This is an unofficial AI generated translation of the official Hebrew version and has no binding force. The only binding version is the official Hebrew version. For more information, please review the legal disclaimer. .

Matrix IT Ltd. Quarterly Financial Reports March 31, 2026

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– Chapter A Board of Directors' Report

– Chapter B Interim Consolidated Financial Statements

– Chapter C Financial data from the interim consolidated financial statements attributed to the company

– Chapter D Report on the effectiveness of internal control

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Chapter A

Board of Directors' Report For the three months ended on 31.03.2026

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1.	Board of Directors' explanations on the corporation's business afairs	3
	1.1. Key data from the description of the corporation's business	3
	1.1.1. General	3
	1.1.2. Description of operating segments	3
	1.1.3. Business environment	4
	1.1.4. Material events in the period	6
	1.1.5. Key results for thefrst quarter of 2026	8
	1.1.6. Summary of consolidated proft and loss reports for the three months ended March 31, 2026	9
	and 2025
	1.2. Analysis of operating results	10
	1.2.1. Seasonality	10
	1.2.2. Analysis of consolidated proft and loss results	10
	1.2.3.Analysis of the efect of the erosion of the dollar exchange rate relative to the shekel on	13
	operating results (on a Constant Currency basis)
	1.2.4. Summary of consolidated proft and loss results by quarters for 2025 and for thefrst quarter	14
	of 2026
	1.2.5.Summary of consolidated proft and loss results by operating segments for the three months	15
	ended March 31, 2026 and 2025
	1.2.6. Analysis of results of operations by operating segments on a Constant Currency basis	18
	1.2.7. Engagements and special events	20
	1.3. Financial position, liquidity and sources offnancing	21
2.	Disclosure requirements in connection with thefnancial reporting of the corporation	24
	2.1. Goodwill	24
Appendix A - Details regarding BONDS issued by the Company and held by the public as of the date of the		25
report

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1. Board of Directors' Explanations on the Corporation's Business

Position

1.1. Main Data from the Description of the Corporation's Business

1.1.1. General

Matrix IT Ltd together with its subsidiaries, is the leading Information Technology (IT) company in Israel. Matrix is a global company operating in the fields of IT service solutions, software products and computing infrastructure, consulting and management in Israel and abroad.

Matrix Group employs over 17,000 software, hardware, engineering, integration and training personnel, providing advanced services in information technology and management fields to thousands of customers in Israel and abroad.

In February 2026, the company completed the acquisition of the entire share capital of Magic Software Enterprises Ltd ("Magic"), by way of a reverse triangular merger.

According to accounting rules, the Magic acquisition transaction (which is considered a business combination under common control) was treated according to the As Pooling approach, under which Magic's assets and liabilities are consolidated at their value as included in the books of the controlling shareholder and, at the time of the first consolidation, the comparative figures are presented as if Magic was consolidated in the company's books since its acquisition by the controlling shareholder.

1.1.2. Description of Activity Segments

With the completion of the Magic acquisition, the company updated its reported activity segments. Therefore, starting from this date, the Group reports according to three activity segments, as follows:

Activity Segment	Main Areas of Activity
IT solutions, software products and services, consulting and systems engineering in Israel	IT solutions and services in Israel, sale and marketing of software products in Israel, defense arm, engineering arm and BPO and Call Center services
IT solutions, software products and services abroad	IT solutions and services abroad, GRC (Governance, Risk & Compliance) solutions forfnancial institutions, sale and marketing of software products abroad and Magic Software Core Business
Cloud solutions, computing infrastructure and systems in Israel and abroad	Sale and marketing of hardware and infrastructure, cloud activity and sale and marketing of advanced technological solutions.

Due to the change in the segment structure, following the merger transaction, comparative data for previous periods were reclassified. For further details regarding the Group's activity segments and the areas of activity included in them, see also Note 3 to the financial statements.

1 1.1.3. Business Environment

The business environment in which the company operates is directly affected by global and local trends and events, the main ones of which are brought below.

A. The Global Economic Environment

3 Board of Directors' Report

As of the date of the report, after several years of economic stability, a decrease in the inflation rate, and subsequently a decrease in interest rates, there are several factors which recreate inflationary pressures including, following the worsening of wars and geopolitical conflicts (such as the war with Iran and its impact on the increase in energy prices), as well as the policy of imposing tariffs by the administration in the USA.

In the American market, the inflation rate stands at about 3.3% (March 2026, in annual terms, on a basis of the last – 12 months LTM) and the Federal Bank interest rate stands at 3.75%.

– In the Eurozone, the inflation rate stands at about 2.6% (March 2026 LTM), and the Central Bank interest rate at 2.15%.

B. The Economic Environment in Israel

The central global economic trends detailed above were largely reflected in the Israeli economy as well. However, the Israeli economy was affected in the past two years mainly by unique and complex local events, with material influence, primarily the "Swords of Iron" war and the campaign against Iran and its fronts.

C. The Security Situation

As of the publication date of the report, the "Swords of Iron" war, which broke out on October 7, 2023 (including related combat operations in additional combat zones) continues to affect the geo-political and economic environment of Israel. Within the framework of the war, Israel manages combat campaigns against terrorist organizations supported by Iran in Gaza, Lebanon, Syria and Yemen arenas.

At the beginning of 2026, tension increased between the USA and Iran, peaking on February 28, 2026, with the start of operation "Roar of the Lion" (and parallel operation "Epic Fury" by the USA), which included aerial attacks of Iran by the USA and Israel. Within the operation, ballistic missiles and UAVs were launched at Israel and toward American targets in the Persian Gulf countries. Two days after the start of fighting against Iran, the Hezbollah terrorist organization also joined the fighting from Lebanon. A ceasefire with Iran was declared on April 7, 2026 and with Hezbollah a few days later. As of the report's publication date, negotiations between the USA and Iran have not yet matured, and Israel is preparing for the possibility of resuming high-intensity fighting.

The increased geopolitical risk environment also affected the credit rating of the State of Israel. During 2024, the rating companies Moody's and S&P lowered Israel's credit rating to Baa1 and A, respectively, and during 2025 even lowered the outlook to a negative horizon. With the stabilization of geopolitical risk levels, the rating companies raised the outlooks to stable (S&P on November 7, 2025, Moody's on January 31, 2026).

1 In this chapter, various data based on research and various websites were included. The Company did not request and in any case did not receive the consent of the editors of said websites for the purpose of including information detailed in the report. Such information is information published to the public and to the best of the Company's knowledge is public information. Furthermore, no check was conducted by the Company as to the correctness and degree of accuracy of these data.

4 | Board of Directors' Report

During the entire war period, despite the many difficulties and challenges in the business environment, the Israeli economy demonstrated stability and resilience. Furthermore, starting from the second half of 2024, following military successes of Israel, positive trends can be identified in the economy. During the second half of 2025 and up until close to the report publication date, the Shekel strengthened sharply. Government bonds also reflected a decrease in the risk premium compared to the initial period of escalation.

In the medium and long term, if there is a significant reduction in the Iranian threat, it is estimated that there are expected to be positive implications for the growth potential in the Israeli economy. On the other hand, to the extent that fighting is renewed against Iran and even against Hezbollah, this could have a negative implication for the Israeli economy as a whole.

D. Economic Indicators

1) Inflation and Interest

As of the report publication date, the Consumer Price Index increase rate stands (March 2026 LTM index) at about

1.9% and the bank of Israel interest rate at 4%.

According to the Bank of Israel's assessment2, the inflation rate at the end of 2026 is expected to stand at about 2.3%, and the bank of Israel interest in the fourth quarter of 2026 is expected to stand at 3.5-3.75%.

According to the company's assessment, the impact of inflation on its operating results is not material, among other things due to the fact that the company's financial debt is not index-linked. On the other hand, an interest rate increase, should it occur, might adversely affect the company's operating results by way of increasing financing costs for variable interest loans (commercial papers and short-term bank loans), as well as for new fixed interest loans that will replace loans reaching maturity. It should also be noted in this context that the main component in the company's expenses is wages (about 55% of the company's operating expenses), which according to the company's assessment is mainly affected by supply and demand trends of technological manpower and inflation is expected to have a limited effect on it.

2) Exchange Rates

Changes in the exchange rate of the Dollar (and to a lesser extent also the Euro) and volatility in it, affect the company's operating results, with emphasis on cloud activity, sale and marketing of software products, hardware and computing infrastructure (where a main part of the transactions is denominated in Dollars) and on the (Shekel) results of the IT solutions, products and software services abroad segment. Also, the exchange rate affects adjustments from the translation of the financial statements of the subsidiaries in the USA (recognized in the translation differences reserve). Generally, a trend of increase in the Dollar exchange rate, in a given period, has a positive impact on the company's results, and vice versa in the event of a decrease in the Dollar exchange rate. The company partially protects itself from fluctuations in the Dollar exchange rate through natural hedging of matching Dollar receipts to Dollar payments, as far as possible, and also performs ongoing hedges for foreign currency exposures.

