

As of Tadiran's annual report for 2019:

• Lighting: Installation was completed in 6 hospitals, and 2 additional hospitals will be completed soon.
• Thermal: Installation was completed in 3 hospitals and 2 additional hospitals will be completed soon.

The ESCO project has been generating profits since 2018 and expects to yield positive cash flow starting in 2020.

The information presented above, including the schedules for carrying out the project, the total expected expenses in connection with the project and the date of their implementation, the scope of the participating hospitals, etc., is considered as Forward-Looking Information, as defined in the Securities Law, based on the company's subjective assessment and familiarity with the project. The realization and / or non-realization of the Forward-Looking Information will be affected by factors that cannot be estimated in advance and are not under the Company's control, including, inter alia, changes in schedules, scope of investments and costs in connection with the project, and issues related to policy and / or actual Ministry of Health and Hospitals.

• Company Summary
• Financial data
• Strategic plan 2020-2025

1

Includes NIS 69 from discontinued operations that were subsequently classified as continuing operations.

Operating profit Operating margin

23% growth between 2015-2019

14.8%

16.1%

Net profit Net profit margin

Since 2015, Tadiran has distributed NIS 192.5 million of dividends.

Summary balance sheet (NIS in millions)

	31 11 222018	%	31 11 2 220 19	%	30.09.2020	%
Cash and cash equivalents	42.4	7.6%	90.5	14.8%	296.7	35.2%
Other current assets	406.1	72.7%	380.7	62.3%	408.6	48.3%
Non-current assets	110.1	19.7%	139.4	22.9%	138.9	16.5%
Total assets	558.7	100.0%	610.7	100.0%	844.3	100.0%
Current liabilities	181.9	32.6%	195.4	32.0%	304.3	36.0%
Non-current liabilities	72.4	13.0%	73.3	12.0%	157.1	18.6%
Equity	304.3	54.5%	342.1	56.0%	382.8	45.4%
Total liabilities and equity	558.7	100.0%	610.7	100.0%	844.3	100.0%

Key financial ratios

Ratio	2018	2019	30.09.2020
Current ratio	2.5	2.4	2.3
Quick ratio	1.5	1.7	1.8
Equity to assets	54.5%	56.0%	45.4%
Net financial debt (asset) to assets	4.4%	(6.5%)	(17.2%)
Equity to assets excluding cash	59.0%	65.8%	70.0%

• Company Summary
• Financial data
• Strategic plan 2020-2025

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The information which is stated in this slide constitutes Forward-Looking Information within the meaning of section 32A of the Securities Law, which may or may not materialize, to the extent and on different dates from those described due to the factors listed in slide 2 of this presentation.

The information in this slide is considered as Forward-Looking Information as defined in the Securities Law based, inter alia, on the Group's objectives as of this date, its assessments of the trends in the Group's businesses in particular and the trends in the market in which the Group operates in general, as well as the Group's management assessments in relation to potential and trends in the field of energy efficiency in Israel and the international markets as of the date of this report. These assessments may not materialize and / or materialize in a materially different way from the Group's assessments, inter alia, as a result of factors external to the Company and which are not under control, including changes in the state of the Israeli economy in general and the market in which the Company operates in particular, development of new and / or different trends from those that the Group's management estimates as of the date of this report, the non-realization of the potential for penetration into international markets in general, and in particular those listed above, regulatory changes and the realization of some of the risk factors described in the Company's reports.

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Principles of the strategic plan

1 Differentiating value proposition for air treatment

2 Entry into emerging markets

3 Expansion into synergistic areas of activity in Israel

4 Preserving our leading position in the local market: a. Residential air conditioning b. Commercial air conditioning

The information in this slide is considered as Forward-Looking Information as defined in the Securities Law based, inter alia, on the Group's objectives as of this date, its assessments of the trends in the Group's businesses in particular and the trends in the market in which the Group operates in general, as well as the Group's management assessments in relation to potential and trends in the field of energy efficiency in Israel and the international markets as of the date of this report. These assessments may not materialize and / or materialize in a materially different way from the Group's assessments, inter alia, as a result of factors external to the Company and which are not under control, including changes in the state of the Israeli economy in general and the market in which the Company operates in particular, development of new and / or different trends from those that the Group's management estimates as of the date of this report, the non-realization of the potential for penetration into international markets in general, and in particular those listed above, regulatory changes and the realization of some of the risk factors described in the Company's reports.

The information which is stated in this slide constitutes Forward-Looking Information within the meaning of section 32A of the Securities Law, which may or may not materialize, to the extent and on different dates from those described due to the factors listed in slide 2 of this presentation.

Thank you

TADIRAN

Appendices

TADIRAN

1 Differentiating value proposition for air treatment

Our living environment is polluted by up to five times that of the outside environment

Air quality in the living and working environment Indoor Air Quality (IAQ)

7-5X

Air pollution in the home is 2–5 times greater than outside

Common air pollutants

Airborne Particles Emissions from diesel, smoke, dust, etc.

