Payton Planar

Annual Report • Mar 27, 2025

Payton Planar Magnetics Ltd.

Annual Report 2024

Contents

	Page
Board of Directors Report	2
Independent Auditors' Report	19
Consolidated Financial Statements:
Statements of Financial Position	23
Statements of Profit or Loss and Other Comprehensive Income	25
Statements of Changes in Equity	26
Statements of Cash Flows	27
Notes to the Financial Statements	28

The Board of Directors' Report¹ on Corporate Affairs

We are pleased to present the Board of Directors' report on the affairs of Payton Planar Magnetics Ltd. and its consolidated subsidiaries for the year ended on December 31, 2024

Notice: This report contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Management of the Company as well as assumptions made by and information currently available to the Management of the Company. Such statements reflect the current views of the Company with respect to future events. Management emphasizes that the assumptions do not in any way imply commitment towards realization. The outcome of which is subject to certain risks and other factors, which may be outside of the Company's control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as projected, anticipated, believed, estimated, expected or intended.

Reference in this report to forward looking statement shall be by stating that such information is given by way of estimation, evaluation, assessment, intentions, expectations, beliefs and similar terms, but it is possible that such information shall be given under other phrases.

1. A concise description of the corporation and its business environment

A. The Group

The Group includes Payton Planar Magnetics Ltd. ("the Company"), its consolidated subsidiaries and its Investee.

The Company holds two fully owned subsidiaries: (1) Payton America Inc., in Florida, USA, which mainly engages in the manufacture and marketing of transformers for the US domestic market; and (2) Himag Planar Magnetics Ltd., in the UK, which mainly engages in the development, manufacture and marketing of transformers and serves as the Group base for the UK and the European markets. The Company also holds an affiliated company, a strategic investment of 20% in a Hong-Kong holding company, PCT Industries Limited ("PCT"), that fully owns a manufacturing subsidiary in China. The Chinese manufacturing subsidiary mentioned above is engaged in manufacturing and assembly, serves as one of Payton's major Manufacturing Partners.

¹ The financial statements as at December 31, 2024 form an integral part thereof.

B. The Group's main fields of activity and changes that occurred in the period from January to December 2024

The Company, an Israeli high-tech enterprise, develops, manufactures and markets Planar and Conventional transformers worldwide. The Company was founded in order to revolutionize the traditional approach to the design and manufacture of transformers through the concept of planar transformers. The Company completed its initial public offering in 1998 on the EuroNext Stock Exchange.

Global Environment changes and External factors effect on the Group's activity

• In 2024 the global slowdown environment continued. It seems that, decrease in demand, excess inventory levels and the high interest rate are factors influencing customers' activity and sometimes resulting in push-out of scheduled deliveries up on their needs. High prices of raw materials and high manpower costs remain relevant too. Management estimates these trends are going to continue in the coming months.
• Additional factors that affect the Group's activity are: the revaluation of the US\$ against the local NIS, the Euro and the Pound, which mainly decreases local labor costs and other operating costs in Israel and the United Kingdom.

Inflation effects - Since the functional currency of the Group's activity is the US dollar, and since the Group does not use bank loans, management believes there is no material effect of the inflation in Israel and/or worldwide on the Group's business activity, except for some adjustments needed in payroll.

Increase of global interest rate - since the Company does not hold loans, the Group is not expected to have a material negative impact due to the increase in the global interest rate, on the contrary, deposits' income increased.

On October 7th, 2023, a war broke out in the state of Israel ("the War"). The War consequences have not significantly affected the Group's day-to-day operations. The Group's local facility, located in the center area of Israel, rapidly adapted a working routine and continued its ongoing business. As of this date, the Group's local facility is fully operative providing products and services on a regular basis to its customers.

Thanks to the Group's financial and operational strength, wide business diversification, global dispersion of production sites and raw material suppliers, the Group's management believes it should be able to continue its ongoing business fully and continuously.

Based on the information the Group has at the date of approval of these financial statements, this War is not expected to have a material impact on the Group's activity and results. However, due to uncertainty involved and lack of information regarding the duration of the War, the Group is currently unable to foresee and assess the future effects of the War.

The Group continues to follow-up and monitors all the abovementioned global developments trying to minimize any impact including maintaining its close contacts with its subcontractors, suppliers and customers, all in order to adjust its operations in the best possible way.

It is noted that the above statement is a forward-looking statement as defined above.

On January 24, 2024, the Company's Board of Directors decided to pay to its shareholders a dividend for the financial year 2023 in the amount of USD 10,072 thousand, USD 0.57 per share (paid on March 5, 2024).

On February 14, 2024, the Parent Company, Payton Industries Ltd. ("the Parent Company"), entered into an agreement with FIMI ISRAEL OPPORTUNITY 7, a Limited Partnership, and FIMI Opportunity 7, LP a Limited Partnership (together hereinafter: "FIMI"), to allocate 1,468,057 ordinary shares of the Parent Company (hereinafter: "Allocated Shares") which, subject to their allocation, dluow constitute approximately 17.76% of the Parent Company's issued and outstanding share capital and voting rights (hereinafter: the "Share Purchase Agreement"), all conditional upon the occurrence of certain precedent conditions.

Simultaneously Mr. David Yativ, the controlling shareholder of the Parent Company (hereinafter: "Yativ") has entered into an agreement to sell to FIMI 1,000,000 shares of the Parent Company, constituting around 12.09% of the Parent Company's share capital. Furthermore, FIMI and Yativ agreed on the terms of a shareholders' rights agreement ol be executed on the closing of the transaction. [It is noted that the completion of the Share Purchase Agreement and the other transactions described above (hereinafter: "the FIMI Transaction") were subject, inter alia, to the approval of the Parent Company's Shareholders' meeting, resolved on April 8, 2024].

On March 7, 2024, the Company's remuneration committee and the Board of Directors examined the updated remuneration policy, found it fair, logical and appropriate and decided to approve it. In addition the above mentioned quorums approved the Company's participation in the service fee of FIMI for the consulting services to be provided to Payton Group as part of the FIMI Transaction, for a period of 3 years, for a monthly payment of NIS 40 thousand (about USD 11 thousand) to be shared equally between the Company and the Parent Company (the participation amount shall be examined and adjusted on a yearly basis according to the actual services). The above resolutions were subject to the approval of the Company's shareholders' meeting, resolved on April 15, 2024.

On April 21, 2024, the Company reported that according to the information provided by its Parent Company and by Yativ, all precedent conditions to the FIMI Transaction had been fulfilled on April 21, 2024, and the closing of the FIMI Transaction was consummated immediately thereafter ("the Closing Date"). Simultaneously, the transaction for the sale of the shares of Yativ was also completed, in such a manner that as of the Closing Date, each of Yativ and FIMI holds approximately 29.85% of the Parent Company's issued and outstanding share capital and voting rights (each approximately 29.28% of the Parent Company's issued and outstanding share capital on a fully diluted basis). Additionally, on the Closing Date, Yativ and FIMI have also entered into a shareholders' agreement pursuant to which the Parent Company considers them, as of the Closing Date, as joint controlling shareholders of the Parent Company due to their joint holdings of approximately 59.7% of the Parent Company's issued and outstanding share capital.

In addition, on the Closing Date, the Parent Company has granted non-marketable options to purchase shares of the Parent Company according to the Parent Company's incentive option plan ("the Options") to certain key-employees and officers of the Parent Company's subsidiaries, as follows: 80,000 Options to 4 (four) employees of the Parent Company's subsidiaries, 30,000 Options to Mr. Doron Yativ² , 20,000 Options to Mr. Amir Yativ³ and 30,000 Options to Mrs. Michal Lichtenstein⁴ (See also Note 1C(3) to 2024 yearly report).

On March 12, 2025, after the reportgni date, the Company's US subsidiary entered into agreements aiming at: (a) acquiring 100% of the issued and paid up share capital of SI Manufacturing, Inc., a corporation incorporated under the laws of California (hereinafter: "SI"), which manufactures and sells electronic coils, assembling power supplies

² David Yativ's son serves as a director and the CEO of the Company.

³ David Yativ's son serves as an engineering and development manager.

⁴ Michal Lichtenstein serves as the CEO of the Parent Company and V.P. Finance & C.F.O of Payton Group.

and custom magnetic components for customers in various industrial sectors including transportation, aviation, space and defence (hereinafter: the "Share Purchase Agreement"); (b) acquiring the real property on which the SI's factory is built, [such factory being] owned by RSG Holdings LLC, a corporation incorporated under the laws of California (hereinafter: "RSG Holdings") and partly held by the Chairman of the SI who is also a shareholder thereof (45%) as well as by two of the founders of the Target Company who currently provide consulting services to SI as independent contractors (hereinafter: the "Real Property Purchase Agreement"), and (c) entering into employment/consulting agreements with the CEO of SI and a senior engineering service provider of SI, which will come into effect as of the closing date and include customary terms for agreements of this type, all in accordance with the provisions of the agreements (the "Transaction"). The completion of the Transaction is subject to the fulfillment of several conditions precedent detailed in the Share Purchase Agreement, including, among others, the transfer of ownership of the real property in accordance with the Real Property Purchase Agreement, as well as the provision of notices and obtainment of required regulatory approvals in the United States and certain other third party consents. (For more detailed information see also press release dated March 12, 2025).

On March 27, 2025 - the Company's Board of Directors decided to pay the shareholders a dividend for the financial year 2024, in the amount of USD 5,301 thousand (USD 0.3 per share), expected to be paid in June 2025.

C. Sales

The Group's main customer base is related to the telecom/datacenter, automotive and power electronic market. Additional markets Group aims for are the Industrial and medical markets. During 2024, the Group kept operating its activities in: North America, Europe, Japan, China, S. Korea, India and UK.

Sales for the year ended December 31, 2024 amounted to USD 50,826 compared with USD 54,856 thousand for the year ended December 31, 2023 reflecting 7% decrease which is reasonable in light of the global slowdown. Revenues for the year ended 2024 consisted of recurring sales to existing customers and sales to new ones. The Sales were generated primarily from telecom/datacenter, automotive companies and industrial companies.

D. Principal customers

The consolidated sales revenues include sales to major customers (which make up in excess of 10% of the sales of the Group).

	For the year ended December 31	For the year ended December 31
	2024	2023
Quanta Computer Inc.)1(	)3( 27%	)3( 15%
Customer B)2(	*	16%
Customer C)2(	15%	14%

)1( Customer related to the Telecom/Datacenter industry.

)2( Customer related to the Automotive industry.

(3) Includes sales to its subsidiaries: QMB Co., Ltd, and Tech-Front (Shanghai) Computer Co., Ltd.

* Less than 10% of the Group's consolidated sales.

E. Marketing

The Group participates in leading electronic exhibitions. Company is focusing on serving Key customers with routine visits and latest technology development updates.