For details regarding the Dollar exchange rate in the reported periods, see Note 2B to the financial statements.

/https://www.boi.org.il/publications/pressreleases/30-3-26a2

5 Board of Directors' Report

As explained above, the strengthening of the Shekel during the report period entails a neutralizing negative impact on the company's continuing growth trend in revenues and profits (namely, without it the company would have – presented even higher growth for details see 1.2.2 (6) regarding the impact of the dollar exchange rate erosion on operating results). Also, following the strengthening of the Shekel relative to the Dollar (and the Euro), the company recorded in the first quarter of 2024 financing expenses for exchange rate differences (net of profits recorded for hedging transactions) in the amount of approximately NIS 4 million, and a movement was recorded in the capital reserve from translation differences (net of the impact of hedging activity credited to the capital reserve) in the amount of approximately NIS 8.3 million, which was recognized in other comprehensive income.

E. Impact on the Company's Operating Results

As of the date of the financial statements and the report publication date, approximately 331 and approximately 263 (respectively) of the company's employees are called up for reserve duty.

Despite the above, as will be detailed below, the company's activity in the first quarter of 2024 was characterized by a continued increase in the volumes of activity and the company's operating results. According to the company's assessment, there is no material impact of the war on its operating results.

The information stated above in this section, including regarding the company's assessments on the implications for its activity, in connection with the security situation, the company's economic environment, the USA's tariff policy, interest and inflation trends, exchange rate fluctuations and trends in the high-tech sector, is forward-looking information, as defined in the Securities Law, 1968 ("Securities Law"), which is based on management's assessments and its business experience and on assumptions, various scenarios, analyses and public information, as well as assessments of research companies and analysts, as of the date of the report. The information may not materialize, in whole or in part, or materialize in a different manner, including materially from what is expected, among other things as a result of geo-political developments, changes in economic or regulatory policy, or the realization of all or – part of the risk factors appearing in section 19 of chapter A description of the corporation's business in the annual report.

1.1.4. Material events during the period

A. Completion of the merger transaction with Magic

On February 24, 2024, the merger transaction between the company and Magic Software Enterprises Ltd ("Magic") was completed after the fulfillment of the suspending conditions set in the merger agreement. Within the framework of the merger, which was performed by way of a reverse triangular merger, the company purchased the entire issued and paid-up share capital of Magic, and from the completion date of the merger Magic became a fully owned (100%) subsidiary of the company. With the completion of the transaction, Magic's shares were delisted from trading on NASDAQ and the Tel Aviv Stock Exchange, and Magic ceased to be a public company.

B. Signing of a Put/Call option agreement regarding a minority shareholder in Comblack

In November 2023, a Put option / Call option agreement was signed between Magic and a minority shareholder in Comblack IT Ltd ("Comblack"), a subsidiary of the company, regarding the sale / purchase respectively, of all the shares of the minority shareholder in Comblack (approximately 19.76%). The consideration for the exercise of the PUT option (or the Call with the necessary changes as stated), is calculated based on a company valuation that will be determined in accordance with the subsidiary's future results.

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C. Issuance of Convertible BONDS (Series 2)

On February 4, 2026, the Company completed an issuance of convertible BONDS (Series 2) with a par value of approximately NIS 297 million, for a gross consideration of approximately NIS 300.6 million. The BONDS bear an annual interest of 0.5% and are due for repayment in one installment on February 1, 2031. The BONDS (Series 2) are convertible on any trading day such that every NIS 178.4 par value of the BONDS shall be convertible into one share of the Company (after adjustment for dividend distribution). For details regarding the issuance of convertible BONDS (Series 2), see Note 25A to the annual financial statements.

Most of the proceeds from the BONDS (Series 2) issuance were used, after the completion of the Magic transaction (see below), to repay existing bank debts of Magic, in a total amount of approximately NIS 200 million.

D. Acquisition of Savannah Company

On December 1, 2025, the Company completed, through CommIT (a subsidiary of the Company), the acquisition of 75% of the share capital of Savannah Solutions Ltd., which specializes in building outsourced development teams for start-ups by recruiting and employing developers from African countries. The basic acquisition consideration amounted to approximately NIS 3.75 million, plus additional contingent consideration depending on the future financial results of the company.

E. Acquisition of Martin Control Systems

On March 12, 2026, the Company completed, through its subsidiary Magic Software Enterprises, the acquisition of 100% of the share capital of Martin Control Systems for a total of approximately $3 million. Martin Control Systems is an American System Integrator company specializing in providing industrial automation and control systems integration services. The company provides industrial manufacturers with end-to-end solutions, including consulting, planning, engineering, development, integration, installation, and commissioning of industrial control systems. The results of operations of Martin Control Systems will be consolidated into the Company's financial statements (under the IT solutions, software products and services abroad segment) starting from the second quarter of 2026.

F. Acquisition of minority rights in the subsidiary Integrity Software Ltd.

In March 2025, the Company acquired the full minority rights (35%) in the subsidiary Integrity Software Ltd., for a total of approximately NIS 30 million, such that the Company now holds the entire share capital of the subsidiary.

1.1.5 Highlights of Results for the First Quarter of 2026

Against the background of the material erosion of the dollar exchange rate relative to the shekel during the reporting periods (a decrease of approximately 13.6% in the average dollar exchange rate in the quarter compared to the corresponding quarter last year), the following highlights of the results of operations are also presented excluding these effects, on a Constant Currency3 basis. For further details, see Section 1.2.3 below.

Revenues grew by approximately 2.4% to a total of approximately NIS 2.127 billion. Revenue growth on a Constant Currency basis stood at approximately 8.9%.
~~Operating proft grew by approximately 11% to a total of approximately NIS 203 million. Operating~~
7 profit growth on a Constant Currency basis stood at approximately 18%. Board of Directors' Report

Net profit grew by approximately 9.2% to a total of approximately NIS 136.8 million. Net profit growth on a Constant Currency basis stood at approximately 19.4%.

Growth rates of the operating segments, on a Constant Currency basis:

Revenues from the IT solutions, software products and services, consulting and systems engineering in Israel segment grew (on a Constant Currency basis) by approximately 4.7% and operating profit grew by approximately 22.4%.
Revenues from the IT solutions, software products and services abroad segment grew (on a Constant Currency basis) by approximately 13.9% and operating profit grew by 25.2%.
Revenues from the cloud solutions, computing infrastructure and systems in Israel and abroad segment grew (on a Constant Currency basis) by approximately 19.8% and operating profit grew by approximately 2.3%.

3 The Company presents, among other things, information on a Constant Currency basis in order to provide data for evaluating the performance of business activities on a uniform comparative basis, by eliminating the impact of fluctuations in foreign currency exchange rates. For the purpose of presenting this information, the results of the current period are translated into shekels according to the exchange rates in the corresponding period last year, instead of the actual exchange rates that were in effect during the relevant periods. All this only with respect to organizational units and subsidiaries whose activities are significantly exposed to changes in exchange rates. Furthermore, net profit data on a Constant Currency basis is excluding financing expenses from exchange rate differences, net of tax.

These financial measures, which are not based on generally accepted accounting principles (Non-GAAP), should not be seen as a substitute for financial performance measures prepared in accordance with generally accepted accounting principles, or as superior to them in importance. All growth comparisons refer to the corresponding period in the previous fiscal year.

Board of Directors' Report

1.1.6. Summary of Consolidated Statements of Profit for the three months ended March 31, 2026 and 2025

(In thousands of NIS)

	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025	Percentage Change
Revenues	2,127,581	2,077,038	2.4%
Cost of sales and services	1,744,863	1,703,190	2.4%
Gross proft	382,718	373,848	2.4%
% of revenues	18%	18%

Research and development expenses	9,180	11,730	(21.7%)
Selling and marketing expenses	87,544	93,829	(6.7%)
General and administrative expenses	82,924	85,423	(2.9%)
Operating proft	203,070	182,866	11%
% of revenues	9.5%	8.8%

Financing expenses, net	23,779	20,526	15.8%
Proft before taxes on income	179,291	162,340	10.4%
Taxes on income	42,451	36,550	16.1%
Company's share in losses of afliates ~~7~~	-	455	(100%) ~~Bd f Dit' R~~	~~p~~ort
Net proft	136,840	125,335	9.2% ~~oar o recors e~~

	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025	Percentage Change
% of revenues	6.4%	6%

Net proft attributable to:
Shareholders of the company	120,736	92,486	30.5%
Non-controlling interests	16,104	32,849	(51%)
Net proft	136,840	125,335	9.2%
% of revenues	6.4%	6%

EBITDA 4	265,661	251,528	5.6%
% of revenues	12.5%	12.1%

4 Profit before finance, taxes, depreciation and amortization
9 | Board of Directors' Report

1.2. Analysis of Results of Operations

1.2.1. Seasonality

In the first quarter of 2026, the number of working hours was similar to that in the corresponding period last year. For details regarding the seasonality involved in the Company's activities, see also Section 9 of the Report on Corporate Business in the Periodic report.