Formaldehyde

From buildings, materials, furniture, cooking and smoking

Household odors and gases Emissions from sources such as painting, cooking,

smoking

"The World Health Organization asserts that about 3 billion people are exposed to the threat of air pollution and about 3.8 million people die from domestic air pollution every year ..."

90% of our lives are spent indoors

Ozone

Gases that originate in the outside air and are harmful to the respiratory system

Carbon Dioxide Gases originating

from humans and cooking

1 Differentiating value proposition for air treatment

The current air conditioning market is traditional and includes a limited value proposition in the field of air treatment

• Focusing on heating and cooling only, with almost no consideration to air pollution treatment
• Does not leverage technological capabilities like artificial intelligence and advanced analytics

• Traditional business model of selling equipment without recurring revenue

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The information which is stated in this slide constitutes Forward-Looking Information within the meaning of section 32A of the Securities Law, which may or may not materialize, to the extent and on different dates from those described due to the factors listed in slide 2 of this presentation.

Tadiran's ability to establish a competitive advantage

Potential for	Ability to build a	Power of
synergies	new brand	local
		brands

2 Entry into emerging markets

Tadiran is already positioned as one of the largest distributors in Europe

Local / Regional Global Brands)

(global brands)

2 Entry into emerging markets

The Eastern European Union and the Iberian Peninsula have been identified as preferred areas for penetration into turope

Market size

1,300K

1 For single-split, (except Central Europe), average price \$ 490, unified regulation Source: Market Research (BSRIA, JARN, JRAIA, Eurostat) Experts

rapidly, even as the West declined

Chinese products, distributed by local players

levels and regulatory environment ¹

About a third of the market comprises of Chinese and Korean products, the rest is Japanese - the market is dominated by Japanese products (65%), but a significant share for Chinese (~30%)

Low standard of service by domestic players are based on Chinese imports

Main distribution channel – approx. 50% of the market are subdistributors, Retail 30%

Diverse product profile of Single and Multi – approx. 80% of the products are Single-Splits, approx. 20% Multi / Mini Central, market transition to Inverter technology

5-10% growth 750k units Portugal

Source: Market Research (BSRIA, JARN, JRAIA, Eurostat) Experts

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The information which is stated in this slide constitutes Forward-Looking Information within the meaning of section 32A of the Securities Law, which may or may not materialize, to the extent and on different dates from those described due to the factors listed in slide 2 of this presentation.

3 Expansion into synerqistic areas of activity in Israel

Expanding activities in the field of energy efficiency, management and selling energy

• Increasing demand for energy efficiency solutions and switching to alternative energies and distributed energy production
• Tadiran is well positioned to operate in this market:
  • O High weighting of air conditioning systems in energy consumption
  • O Knowledge, products and expertise
  • O Relevant experience in the framework of 'Blue Sky' our ESCO project
  • High reliability, valued brand
  • O Financing capabilities

TADIRA

3 Expansion into synergistic areas of activity in Israel

Tadiran is expanding its energy activities in two phases

Energy activity in Tadiran

Phase 1:

Efficiency in energy use. Expanding the "Blue Sky" activity to additional segments

Reducing energy costs by replacing air conditioning, lighting equipment, and installing management and control systems

Leverage the capabilities and knowledge accumulated in Blue Sky

The information which is stide consible of online the maning of section 324 of the Securities Lawy witch may or may not materialize, to the extent and on different dates from those described due to the factors listed in slide 2 of this presentation.

Phase 2: Distributed energy production and alternative energy

Reducing production costs and moving energy by self and local production of energy based on natural gas

The market for small power stations is expected to reach NIS 1.75 billion in the next five years (based on the Electricity Authority's requlation of natural qas production)

Synergies

Establishment, service and maintenance, sales channels, products (chiller in absorption and cogeneration)

4a Preserving the lead in the local market: Residential Air Conditioning

Preserving the lead in the local market : residential air conditioning

Background

The residential air conditioning market in Israel is estimated to be NIS 2.2 billion and is growing at an annual rate of 4.3%¹

The domestic air conditioning market is expected to grow in the coming years

Tadiran has presence and leadership in all channels: installers, wholesalers, retailers, institutional market

1 in units. The data is based on the company's evaluation

Strategy focus

• Continue to strengthen the brand
• Maintaining the quality gap in products and service
• Investment in differentiation, technology and innovation

4b Preserving the lead in the local market: Commercial Air Conditioning

Expansion of activity in the commercialindustrial market

Background

Tadiran has a relatively small market share of the commercial-industrial market (approx. 5% mainly based on VRF and chillers)

Tadiran is currently not present in several segments / products that could be entered, and gain market share based on import and export

Source: Financial statements of companies, interviews with installers, consultants, company valuation

Strategy focus

Leverage Tadiran's strengths to expand its value proposition and build a broad product portfolio:

• 1 Brand
• 2 Level of service
• 3 Engineering capabilities
• 4 Network of business relationships and collaborations, import and trade capabilities