The Company strategy, which enables fulfilling the mission of gaining worldwide recognition and market share growth, is:

• * Targeting world leaders in their fields. Having these leaders as our customers is convincing other second tier companies to adopt the Planar Technology.
• * Focusing on high-growth-potential customers with a need for advanced technology.
• * To use the Group's own sales team as well as its sales representatives' network as sales channels.
• * Expanding our activity in Japan, Europe, North America, India and South Korea markets.
• * Supporting Research & Development institutes and Engineering Consultants in order to increase exposure to engineers in the field.
• * Deepening activity with existing customers.
• * Maintaining the wide presence and global recognition.

F. Manufacturing

The Group intends to expand and diversify its manufacturing capacity and capabilities, through manufacturing partners in the Far East, especially in China and the Philippines. The objective of this initiative is to increase flexible production capacity, to enable mass production quantities, lower product costs and increase competitiveness.

G. Competition

In recent years there has been an increasing interest of magnetics manufacturers to get into the Planar field. We can note that there are more and more companies that are trying to design and manufacture the planar components. However, the Company believes in its technology advantage know-how and capabilities. It estimates it could generally benefit from an increasing competition in the market due to greater exposure of the technology.

The Company cannot estimate its future market share. The following companies are considered as its potential competitors: Pulse, Standex and Coilcraft - from the U.S.A. and Premo - from Spain.

H. Order Backlog

As at December 31, 2024 this backlog amounted to USD 25,165 thousand, and as at March 13, 2025 to USD 25,712 thousand (December 31, 2023 - USD 30,765 thousand). The backlog is composed of the Company and its two fully owned subsidiaries firm orders.

	Order Backlog
	US\$ in thousands
	December 31, 2024	March 13, 2025
Delivery due date within first quarter of 2025	10,771	3,180
Delivery due date within second quarter of 2025	8,414	9,658
Delivery due date within third quarter of 2025	3,114	7,911
Delivery due date within fourth quarter of 2025	2,332	4,363
Delivery due date is after 1.1.2026	534	600
Total	25,165	25,712

It should be noted that in light of global slowdown sometimes customers tend to postpone scheduled deliveries up on their needs. Such changes of delivery dates may lead to a different sales volume than indicated above according to the quarterly order backlog split.

It is noted that the above statement is a forward-looking statement as defined above.

I. Framework agreements that do not constitute binding orders

As of December 31, 2024 and the date of signing the financial statements, the Group has no material framework agreements.

J. Human Resources

A factor of importance to the Company's success is its ability to attract, train and retain highly skilled technical, and more specifically, qualified electronics engineers with experience in high frequency magnetics and with a comprehensive understanding of high frequency magnetics, managerial, sales and marketing personnel. Competition for such personnel is intense. The Company constantly improves its personnel and has so far succeeded in recruiting the appropriate personnel as required. This personnel is important in maintaining the pace in research, design and technical customer support. The Company is confident however, that the challenges inherent to its operations will satisfy its future recruitment needs. By the end of 2024, the Group employed about 170 people. The Company retains employment contracts with most of its key employees and is of the opinion that relations with its employees are satisfactory.

K. Quality Control

Payton Group has the ISO9001:2015 certification for its quality system. It has UL recognition for the use of several Electrical Insulation Systems classes B, F and H in its products, also has recognition for the construction of a family of magnetic components as complying with the requirements of UL and IEC 60950 standards of safety. Payton is authorized by an accredited testing agency to apply the CE mark to many of its commercial transformers.

Payton also meets recognized international safety standards and conforms to MIL-T, CSA VDE and other standards. The Company is certified with ISO14001:2015 (Environmental standard). Payton is a Lead Free company as required by the 2015/863/EU RoHS directive.

The Company is certified with two important International Quality Management Standards: for Automotive - IATF 16949:2016 and for Space & Avionic - AS9100 (at Payton America only).

L. Objective and Business Strategy

Since its incorporation, Payton has provided innovative and affordable Planar Magnetic solutions to the Power Electronic Industry.

By doing so, it has become the undisputable worldwide market leader in the Planar Magnetics Technology, with a customer base of leading technology-driven OEMs.

Payton plans to maintain its lead and continue to facilitate the transition of the Magnetics market to the Planar Technology by:

• 1. Constantly looking for business opportunities to expand its core business with synergetic product lines.
• 1. Increasing the R&D team, in order to keep technological superiority through innovative designs, patents, and minimization of components.
• 1. Maintaining business efficiency, operational efficiency and constant search for cost saving solutions.
• 1. Maintaining and strengthening its current customer base. This will enable Payton to build a track record as a reliable high-volume Planar component supplier to leading OEM's.
• 1. Selectively developing additional key strategic customers, especially in Japan, North America, India, South Korea to further propagate Payton Planar unique technology.
• 1. Aiming at and focusing on new high growth segments such as Automotive (EV/HEV) in addition to the present Telecom and industrial markets.
• 1. Continuing to educate the Power Electronics industry about Planar technology.
• 1. Continuing to develop its mass production expertise and capacities to a level that will enable Payton to address the large price-sensitive segments and mass production quantities segments of the global Magnetics market.

It is noted that the above statement is a forward-looking statement as defined above.

M. Coming year outlook

In 2025, the Group plans to complete and integrate the purchase of SI MANUFACTURING, INC. (see also paragraph B above and Note 20 to 2024 yearly report(, in order to expand Group activity and global presence. Furthermore, the Group will continue its ongoing search for business and M&A opportunities synergetic to its core business.

The Group is also preparing, in 2025, to continue coping with current slowdown of global markets. There are some push-out of scheduled deliveries based on customer needs, and great caution needs to be taken with regard to purchase forecast and inventory planning. The raw materials prices are high and no significant price reduction is expected in coming future. At this stage, it is not possible to assess the extent of the impact of the trends described above on the Group's activities.

With regards to the War, currently, there is no material impact on the Group's activity and results. However, it is still impossible to foresee and assess long future effects.

The Group plans to continue investing efforts to improve and efficient its production capacity as well as integration of automation. In addition to its normal course of business, the Group will continue its ongoing search for new markets as well as other business opportunities providing innovative solutions and new technologies in order to keep expanding its customer base, core business, enlarging its market share and maximize business opportunities to the greatest possible extent.

It is noted that the above statement is a forward-looking statement as defined above.

N. Risk Factors

	Major Impact	Medium Impact	Small Impact
Macro Risks Market Risks		The global business environment changes have many implications including the following:  Raw material high costs.  Difficulties in recruiting manpower and increase of labor costs.  Changes and push-out of scheduled deliveries by customers.  Geopolitical, regulations and international tariffs changes.  Metals prices fluctuations especially: Copper, Aluminum, Tin and Silver, which are part of the transformers bill of materials.  Automotive industry - alongside the opportunity for a large growth there is an inherent risk in this industry, especially during a period of economic uncertainty where a decrease in demand could be material. In addition, the growing competition in this industry creates a constant pressure to reduce prices and margins.	 Currency exposure during credit term period with regards to invoices issued in local currency.  Evaluation/Devaluation of the local currencies, NIS and GBP, reflects an increase/decrease in labor costs and other operating costs.
	dependency.
Specific Risks	Manufacturing partners

O. Current Shareholders position

Shareholder name	Number of shares	Percentage of the outstanding shares	Comments
Payton Industries Ltd.	11,694,381	66.2%	Israeli company traded in the Tel Aviv stock exchange.
Public	5,976,394	33.8%	Listed on the EuroNext since June 1998.
Total	17,670,775	100.0%	Total outstanding shares.

2. Financial position

A. Statement of Financial Position as at December 31, 2024

Cash and cash equivalents, Short-term Deposits and marketable securities - these items amounted to a total of USD 58,088 thousand as at December 31, 2024 compared to USD 56,186 thousand as at December 31, 2023. Despite the dividend payment during the year 2024, the Company presents increase in Cash and cash equivalents attributed mainly to Company's profitability.

The Group's management believes a solid financial position is an important factor in order to successfully overcome times of crisis.

Trade accounts receivable - these amounted to USD 7,925 thousand as December 31, 2024, compared with USD 9,546 thousand as at December 31, 2023. The decrease in this item is in line with the sales volume near the reports dates.

Other investment - as at December 31, 2024 this amounted to USD 2,733 thousand compared with USD 900 thousand as at December 31, 2023. This item representing the Company's investment in shares of CaPow Technologies Ltd. (hereinafter: "CaPow"), an Israeli startup in the field of wireless charging solution. In May 2024, the Company exercised its warrants to purchase additional 4,489 Shares, and keep its holding share, against payment of USD 333 thousand (representing 1.2 times the original purchase price). In September 2024, the Company participated in a second fundraising round with an additional investment of USD 1.5 million. The Company holds about 7% of the shares of CaPow and following the additional investment, the Company was granted representation on CaPow's Board of Directors. The Company has a professional and business interest in being involved in new developments in this area and sees CaPow as a strategic investment.

Trade payables - amounted to USD 1,261 thousand as at December 31, 2024 compared with USD 3,663 thousand as at December 31, 2023. The decrease in this item resulted mainly from an increase in advance payment to a principal subcontractor in addition to a decrease caused by purchases decrease near the report dates which was in line with the business activity.

Other payables - amounted to USD 3,010 thousand as at December 31, 2024 compared with USD 2,532 thousand as at December 31, 2023. The increase in this item resulted mainly from a provision, initially recorded for employees' incentives relating to the current year (2024) results.

B. Interest rate, Currency and Market exposure - Data and Policy

Interest rate exposure

The Group's interest rate exposure relates mainly to its balance of cash equivalents and bank deposits. These balances are mostly held in USD bearing interest rates given by banks (during 2024, about 6%).

Data on linkage terms

The financial statements of the Company reflect the functional currency of the Company, which is the USD.

Most of the Group's sales (93%) in the reported periods were in USD or were linked to the USD. Approximately 2% of the Group's sales in 2024 were in Euro, 1% were in NIS, and about 4% were in GBP.

During 2024, approximately 96% of the costs of raw material and finished goods purchased by the Group were in USD or were linked to the USD.

During 2024, approximately 82% of the Group's salaries were in New Israeli Shekel ("NIS") and about 6% were in GBP.

Currency exposure risks

Since most of the Group's sales and purchases were in USD or linked to the USD, the Group's gross profit was exposed to the changes in exchange rates of the USD in relation to the Euro, the GBP and to the local New Israeli Shekel ("NIS") mostly with regard to labor costs and other operating costs (see also Data on linkage terms, above).

The Group is exposed to erosion of the USD in relation to the NIS and the GBP. Most of the Group's salaries and other operating costs are fixed in the local currencies. Devaluation of the USD in relation to the NIS and the GBP increases the Group's labor costs and thus influences its operating results.

Devaluation of the USD in relation to the Euro and the GBP leads to a decrease in Group's assets held in those currencies.

The Company is subcontracting in China. Devaluation of the USD with relation to the Chinese currency has an indirect effect on the Group's cost of goods sold.

Market risks

During 2024 the Company mostly used 'limit orders' for exchanging currency mainly in order to cover its labor costs paid in NIS. With regard to all other operating costs, there is no need to use derivatives since hedging is being kept inherently as part of the operational activity.