1.2.2. Analysis of Consolidated Profit and Loss Results

1) Revenues

Company revenues in the quarter amounted to approximately NIS 2,127.6 million, compared to approximately NIS 2,077 million in the corresponding quarter last year, an increase of approximately 2.4%. The rate of increase in revenues excluding the impact of the erosion of the dollar exchange rate relative to the shekel (a decrease in the average USD exchange rate compared to the corresponding quarter last year of approximately 13.6%) stood at approximately 8.9% (see details in Section 1.2.3 below).

The increase in revenues in the quarter compared to the corresponding period last year was mainly due to an increase in the volume of activity in the IT solutions, software products and services, consulting and systems engineering in Israel segment, and in the cloud solutions, computing infrastructure and systems in Israel and abroad segment, which was partially offset by a slight decrease in revenues in the IT solutions, software products and – services abroad segment due to the negative impact of the dollar's erosion relative to the shekel (for details, see Section 6 regarding the exchange rate effect on results of operations). The impact of the initial consolidation of the results of Savannah Tech (starting from December 2025) on revenue growth was immaterial.

2) Gross Profit

Gross profit in the quarter amounted to approximately NIS 382.7 million (approximately 18% of revenues), compared to approximately NIS 373.8 million in the corresponding quarter last year (approximately 18% of revenues), an increase of approximately 2.4%. The increase in gross profit in the quarter compared to the corresponding quarter stems from the increase in the Company's revenue turnover.

3) Research and Development Expenses

Board of Directors' Report

R&D expenses are attributed to development activities of technological and applicative capabilities (including, among other things, cloud integration and AI capabilities) in connection with software products which are the Intellectual Property (IP) of Magic.

Net research and development expenses in the quarter amounted to approximately NIS 9.2 million (approximately 0.4% of revenues), compared to approximately NIS 11.7 million in the corresponding quarter last year (approximately 0.6% of revenues).

Gross research and development expenses (including capitalized R&D costs) in the quarter amounted to approximately NIS 11.3 million (approximately 0.5% of revenues), compared to approximately NIS 13.5 million in the corresponding quarter last year (approximately 0.7% of revenues).

Most of the decrease in R&D expenses compared to last year is attributed to the impact of the dollar's erosion.

4) Selling, Marketing, General and Administrative Expenses

Selling and marketing, general and administrative expenses (SG&A) in the quarter amounted to approximately NIS 170.5 million (approximately 8% of revenues), compared to approximately NIS 179.3 million in the corresponding quarter last year (approximately 8.6% of revenues). The decrease in SG&A expenses and the decrease in their rate out of total revenues were mainly due to the impact of the erosion of the dollar exchange rate relative to the shekel on the SG&A expenses of subsidiaries abroad and from the recording of costs in connection with the Magic transaction in the corresponding quarter.

It should be noted that selling expenses include an amount of approximately NIS 14.2 million (compared to approximately NIS 18.4 million in the corresponding quarter last year) for the amortization of intangible assets resulting from business combinations.

General and administrative expenses include a total of approximately NIS 1.4 million (compared to approximately NIS 2.8 million in the corresponding quarter last year) in expenses for equity-based compensation for officers and managers.

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Board of Directors' Report

5) Operating Profit

The operating profit in the quarter totaled approximately NIS 203.1 million (approximately 9.5% of revenue), compared to approximately NIS 182.9 million in the corresponding quarter last year (approximately 8.8% of revenue), an increase of approximately 11%.

The rate of increase in profit in the quarter neutralizing the effect of the erosion of the dollar exchange rate relative to the NIS stood at approximately 18% (for details see section 1.2.3 below).

The increase in operating profit in the quarter, compared to the corresponding quarter last year, is attributed to growth in profit in all segments, except for a decrease in the cloud solutions, computing infrastructure and systems segment in Israel and abroad.

Neutralizing the effect of the first-time consolidation of Savannah Tech, as mentioned, the company recorded organic growth in operating profit at a rate of approximately 10.7%.

6) Financing expenses / income (net)

The financing expenses (net) in the quarter totaled approximately NIS 23.8 million compared to financing expenses (net) totaling approximately NIS 20.5 million in the corresponding quarter last year, an increase of approximately NIS 3.3 million (15.8%).

Below is the composition of net financing expenses (in thousands of NIS):

	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025	Change
Interest, commissions and others (net)	8,636	9,783	(1,147)
Exchange rate diferences	4,051	(259)	4,310
Accountingfnancing expenses*	11,092	11,002	90
Totalfnancing expenses (net)	23,779	20,526	3,253

Mainly includes financing expenses regarding leases, adjustments regarding PUT warrants for non-controlling interests in subsidiaries, accounting financing expenses regarding convertible BONDS (the difference between the stated BOND interest and the effective interest derived from accounting rules), and changes in fair value of financial assets presented at fair value.

As detailed above, the increase in financing expenses in the quarter, compared to the corresponding quarter last year, results entirely from an increase in exchange rate difference expenses, as a result of the erosion of the dollar exchange rate relative to the NIS by a rate of approximately 0.8% during the quarter. The said increase was partially offset by a decrease in interest expenses on the company's financial liabilities (net of financing income on investments and deposits) in the quarter, compared to the corresponding quarter last year.

7) Taxes on income

Tax expenses in the quarter totaled approximately NIS 42.5 million (approximately 23.7% of profit before tax), compared to approximately NIS 36.6 million in the corresponding quarter last year (approximately 22.5% of profit before tax).

The increase in tax expenses results from the increase in profit.

8) Net profit

The net profit in the quarter totaled approximately NIS 136.8 million (approximately 6.4% of revenue), compared to approximately NIS 125.3 million (approximately 6% of revenue) in the corresponding quarter last year, an increase of approximately 9.2%.

The rate of increase in net profit in the quarter neutralizing the effect of the erosion of the dollar exchange rate relative to the NIS stood at approximately 19.4% (for details see section 1.2.3 below).

9) Net profit attributable to company shareholders

The net profit attributable to the company shareholders in the quarter totaled approximately NIS 120.7 million (approximately 5.7% of revenue), compared to approximately NIS 92.5 million (approximately 4.5% of revenue) in the corresponding quarter last year, an increase of approximately 30.5%. It should be noted in this context that until the date of the Magic transaction, the non-controlling interests in Magic were calculated taking into account Formula's holding rate in Magic until that date (46.7%), while at the time of the transaction the company purchased (as part of the Magic transaction) also the minority rights in Magic.

Board of Directors' Report

10) Comprehensive income (in thousands of NIS)

	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025
Net proft	136,840	125,335
Other comprehensive income (after tax efect):
Amounts that will not be reclassifed subsequently to proft or loss:
Proft (loss) from remeasurement regarding defned beneft plans	1,925	1,335
Amounts that will be reclassifed or are reclassifed to proft or loss upon fulfllment of specifc conditions:
Adjustments resulting from translation offnancial statements	(8,375)	22,009
Change in fair value of instruments used for cashfow hedging	(593)	(279)
Total comprehensive income	129,797	148,400

– 11) Earnings before interest, taxes, depreciation and amortization EBITDA (in thousands of NIS)

The EBITDA figure is included in the report as it is an accepted measure for measuring the results of operations in similar companies, and since it constitutes an approximation of cash flow operating profit, neutralizing from operating profit expenses not involving cash flows, such as depreciation and amortization expenses, including regarding intangible assets acquired within business combinations.

Below is the EBITDA index and adjusted EBITDA index, neutralizing IFRS 16:

	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025	Percentage change
Operating proft	203,070	182,866	11%
Depreciation and amortization	62,591	68,662	(8.8%)
EBITDA	265,661	251,528	5.6%
% of total revenue	12.5%	12.1%
Neutralizing expenses regarding implementation of IFRS 16 5	44,142	45,129	(2.2%)
EBITDA neutralizing IFRS 16	221,519	206,339	7.3%
% of total revenue	10.4%	9.9%

12) Earnings per share attributable to company shareholders (in NIS)

or more information, please review the legal disclaimer. .
	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025
Diluted net earnings per share attributable to company shareholders	1.3	1.2

5 In accordance with IFRS 16 International Financial Reporting Standard - Leases, depreciation and financing expenses regarding leases must be recognized instead of lease payments.

Board of Directors' Report 12

1.2.3. Analysis of the impact of the dollar exchange rate erosion relative to the NIS on results of operations (on a Constant Currency basis)

The report period was characterized by a sharp decline in the dollar exchange rate relative to the NIS. Thus, the average exchange rate of the dollar in the quarter eroded by approximately 13.6% relative to the corresponding quarter.

In order to neutralize the external effects of changes in exchange rates as mentioned, the company's revenue and operating profit will be presented below on a constant currency basis (Constant Currency)6 which neutralizes effects on exchange rates between reporting periods and allows presenting the development of business results on a uniform comparative basis.

For additional details regarding the impact of change in exchange rates on segment results, see section 1.2.5 below.

