Unitronics (1989) (R”G) Ltd Periodic and Annual Report for 2014 The Company is a “Small Company” as defined in the Securities Regulations (Periodic and Immediate Reports), 1970 (hereinafter: the "Regulations"). On March 9, 2014, the Company’s Board of Directors adopted the reliefs specified in the Regulations: (1) Annulment of the obligation to publish a report on the internal audit and an auditors’ report in respect of the internal audit; (2) Raising the materiality threshold with respect to the attachment of valuations to 20%; (3) Raising the threshold for attaching statements of material consolidated companies to the interim reports to 40%; and (4) Exemption from implementation of the provisions of the Second Schedule of the Regulations (Details on Exposure to Market Risks and Methods of Managing Such Risks). Table of Contents Chapter/ Content Page Paragraph Chapter A Description of the Company’s business (Reg. 8A) Part I- Description of the general development of the Company’s business A-1 1.1 Company’s activity and description of its business development A-1 1.2 Subsidiaries and holding structure diagram A-1 1.3 Operating segments A-3 1.4 Investments in the Company’s capital and transactions with its shares A-3 1.5 Dividend distribution A-3 Part II- Other information A-4 1.6 Financial information on the Company’s business activities A-4 1.7 General environment and impact of external factors on the Company activity A-6 Part III- Description of the Company’s business by operating segments A-7 1.8 Overview - synergy between Company’s operating segments A-7 1.9 Products Segment A-7 1.10 Systems Segment A-27 1.11 Parking solutions Segment A-39 1.12 Other Activities A-51 Part IV- Matters Related to the Company’s Operations A-52 1.13 Fixed assets, land, facilities, insurance and liens A-52 1.14 Intangible assets A-55 1.15 Human resources A-57 1.16 Investments A-59 1.17 Financing A-59 1.18 Taxation A-61 1.19 Restrictions on and supervision of Company activities A-61 1.20 Material agreements and cooperation agreements A-62 1.21 Legal Proceedings A-63 1.22 Subsidiaries A-63 1.23 Discussion of risk factors A-70 Chapter B Board of Directors Report On the State of Affairs of the Corporation (Reg. B-1 10 - 10A) 2.1 Summarized Description of the Corporate and its business environment B-1 2.2 Analysis of Financial Position B-1 2.3 Liquidity and financing sources B-9 2.4 Exposure to market risk and management thereof B-10 2.5 Projected Cash Flow B-10 2.6 Report on Liabilities by Maturity Dates (Reg. 9D) B-10 2.7 Corporate Governance Aspects B-10 2.8 Disclosure Requirements in Connection with Financial Reporting B-14 2.9 Specific Disclosure to Debenture Holders B-14 2.10 Compensation of Senior Corporate Officers B-22 2.11 Details on Process of Approval of the Company’s Financial Statements B-23 2.12 Share buyback B-25 Chapter C Financial Statements December 31, 2014 C-1 3.1 Independent Auditors’ Report C-2 3.2 Consolidated Statements of Financial Position C-3 3.3 Consolidated Statements of Operations C-5 3.4 Consolidated Statements of comprehensive income C-6 3.5 Consolidated Statements of Shareholders’ Equity C-7 3.6 Consolidated Statements of Cash Flows C-8 3.7 Notes to the Financial Statements C-10 3.8 Financial data from the consolidated financial statements attributed to the C-58 company itself Chapter D Additional Details about the Corporation (Reg. 10C - 29A) D-1 4.1 Use of the Proceeds of Securities (Reg. 10C) D-1 4.1.A. List of Investments in Active Subsidiaries and Included Companies (Reg. 11) D-2 4.2 Changes in Investments in Active Subsidiaries and in Included Companies D-2 (Reg. 12) 4.3 Revenues of Active Subsidiaries and Included Companies and revenues from D-2 such (Reg. 13) 4.4 Trading on the Stock Exchange (Reg. 20) D-3 4.5 Remuneration of interested parties and senior officers (Reg. 21) D-3 4.5a Control of the Corporation (Reg. 21a) D-7 4.6 Transaction with Controlling Shareholder (Reg. 22) D-8 4.7 Holdings of interested parties and Senior Officers (Reg. 24) D-12 4.8 Registered Capital, Issued Capital and Convertible Securities (Reg. 24A) D-12 4.9 Registry of Shareholders of the Corporation (Reg. 24b) D-12 4.9.A. Registered address (Reg. 25A) D-12 4.10 Board Members of the Corporation (Reg. 26) D-13 4.11 Senior Officers (Reg. 26A) D-16 4.12 Authorized Signatories of the corporation (Reg. 26b) D-17 4.13 Corporation's Independent Auditor (Reg. 27) D-17 4.14 Amendment of the Articles or Memorandum of Association (Reg. 28) D-18 4.15 Recommendations and Resolutions of Directors and Resolutions of D-18 Extraordinary General meeting (Reg. 29) 4.16 The Company's Resolutions (Reg. 29 A) D-18 Chapter E Statements by the CEO and CFO of the Corporation (Reg. 9b) E-1 Chapter A - Description of the Company's Business (Reg. 8A) Part I – Description of the general development of the Company's business 1.1 Company activity and description of its business development The Company engages in the design, development, manufacture, marketing, sale and support