C. Operating results

Summary of Consolidated Statements of Income US Dollars in thousands

Payton Planar Magnetics Ltd. Consolidated Comprehensive Income Statements

	Total 2024	Total 2023	Quarter 10-12/24	Quarter 7-9/24	Quarter 4-6/24	Quarter 1-3/24
Revenues	50,826	54,856	9,611	12,695	15,878	12,642
Cost of sales	(28,709)	(30,753)	(5,357)	)7,291(	)9,015(	(7,046)
Gross profit	22,117	24,103	4,254	5,404	6,863	5,596
Development costs	(1,672)	(1,442)	(412)	(404)	(487)	(369)
Selling & marketing expenses	(2,203)	(2,152)	(615)	(432)	(599)	(557)
General & administrative expenses	(4,703)	(3,863)	(1,115)	(1,088)	(1,453)	(1,047)
Other income (expenses), net	7	(245)	-	(3)	-	10
Operating profit	13,546	16,401	2,112	3,477	4,324	3,633
Finance income, net	2,340	1,881	557	744	501	538
Share of profits (losses) of
equity accounted investee	235	218	14	75	152	(6)
Profit before taxes on income	16,121	18,500	2,683	4,296	4,977	4,165
Taxes on income	(2,810)	(3,234)	(529)	(732)	(875)	(674)
Net profit for the year/period	13,311	15,266	2,154	3,564	4,102	3,491
Other comprehensive income (loss) items that will not be transferred to profit &loss Remeasurement of defined benefit plan Share of other comprehensive	41	27	41	-	-	-
income (loss) of equity accounted investee	(17)	(6)	(8)	3	(2)	(10)
Total other comprehensive income (loss), net of tax	24	21	33	3	(2)	(10)
Total comprehensive income for the year/period	13,335	15,287	2,187	3,567	4,100	3,481

General Note: The Group is exposed to abrasion of the USD in relation to the NIS, Euro (€) and the Pound (£). Most of the Group's salaries and other operating costs are fixed in local currencies. Revaluation/devaluation of the local currencies drives to an increase/decrease in labor costs and other operating costs, thus, affects the operating results of the Company.

Sales revenues - The Group's sales revenues for the year ended December 31, 2024 were USD 50,826 thousand compared with USD 54,856 thousand for the year ended December 31, 2023, reflecting 7% decrease mainly explained by the global economic slowdown and deliveries pushouts.

Gross profit - The Group's gross results for the year ended December 31, 2024 were USD 22,117 thousand (44%), compared with USD 24,103 thousand (44%), in the year ended December 31, 2023. The gross margin is mainly affected by sales product mix and production sites.

Development costs - Payton's strategy is aimed at maintaining the leadership of Planar Technology. The Engineering Department works in conjunction with the engineering departments of the forerunners of today's global technology. Development costs are mainly incurred to design and customize products for specific orders. These development costs, mainly engineering labor costs, are based upon time expended by the department's employees. The Group's development costs for the year ended December 31, 2024 were USD 1,672 thousand compared with USD 1,442 thousand in the year ended December 31, 2023. The increase in this item resulted mainly from enlargement of the engineering team as well as increase of labor cost and other employees' benefits.

Selling & marketing expenses - The Group's selling & marketing expenses are mainly comprised of: (1) commissions to the Group's reps' and Marketing Personnel, which are calculated as a portion of sales, however it is further explained that not all the sales are subject to reps' commissions and (2) other selling expenses (fixed) based on management policy. The Group's marketing efforts are concentrated through participation in major power electronic shows around the world and by collaborating with its worldwide reps' Network. The Group's selling & marketing expenses for the year ended December 31, 2024, amounted to USD 2,203 thousand (4%) compared with USD 2,152 thousand (4%) in the year ended December 31, 2023.

General & Administrative expenses - The Group's General & Administrative expenses for the year ended December 31, 2024 amounted to USD 4,703 thousand compared with USD 3,863 thousand in the year ended December 31, 2023. The increase relates mainly to an increase in management & administration employer costs, benefits and other incentives, as well as an increase in computing and data security expenses.

Finance income, net - The Group's finance income for the year ended December 31, 2024 amounted to USD 2,340 thousand compared with USD 1,881 thousand for the year ended December 31, 2023. Most of the finance income stemmed from interest on bank deposit balances. Increase resulted mainly from interest received and from exchange rate differences.

D. Information regarding transactions with related parties (pursuant to note 17 to the Consolidated Financial Statements as at December 31, 2024)

D.1 Balances with key management personnel and interested and related parties

December 31, 2024

	Equity accounted investee \$ thousands	The Parent Company \$ thousands	Key management personnel employed by the Group \$ thousands	Key management personnel not employed by the Group \$ thousands	Directors and interested parties not employed by the Group \$ thousands
Payables:
Short-term employment
Benefits	-	-	151	-	-
Post-employment benefits	-	-	118	-	-
Trade payables	463	-	-	-	-
Other payables	-	-	-	759	29

December 31, 2023

	Equity accounted investee \$ thousands	The Parent Company \$ thousands	Key management personnel employed by the Group \$ thousands	Key management personnel not employed by the Group \$ thousands	Directors not employed by the Group \$ thousands
Payables:
Short-term employment
benefits	-	-	99	-	-
Post-employment benefits	-	-	27	-	-
Trade payables	152	-	-	-	-
Other payables	-	-	-	723	9

D2. Transactions with related parties

Equity accounted investee Year ended December 31,
		2023
\$ thousands	\$ thousands
9,504	11,284
	Other investment
Year ended December 31,
2023	2024
\$ thousands	\$ thousands
36	82

D3. Compensation to key management personnel and interested parties

For the year ended December 31, 2024

	Key management personnel employed by the Group \$ thousands	Key management personnel not employed by the Group (*) \$ thousands	Directors and interested parties not employed by the Group (**) \$ thousands
Short-term employee benefits	545	-	-
Post-employment benefits	245	-	-
Share-based compensation	97	58	-
Other	-	1,669	108
Total	887	1,727	108
Number of people	5	2	8

For the year ended December 31, 2023

	Key management personnel employed by the Group \$ thousands	Key management personnel not employed by the Group (*) \$ thousands	Directors not employed by the Group \$ thousands
Short-term employee benefits	510	-	-
Post-employment benefits	51	-	-
Other	-	1,604	38
Total	561	1,604	38
Number of people	3	2	3

(*) Management fees and related benefits to Wichita Ltd. (see Note 14A) and to Yaarh-Looking To The Future Ltd. (see Note 14B) include an amount of USD 189 (year ended December 31, 2023: USD 184 thousand) and an amount of USD 264 (year ended December 31, 2023: USD 251 thousand), respectively, recorded as selling and marketing expenses.

(**) Includes management fees to FIMI (see Note 14C) in the amount of USD 36 thousand recorded as selling and marketing expenses.

3. Liquidity

A. Operating activities

Cash flows generated from operating activities for the year ended December 31, 2024, amounted to USD 13,831 thousand, compared with the cash flows generated from operating activities of USD 19,204 thousand for the year ended December 31, 2023. The decrease in cash flows from operating activities generated mainly from decrease in the net profit and in trade payables as well as from other non-cash adjustments and changes in assets and liabilities.

B. Investing activities

Cash flows used for investing activities in the year ended December 31, 2024 amounted to USD 7,540 thousand compared with cash flows used for investing activities of USD 2,636 thousand in the year ended December 31, 2023. In 2024 cash flows were mostly used for investment in bank deposits and in CaPow Technologies Ltd. (see also paragraph 2.A- other investment above), which was partly financed by the sale of all marketable securities.

C. Financing activities

Cash flows used for financing activities for the year ended December 31, 2024, amounted to USD 10,072 thousand, representing a dividend payment (announced January 24, 2024) that was paid in March 2024. Cash flows used for financing activities for the year ended December 31, 2023, amounted to USD 8,482 thousand, representing a dividend payment (announced March 28, 2023) that was paid in June 2023.

4. Financing sources

The Group financed its activities during the reported periods from its own resources.

5. Subsequent Events

On March 12, 2025, the Company's US subsidiary entered into agreements aiming at: (a) acquiring 100% of the issued and paid-up share capital of SI Manufacturing, Inc., a corporation incorporated under the laws of California (hereinafter: "SI") in exchange for payment of total consideration of approximately USD 5.6 million (hereinafter: the "Share Purchase Agreement"). SI manufactures and sells electronic coils, assembling power supplies and custom magnetic components for customers in various industrial sectors including transportation, aviation, space and defence. The Share Purchase Agreement includes additional contingent consideration of up to USD 500 thousand based on SI performance during 2025; (b) acquiring the real property, for a total amount of USD 4.4 million, on which the SI's factory is built, [such factory being] owned by RSG Holdings LLC, a corporation incorporated under the laws of California (hereinafter: "RSG Holdings") and partly held by the Chairman of the SI who is also a shareholder thereof (45%) as well as by two of the founders of the Target Company who currently provide consulting services to SI as independent contractors (hereinafter: the "Real Property Purchase Agreement"), and (c) entering into employment/consulting agreements with the CEO of SI and a senior engineering service provider of SI, which will come into effect as of the closing date and include customary terms for agreements of this type, all in accordance with the provisions of the agreements (the "Transaction"). The completion of the Transaction is subject to the fulfillment of several conditions precedent detailed in the Share Purchase Agreement, including, among others, the transfer of ownership of the real property in accordance with the Real Property Purchase Agreement, as well as the provision of notices and obtainment of required regulatory approvals in the United States and certain other third-party consents. The financing of this acquisition will be through a loan between the Company and its fully owned US subsidiary, as well as from the subsidiary's own equity. (For more detailed information see also press release dated March 12, 2025).

On March 27, 2025, the Company's Board of Directors decided to pay its shareholders a dividend for the financial year 2024 at the amount of USD 5,301 thousand (USD 0.3 per share), expected to be paid in June 2025.

6. External factors effects

• Global business environment see paragraph 1.B above.
• For the effect of 'Risk Factors' see paragraph 1N above.

To the best of the Board of Directors' and management's knowledge, except the above-mentioned, there have been no significant changes in external factors that may materially affect the Company's financial position or results of operations.

7. Statement by senior management in accordance with article 12, § 2 (3°( of the Royal Decree per 14.11.2007

Pursuant to article 12 § 2, 3° of the Royal Decree of 14 November 2007, David Yativ Chairman of the Board of Directors declares, on behalf of and for the account of Payton Planar Magnetics that, as far as is known to him,

a) The consolidated financial statements at December 31, 2024 are drawn up in accordance with IFRS-reporting as adopted by the European Union and present a true and fair view of the equity, financial situation and results of the company and the companies included in the consolidation.

b) The annual report gives a true and fair view of the company's development and results for the financial year 2024, the position of the company and the companies included in the consolidation, the main risk factors and uncertainties, as well as the main transactions with related parties and their possible impact on the financial statements.

The Company's Board of Directors wishes to thank our shareholders for their continuance trust and belief.