Reported results (in thousands of NIS):

	For the 3 months ended on 31.3.2026	For the 3 months ended on 31.3.2025	Percentage change
Revenue	2,127,581	2,077,038	2.4%
Operating proft	203,070	182,866	11%
Operating proft rate	9.5%	8.8%
Net proft	136,840	125,335	9.2%
Net proft rate	6.4%	6%

Company results on a Constant Currency basis (in thousands of NIS):

	For the 3 months ended on 31.3.2026	For the 3 months ended on 31.3.2025	Percentage change
Revenue	2,262,887	2,077,038	8.9%
Operating proft	215,771	182,866	18%
Proft rate	9.5%	8.8%
Net proft	149,626	125,335	19.4%
Net proft rate	6.6%	6%

6 Regarding the presentation of data on a constant exchange rate basis (Constant Currency) see footnote (3) above. Board of Directors' Report 13

1.2.4. Summary of consolidated profit and loss results by quarter for the year 2025 and for the first quarter of 2026 (thousands of NIS)

	Q1/2026	Q4/2025	Q3/2025	Q2/2025	Q1/2025
Revenue	2,127,581	2,130,210	2,185,340	1,994,394	2,077,038
Cost of sales and services	1,744,863	1,741,826	1,795,102	1,619,960	1,703,190
Gross proft	382,718	388,384	390,238	374,434	373,848
% of revenue	18%	18.2%	17.9%	18.8%	18%
Research and development expenses	9,180	10,005	10,669	12,265	11,730
Selling and marketing expenses	87,544	95,714	100,863	94,369	93,829
General and administrative expenses	82,924	107,362	89,660	85,061	85,423
Operating proft	203,070	175,303	189,046	182,739	182,866
% of revenue	9.5%	8.2%	8.7%	9.2%	8.8%
Financing expenses, net	23,779	24,296	23,554	25,807	20,526
Proft before taxes on income	179,291	151,007	165,492	156,932	162,340
Taxes on income	42,451	37,113	38,962	36,957	36,550
Company's share in losses of associated companies	-	-	-	595	455
Net proft	136,840	113,894	126,530	119,380	125,335
% Net proft	6.4%	5.3%	5.8%	6%	6%
Company shareholders	120,736	88,181	93,921	90,136	92,486
Non-controlling interests	16,104	25,713	32,609	29,244	32,849
Net proft	136,840	113,894	126,530	119,380	125,335
% Net proft	6.4%	5.3%	5.8%	6%	6%

14 Board of Directors' Report

5/19/2026 | 4:12:40 AM | v1.2.5

1.2.5. Summary of consolidated profit and loss results by operating segments for the three months ended March 31, 2026 and 2025 (NIS thousands)

		For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025	For the 3 months ended 31.03.2025	Percentage change
Revenue by operating segments
IT solutions, products and software services, consulting and systems engineering in Israel		1,303,523	1,261,439		3.3%
IT solutions, products and software services abroad		344,662	350,127		(1.6%)
Cloud solutions, computing infrastructure and systems in Israel and abroad		529,993	495,596		6.9%
Inter-segment adjustments		(50,597)	(30,124)
Total Revenues		2,127,581	2,077,038		2.4%

Operating Proft
IT solutions, products and software services, consulting and systems engineering in Israel		126,613	105,180		20.4%
IT solutions, products and software services abroad		37,812	34,957		8.2%
Cloud solutions, computing infrastructure and systems in Israel and abroad		42,737	46,254		(7.6%)
Inter-segment adjustments		(4,092)	(3,525)
Operating Proft		203,070	182,866		11%

				For the 3 months ended 31.03.2025 In percentages 8.3% 10% 9.3% 8.8%
		For the 3 months ended 31.03.2026		For the 3 months ended 31.03.2025
		In percentages		In percentages
	Operating proft margin
	IT solutions, products and software services, consulting and systems engineering in Israel	9.7%		8.3%
	IT solutions, products and software services abroad	11%		10%
	Cloud solutions, computing infrastructure and systems in Israel and abroad	8.1%		9.3%
	Operating proft margin in percentages	9.5%		8.8%

more information, please review the legal disclaimer. .
	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025
	In percentages	In percentages
Revenue share by operating segments:
IT solutions, products and software services, consulting and systems engineering in Israel	59.9%	59.9%
IT solutions, products and software services abroad	15.8%	16.6%
Cloud solutions, computing infrastructure and systems in Israel and abroad	24.3%	23.5%
Total revenues in percentages	100%	100%

	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025
	In percentages	In percentages
Contribution share to operating proft by operating segments
IT solutions, products and software services, consulting and systems engineering in Israel	61.1%	56.4%
IT solutions, products and software services abroad	18.3%	18.8%
Cloud solutions, computing infrastructure and systems in Israel and abroad	20.6%	24.8%
Total contribution in percentages	100%	100%

Board of Directors Report 16

	For the 3 months ended 31.03.2026	For the 3 months ended 31.03.2025	Percentage change
Geographic information
Revenues
Revenues from customers in Israel	1,758,060	1,685,819	4.3%
Revenues from customers in the United States	348,036	336,268	3.5%
Revenues from customers in Europe	58,615	68,595	(14.5%)
Revenues from customers in Asia	9,190	13,874	(33.8%)
Revenues from customers in all others	4,277	2,606	64.1%
Inter-segment adjustments	(50,597)	(30,124)

more information, please review the legal disclaimer. .
	For the 3 months ended 31.03.2026		For the 3 months ended 31.03.2025		Percentage change
Geographic information
Revenues
Total Revenues		2,127,581	2,077,038		2.4%

		For the 3 months ended 31.03.2026 In percentages		For the 3 months ended 31.03.2025 In percentages
Revenue share by geography
Revenues from customers in Israel		80.7%		79.9%
Revenues from customers in the United States		16%		16%
Revenues from customers in Europe		2.7%		3.3%
Revenues from customers in Asia		0.4%		0.7%
Revenues from customers in all others		0.2%		0.1%
Total revenue share in percentages		100%		100%

Board of Directors Report 17

1.2.6. Analysis of results of operations by operating segments on a Constant Currency basis

Following is an analysis of the results of operations of the segments, including a presentation of the results of operations of each segment according to the original shekel reporting and on a Constant Currency basis, as defined in section 1.2.3 above.

IT solutions, products and software services, consulting and systems engineering in Israel

Reported results (NIS thousands):

	For the 3 months ended 31.3.2026	For the 3 months ended 31.3.2025	Percentage change
Revenues	1,303,523	1,261,439	3.3%
Operating Proft	126,613	105,180	20.4%
Proft margin	9.7%	8.3%

As explained above (see also reference in section 1.1.3, Economic Environment), the results of the software product sales and marketing activity included in this segment were adversely affected by the erosion of the dollar exchange rate (a decrease in the average dollar exchange rate relative to the corresponding quarter by 13.6%).

Segment results on a Constant Currency basis (NIS thousands):

	For the 3 months ended 31.3.2026	For the 3 months ended 31.3.2025	Percentage change
Revenues	1,320,694	1,261,439	4.7%

	For the 3 months ended 31.3.2026	For the 3 months ended 31.3.2025	Percentage change
Operating Proft	128,773	105,180	22.4%
Proft margin	9.7%	8.3%

The increase in revenues, operating profit and its margin in the quarter, compared to the same quarter last year, results mainly from an increase in activity volumes in the fields of Data, AI, Cyber, Security, core systems and software product sales. The increase in profitability margin is mainly attributed to a change in the mix of transactions and continued operational efficiency measures in the company, which are mainly reflected in this operating segment.

IT solutions, products and software services abroad

Reported results (NIS thousands):

	For the 3 months ended 31.3.2026	For the 3 months ended 31.3.2025	Percentage change
Revenues	344,662	350,127	(1.6%)
Operating Proft	37,812	34,957	8.2%
Proft margin	11%	10%

As explained above (see also reference in section 1.1.3, Economic Environment), the segment results were adversely affected by the erosion of the dollar exchange rate (a decrease in the average dollar exchange rate relative to the corresponding quarter by 13.6%).

Board of Directors Report

5/19/2026 | 4:12:41 AM | v1.2.5

Segment results on a Constant Currency basis (in NIS thousands):

	For the 3 months ended on 31.3.2026	For the 3 months ended on 31.3.2025	Percentage change
Revenues	398,924	350,127	13.9%
Operating proft	43,765	34,957	25.2%
Proft margin	11%	10%

The increase in revenues and operating profit, as well as in the operating profit margin, resulted from growth in the segment's activity volumes, with an emphasis on GRC activity for financial institutions abroad, Data & AI activity, and expert services activity in the USA.

Cloud solutions, computing infrastructure and systems in Israel and abroad

Reported results (in NIS thousands):

	For the 3 months ended on 31.3.2026	For the 3 months ended on 31.3.2025	Percentage change
Revenues	529,993	495,596	6.9%
Operating proft	42,737	46,254	(7.6%)
Proft margin	8.1%	9.3%

As explained above (see also reference in section 1.1.3, Economic Environment), the segment's results were adversely affected by the erosion of the dollar exchange rate (a 13.6% decrease in the average dollar exchange rate compared to the corresponding quarter), with an emphasis on cloud activity and marketing and sales of hardware and computing infrastructure.