of industrial automation products, mainly PLCs (programmable logic controllers) (hereinafter: "PLCs"). PLCs are computer-based electronic products (hardware and software) used for command and control of machines performing automated actions, such as production systems and other automated installations in various areas. The Company also provides design, construction and maintenance services within the framework of projects for the automation, computerization and integration of computerized logistic systems, mainly automated warehouses and mechanized distribution centers. Also, the Company engages, through wholly owned subsidiaries (and second tier subsidiaries), in the design, development, marketing, production, construction and maintenance of mechanized systems for automated parking solutions. The Company was incorporated in August 1989 as a private company according to the Israeli Companies Ordinance (New Version), 5743-1983 (hereinafter: the “Companies Ordinance”). In July 1999 the Company became a public company as defined in the Companies Ordinance. In September 1999 the Company first published a prospectus offering its shares to the public in Belgium, subsequent to which its shares were listed for trading on the Euro.NM Belgium stock exchange in Belgium. In 2000, following the establishment of the EuroNext stock exchange in Belgium, trading of the Company’s shares was moved to this stock exchange. In May 2004 the Company published a prospectus in Israel according to which shares and other securities of the Company were listed for trading also on the Tel Aviv Stock Exchange (hereinafter: the “Stock Exchange”). The Company operates mainly from an office and industry building situated in Airport City near the David Ben Gurion Airport (for further details see Section 1.13 of this Report). 1.2 Subsidiaries and holding structure diagram The Company has three wholly-owned active subsidiaries and one active second tier subsidiary wholly owned by the Company (hereinafter: the “Subsidiaries”): Unitronics Inc., which is incorporated in the United States (Delaware) (hereinafter: "Unitronics Inc.") and engages primarily in coordinating and running the Company’s product segment marketing and distribution operations in the United States; and Unitronics Building - Management & Maintenance (2003) Ltd. (hereinafter: “Unitronics Management”), which is primarily engaged in the management and maintenance of the Unitronics Building (for details see section 1.22.1 below); Unitronics Parking Solutions Ltd. (hereinafter: “Unitronics Automated Solutions”), which coordinates the Company’s automated parking solutions business in Israel; and Unitronics Systems Inc. A-1 (a subsidiary of Unitronics Automated Solutions), which is incorporated in the United States (Delaware) (hereinafter: “Unitronics Systems Inc.”) and engages primarily in the Company's business operations in the field of automated parking systems and/or solutions in the US and in North America; the direct holdings of the Company in Unitronics Systems Inc. were transferred to Unitronics Automated Solutions during the reported period as specified below. Below is a diagram of the holding structure of the Company and its subsidiaries (*): Unitronics (1989) (R.G.) Ltd. Unitronics Unitronics Unitronics Unitronics Unitronics Inc. Building - Automated Industries S.A. Management Solutions Automation (Proprietary) and Ltd. GmbH Limited Maintenance (2003) Ltd )Inactive) )Inactive) 100% 100% 100% 100% 30% 100% Unitronics Systems Inc. 100% (*) In November 2014, the Company sold its holdings in Unitronics Systems Inc. to Unitronics Automated Solutions for the par value of the shares of Unitronics Systems Inc. A-2 1.3 Operating segments The Company has three major operating segments as detailed below. In addition, the Company engages in the management and maintenance of the Unitronics Building through Unitronics Management Ltd. Products segment: The Company is engaged, through the Products Department and Unitronics Inc., in the design, development, manufacture, marketing, sale and support of its products, mainly series of PLCs of various models that incorporate an operating panel (a keyboard and a display) as an integral part of the PLC, and connectivity (including Internet, intranet, and cellular phone communications), as well as external expansion units for the PLCs, software for the PLCs, for management of automatic systems including industrial automation, logistics systems, automated parking lots and for management of production floors, and additional auxiliary items. System segment: The Company is engaged, through the Systems Department, in the design, construction and maintenance of computerized storage and/or logistics systems, mainly automated warehouses and computerized distribution centers, including the construction of new systems and/or the upgrading and rendering serviceable of existing systems, and maintenance services for these systems provided through framework arrangements or on a service call basis.