The Company's Board of Directors wishes to express its sincere thanks to the entire personnel for their efforts and contribution to the Group's affairs.

Ness-Ziona, March 27, 2025.

David Yativ Chairman of the Board of Directors

Doron Yativ Director and C.E.O.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2024

I N D E X

	Page
Independent Auditor's Report	19-22
Consolidated Statements of Financial Position	23-24
Consolidated Statements of Profit or Loss and Other Comprehensive Income	25
Consolidated Statements of Changes in Equity	26
Consolidated Statements of Cash Flows	27
Notes to the Consolidated Financial Statements	28-60

- - - - - - - - - - - - - - - - - - - - -

Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel

Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com

Independent Auditor's Report To the Shareholders of Payton Planar Magnetics Ltd.

Opinion

We have audited the consolidated financial statements of Payton Planar Magnetics Ltd. ("the Company"), which comprise the consolidated statement of financial position as at December 31, 2024, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) and we have fulfilled our ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Revenue recognition

As discussed in Notes 2E and 16A to the consolidated financial statements, revenues for the year ended December 31, 2024, are USD 50.8 million. According to IFRS 15, the Company recognizes revenue from goods with no alternative use over time. The Company's revenues are generated from the sale of goods manufactured according to customer specifications and based mainly on noncancelable and non-refundable terms. The Company is entitled to reimbursement of the costs incurred to date, including a reasonable margin. Customer-specific goods cannot be sold to any other customer and therefore have no alternative use. Furthermore, and due to the materiality of revenue to the financial statements of the Company, and the significant management judgment involved in the revenue recognition process, we identified revenue recognition as a key audit matter.

How our audit addressed the key audit matter

With respect to this audit matter, our main audit procedures included obtaining an understanding of the design and implementation of key internal controls surrounding the recording of revenues. We sampled revenues while focusing on transactions recorded close to the year-end and in the beginning of the subsequent period, and checked that such transactions were included in the appropriate period. Our testing included sampling of source documents such as purchase orders and reviewing terms of contracts with customers to obtain evidence that revenues recorded meet the criteria of IFRS 15. We also checked if any credit notes were issued in the subsequent period in order to obtain evidence of proper revenue recognition in 2024.

Other Information in the Company's 2024 Annual Report

Other information consists of the information included in the Annual Report, other than the consolidated financial statements and our auditor's report thereon. Management is responsible for the other information.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

European Uniform Electronic Format (ESEF)

In accordance with the draft standard on the audit of compliance of the Financial Statements with the European Single Electronic Format (hereafter "ESEF"), we have audited as well whether the ESEFformat is in accordance with the regulatory technical standards as laid down in the EU Delegated Regulation nr. 2019/815 of 17 December 2018 (hereafter "Delegated Regulation").

The Board of Directors is responsible for the preparation, in accordance with the ESEF requirements, of the consolidated financial statements in the form of an electronic file in ESEF format (hereafter "digital consolidated financial statements") included in the annual financial report.

It is our responsibility to obtain sufficient and appropriate information to conclude whether the format and the tagging of the digital consolidated financial statements comply, in all material respects, with the ESEF requirements under the Delegated Regulation.

In our opinion, based on our work performed, the format of and the tagging of information in the official English version of the digital consolidated financial statements as per March 27, 2025, included in the annual financial report of Payton Planar Magnetics Ltd., are, in all material respects, prepared in compliance with the ESEF requirements under the Delegated Regulation.

The partner in charge of the audit resulting in this independent auditor's report is Mr. Shahar Zvulun.

Tel-Aviv, Israel KOST FORER GABBAY & KASIERER March 27, 2025 A Member of Ernst & Young Global

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

		December 31,
		2024	2023
	Note	\$ thousands	\$ thousands
Current assets
Cash and cash equivalents	3	23,148	26,921
Short-term deposits and marketable securities	4	34,940	29,265
Trade accounts receivable	5	7,925	9,546
Other accounts receivable	6	2,027	2,804
Inventory	7	3,922	3,932
Total current assets		71,962	72,468
Non-current assets
Investment in equity accounted investee	8	1,545	1,409
Other investment	8	2,733	900
Property, plant and equipment	9	9,611	9,830
Intangible assets		22	22
Total non-current assets		13,911	12,161
Total assets		85,873	84,629

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

			December 31,
		2024	2023
Note		\$ thousands	\$ thousands
Liabilities and equity
Current liabilities
Trade payables		1,261	3,663
Other payables	10	3,010	2,532
Current income tax liability		1,244	1,520
Total current liabilities		5,515	7,715
Non-current liabilities
Employee benefits	12	473	381
Deferred tax liabilities	13D	1,089	1,311
Total non-current liabilities		1,562	1,692
Total liabilities		7,077	9,407
Equity
Share capital	15	4,836	4,836
Share premium		8,993	8,993
Reserve from transaction with controlling shareholder		311	-
Retained earnings		64,656	61,393
Total equity		78,796	75,222
Total liabilities and equity		85,873	84,629

David Yativ Doron Yativ Michal Lichtenstein Chairman of the Board of Directors Chief Executive Officer V.P. Finance & CFO

Date of approval of the financial statements: March 27, 2025

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

		Year ended December 31,
		2024	2023
	Note	\$ thousands	\$ thousands
Revenues	16A	50,826	54,856
Cost of sales	16B	(28,709)	(30,753)
Gross profit		22,117	24,103
Development costs		(1,672)	(1,442)
Selling and marketing expenses	16C	(2,203)	(2,152)
General and administrative expenses	16D	(4,703)	(3,863)
Other income (expenses), net	16E	7	(245)
Operating profit		13,546	16,401
Finance income	16F	2,404	2,023
Finance expenses	16F	(64)	(142)
Finance income, net		2,340	1,881
Share of profits of equity accounted investee		235	218
Profit before taxes on income		16,121	18,500
Taxes on income	13F	(2,810)	(3,234)
Net Profit		13,311	15,266
Other comprehensive income (loss) items that will not be transferred to profit and loss
Remeasurement of defined benefit plan	12B	41	27
Share of other comprehensive loss of equity accounted
investee		(17)	(6)
Total other comprehensive income, net of tax		24	21
Total comprehensive income		13,335	15,287
Earnings per share
Basic and diluted earnings per share (in \$)	18	0.75	0.86

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

				Reserve from transactions with
	Share capital Number of		Share premium	controlling shareholder	Retained earnings	Total
	shares	\$ thousands	\$ thousands	\$ thousands	\$ thousands	\$ thousands
Balance at January 1, 2023	17,670,775	4,836	8,993	-	54,588	68,417
Net profit Other comprehensive income	- -	- -	- -	- -	15,266 21	15,266 21
Total comprehensive income	-	-	-	-	15,287	15,287
Transactions with owners, recognized directly in equity Dividend to owners	-	-	-	-	(8,482)	(8,482)
Balance at December 31, 2023	17,670,775	4,836	8,993	-	61,393	75,222
Net profit Other comprehensive income	- -	- -	- -	- -	13,311 24	13,311 24
Total comprehensive income	-	-	-	-	13,335	13,335
Transactions with owners, recognized directly in equity Dividend to owners Equity component of transaction	-	-	-	-	(10,072)	(10,072)
with controlling shareholder (Note 1C(3))	-	-	-	311	-	311
Balance at December 31, 2024	17,670,775	4,836	8,993	311	64,656	78,796

CONSOLIDATED STATEMENTS OF CASH FLOWS

2024 2023 Note \$ thousands Operating activities Net Profit 13,311 Adjustments: Depreciation 9 768 Taxes on income 13F 2,810 Share of profits of equity accounted investee 8 (235) Loss (gain) on sale of property, plant and equipment, net 16E (7) Impairment loss of an option in an equity accounted investee 8,16E - Share-based compensation provided by controlling shareholder 1C(3) 311 Finance income, net 16F (2,205) 14,753 Decrease in trade accounts receivable 5 1,621 Decrease (increase) in other accounts receivable 6 769 Decrease in inventory 7 10 Increase (decrease) in trade payables (2,492) Increase (decrease) in other payables 10 478 Change in employee benefits 12 142 15,281 Interest received 16F 1,886 Interest paid 16F (32) Income taxes paid, net 13 (3,304) Cash flows generated from operating activities 13,831 Investing activities Investments in deposits, net 4 (6,149)	Year ended December 31,
	\$ thousands
	15,266
	828
	3,234
	(218)
	145 100
	-
	(1,779)
	17,576
	828
	(541)
	587
	2,275
	(128)
	1
	20,598
	1,181
	(23)
	(2,552)
	19,204
	(2,321)
Dividend received from an equity accounted investee 8 77	128
Investment in other investment 8 (1,833)	-
Acquisition of property, plant and equipment 9 (479)	(536)
Investments in marketable securities 4 (303)	(57)
Proceeds from sale of property, plant and equipment 9, 16E 27	14
Proceeds from sale of marketable securities 4 1,120	136
Cash flows used for investing activities (7,540)	(2,636)
Financing activities
Dividend paid 15B (10,072)	(8,482)
Cash flows used for financing activities (10,072)	(8,482)
Net increase (decrease) in cash and cash equivalents (3,781)	8,086
Cash and cash equivalents at beginning of the year 26,921	19,003
Effect of exchange rate fluctuations on cash and cash equivalents 8	(168)
Cash and cash equivalents at end of the year 23,148	26,921

NOTE 1: - GENERAL

A. Reporting entity

Payton Planar Magnetics Ltd. ("the Company") was incorporated in Israel in December 1992. The address of the Company's registered office is 3 Ha'avoda Street, Ness-Ziona.

The Company is a subsidiary of Payton Industries Ltd. (the "Parent Company") and its ultimate joint controlling shareholders are Mr. David Yativ and FIMI (Fimi Israel opportunity 7, limited partnership and Fimi Opportunity 7, LP, a limited partnership). The securities of the Company are registered for trade on the Euronext stock exchange in Brussels.

The consolidated financial statements of the Group comprise the Company and its subsidiaries (together referred to as the "Group").

The Group develops, manufactures and markets mainly planar transformers and operates abroad through its subsidiaries and distributors.

B. Definitions:

In these financial statements:

• 1. The Company Payton Planar Magnetics Ltd.
• 1. The Group The Company and its subsidiaries.
• 1. Payton Industries Ltd. Parent company, traded on the Tel Aviv Stock Exchange.
• 1. Subsidiaries Companies, the financial statements of which are fully consolidated, directly or indirectly, with the financial statements of the Company.
• 1. Investee companies Subsidiaries and companies, the Company's investment in which is stated, directly or indirectly, on the equity basis.
• 1. Related party Within its meaning in IAS 24 (2009), "Related Party Disclosures".
• 1. Israeli CPI The Consumer Price Index as published by the Central Bureau of Statistics in Israel.
• 1. NIS New Israeli Shekel.
• 1. \$ or USD U.S. Dollar.
• 1. GBP Great Britain Pound.