Segment results on a Constant Currency basis (in NIS thousands):

	For the 3 months ended on 31.3.2026	For the 3 months ended on 31.3.2025	Percentage change
Revenues	593,866	495,596	19.8%
Operating proft	47,325	46,254	2.3%
Proft margin	8.1%	9.3%

The high increase in revenues versus the moderate increase in operating profit, alongside the decrease in its rate of total revenues, compared to the corresponding quarter last year, result from changes in the mix of transactions relative to the corresponding quarter and particularly from a decrease in the volume of activity in the field of marketing, implementation and support of advanced technological solutions (mainly the subsidiaries RDT and Ortech), which is characterized by higher profitability rates.

Board of Directors Report

1.2.7. Engagements and Special Events

Dividend distribution

Distribution date	Dividend amount per share (agorot)	Dividend amount (NIS millions)
05.05.2026	0.79	73.1

Below is a breakdown of the dividends distributed by the Company and by Magic during 2024-2025, prior to the completion of the merger transaction (in NIS millions):

completion of the merger	transaction (in NIS millions):
	Matrix	Magic	Total
2025	220.8	129.9	350.7
2024	232.49	79.2	311.69

The Company's dividend distribution policy is to distribute a dividend of up to 75% of the annual net profit attributable to the Company's shareholders. The dividend will be distributed once a quarter subject to the distribution tests under the law, which are examined by the Board of Directors at each relevant date.

Credit rating upgrade

On March 23, 2026, Midroog raised the Company's credit rating to an issuer rating of Aa2 with a stable outlook, and the BONDS rating (Series 2' and Series 2) to Aa2, both with a stable outlook. Midroog also reaffirmed the rating of non-marketable commercial papers (CP) at P-1.il.

1.3. Financial position, liquidity and sources of financing

Analysis of financial position as of March 31, 2026

Balances of liquid assets and financial ratios (in NIS thousands)

	31.03.2026	31.12.2025	Change
Cash and cash equivalents	1,011,451	1,207,350	(195,899)
Short-term credit	(464,408)	(560,536)	96,128
Long-term credit	(503,592)	(420,818)	(82,774)
Net cash (netfnancial debt)	43,451	225,996	(182,545)
Total balance sheet	6,419,582	6,322,165	97,417
Ratio of net debt to balance sheet	(0.7%)	(3.6%)
Current ratio	1.2	1.2
Retained earnings	1,039,811	990,250	49,561
Total equity attributable to shareholders	1,969,081	1,478,895	490,186
Ratio of equity to shareholders to balance sheet	30.7%	23.4%

Summary of consolidated reports on financial position (in NIS thousands)

Summary of consolidated reports onfnancial position (in NIS thousands)
	31.03.2026	31.12.2025	Diference
Assets:
Cash and cash equivalents	1,011,451	1,207,350	(195,899)
Trade receivables and income receivable, net	2,521,139	2,324,423	196,716
Inventory	110,899	92,672	18,227
Goodwill	1,520,602	1,518,311	2,291
Intangible assets	209,654	216,912	(7,258)

or more information, please review the legal disclaimer. .
	31.03.2026	31.12.2025	Diference
Right-of-use assets	418,163	422,866	(4,703)
All other (fxed assets, deferred taxes, etc.)	627,674	539,631	88,043
Total assets	6,419,582	6,322,165	97,417
Liabilities:
Credit from banking corporations and other credit providers	968,000	981,354	(13,354)
Trade payables	1,120,855	1,131,788	(10,933)
Deferred income	577,720	511,895	65,825
Lease liabilities	432,386	438,032	(5,646)
Liabilities regarding warrants to non-controlling interest holders and liability regarding activity acquisition	281,036	246,652	34,384
All other	913,018	905,679	7,339
Total liabilities	4,293,015	4,215,400	77,615

The increase in asset items stems mainly from an increase in the trade receivables and income receivable balance, and an increase in the receivables and debit balances item (presented above as part of the "All other" item). This increase was partially offset by a decrease in the cash and cash equivalents balance.

The increase in total liabilities stems mainly from an increase in deferred income (mainly advances from customers in transactions over time) and in the item of liabilities regarding warrants to non-controlling interest holders and liability regarding activity acquisition (mainly due to signing a put/call option agreement in connection with the minority shares in a subsidiary - for details see section 1.1.4 B above). This increase was offset by a decrease in the credit from banking corporations item (continued net repayment of financial liabilities) and by a decrease in the trade payables item.

21 Board of Directors Report

Summary of cash flow statements (in NIS thousands)

	For the 3 months ended on 31.03.2026	For the 3 months ended on 31.03.2025
Cashfows from operating activities
Net proft	136,840	125,335
Adjustments to proft and loss items	137,641	125,410
Changes in asset and liability items	(353,685)	(145,371)
Cash paid and received for interest and taxes, net	(43,930)	(36,877)
Net cash generated from (used for) operating activities	(123,134)	68,497
Cashfows from investing activities
Purchase offxed assets	(11,036)	(11,871)
Capitalized software development costs	(2,107)	(1,792)
Proceeds from disposal offxed assets	170	1,137
Acquisition of subsidiariesfrst consolidated	(3,497)	(79,330)
Cash payments regarding deferred payments and contingent liabilities related to business combinations	(11,882)	(1,732)
Proceeds from sale (purchase) offnancial assets, net	(14,283)	2,150
Change in short-term and long-term deposits	680	(2,345)

or more information, please review the legal disclaimer. .
	For the 3 months ended on 31.03.2026	For the 3 months ended on 31.03.2025
Net cash used for investing activities	(41,955)	(93,783)
Cashfows fromfnancing activities
Receipt (repayment) of credit, net	(209,825)	(28,110)
Receipt of long-term loan	-	120,000
Dividend distribution	(579)	(67,830)
Acquisition of non-controlling interests	(21,740)	-
Repayment of lease liabilities	(39,916)	(32,950)
Dividend distribution to minority	(6,818)	(35,661)
Repayment of liability regarding warrants for non-controlling interests	(8,696)	-
Proceeds from issuance of convertible BONDS	297,272	-
Repayment of BONDS	(33,959)	(33,959)
Net cash used forfnancing activities	(24,261)	(78,510)

Cash flow from operating activities

In the first quarter of 2026, the Company recorded a negative cash flow from operating activities of approximately NIS 123.1 million, compared to a positive cash flow from operating activities in the corresponding period last year of approximately NIS 68.5 million. The decrease in the quarter results mainly from changes in working capital, primarily due to engagement in a customer discounting transaction carried out in the fourth quarter of 2025 in the amount of approximately NIS 260 million.

The Company's cash flow from operating activities in the last 12 months ("LTM") stood at approximately NIS 856.5 million, compared to an LTM cash flow from operating activities of approximately NIS 865 million in the corresponding period last year.

5/19/2026 | 4:12:42 AM | v1.2.5

Cash flows from investing activities

Cash flows used for investing activities in the first quarter amounted to approximately NIS 41.9 million, compared to a flow of approximately NIS 93.8 million in the corresponding quarter, the main difference is attributed to approximately NIS 65.4 million paid for the acquisition of the Gev company in the corresponding quarter.

Cash flows from financing activities

Cash flows used for financing activities in the quarter amounted to approximately NIS 24.3 million, compared to approximately NIS 78.5 million in the corresponding quarter last year, the main difference stems from a receipt regarding the issuance of convertible BONDS of NIS 297.3 million, which was offset by the repayment of loans from banking institutions in the group.

Average short-term credit (in thousands of NIS)*

	31.03.2026	31.03.2025
Customers	2,428,673	2,357,655
Suppliers	1,026,384	879,517

Quarterly average of the last 12 months for the report date

The company finances its operations (including the gap between average credit to customers and average credit to suppliers) from cash flows from operating activities, from equity and from taking credit from financial entities and BONDS.

Disclosure regarding a projected cash flow report, according to Regulation 10(b)(1)(d) of the Securities Regulations (Periodic and Immediate Reports):

As of March 31, 2026, in the company's solo reports, there is a working capital deficit. In light of the above, the company's board of directors reviewed the company's financial indicators, its compliance with financial covenants applicable to it and the existing and expected cash sources and needs of the company. In the opinion of the company's board of directors, the working capital deficit in the solo report does not indicate a liquidity problem. In light of the above, the company is not required to publish a projected cash flow report.

