Group Strategy

The Corporation's operations

1 The Company operates, by itself and through companies under its control ("The Group"), primarily in the investment property and hostelry fields, in Israel and outside of Israel, by entrepreneurial activity or by the acquisition of income-generating properties, and commercial centers, office buildings and hotels in particular. The Group's operations outside of Israel in the investment property field, are concentrated primarily in Switzerland, together with particular investments in France and in England; and in the hostelry field, they are concentrated in Amsterdam, in London and in Paris.

2. The Group operates in the investment property field abroad, primarily through the subsidiary companies Epic Suisse AG and P.I.H. Property Investment Holding BV, which is activity that concentrated in investments in income-generating properties in Switzerland and in France and in three additional income-generating properties in London.

Furthermore, the Group holds an income-generating property in London (through a subsidiary company of Locka, as defined below), within the context of the "Café Royal" project and adjacent to the "Café Royal" hotel.

3. In the hostelry field in Israel, the Group owns rights and is the operating of the following hotels: (A) "The David Citadel"; and (B) "The Mammilla Hotel" in Jerusalem. In the hostelry field abroad, the Company's hostelry activity outside of Israel is conducted primarily through the subsidiary company Locka Holding BV, as follows: (A) "The Conservatorium" in Amsterdam, the Netherlands, which began its operations gradually at the beginning of 2012; (B) The "Café Royal" in London, England, which began its operations gradually at the beginning of 2013; (C) the Lutetia Hotel in Paris, France, which was acquired as an active hotel in July 2010. It should be mentioned that the hotel was closed in the second quarter of 2014 for the purpose of an upgrade and conversion and it was reopened gradually as from July 2018.

4. The Group also has activity in the field of investments in marketable securities. In the field of investments in marketable securities the Group focuses, primarily, on investments in shares in Bank Leumi Le'Israel Ltd. ("Bank Leumi")

Business targets and strategies

The Company's objective is to maximize the profits for the shareholders in the Company over time, together with its other obligations, including its commitment to values, to ethics, to professionalism and to excellence.

In order to realize this strategy, the Company relies upon its holdings, which is done taking note of the local and global trends, whilst adapting the, to the abilities, the strengths and the infrastructure, which have been built by the Company.

The Company's strategy includes, inter alia, the components that are set forth below:

1. Focusing on core activities: The Company relies upon its holdings and accordingly it concentrates its activity in the core of its business, which is the fields of hostelry and of income-generating properties, which are fields, which the Company views as its engines for growth.

2. The development of the Company's core fields (hostelry and investment property): The Group is continuing to take action to identify income-generating properties in Switzerland, to be financed with shareholders' equity and with credit; in addition, it is taking action to expand its hostelry operations, which is being done pursuant to its strategy to manage the hotels that it owns and to take action, inter alia, to identify additional hotels in central cities in Western Europe and in New York.

3. Correlation and reciprocal relationships between the income-generating field and the hostelry field: The Company strives to achieve a situation in which the mix of the operating surpluses on the Group's hotels approximates to the rental income from the income-generating properties.

4. Increasing the penetration into international markets in Central Europe: In the income-generating realty field, the Company focuses in strengthening its position in Switzerland. In the luxury hotels field, operating through Locka, the Company focuses on the strong countries in Europe (as of the time of this report, the hotels are concentrated in Paris, in Amsterdam and in London).