C. Material events in the reporting period

1. On February 14, 2024, the Parent Company entered into an agreement with FIMI ISRAEL OPPORTUNITY 7, a Limited Partnership, and FIMI Opportunity 7, LP a Limited Partnership (together hereinafter: "FIMI"), to allocate 1,468,057 ordinary shares of the Parent Company (hereinafter: "Allocated Shares") which, subject to their allocation, would constitute approximately 17.76% of the Parent Company's issued and outstanding share capital and voting rights (hereinafter: the "Share Purchase Agreement"), all conditional upon the occurrence of certain precedent conditions.

Simultaneously Mr. David Yativ, the controlling shareholder of the Parent Company (hereinafter: "Yativ") has entered into an agreement to sell to FIMI 1,000,000 shares of the Parent Company, constituting around 12.09% of the Parent Company's share capital.

NOTE 1: - GENERAL (Cont.)

Furthermore, FIMI and Yativ agreed on the terms of a shareholders' rights agreement to be executed on the closing of the transaction. It is noted that the completion of the Share Purchase Agreement and the other transactions described above (hereinafter: "the FIMI Transaction") were subject, inter alia, to the approval of the Parent Company's Shareholders' meeting, resolved on April 8, 2024 (see 3 hereinafter).

• 2. On March 7, 2024, the Company's remuneration committee and the Board of Directors have examined the updated remuneration policy, found it fair, logical and appropriate and decided to approve it. In addition the above mentioned quorums approved the Company's participation in the service fee of FIMI for the management services to be provided to Payton Group as part of the FIMI Transaction, for a period of 3 years, for a monthly payment of NIS 40 thousand (about USD 11 thousand) to be shared equally between the Company and the Parent Company (the participation amount shall be examined and adjusted on a yearly basis according to the actual services). The above resolutions were subject to the approval of the Company's shareholders' meeting, resolved on April 15, 2024 (see 3 hereinafter).
• 3. On April 21, 2024, the Company reported that according to the information provided from its Parent Company and from Mr. David Yativ, the controlling shareholder of the Parent Company ("Yativ"), all precedent conditions to the FIMI Transaction had been fulfilled on April 21, 2024, and the closing of the FIMI Transaction was consummated immediately thereafter ("the Closing Date"). Simultaneously, the transaction for the sale of the shares of Mr. Yativ was also completed, in such a manner that as of the Closing Date, each of Yativ and FIMI holds approximately 29.85% of the Parent Company's issued and outstanding share capital and voting rights (each approximately 29.28% of the Parent Company's issued and outstanding share capital on a fully diluted basis). Additionally, on the Closing Date, Yativ and FIMI have also entered into a shareholders' agreement pursuant to which the Parent Company considers them, as of the Closing Date, as joint controlling shareholders of the Parent Company due to their joint holdings of approximately 59.7% of the Parent Company's issued and outstanding share capital.

In addition, on the Closing Date, the Parent Company has granted non-marketable options to purchase shares of the Parent Company according to the Parent Company's incentive option plan ("the Options") to certain key-employees and officers of the Parent Company's subsidiaries, as follows: 80,000 Options to 4 (four) employees of the Parent Company's subsidiaries, 30,000 Options to Mr. Doron Yativ (David Yativ's son serves as a director and the CEO of the Company), 20,000 Options to Mr. Amir Yativ (David Yativ's son serves as an engineering and development manager) and 30,000 Options to Mrs. Michal Lichtenstein (serves as the CEO of the Parent Company and V.P. Finance & C.F.O of Payton Group).

The total fair value of the options granted to these employees on the date of grant amounts to USD 1,238 thousand. In accordance with IFRS 2, the Company records the share-based compensation in respect of these employees over the vesting period (4 years) with a corresponding credit to equity (reserve from transactions with controlling shareholder).

NOTE 2: - ACCOUNTING POLICIES

The following accounting policies have been applied consistently in the financial statements for all periods presented, unless otherwise stated.

A. Basis of presentation of the financial statements

These financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") and its interpretations adopted by the International Accounting Standards Board ("IASB").

The Group's financial statements have been prepared on a cost basis, except for: financial assets and liabilities which are presented at fair value through profit or loss, provisions, employee benefit assets and liabilities and investment in equity accounted investee.

The Group has elected to present the profit or loss items using the function of expense method. The consolidated financial statements were authorized for issue by the Company's Board of Directors on March 27, 2025.

B. Functional currency and presentation currency

The functional currency of the Group is the USD and it represents the primary economic environment in which the Group operates. The presentation currency of the financial statements is the USD.

C. Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase and costs incurred in bringing the inventories to their present location and condition. The Group periodically evaluates the condition and age of inventories and makes provisions for slow moving inventories accordingly.

Cost of inventories is determined as follows:

Raw materials - at cost of purchase on the basis of weighted average

Work in progress and finished goods - on the basis of average costs including materials, labor and other direct and indirect manufacturing costs

Purchased merchandise and products - at cost of purchase on the basis of weighted average

D. Property, plant and equipment

Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of the assets, as follows:

	%
Buildings (except land component)	2-15	(mainly 2%)
Land under finance lease	1.5
Machinery and equipment	15-33	(mainly 15%)
Motor vehicles	15
Office equipment	7-33	(mainly 7%)
Computers	20-33

NOTE 2: - ACCOUNTING POLICIES (Cont.)

E. Revenue

The Group applies International Financial Reporting Standard 15 ("IFRS 15" or "the standard") which provides guidance on revenue recognition. According to IFRS 15, the Group recognizes revenue from goods with no alternative use over time.

The standard describes a five step model for recognizing revenue from contracts with customers:

• (1) Identifying the contract with the customer.
• (2) Identifying distinct performance obligations in the contract.
• (3) Determining the transaction price.
• (4) Allocating the transaction price to distinct performance obligations.
• (5) Recognizing revenue when the performance obligations are satisfied.

Identifying the contract

The Group accounts for a contract with a customer only when the following conditions are met:

• (a) The parties to the contract have approved the contract (in writing, orally or according to other customary business practices) and they are committed to satisfying the obligations attributable to them;
• (b) The Group can identify the rights of each party in relation to the goods that will be transferred;
• (c) The Group can identify the payment terms for the goods that will be transferred;
• (d) The contract has a commercial substance (i.e. the risk, timing and amount of the entity's future cash flows are expected to change as a result of the contract); and
• (e) It is probable that the consideration, to which the Group is entitled to in exchange for the goods transferred to the customer, will be collected.

Identifying performance obligations

In accordance with the standard, the Group should identify distinct performance obligations in contract with customers. The Group is characterized by transactions with a one performance obligation in each contract.

Determining the transaction price

The transaction price is the amount of the consideration to which the Group expects to be entitled in exchange for the goods promised to the customer.

NOTE 2: - ACCOUNTING POLICIES (Cont.)

Satisfaction of performance obligations

Revenue is recognized when the Group satisfies a performance obligation by transferring control over promised goods to the customer.

The Group's revenue is generated from the sale of goods manufactured according to customer specifications and based mainly on NCNR terms (non-cancelable and non-refundable). The Group is entitled to reimbursement of the costs incurred to date, including a reasonable margin. Customer-specific goods cannot be sold to any other customer and therefore have no alternative use.

Contract asset

A contract asset is recognized when the Group may recognize revenue but still has a contractual obligation to perform, such as delivery, before it can receive consideration for goods sold to the customer.

Contract assets are classified as receivables when the rights in their respect become unconditional. In the following year, as the contractual obligation is completed, contract assets are classified as trade accounts receivable.

F. Disclosure of new standards in the period prior to their adoption

IFRS 18, "Presentation and Disclosure in Financial Statements"

In April 2024, the International Accounting Standards Board ("the IASB") issued IFRS 18, "Presentation and Disclosure in Financial Statements" ("IFRS 18") which replaces IAS 1, "Presentation of Financial Statements".

IFRS 18 is aimed at improving comparability and transparency of communication in financial statements.

IFRS 18 retains certain existing requirements of IAS 1 and introduces new requirements on presentation within the statement of profit or loss, including specified totals and subtotals. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information.

IFRS 18 does not modify the recognition and measurement provisions of items in the financial statements. However, since items within the statement of profit or loss must be classified into one of five categories (operating, investing, financing, taxes on income and discontinued operations), it may change the entity's operating profit. Moreover, the publication of IFRS 18 resulted in consequential narrow scope amendments to other accounting standards, including IAS 7, "Statement of Cash Flows", and IAS 34, "Interim Financial Reporting".

IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, and is to be applied retrospectively. Early adoption is permitted commencing from January 1, 2025, subject to disclosure.

The Group is evaluating the effects of IFRS 18, including the effects of the consequential amendments to other accounting standards, on its consolidated financial statements.

NOTE 3: - CASH AND CASH EQUIVALENTS

	December 31,
	2024	2023 \$ thousands
	\$ thousands
Cash for immediate withdrawal	22,317	23,900
Cash equivalents - short-term deposits	831	3,021
	23,148	26,921

The Group's exposure to currency risk and sensitivity analysis concerning cash and cash equivalents is disclosed in Note 11 on financial instruments.

NOTE 4: - SHORT-TERM DEPOSITS AND MARTKETABLE SECURITIES

		December 31,
	2024	2023
	\$ thousands	\$ thousands
Bank deposits (*)	34,940	28,517
Marketable securities:
Shares	-	329
Mutual funds	-	419
	-	748
	34,940	29,265

(*) Include short-term deposits, mainly in dollars, bearing interest at an average annual rate of approximately 5.8% (December 31, 2023: 6%).

The Group's exposure to currency risk concerning deposits and marketable securities is disclosed in Note 11 on financial instruments.

NOTE 5: - TRADE ACCOUNTS RECEIVABLE

A. Trade accounts receivable, net:

		December 31,
	2024	2023 \$ thousands
	\$ thousands
Trade receivables	7,925	9,546
Less provision for doubtful debts	-	-
Trade accounts receivable, net	7,925	9,546

The Company grants its customers interest-free credit for periods of 30 up to EOM+90 days. As at December 31, 2024, and 2023, there is no provision for expected credit losses as there are no amounts that are significantly past due.

B. Following is information about the credit risk exposure of the Group's trade accounts receivable:

December 31, 2024:

		Past due
	Not past due	< 30 days	31- 120 days \$ thousands	> 120 days	Total
Gross carrying amount	6,897	745	283	-	7,925
Allowance for ECLs	-	-	-	-	-

December 31, 2023:

		Past due
	Not past due	< 30 days	31- 120 days \$ thousands	> 120 days	Total
Gross carrying amount	7,642	1,442	462	-	9,546
Allowance for ECLs	-	-	-	-	-

NOTE 6: - OTHER ACCOUNTS RECEIVABLE

	December 31,
	2024
	\$ thousands	\$ thousands
Contract assets	665	2,204
Government institutions	88	130
Current tax assets	-	8
Prepaid expenses	373	290
Other receivables	901	172
	2,027	2,804

The Group's exposure to currency risk concerning other accounts receivable is disclosed in Note 11 on financial instruments.