Summary of reports on the changes in equity (in thousands of NIS)

	31.03.2026	31.03.2025
Opening balance	2,106,765	2,197,865
Net proft	136,840	125,335
Dividend declared	(73,100)	(79,504)
Dividend to non-controlling interests	(5,923)	(35,267)
Translation diferences	(8,968)	21,730
Share-based payment	1,445	2,785
Transactions with non-controlling interests	(21,695)	(14,103)
Settlement of put warrants on non-controlling interests	(48,560)	(26,849)
Reserve regarding convertible BONDS	37,838	-
Actuarial gains regarding a beneft plan	1,925	1,335
Closing balance	2,126,567	2,193,327

Board of Directors Report

2. Disclosure Instructions regarding the corporation's financial reporting

2.1. Goodwill

The goodwill balance as included in the company's financial reports is material to the company's total assets. Goodwill represents the excess cost of investment over the book value in subsidiaries acquired by the Group. In accordance with accepted accounting principles, the company examines the need for impairment annually. Beyond the annual test for the need for impairment, the company also examines during the year the existence of indications for impairment.

May 18, 2026

Guy Bernstein Moti Gutman Chairman of the Board of Directors CEO

24 | Board of Directors Report

– Appendix A Details regarding debt certificates issued by the Company and held by the public as of the date of the report

– 1) Below are details regarding the BONDS Series 2' and the convertible BONDS Series 2 data in thousands of NIS

1) Below are details regardin	g the BONDS Series 2' and the convertible B	ONDS Series 2–data in thousands of NIS
Disclosure item	Details regarding the BONDS (Series 2')	Details regarding the convertible BONDS (Series 2)
Issuance date	First issuance on September 18, 2022, series expansion on December 4	February 4, 2026
Total par value at issuance date (1)	295,249 infrst issuance and 180,366 in series expansion	297,028
Par value balance as of March 31, 2026	271,861	297,028
Par value balance for the report date when revalued according to linkage terms	The series is not linked	The series is not linked
Value infnancial reports as of March 31, 2026 (amortized cost according to efective interest method)	271,658	249,387
Accrued interest as of March 31, 2026	1,869	1,533
Market value as of March 31, 2026	271,671	268,810
Interest type	Fixed interest at an annual rate of 4.1%; it should be noted that in the trust deed regarding the BONDS (Series 2'), attached to the ofering report ("Trust Deed"), mechanisms were established for adjustment in the change of the annual interest rate regarding the BONDS (Series 2'), in the event of non- compliance withfnancial covenants or a decrease in the rating of the BONDS (Series 2'). In accordance with the aforementioned adjustment mechanisms (cumulatively), the total rate of the interest addition shall not exceed 1%. For details see sections 5.8 and 5.9 of the Trust Deed.	Fixed interest at an annual rate of 0.5%; it should be noted that in the trust deed regarding the convertible BONDS (Series 2), attached to the ofering report ("Trust Deed"), mechanisms were established for adjustment in the change of the annual interest rate regarding the convertible BONDS (Series 2), in the event of non-compliance withfnancial covenants or a decrease in the rating of the convertible BONDS (Series 2). In accordance with the aforementioned adjustment mechanisms (cumulatively), the total rate of the interest addition shall not exceed 1%. For details see sections 5.8 and 5.9 of the Trust Deed.

Disclosure item	Details regarding the BONDS (Series 2')	Details regarding the convertible BONDS (Series 2)
Principal payment dates	The principal of the BONDS (Series 2') will be due for repayment in fourteen (14) semi-annual installments, of which thirteen are equal installments (each payment totaling 7.14% of the principal) and afnal payment which will stand at 7.18%, from August 1, 2023 to February 1, 2030.	The principal of the convertible BONDS (Series 2) will be due for repayment in one installment, which will be paid on February 1, 2031.
Interest payment dates	Interest regarding the BONDS (Series 2') will be paid in semi-annual installments, which will be paid on February 1 and August 1, from February 1, 2023 to February 1, 2030.	The interest regarding the BONDS (Series 2) will be paid in semi-annual installments, which will be paid on February 1 and August 1, from August 1, 2026 to February 1, 2031.
Principal and interest linkage basis	The BONDS (Series 2') are not linked (principal and interest) to any linkage basis	The convertible BONDS (Series 2) are not linked (principal and interest) to any linkage basis
Does a conversion right exist	No	Yes

25 Board of Directors Report

Disclosure item	Details regarding the BONDS (Series 2')	Details regarding the convertible BONDS (Series 2)
Conversion right	-	The convertible BONDS (Series 2) are convertible into ordinary shares, registered in name, of NIS 1 par value each of the company, on any trading day from the date of their registration for trading on the TASE until January 22, 2031. Every 178.4 NIS par value of the BONDS will be convertible into one share of the company (after adjustment for dividend distribution). For details see section 5 of the Trust Deed.
Early redemption or forced conversion of the BONDS	The company shall be entitled on its initiative to call the BONDS (Series 2') for early redemption, all in accordance with the provisions of section 6.2 of the Trust Deed.	The company is not entitled to perform early redemption on the company's initiative according to the provisions of section 6.2 of the Trust Deed.
Guarantee for payment of the company's obligations under the Trust Deed	None	None
Whether as of the report date the company complies with all conditions and obligations under the Trust Deed	Yes	Not relevant (the BONDS were issued after the report date)
Whether as of the report date and during the report period the conditions establishing a cause for calling the BONDS for immediate repayment occurred	No	Not relevant (the BONDS were issued after the report date)
Whether the company was required by the trustee to perform various actions, including calling bondholders' meetings	No	Not relevant (the BONDS were issued after the report date)

Disclosure item	Details regarding the BONDS (Series 2')	Details regarding the convertible BONDS (Series 2)
Detail of collateral/liens	None	None

(2) Details regarding the trustee for the BONDS holders (Series 2')

Trustee name	Reznik Paz Nevo Trusts Ltd.
Name of the person responsible for the BONDS	Hagar Shaul, Adv.
Contact information	14 Yad Harutzim St., Tel Aviv (Phone: 03-6389200, Fax: 03-6389222) Email: [email protected]

(3) Details regarding the rating of the BONDS (Series 2') and regarding the convertible BONDS (Series 2)

Name of the rating company as of the report date	Midroog Ltd. ("Midroog")
Rating at the time of issuance	Aa2 with a stable outlook
Rating as of the report date	Unchanged For the updated rating report, see the immediate report published by the company on 24.03.2026 (Reference No.–2026-15-026533)

(1) On September 14, 2022, the company published a shelf offering report (reference number: 2022-01-117502) ("Offering Report"), under which the company first issued to the public a total of 295,249 thousand NIS par value BONDS (Series 2') of the company. Furthermore, on December 4, 2022, the company performed a BONDS (Series 2') issuance by way of series expansion, in a net amount of 178,000 thousand NIS.

Board of Directors Report 26

5/19/2026 | 4:12:43 AM | v1.2.5

– 4) Financial Covenants BONDS (Series 2') and Convertible BONDS (Series 2)

Below is a detail of the various covenants to which the Company committed towards the bondholders and the results of their calculation as of March 31, 2026, as follows:

Financial Covenant set in BONDS (Series 2')(*)	Financial Covenant set in Convertible BONDS (Series 2)(**)	Actual Covenant as of March 31, 2026
Ratio of consolidated netfnancial debt (as defned in the trust deed) to total balance sheet, shall not exceed 45%	Ratio of consolidated netfnancial debt (as defned in the trust deed) to total balance sheet, shall not exceed 45%	(0.7%)
Ratio of consolidated netfnancial debt (as defned in the trust deed) to adjusted EBITDA (as defned in the trust deed), shall not exceed 5	Ratio of consolidated netfnancial debt (as defned in the trust deed) to adjusted EBITDA (as defned in the trust deed), shall not exceed 5	(0.04)
Minimum equity (as defned in the trust deed), shall not be less than 275,000 thousand NIS	Minimum equity (as defned in the trust deed), shall not be less than 400,000 thousand NIS	2,126,567

– (*) BONDS (Series 2') - the outstanding par value balance of the security as of March 31, 2026 271,861,534 NIS; the outstanding par value balance of the security close to the date of the report is identical.

(**) Convertible BONDS (Series 2) - the outstanding par value balance of the security close to the date of the report is 297,028,000 NIS (issued after the date of the report).

Board of Directors Report

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Part B

Consolidated Interim Financial Statements As of 31.03.2026 Unaudited

Table of Contents
Auditor's review report to the shareholders of Matrix IT Ltd.	3
Consolidated statements offnancial position	4
Consolidated statements of proft or loss and other comprehensive income	6
Consolidated statements of changes in equity	7
Consolidated statements of cashfows	10

Notes to the consolidated interim financial statements

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13
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Matrix IT Ltd.

To The Shareholders of

Matrix IT Ltd.

Dear Sirs/Mmes.,

Subject: Auditor's review report to the shareholders of Matrix IT Ltd.

Introduction

We have reviewed the accompanying financial information of Matrix IT Ltd. and its subsidiaries (hereinafter: the Group), which includes the condensed consolidated statement of financial position as of March 31, 2026, and the condensed consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the three-month period then ended. The board of directors and management are responsible for the preparation and presentation of financial information for this interim period in accordance with International Accounting Standard IAS 34 - "Interim Financial Reporting", and they are also responsible for the preparation of financial information for this interim period according to Chapter D of the Securities Regulations (Periodic reports and Immediate Reports), 1970. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with Review Standard (Israel) 2410 of the Institute of Certified Public Accountants in Israel - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the aforementioned financial information is not prepared, in all material respects, in accordance with International Accounting Standard IAS 34.

