Matrix IT : Immidiate Report

Matrix I.T. Ltd.

Periodic Report For 2023

Table of contents

Chapter A

Description of the corporation's business

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Chapter B

Report of the Directors

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Chapter C

Financial statements

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CHAPTER A

Description of the

Corporation`s

Business

The information contained in these Description of the Corporation`s Business published by the Company constitutes a translation of the Description of the Corporation`s Business published by the Company. The Hebrew version was submitted by the Company to the relevant authorities pursuant to Israeli law, and represents the binding version and the only one having legal effect. This translation was prepared for convenience purposes only.

In deep grief, Matrix honors the memory of its employees- Aviv Kotz, and his family, who were brutally murdered, and the late sergeant major (Res.) Raphael Elias Moshioff, killed in battle in Gaza for the defense of the State.

Matrix share in the grief of all the families of the fallen and the murdered, and wish full and a speedy recovery to the injured, we pray and wish for the return alive of all the kidnapped as soon as possible, and we fully back the security forces in this most important mission.

Description of the corporation's business

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Table Of Contents
1.	Activity of Matrix and description of development of its business development	.............6
2.	Areas of activity	9
3.	Investments made in the capital of Matrix and transactions in its shares	11
4.	Dividend distribution	11
5.	Financial information regarding Matrix's areas of activity	11
6.	General environment and the influence of external factors	11
7.	Description of Matrix's activity by area of activity	17
7.1	Information technology solutions and services, consulting and management in Israel	17
7.2	Information technology solutions and services in the United States	28
7.3	Sales, marketing, and support of software products	......32
7.4	Cloud infrastructure and computing	37
7.5	Training and implementation	42
8.	Backlog	45
9.	Seasonality	48
10.	Fixed assets, land, and facilities	49
11.	Human capital	50
12.	Working capital	54
13.	Financing	55
14.	Taxation	56
15. Limitations and supervision of Matrix activity	57
16.	Legal proceedings	58
17. Goals and business strategy	59
18. Financial information with regard to geographic areas	62
19. Discussion of risk factors	62
20.	Glossary	70

Description of the corporation's business

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1. Activity of Matrix and description of development of its business development

1. General
   Matrix I.T. Ltd.1 ("The Company"), together with its subsidiaries, is a company operating in the fields of information technology (IT) solutions and services, consulting and management.
   The Matrix Group employs approximately 11,200 software, hardware, engineering, integration, and training personnel, who provide services in the fields of information technology and advanced management to hundreds of customers in the Israeli market, as well as to customers in the American market while specializing in the areas of banking and finance, high-tech and start-ups, industry and trade, education and academia sectors, health, security, transportation, government and the public sector. The Group is also engaged in the sale and marketing of software and hardware products of a wide variety of manufacturers from Israel and around the world and in the provision of consulting services, project management, and multidisciplinary engineering consulting. The solutions, services, and products that the Group provides are designed to improve the competitiveness of its customers in the markets in which they operate, by responding to their unique needs in the field of IT, in the field of operational optimization, and in the field of management and engineering.
2. Purchase or sale of assets on a substantial extent
3. 1. On April 24, 2022, a transaction was completed in which the Company sold holdings representing 45.2% of the issued share capital of the subsidiary, Infinity Labs R&D. Ltd. ("Infinity"), for a total of NIS 154.5 million, such that, following the completion of the transaction, the Company was left with a holding of 4.9% of Infinity's share capital. As a result of the transaction, the Company recorded a capital gain, net of tax, amounting to NIS 121 million, and ceased to consolidate Infinity in the financial statements (included in the information technology solutions and services sector, consulting and management in Israel) commencing the second quarter of 2022.
      For further details, see note 3a to the financial statements.
   2. On June 20, 2022, the Company completed the purchase of RDT Equipment and Systems 1993 Ltd., which markets solutions and systems for a wide range of technologies, including control and automation systems, testing and measurement equipment (TME), advanced technological solutions for data communication testing, EMC and RF (Radio Frequency), and which acts, among other things, as a representative in Israel of dozens of international companies. RDT is consolidated in the Company's financial statements commencing the third quarter of 2022 in the Cloud and Computing Infrastructure sector. For more details, see note 3b to the financial statements.
   3. On January 1, 2023, after the date of the financial statements, the Company completed the acquisition of Zebra AGR Ltd., which is engaged in the distribution of solutions in the fields of information security and data communication. Zebra will be consolidated in the company's financial statements commencing the first quarter of 2023, as part of the segment of sales, marketing, and support of software products. For further details, see note 3c to the financial statements.
4. Structure of holdings

The diagram below shows the Company's holdings in the Matrix Group2 as of the date of the Company's annual report for 2023 ("the Report"), classified by areas of activity:

1. The Company was incorporated in Israel on September 12, 1998 and is a public company whose shares were registered for trading on the Tel Aviv Stock Exchange in May 1993.
2. The chart includes material and other companies. It is clarified that, in addition to the holdings in the companies in the chart, the Company has holdings in other companies.