NOTE 7: - INVENTORY

	December 31,
	2024	2023
	\$ thousands	\$ thousands
Raw and packing material	2,590	2,575
Work-in-process	635	754
Finished products	697	603
	3,922	3,932

NOTE 8: - INVESTMENTS IN INVESTEES AND OTHER

A. Details of the subsidiaries, their activities and the Company's interest therein as at December 31, 2024:

1. Payton America Inc. (hereinafter "Payton America"): Payton America, a fully owned U.S. subsidiary, located in Florida, manufactures and sells

Planar transformers and inductors.

2. Himag Planar Magnetics Ltd. (hereinafter "Himag Planar"):

Himag Planar, a fully owned UK subsidiary, incorporated for the purpose of the business activity acquisition of Himag Solutions Ltd. The investment in Himag Planar constitutes capital notes in USD which do not bear any interest.

NOTE 8: - INVESTMENTS IN INVESTEES AND OTHER (Cont.)

B. Investment in Equity Accounted Investee

In October 2018 the Company acquired 20% of the rights in a Hong-Kong holding company - PCT Industries Limited (hereinafter - "PCT"), holding a fully owned manufacturing subsidiary in Dongguan, China, engaging in manufacturing and assembly, which currently serves as one of the Company's major manufacturing partners.

In accordance with the investment agreement, the Company was granted an option to increase its share of the rights in PCT by 15% (up to 35%) (hereinafter - "the option").

The option expired in 2023 without being exercised. As a result, as at December 31, 2023, the Company recognized an impairment loss in the amount of USD 100 thousand that is recorded in profit or loss under other expenses, net (see Note 16E, hereinafter).

During 2024 PCT decided to pay the shareholders a dividend at the amount of USD 383 thousand, of which the Company received an amount of USD 77 thousand.

During 2023 PCT decided to pay the shareholders a dividend at the amount of USD 640 thousand, of which the Company received an amount of USD 128 thousand.

C. Other Investment

In September 2022, the Group acquired shares and options of CaPow Technologies Ltd. (hereinafter: "CaPow"), an Israeli startup in the field of wireless charging solutions, for a consideration of USD 900 thousand.

In May 2024, the Company exercised its warrants to purchase additional 4,489 shares of CaPow, and keep its holding share, against payment of USD 333 thousand.

In September 2024, the Company participated in a second fundraising round with an additional investment of USD 1,500 thousand.

The Company holds about 7% of the shares of CaPow and following the additional investment, the Company was granted representation on CaPow's Board of Directors.

The investment is measured at fair value designated to profit or loss.

NOTE 9: - PROPERTY, PLANT AND EQUIPMENT

A. Composition and movement

Year 2024:

	Machinery and equipment	Motor vehicles	Computers and Office equipment \$ thousands	Land and Buildings	Total
Cost
Balance as of January 1, 2024	4,507	713	2,102	12,140	19,462
Acquisitions	132	65	372	-	569
Disposals	(7)	(53)	-	-	(60)
Balance as of December 31, 2024	4,632	725	2,474	12,140	19,971
Accumulated depreciation
Balance as of January 1, 2024	3,599	234	1,482	4,317	9,632
Depreciation for the year	240	105	154	269	768
Disposals	(4)	(36)	-	-	(40)
Balance as of December 31, 2024	3,835	303	1,636	4,586	10,360
Carrying amounts as of December 31, 2024	797	422	838	7,554	9,611
Year 2023:
	Machinery and equipment	Motor vehicles	Computers and Office equipment	Land and Buildings	Total
			\$ thousands
Cost
Balance as of January 1, 2023	4,679	703	1,845	12,131	19,358
Acquisitions	170	68	258	9	505
Disposals	(342)	(58)	(1)	-	(401)
Balance as of December 31, 2023	4,507	713	2,102	12,140	19,462
Accumulated depreciation
Balance as of January 1, 2023	3,480	184	1,351	4,031	9,046
Depreciation for the year	308	102	132	286	828
Disposals	(189)	(52)	(1)	-	(242)
Balance as of December 31, 2023	3,599	234	1,482	4,317	9,632
Carrying amounts as of

NOTE 9: - PROPERTY, PLANT AND EQUIPMENT (Cont.)

B. Details on land rights used as property, plant and equipment by the Group

The land on which the Company's premises in Israel are built, had a carrying amount of USD 1,163 thousand as at December 31, 2024 (December 31, 2023: USD 1,183 thousand) and is leased from the Israel Lands Administration under a capital lease ending on June 30, 2032. The Company has the right to extend the lease period by another 49 years under certain circumstances.

C. Acquisition of property, plant and equipment on credit

As at December 31, 2024, the Group acquired property, plant and equipment on credit in the amount of USD 108 thousand (December 31, 2023: USD 18 thousand). As of the date of signing these financial statements, the majority of this amount has been paid.

D. Additional information

The Group has assets that have been fully depreciated and are still in use. As at December 31, 2024 the original cost of such assets was USD 4,968 thousand (December 31, 2023: USD 4,561 thousand).

NOTE 10: - OTHER PAYABLES

	December 31,
	2024	2023
	\$ thousands	\$ thousands
Employees and related benefits	873	789
Short-term employee benefits	880	493
Government institutions	49	46
Other payables and accrued expenses (*)	1,208	1,204
	3,010	2,532

(*) See Note 17A - balances with related parties

The Group's exposure to currency and liquidity risks concerning other payables is disclosed in Note 11 on financial instruments.

NOTE 11: - FINANCIAL INSTRUMENTS

A. Fair value

Management believes that the carrying amount of cash and cash equivalents, short-term deposits, trade accounts receivable, other accounts receivable, trade payables and other payables approximate their fair value.

Financial assets presented in the Statement of Financial Position at fair value are measured according to inputs that are not based on observable market data (Level 3).

B. Financial risk management objectives and policies:

The Group's principal financial assets include cash and cash equivalents, short-term deposits and receivables that derive directly from its operations. The Group's principal financial liabilities are comprised payables.

The Group is exposed to market risk, credit risk and liquidity risk. The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board of Directors defines principles for overall risk management, as well as the specific policy for certain risk exposures and also the use of financial instruments and excess liquidity investments. The Group's risk management framework focuses on actions to minimize possible negative effects on the Group's financial performance.

1. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises currency risk.

The Group's normal course of business is being managed in U.S. dollar, thus, most of the market risks are hedged.

The Group uses, from time to time, derivatives as a tool for hedging, in order to neutralize fluctuations in profit or loss.

1. Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in foreign currency exchange rates.

Since most of the Group's sales are in U.S. dollar, the Group's gross profit is exposed to the changes in exchange rates of the U.S. dollar in relation to the NIS and GBP, with regards to local labor costs and other operating costs, and in relation to the Chinese currency, with regards to costs of raw materials. The Group uses derivatives, from time to time, as a tool for economic hedging, especially in order to hedge labor costs and other costs paid in NIS.

NOTE 11: - FINANCIAL INSTRUMENTS (Cont.)

	December 31, 2024
	Dollar	NIS	Euro	GBP	Other	Total
	\$ thousands
Current financial assets:
Cash and cash equivalents	21,291	1,030	206	589	32	23,148
Deposits	34,109	831	-	-	-	34,940
Trade and other receivables	7,816	229	99	448	-	8,592
Current financial liabilities:
Trade payables	(685)	(486)	(11)	(79)	-	(1,261)
Other payables	(961)	(217)	(30)	-	-	(1,208)
	61,570	1,387	264	958	32	64,211
			December 31, 2023
	Dollar	NIS	Euro	GBP	Other	Total
			\$ thousands
Current financial assets:
Cash and cash equivalents	26,347	107	58	403	6	26,921
Deposits and Marketable
securities	25,188	4,077	-	-	-	29,265
Trade and other receivables	11,068	313	15	356	-	11,752
Current financial liabilities:
Trade payables	(3,139)	(400)	(20)	(104)	-	(3,663)
Other payables	(1,006)	(174)	(17)	-	(7)	(1,204)
	58,458	3,923	36	655	(1)	63,071

The Group's exposure to foreign currency risk was as follows based on notional amounts:

Information regarding significant exchange rates:

	1 US Dollar
	December 31	Rate of change	December 31	Rate of change	December 31	Rate of change
	NIS	%	Euro	%	GBP	%
2024	3.647	0.55	0.961	6.31	0.797	1.53
2023	3.627	3.07	0.904	(3.62)	0.785	(5.42)

NOTE 11: - FINANCIAL INSTRUMENTS (Cont.)

Foreign currency sensitivity analysis:

The following table demonstrates the sensitivity test to a reasonably possible change in NIS, Euro and GBP exchange rates, with all other variables held constant. The impact on the Group's income before tax is due to changes in the fair value of monetary assets and liabilities. The Group's exposure to foreign currency changes for all other currencies is immaterial.

	Profit or loss December 31,
	2024	2023
	\$ thousands	\$ thousands
Increase in the exchange rate of:
5% in the NIS	69	196
5% in the Euro	13	2
5% in the GBP	48	33

A strengthening of the USD against the above currencies as at December 31 would have had an equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

1. Credit risk

Credit risk is the risk that counterparty will not meet its obligations as a customer or under a financial instrument leading to a loss for the Group. The Group is exposed to credit risk from its operating activity (primarily trade accounts receivable) and from its financing activity, including deposits with banks.

The Group's revenues are derived from sales to customers in Israel, Asia, Europe, America and other countries around the world. The Company's Management regularly monitors the customers' balances and includes specific provisions for doubtful debts in the financial statements that adequately reflect, in the opinion of management, the loss inherent in debts the collection of which is doubtful. The Group has credit risk insurance for most of its Israeli and other customers, whose yearly activity exceeds USD 5 thousand and USD 10 thousand, respectively.

The Group's cash surpluses are invested in banks. The Group has a surplus cash investment policy for the purpose of reducing risk or maintaining liquidity. This policy is reviewed and updated from time to time according to market changes.

NOTE 11: - FINANCIAL INSTRUMENTS (Cont.)

1. Liquidity risk

The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The following are the contractual maturities of financial liabilities based on the actual rates at the reporting date:

		December 31, 2024
	6 months or less	Total
	\$ thousands	\$ thousands
Trade payables	1,261	1,261
Other payables	1,208	1,208
	2,469	2,469
	December 31, 2023
	6 months or less	Total
	\$ thousands	\$ thousands
Trade payables	3,663	3,663
Other payables	1,204	1,204
	4,867	4,867

NOTE 12: - EMPLOYEE BENEFIT ASSETS AND LIABILITIES

Post-employment benefits

According to the labor laws and Severance Pay Law in Israel, the Company is required to pay compensation to an employee upon dismissal or retirement or to make current contributions in defined contribution plans pursuant to section 14 of the Severance Pay Law, as specified below. The Group's liability is accounted for as a post-employment benefit. The computation of the Group's employee benefit liability is made according to the current employment contract based on the employee's salary and employment term which establish the entitlement to receive the compensation.