In addition to the aforementioned in the previous paragraph, based on our review, nothing has come to our attention that causes us to believe that the aforementioned financial information does not comply, in all material respects, with the disclosure requirements under Chapter D of the Securities Regulations (Periodic reports and Immediate Reports), 1970.

Emphasis of Matter

Without qualifying our aforementioned conclusion, we draw attention to the matters stated in Notes 1e and 4a to the interim financial statements, regarding the merger between the Company and Magic Software Enterprises Ltd.

Tel Aviv, Ziv Haft May 18, 2026 Accountants

Consolidated Interim Financial Statements

5/19/2026 | 4:12:44 AM | v1.2.5

Matrix IT Ltd.

Consolidated Statements of Financial Position

(In thousands of NIS)

	As of March 31 2026 Unaudited	As of March 31 2025 Unaudited 1	As of December 31 2025 1
Current Assets
Cash and cash equivalents	1,011,451	988,816	1,207,350
Short-term bank deposits	641	1,602	641
Trade receivables and income receivable, net	2,521,139	2,547,195	2,324,423
Income tax receivable	58,405	50,296	72,894
Other receivables and debit balances	279,737	241,296	176,373
Inventory	110,899	99,304	92,672
	3,982,272	3,928,509	3,874,353

Non-current Assets
Other investments and loans	11,871	14,512	14,512
Prepaid expenses	84,431	88,412	83,054
Right-of-use assets	418,163	446,523	422,866
Property, plant and equipment	130,633	133,642	129,429
Goodwill	1,520,602	1,594,860	1,518,311
Intangible assets	209,654	270,645	216,912
Deferred taxes	61,956	67,778	62,728
	2,437,310	2,616,372	2,447,812
	6,419,582	6,544,881	6,322,165

The accompanying notes form an integral part of the interim consolidated financial statements.

1 Retroactive classification due to the merger, see Notes 1e and 4a below

Interim Consolidated Financial Statements

Matrix IT Ltd. Consolidated Statements of Financial Position (In thousands of NIS)

	As of March 31 2026 Unaudited	As of March 31 2025 Unaudited 2	As of December 31 2025 2
Current liabilities
Credit from banking corporations and other credit providers	385,405	516,059	481,939

or more information, please review the legal disclaimer. .
	As of March 31 2026 Unaudited	As of March 31 2025 Unaudited 2	As of December 31 2025 2
Current maturities of liability regarding BONDS	79,003	79,078	78,597
Current maturities of lease liability	128,495	131,705	125,593
Trade payables and service providers	1,120,855	995,704	1,131,788
Income tax payable	45,520	20,935	28,922
Other payables and credit balances	173,996	236,973	176,746
Employees and institutions regarding wages	617,655	671,260	633,338
Liability regarding activity acquisition	9,444	30,952	17,658
Liabilities regarding minority warrant	144,938	165,769	156,951
Deferred income	531,217	469,498	459,396
	3,236,528	3,317,933	3,290,928
Non-current liabilities
Liabilities to banking corporations and other credit providers	61,550	202,031	190,631
Liability regarding BONDS	194,082	259,866	230,187
Liability regarding convertible BONDS	247,960	-	-
Deferred income	46,503	96,422	52,499
Liabilities regarding minority warrant	107,981	62,009	55,635
Lease liability	303,891	332,334	312,439
Deferred taxes	58,795	56,159	50,421
Liability regarding activity acquisition	18,673	8,880	16,408
Liabilities for employee benefts	17,052	15,920	16,252
	1,056,487	1,033,621	924,472
Equity attributable to the Company's shareholders
Paid-up share capital and capital reserves	929,270	594,329	488,645
Retained earnings	1,039,811	916,717	990,250
	1,969,081	1,511,046	1,478,895
Non-controlling interests	157,486	682,281	627,870
Total equity	2,126,567	2,193,327	2,106,765
	6,419,582	6,544,881	6,322,165

The accompanying notes form an integral part of the interim consolidated financial statements.

Guy Bernstein Chairman of the Board

Motti Gutman Bebo Brenner CEO CFO

May 18, 2026

Date of approval of the financial statements

2 Retroactive classification due to the merger, see Notes 1e and 4a below

Interim Consolidated Financial Statements | 5

Consolidated Statements of Profit or Loss and Other Comprehensive Income

Matrix IT Ltd.

– (In thousands of NIS except for net profit per share data)

	For the 3 months ended March 31 2026 Unaudited	For the 3 months ended March 31 2025 Unaudited 3	For the year ended on December 31 2025 3
Revenues	2,127,581	2,077,038	8,386,982
Cost of sales and services	1,744,863	1,703,190	6,860,078
Gross proft	382,718	373,848	1,526,904
Research and development expenses	9,180	11,730	44,669
Selling and marketing expenses	87,544	93,829	384,775
General and administrative expenses	82,924	85,423	367,506
Operating proft	203,070	182,866	729,954
Finance expenses	31,771	28,195	122,258
Finance income	7,992	7,669	28,075
Proft before taxes on income	179,291	162,340	635,771
Taxes on income	42,451	36,550	149,582
Company's share in losses of associates	-	455	1,050
Net proft	136,840	125,335	485,139
Other comprehensive income (after tax efect):
Amounts that will not be subsequently reclassifed to proft or loss

Proft from remeasurement regarding defned beneft plans	1,925	1,335	5,596
Amounts that will or are reclassifed to proft or loss under specifc conditions

Adjustments from translation offnancial statements	(8,375)	22,009	(127,337)
Change in fair value of instruments used for cash fow hedging	(593)	(279)	2,010
Total comprehensive income	129,797	148,400	365,408
Net proft attributable to
Company's shareholders	120,736	92,486	364,724
Non-controlling interests	16,104	32,849	120,415
	136,840	125,335	485,139
Total comprehensive income attributable to
Company's shareholders	113,698	107,684	284,645
Non-controlling interests	16,099	40,716	80,763

								For the 3 months ended March 31 2026 Unaudited	For the 3 months ended March 31 2026 Unaudited	For the 3 months ended March 31 2025 Unaudited 3	For the 3 months ended March 31 2025 Unaudited 3	For the 3 months ended March 31 2025 Unaudited 3	For the year ended on December 31 2025 3	For the year ended on December 31 2025 3	For the year ended on December 31 2025 3
								129,797		148,400			365,408
		Net proft per share attributable to Company's shareholders (in NIS)

		Basic net proft						1.3		1.2			4.73
		Diluted net proft						1.3		1.2			4.72
	The accompanying notes form an integral part of the interim consolidatedfnancial statements. Retroactive classifcation due to the merger, see Notes 1e and 4a below 6 Interim Consolidated Financial Statements 3
Matrix IT Ltd.										Consolidated Statements of Changes in Unaudited (In thousands of NIS)					Equity
			Share capital	Share premium	Reserve for convertible BONDS	Treasury shares	Reserve for adjustments resulting from translation offnancial statements of foreign activity and cashfow hedging		Reserve for transactions between entity and controlling shareholder therein	Share- based payment reserve and transactions with non- controlling interests	Retained earnings	Total attributable to Company's shareholders		Non- controlling interests	Total equity
Balance as of January 1, 2026 4			82,001	328,214	-	(7,982)	(104,355)		10,186	180,581	990,250	1,478,895		627,870	2,106,765
Net proft			-	-	-	-	-		-	-	120,736	120,736		16,104	136,840
Adjustments from translation of fnancial statements of foreign activity and cashfow hedging			-	-	-	-	(8,963)		-	-	-	(8,963)		(5)	(8,968)
Actuarial gains regarding beneft plan			-	-	-	-	-		-	-	1,925	1,925		-	1,925
Total other comprehensive income			-	-	-	-	(8,963)		-	-	1,925	(7,038)		(5)	(7,043)
Total comprehensive income			-	-	-	-	(8,963)		-	-	122,661	113,698		16,099	129,797
Exercise of employee warrants into shares			36	1,554	-	-	-		-	(1,590)	-	-		-	-
Share issuance in Magic transaction			15,381	-	-	-	(52,611)		-	502,597	-	465,367		(465,367)	-
Dividend declared			-	-	-	-	-		-	-	(73,100)	(73,100)		-	(73,100)
Conversion option regarding convertible BONDS			-	-	37,838	-	-		-	-	-	37,838		-	37,838

	Share capital	Share premium	Reserve for convertible BONDS	Treasury shares	Reserve for adjustments resulting from translation offnancial statements of foreign activity and cashfow hedging	Reserve for transactions between entity and controlling shareholder therein	Share- based payment reserve and transactions with non- controlling interests	Retained earnings	Total attributable to Company's shareholders	Non- controlling interests	Total equity
Dividend to non-controlling interests	-	-	-	-	-	-	-	-	-	(5,923)	(5,923)
Transactions with non- controlling interests	-	-	-	-	-	-	(18,649)	-	(18,649)	(3,046)	(21,695)
Share-based payment	-	-	-	-	-	-	1,377	-	1,377	68	1,445
Disposal (creation) of put warrants on non- controlling interests	-	-	-	-	-	-	(36,345)	-	(36,345)	(12,215)	(48,560)
Balance as of March 31, 2026	97,418	329,768	37,838	(7,982)	(165,929)	10,186	627,971	1,039,811	1,969,081	157,486	2,126,567

The accompanying notes form an integral part of the interim consolidated financial statements.