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2. Areas of activity

The Group has five areas of activity - (1) information technology solutions and services, consulting and management in Israel; (2) information technology solutions and services in the USA; (3) sales, marketing, and support of software products; (4) cloud and computing infrastructures; and (5) training and implementation - which provide solutions, services, and products, mainly to the following customer sectors ("sectors" ): banking and finance, high-tech and start-ups, government and the public sector, defense, transportation, health, industry, retailand trade, education, and academia. Within each of the sectors, there are dedicated departments that specialize in providing specific solutions to the particular customer sector in which they operate, as well as managing and executing projects for departments across the Company.

The specialization in the various sectors is reflected in that sector's applicative, professional, and marketing aspects. Accordingly, in each sector, a professional and marketing infrastructure is developed, which is required for the support designated in that sector.

Below is a percentage distribution table of the Company's customers, according to sectoral affiliation, for all of the Company's activities for 2023:

Area	Percentage
Banking, finance, and insurance	18.1%
High Tech	14.1%
Government	17.6%
Defense	8.9%
Transportation	6.8%
Health	5.7%
Communication	3%
Retail,industry	10%
Other areas	15.8%

In addition to the five focused areas of activity, as detailed above, the Matrix Group operates centers of excellence, which provide specialized services to all areas of activity and to the various sectors:

1. Centers of expertise - a group of about 30 centers of excellence (CoE), in areas such as Digital, Cloud, Customer Experience, Mobile, Data, Security & Cyber, AI, Machine learning, Learning Technology, Open Source, DevOps, Agile & ALM, ERP, CRM, Smart Campus, Low Code, Data Bricks, etc. The centers of excellence are based on an organizational concept that aims to provide substantial professional-technological added values to both the Company's development teams and to the Company's customers, including groups of experts specializing in the areas of content, practical experience in the specialized technologies, a comprehensive team (which includes, among other things, methodologies, and best practices) which shorten the time to go live and reduce risks, technological support of the CTO team in the Company, etc.

1. Comprehensive management and engineering consulting services, from the stage of formulating the strategy and management consulting to the stages of execution and implementing the change, including the management of complex projects, including engineering projects, large- scale engineering supervision projects, in particular, in the field of transportation, and projects in the field of planning and environmental quality, as well as multidisciplinary engineering consulting services, and consulting and implementation services in the field of supply chain management and logistical-operational management.

1. Matrix R&D Services and Offshore provides software development services, testing, and quality assurance services in the Offshore and Nearshore model.

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The following is a summary description of the five areas of activity:

Information technology solutions and services, consulting, and management in Israel

The activity in this area is focused mainly on the development of large-scale core technological organization systems, Data and AI, Information Security, Cyber, Digital, and the provision of related services, including consulting and management, execution of computerization and software integration projects, outsourcing, software project management, software development, software testing and QA, as well as improving and upgrading existing technological systems. In addition, the activity in this area includes management consulting services and multidisciplinary engineering and operational consulting, including the supervision of complex engineering projects, in particular, infrastructure projects, all in accordance with the specific needs of the customer and in accordance with the professional specialization topics required in each case.

Information technology solutions and services in the USA

The activity in this area, which is carried out through two arms - Matrix US Holding and XTIVIA, each of which hold several subsidiaries in the United States. The activity includes the provision of expert solutions and services in the field of Governance, Risk, and Compliance (GRC), including activity in the following areas: Financial Risk Management, Fraud Prevention Management, Anti-Money Laundering, Trade Surveillance, Payment Services, and ensuring regulatory compliance in these matters, as well as specialized consulting services in the field of compliance with financial regulation and implementation of regulations and operation services, as well as Electronic Medical Records (EMR) - Clinical Support services and IT Help Desk and Desktop Support services specialized in the field of Healthcare.

This field of activity also includes the provision of specialized technological solutions and services in the fields of portals, BI, CRM, DBA, and EIM, dedicated solutions for the government contracting market in the United States, and software product distribution services. In addition, the activity in this area includes professional services and offshore solutions, including through employees in the company's activity centers in India and professional services and projects through personnel from around the Matrix Group, as a gateway to a business model of exporting the Company's services and products in the United States.

Sales, marketing, and support of software products

The activity in this area is focused mainly on the sale and distribution of software products (mainly from software manufacturers from abroad) in various and diverse fields and providing professional support services for these products to customers, as well as projects for implementation, training, support, and maintenance of the products and the integrated systems.

Cloud infrastructure and computing

The Company's activity in this field is mainly focused on providing computing solutions for computer infrastructures, a range of solutions and services in the field of cloud computing (through the Company's business unit specializing in this field - CloudZone), communication solutions, marketing and sales of hardware, software licenses and peripheral equipment to business customers, together with the provision of related professional services, multimedia solutions and control and monitoring centers, office automation and printing solutions, a range of services in the field of Data and Big Data, through the Company's specialized business unit - DataZone, as well as representing leading manufacturers of testing and measurement equipment, communication and cyber and RF solutions, projects and integration in the field of automation, calibration services in advanced technologies and the provision of industrial video and image-processing solutions tailored to the customer's needs, through the business units that specialize in this field - RDT Equipment and Asio Vision Systems.

Training and implementation

The operation of training centers in which advanced courses are delivered to high-tech personnel, application courses, and professional training and retraining courses, as well as courses in the field of soft skills and executive training, and the provision of training services and implementation of computer systems directly to organizations and outsourcing and BPO of management of training centers to customers, as well as the provision of a range of professional services by the outstanding graduates of the Company's training courses, in an outsourcing format.

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