A. Defined contribution plans

Section 14 to the Severance Pay Law, 1963 applies to part of the compensation payments, pursuant to which the fixed contributions paid by the Group into pension funds and/or policies of insurance companies release the Group from any additional liability to employees for whom said contributions were made. These contributions and contributions for benefits represent defined contribution plans.

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Expenses in respect of defined contribution plans	506	481

B. Defined benefit plans

The Group accounts for that part of the payment of compensation that is not covered by contributions in defined contribution plans, as above, as a defined benefit plan for which an employee benefit liability is recognized and for which the Group deposits amounts in severance pay funds and in qualifying insurance policies. The net liability for the defined benefit plan is presented under non-current liabilities.

Risks associated with the Group's liability for defined benefit obligations refer to deviations in salary increases, deviations in assets performances from the expectation, as well as changes in the interest rate environment.

For sensitivity analyses, reflecting the effect of changes in salary increase assumptions and interest rate, see 4 hereinafter.

	December 31,
	2024	2023
	\$ thousands	\$ thousands
Present value of defined benefit obligation *(	2,329	2,008
Fair value of plan assets	1,856	1,627
Net recognized liability for defined benefit obligations	473	381

*( Including benefits in respect of adaption grants

NOTE 12: - EMPLOYEE BENEFIT ASSETS AND LIABILITIES (Cont.)

1. Changes in the defined benefit obligation

	2024	2023
	\$ thousands	\$ thousands
Defined benefit obligations as at January 1	2,008	1,944
Expenses recognized in profit or loss:
Current service costs	179	75
Past service cost	3	16
Interest costs	85	72
Loss (gain) from remeasurement in other comprehensive income:
Actuarial gain arising from changes in financial assumptions	-	(36)
Return on plan assets (excluding amounts included in net interest
expenses)	42	1
Other actuarial loss	23	21
Changes in respect of foreign exchange differences	3	12
Other adjustments:
Benefits paid	(3)	(29)
Changes in respect of foreign exchange differences	(11)	(68)
Defined benefit obligation as at December 31	2,329	2,008

2. Changes in the fair value of plan assets

Plan assets comprise assets held by a long-term employee benefit fund or qualifying insurance policies.

	2024 \$ thousands	2023
		\$ thousands
Fair value of plan assets as at January 1	1,627	1,530
Income recognized in profit or loss:
Interest income	40	35
Gain (loss) from remeasurement in other comprehensive income:
Return on plan assets (excluding amounts included in net interest
expenses)	117	37
Other actuarial loss	-	(5)
Changes in respect of foreign exchange differences	1	-
Other adjustments:
Contributions by employer	78	74
Changes in respect of foreign exchange differences	(7)	(44)
Fair value of plan assets as at December 31	1,856	1,627

NOTE 12: - EMPLOYEE BENEFIT ASSETS AND LIABILITIES (Cont.)

3. The principal assumptions underlying the defined benefit plan

	2024 %	2023 %
Discount rate (*)	3.12	3.11
Expected rate of salary increase	3	3

(*) The discount rate is the yield at the reporting date on high quality NIS-denominated corporate debentures that have maturity dates approximating the terms of the Group's obligations.

Assumptions regarding future mortality are based on published statistics and mortality tables.

1. Sensitivity analysis

Below are reasonably possible changes at the end of the reporting period in each actuarial assumption assuming that all other actuarial assumptions are constant:

	Change in defined benefit obligation
	\$ thousands
December 31, 2024:
Sensitivity test for changes in the expected rate of salary increase
The change as a result of:
Salary increase of 1%	82
Salary decrease of 1%	(52)
Sensitivity test for changes in the discount rate of the plan assets and liability
The change as a result of:
Increase of 1% in discount rate	(51)
Decrease of 1% in discount rate	81
5. Effects of the Group's defined benefit plan on its future expected cash flows

The expected contributions to the plan in 2025 are USD 81 thousand. The average weighted life of the plan as of December 31, 2024 is 7.60 years (as of December 31, 2023: 8.06 years).

NOTE 13: - TAXES ON INCOME

A. Tax laws applicable to the Group's companies

1. The Dollar regulations

The Company, being a "foreign investment company", elected to be taxed as from the year 2009, based upon its results in dollars and according to applicable income tax regulations (hereinafter - "the Dollar regulations").

2. Tax benefits under the Law for the Encouragement of Capital Investments - 1959 ("the Investment Law")

The Company is subject to the Law for the Encouragement of Capital Investments - 1959 which was amended last in 2010 (hereinafter - "the Amendment to the Law"). The Amendment to the Law provisions applies to preferred income derived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms in the Amendment to the Law.

The Amendment provides that only companies in Development Area A will be entitled to the grants track and that they will be entitled to receive benefits under this track and under the tax benefits track at the same time. In addition, a preferred enterprise track was introduced, which mainly provides a uniform and reduced tax rate for all the company's income entitled to benefits. On August 5, 2013 the Knesset passed the Law for Changes in National Priorities (Legislative Amendments for Achieving Budget Objectives in the Years 2013 and 2014) - 2013, which raised the tax rates on preferred income as from the 2014 tax year as follows: 9% for Development Area A and 16% for the rest of the country. As stated in Note 1, the Company's factory is not located in Development Area A, and therefore the Company's tax rate on preferred income is 16%.

The Amendment to the Law also provides that no tax will apply to a dividend distributed out of preferred income to a shareholder that is a company, for both the distributing company and the shareholder. A tax rate of 20% shall apply to a dividend distributed out of preferred income to an individual shareholder or foreign resident, subject to double taxation prevention treaties.

The Company complies with the conditions provided in the amendment to the Law for the Encouragement of Capital Investments for inclusion in the scope of the tax benefits track.

On November 15, 2021 the Economic Efficiency Law (Legislative Amendments for the 2021 and 2022 Budget Years) - 2021 (hereinafter: "the Economic Efficiency Law") was published as well as a Temporary Order to the Law for the Encouragement of Capital Investments - 1959 (hereinafter: "the temporary order"), which offers a reduced tax rate arrangement to companies that received an exemption from corporate tax under the aforesaid law. The temporary order provided that companies that choose to apply the temporary order, which is effective until November 14, 2022, will be entitled to a reduced tax rate on the "release" of exempt profits (hereinafter: "the beneficiary corporate tax rate"). The release of exempt profits makes it possible to distribute them at a reduced rate of corporate tax at the company level based on the rate of the profits being distributed pursuant to the conditions set forth in the Amendment.

NOTE 13: - TAXES ON INCOME (Cont.)

The reduced corporate tax rate will be determined according to the rate of exempt profits the company chooses to release from its entire exempt profits, and will be between 40% and 70% of the corporate tax rate that would have applied to the revenue in the year it was produced if it had not been exempt, but in any event no less than 6%.

Furthermore, a company that chooses to release its exempt profits and pay a beneficiary corporate tax rate will be required to invest in its enterprise, within a period of 5 years beginning from the tax year it elected, an amount calculated according to a formula provided in the temporary order (30% of the exempt income multiplied by the corporate tax rate and multiplied by the release rate). The investment will be made in productive assets (with the exclusion of buildings), research and development in Israel and salaries to new employees of the enterprise. Failure to comply with this condition will require the company to pay additional corporate tax.

In addition, according to the Economic Efficiency Law an amendment was made to Section 74 of the Law for the Encouragement of Capital Investments - 1959 with respect to identifying the sources of dividend distributions as of August 15, 2021.

The Company applied the temporary order in 2022.

1. Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969

The Company currently qualifies as an "Industrial Company" as defined in the Law for the Encouragement of Industry (Taxes) - 1969 and accordingly it is entitled to benefits, of which the most significant one is higher rates of depreciation than those prescribed in the Israeli tax ordinance.

B. Tax rates applicable to the Group

1. The Israeli corporate income tax rate was 23% in 2024 and 2023.

Current taxes for the reported periods and deferred tax balances as at December 31, 2024 and 2023 are calculated according to the tax rate presented above. See also Note 13A(2) above.

• 1. The principal tax rates applicable to the subsidiaries whose place of incorporation is abroad are:
  2. A. A company incorporated in the U.S. Payton America is subject to the tax rate of its country of domicile. The primary tax rates applicable to the subsidiary are 21% Federal Tax and 5.5% State Tax.
  3. B. A company incorporated in the UK Himag Planar is subject to the tax rate of its country of domicile. The primary tax rate applicable to the subsidiary is 19%.

NOTE 13: - TAXES ON INCOME (Cont.)

C. Final tax assessments

The Company has final tax assessments up to and including the 2018 tax year. With few exceptions the U.S. subsidiary is no longer subject to U.S. Federal income tax examinations by tax authorities for years before 2021.

D. Deferred tax assets and liabilities

Composition:

	Statements of financial position		Statements of profit or loss
	December 31,		Year ended December 31,
	2024	2023	2024	2023
		\$ thousands
Deferred tax liabilities:
Property, plant and equipment	(1,091)	(1,121)	30	62
Investment in investees	(153)	(104)	(54)	(50)
Others	(97)	(246)	149	(93)
	(1,341)	(1,471)
Deferred tax assets:
Employee benefits	252	160	101	(11)
	252	160
Deferred tax income (expenses)			226	(92)
Deferred tax liabilities, net	(1,089)	(1,311)

Deferred taxes in respect of companies in Israel are calculated according to the tax rate anticipated to be in effect on the date of reversal as stated above. Deferred taxes in respect of foreign subsidiary are calculated according to the relevant tax rates.

As at December 31, 2024 a deferred tax liability in the amount of USD 920 thousand (2023: USD 786 thousand) for temporary differences in the amount of USD 4,000 thousand (2023: USD 3,419 thousand) related to investment in subsidiaries was not recognized because the Company is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

As at December 31, 2024 deferred tax assets have not been recognized mainly for capital tax losses in the amount of USD 672 thousand (year ended December 31, 2023: USD 722 thousand), since currently their utilization in the foreseeable future is not probable.

NOTE 13: - TAXES ON INCOME (Cont.)

E. Taxes on income relating to items recorded in other comprehensive income

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Actuarial gain from defined benefit plans Company's share of other comprehensive loss	(9)	(7)
of equity accounted investee	5	2
	(4)	(5)

F. Taxes on income included in profit or loss

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Current taxes	3,036	3,142
Deferred taxes (see also D above)	(226)	92
	2,810	3,234

NOTE 13: - TAXES ON INCOME (Cont.)

G. Theoretical tax

The reconciliation between the tax expense, assuming that all the income, expenses, gains and losses in profit or loss were taxed at the statutory tax rate and the taxes on income recorded in profit or loss is as follows:

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Profit before taxes on income	16,121	18,500
Statutory tax rate	23%	23%
Tax computed at the statutory tax rate	3,708	4,255
Increase (decrease) in taxes on income resulting from the following:
Tax benefit arising from preferred income tax rates by virtue of the
Encouragement Law	(867)	(1,004)
Non-deductible expenses and tax-exempt income, net	74	64
Tax saving in respect of foreign subsidiaries	(62)	(79)
Others	(43)	(2)
	2,810	3,234

NOTE 14: - COMMITMENTS

A. According to a Management Services Agreement signed between the Company and Wichita Ltd., a management company under the full control of Mr. David Yativ (approved by the Company's General meeting dated September 20, 2023), David Yativ will continue to provide management services as the Active Chairman of the Company for a period of 3 years, as of November 1, 2023. For providing these management services, Wichita Ltd. will be entitled to a monthly management fee of USD 54 thousand (linked to the Israeli consumer price index according to the base index known on April 15, 2023) and an annual bonus calculated as 3.4% of the Company's annual profit before taxes on income and before any other profit based bonus.

NOTE 14: - COMMITMENTS (Cont.)

• B. According to a Management Services Agreement signed between the Company and Yaarh Looking To The Future Ltd., a management company under the full control of Mr. Doron Yativ (approved by the Company's General meeting dated September 20, 2023), Doron Yativ will continue to provide management services as the Company's C.E.O., for a period of 3 years, as of November 1, 2023. For providing these management services, Yaarh - Looking To The Future Ltd. will be entitled to a monthly management fee of USD 29 thousand (linked to the Israeli consumer price index according to the base index known on April 15, 2023) which shall be raised by 3% in April each year, and an annual bonus calculated as 2% of the Company's annual profit before taxes on income and before any other profit based bonus.
• C. On March 7, 2024, the Company's remuneration committee and the Board of Directors, approved the Company's participation in the service fee of FIMI for the management services to be provided to Payton Group as part of the FIMI Transaction, for a period of 3 years, as of the Closing Date of the FIMI Transaction - April 21, 2024. The above resolutions were approved by the Company's shareholders' meeting, resolved on April 15, 2024. For providing these management services, FIMI will be entitled to a monthly management fee in the total amount of USD 11 thousand, to be shared equally between the Company and the Parent Company (the participation amount shall be examined and adjusted on a yearly basis according to the actual services).

NOTE 15: - EQUITY

A. Share capital - Composition

		Number of shares
	Authorized	Issued and paid
	December 31, 2024 and 2023
Ordinary shares of NIS 1 each	20,000,000	17,670,775

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to Company's residual assets.

NOTE 15: - EQUITY (Cont.)

B. Dividends

The following dividends were paid by the Company:

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
USD 0.570 per ordinary share	10,072	-
USD 0.480 per ordinary share	-	8,482

After the reporting date, on March 27, 2025, the Company declared a dividend for the financial year 2024 in the amount of USD 5,301 thousand (USD 0.30 per share, expected to be paid during June 2025). This amount was not recognized as distribution to the owners in the period and no liability was recorded in its respect. (See Note 20)

NOTE 16: - ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS

A. Additional information on revenues

		Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Export	49,487	53,567
Israel	1,339	1,289
	50,826	54,856

Revenues from principal customers which each accounts for 10% or more of total revenues reported in the financial statements:

	Year ended December 31,
	2024	2023 %
	%
Customer A	27	15
Customer B	*	16
Customer C	15	14

* Less than 10% of the sales of the Group

NOTE 16: - ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS (Cont.)

Geographical information

Segment revenue based on the geographical location of customers:

		Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Israel	2,238	2,200
Europe	9,208	11,652
America	8,603	10,772
Asia	30,777	30,232
	50,826	54,856

B. Cost of sales

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Materials consumed*	21,312	23,616
Salaries and related benefits	5,618	5,272
Depreciation	462	543
Other manufacturing expenses	1,292	1,236
Change in inventory of finished products
and work in process	25	86
	28,709	30,753

* Includes inventory write-off of USD 83 thousand and USD 142 thousand for the years ended December 31, 2024 and 2023, respectively.

NOTE 16: - ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS (Cont.)

C. Selling and marketing expenses

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Salaries and related benefits*	1,068	975
Sales commissions	652	777
Advertising and marketing	82	70
Exhibits and travel abroad	314	173
Other	87	157
	2,203	2,152

* Includes expenses related to related parties in the amount of USD 489 and USD 435 thousand for the years ended December 31, 2024 and 2023, respectively (see Note 17C).

D. General and administrative expenses

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Salaries and related benefits	1,517	1,230
Share-based compensation provided by
controlling shareholder (see note 1C(3))**	311	-
Maintenance and communications	479	316
Depreciation	306	285
Professional services	314	295
Management fees and related benefits to
related parties (see note 17)	1,190	1,134
Other	586	603
	4,703	3,863

** Includes compensation to key management personnel and interested parties in the amount of USD 155 thousand for the year ended December 31, 2024 (see Note 17C).

NOTE 16: - ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS (Cont.)

E. Other income (expenses), net

	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Capital gain (loss) on sale of property, plant and
equipment, net	7	(145)
Impairment loss of an option in an equity accounted investee (see note 8B)	-	(100)
	7	(245)
F. Finance income (expenses)
	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Finance income
Interest income from bank deposits and cash	2,209	1,947
Income from marketable securities, net	82	76
Net profit from change in exchange rates	112	-
Other	1	-
	2,404	2,023
Finance expenses
Bank charges and others	32	33
Interest for delayed tax payments	32	23
Net loss from change in exchange rates	-	77
Other	-	9
	64	142

NOTE 17: - BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES

A. Balances with key management personnel and interested and related parties

	Equity accounted investee \$ thousands	The Parent Company \$ thousands	Key management personnel employed by the Group \$ thousands	Key management personnel not employed by the Group \$ thousands	Directors and interested parties not employed by the Group \$ thousands
Payables:
Short-term employment
benefits	-	-	151	-	-
Post-employment benefits	-	-	118	-	-
Trade payables	463	-	-	-	-
Other payables	-	-	-	759	29

December 31, 2024

December 31, 2023

	Equity accounted investee	The Parent Company	Key management personnel employed by the Group	Key management personnel not employed by the Group	Directors not employed by the Group
	\$ thousands	\$ thousands	\$ thousands	\$ thousands	\$ thousands
Payables:
Short-term employment
benefits	-	-	99	-	-
Post-employment benefits	-	-	27	-	-
Trade payables	152	-	-	-	-
Other payables	-	-	-	723	9

B. Transactions with related parties

	Equity accounted investee
	Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Purchases	11,284	9,504
	Other investment
		Year ended December 31,
	2024	2023
	\$ thousands	\$ thousands
Sales	82	36

NOTE 17: - BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES (Cont.)

C. Compensation to key management personnel and interested parties

For the year ended December 31, 2024

	Key management personnel employed by the Group \$ thousands	Key management personnel not employed by the Group (*) \$ thousands	Directors and interested parties not employed by the Group (**) \$ thousands
Short-term employee benefits	545	-	-
Post-employment benefits	245	-	-
Share-based compensation	97	58	-
Other	-	1,669	108
Total	887	1,727	108
Number of people	5	2	8

For the year ended December 31, 2023

	Key management personnel employed by the Group	Key management personnel not employed by the Group (*)	Directors not employed by the Group
	\$ thousands	\$ thousands	\$ thousands
Short-term employee benefits	510	-	-
Post-employment benefits	51	-	-
Other	-	1,604	38
Total	561	1,604	38
Number of people	3	2	3

• (*) Management fees and related benefits to Wichita Ltd. (see Note 14A) and to Yaarh-Looking To The Future Ltd. (see Note 14B) include an amount of USD 189 (year ended December 31, 2023: USD 184 thousand) and an amount of USD 264 (year ended December 31, 2023: USD 251 thousand), respectively, recorded as selling and marketing expenses.
• (**) Includes management fees to FIMI (see Note 14C) in the amount of USD 36 thousand recorded as selling and marketing expenses.

NOTE 17: - BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES (Cont.)

Inter-company transactions between the Company and its two fully owned subsidiaries (Payton America Inc. and Himag Planar Magnetics Ltd.) include, inter alia, the following: engineering support, purchasing and subcontracting, marketing, administrative and management services. All the inter-company transactions are being eliminated within these consolidated financial statements.

D. Commitments

Regarding agreements with related parties and shareholders - see Note 14A, 14B and 14C.

NOTE 18: - NET EARNINGS PER SHARE

Details of the number of shares and income used in the computation of net earnings per share:

		Year ended December 31,
	2024	2023
Net profit attributable to equity holders of the Company (\$ thousands)	13,311	15,266
Weighted number of shares (*)	17,671	17,671
Basic and diluted earnings per ordinary share (in US\$)	0.75	0.86

(*) The Company has no dilutive instruments. Data relates to the computation of basic and dilutive earnings per share.

NOTE 19: - OPERATING SEGMENTS

The Group has one operating segment, the transformer segment. The Group's chief operating decision maker (hereinafter: "CODM") makes decisions and allocates resources with respect to all the transformers as a whole.

Geographical information

Non-current assets (property, plant and equipment and intangible assets) are based on the geographical location of the assets:

		December 31,
	2024	2023
	\$ thousands	\$ thousands
Israel	8,479	8,646
Europe	538	561
America	616	645
	9,633	9,852

NOTE 20: - EVENTS AFTER THE REPORTING DATE

A. On March 12, 2025, the Company's US subsidiary entered into agreements aiming at: (a) acquiring 100% of the issued and paid-up share capital of SI Manufacturing, Inc., a corporation incorporated under the laws of California (hereinafter: "SI") in exchange for payment of total consideration of approximately USD 5.6 million (hereinafter: the "Share Purchase Agreement"). SI manufactures and sells electronic coils, assembling power supplies and custom magnetic components for customers in various industrial sectors including transportation, aviation, space and defence. The Share Purchase Agreement includes additional contingent consideration of up to USD 500 thousand based on SI performance during 2025; (b) acquiring the real property, for a total amount of USD 4.4 million, on which the SI's factory is built, [such factory being] owned by RSG Holdings LLC, a corporation incorporated under the laws of California (hereinafter: "RSG Holdings") and partly held by the Chairman of the SI who is also a shareholder thereof (45%) as well as by two of the founders of the Target Company who currently provide consulting services to SI as independent contractors (hereinafter: the "Real Property Purchase Agreement"), and (c) entering into employment/consulting agreements with the CEO of SI and a senior engineering service provider of SI, which will come into effect as of the closing date and include customary terms for agreements of this type, all in accordance with the provisions of the agreements (the "Transaction"). The completion of the Transaction is subject to the fulfillment of several conditions precedent detailed in the Share Purchase Agreement, including, among others, the transfer of ownership of the real property in accordance with the Real Property Purchase Agreement, as well as the provision of notices and obtainment of required regulatory approvals in the United States and certain other third-party consents. The financing of this acquisition will be through a loan between the Company and its fully owned US subsidiary, as well as from the subsidiary's own equity.

NOTE 20: - EVENTS AFTER THE REPORTING DATE

B. On March 27, 2025, the Company's Board of Directors decided to pay the shareholders a dividend for the financial year 2024, in the amount of USD 5,301 thousand (USD 0.30 per share, expected to be paid in June 2025).