7 Interim Consolidated Financial Statements

4 Retroactive classification due to the merger, see Notes 1e and 4a below

5/19/2026 | 4:12:47 AM | v1.2.5

Matrix IT Ltd.

Consolidated Statements of Changes in Equity

Unaudited (in thousands of NIS)

		Share Capital	Share Premium	Share Premium	Treasury Shares	Treasury Shares	Reserve for adjustments resulting from translation of fnancial statements of foreign operations and cash fow hedging	Reserve for adjustments resulting from translation of fnancial statements of foreign operations and cash fow hedging	Reserve for transactions between the corporation and a controlling shareholder	Reserve for transactions between the corporation and a controlling shareholder	Reserve for share-based payment and transactions with non- controlling interests	Reserve for share-based payment and transactions with non- controlling interests	Retained Earnings	Retained Earnings	Total attributable to company shareholders	Total attributable to company shareholders	Non- controlling interests	Non- controlling interests	Total Equity
Balance as of January 1, 2025 5		81,736	309,448		(7,982)		(18,680)		10,186		239,352		902,400		1,516,460		681,405		2,197,865
Net proft		-	-		-		-		-		-		92,486		92,486		32,849		125,335
Adjustments from translation of fnancial statements of foreign operations and cashfow hedging		-	-		-		13,863		-		-		-		13,863		7,867		21,730
Actuarial gains on beneft plan		-	-		-		-		-		-		1,335		1,335		-		1,335
Total other comprehensive income		-	-		-		13,863		-		-		1,335		15,198		7,867		23,065
Total comprehensive income		-	-		-		13,863		-		-		93,821		107,684		40,716		148,400
Exercise of employee warrants into shares		239	17,191		-		-		-		(17,430)		-		-		-		-
Dividend declared		-	-		-		-		-		-		(79,504)		(79,504)		-		(79,504)
Dividend to non-controlling interests		-	-		-		-		-		-		-		-		(35,267)		(35,267)
Transactions with non-controlling interests		-	-		-		-		-		(14,103)		-		(14,103)		-		(14,103)
Disposal (creation) of put options on non-controlling interests		-	-		-		-		-		(22,512)		-		(22,512)		(4,337)		(26,849)
Share-based payment		-	-		-		-		-		3,021		-		3,021		(236)		2,785
Balance as of March 31, 2025 5		81,975	326,639		(7,982)		(4,817)		10,186		188,328		916,717		1,511,046		682,281		2,193,327
The accompanying notes are an integral part of the interim consolidatedfnancial statements. Retrospective classifcation regarding the merger, see notes 1E and 4A below Interim consolidatedfnancial statements 5																			8

Matrix IT Ltd.								Consolidated				Statements of Changes in Equity (in thousands of NIS)
	Share Capital	Share Premium		Treasury Shares		Reserve for adjustments resulting from translation of fnancial statements of foreign operations and cash fow hedging		Reserve for transactions between the corporation and a controlling shareholder		Reserve for share-based payment and transactions with non- controlling interests		Retained Earnings		Total attributable to company shareholders		Non- controlling interests		Total Equity
Balance as of January 1, 2025 6	81,736	309,448		(7,982)		(18,680)		10,186		239,352		902,400		1,516,460		681,405		2,197,865
Net proft	-	-		-		-		-		-		364,724		364,724		120,415		485,139

	Share Capital	Share Premium	Treasury Shares	Reserve for adjustments resulting from translation of fnancial statements of foreign operations and cash fow hedging	Reserve for transactions between the corporation and a controlling shareholder	Reserve for share-based payment and transactions with non- controlling interests	Retained Earnings	Total attributable to company shareholders	Non- controlling interests	Total Equity
Adjustments from translation offnancial statements of foreign operations and cashfow hedging	-	-	-	(85,675)	-	-	-	(85,675)	(39,652)	(125,327)
Actuarial gains on beneft plan	-	-	-	-	-	-	5,596	5,596	-	5,596
Total other comprehensive income	-	-	-	(85,675)	-	-	5,596	(80,079)	(39,652)	(119,731)
Total comprehensive income	-	-	-	(85,675)	-	-	370,320	284,645	80,763	365,408
Exercise of employee warrants into shares	265	18,766	-	-	-	(19,031)	-	-	-	-
Dividend declared	-	-	-	-	-	-	(282,470)	(282,470)	-	(282,470)
Non-controlling interests in a company consolidated for thefrst time	-	-	-	-	-	-	-	-	512	512
Dividend to non- controlling interests	-	-	-	-	-	-	-	-	(101,632)	(101,632)
Transactions with non- controlling interests	-	-	-	-	-	(21,135)	-	(21,135)	(19,037)	(40,172)
Disposal (creation) of put options on non- controlling interests	-	-	-	-	-	(28,088)	-	(28,088)	(16,708)	(44,796)
Share-based payment	-	-	-	-	-	8,213	-	8,213	501	8,714
Excess tax beneft for share-based payment recognized in equity	-	-	-	-	-	1,270	-	1,270	2,066	3,336
Balance as of December 31, 2025 6	82,001	328,214	(7,982)	(104,355)	10,186	180,581	990,250	1,478,895	627,870	2,106,765

The accompanying notes are an integral part of the interim consolidated financial statements.

6 Retrospective classification regarding the merger, see notes 1E and 4A below

Interim consolidated financial statements

Matrix IT Ltd.

Consolidated Statements of Cash Flows

(in thousands of NIS)

	For the 3 months ended March 31, 2026	For the 3 months ended March 31, 2025 7	For the year ended December 31, 2025 7
	Unaudited	Unaudited
Cashfows from operating activities
Net proft	136,840	125,335	485,139
Adjustments required to present cashfows from operating activities
Adjustments to proft and loss items:
Depreciation and amortization	62,591	68,662	272,604
Income taxes	43,600	36,550	149,512
Change in liabilities for employee benefts	3,267	3,136	8,944
Otherfnance expenses, net	25,174	12,677	53,938
Revaluation of liability for acquisition of activity	562	849	3,481
Capital loss (gain) from disposal offxed assets	59	(507)	(296)
Share-based payment	1,445	2,785	8,714
Increase in value of liabilities for options for non-controlling interests	943	1,258	4,540
	137,641	125,410	501,437
Changes in asset and liability items:
Decrease (increase) in accounts receivable	(232,140)	(21,893)	162,036
Increase in other receivables and prepaid expenses	(87,121)	(84,596)	(29,408)
Decrease (increase) in inventory	(18,259)	9,425	15,992
Increase (decrease) in accounts payable and service providers	(14,176)	(70,717)	75,894
Increase (decrease) in employee and institutional obligations, deferred income, and other payables	(1,989)	22,410	9,357
	(353,685)	(145,371)	233,871
Cash paid and received during the period for:
Interest paid	(31,683)	(24,700)	(59,535)
Interest received	7,992	7,669	28,075
Taxes paid	(36,970)	(41,528)	(172,889)
Taxes received	16,731	21,682	32,069
	(43,930)	(36,877)	(172,280)
Net cash provided by (used in) operating activities	(123,134)	68,497	1,048,167

The accompanying notes are an integral part of the interim consolidated financial statements.

7 Retrospective classification regarding the merger, see notes 1E and 4A below

Interim consolidated financial statements

Matrix IT Ltd.

Consolidated Statements of Cash Flows

(in thousands of NIS)

	For the 3 months ended March 31 2024 Unaudited	For the 3 months ended March 31 2023 Unaudited 8	For the year ended December 31 2023 8
Cashfows from investing activities
Proceeds from disposal offxed assets	170	1,137	1,513
Acquisition offxed assets	(11,036)	(11,871)	(41,006)
Acquisition of companies consolidated for thefrst time (a)	(3,497)	(79,330)	(79,330)
Capitalized software development costs	(2,107)	(1,792)	(7,819)
Cash payments for deferred payments and contingent liabilities related to business combinations	(11,882)	(1,732)	(12,145)
Proceeds from sale (acquisition) offnancial assets, net	(14,283)	2,150	(1,312)
Change in short-term and long-term deposits	680	(2,345)	(1,326)
Net cash used in investing activities	(41,955)	(93,783)	(141,425)
Cashfows fromfnancing activities
Short-term credit from banking corporations and other credit providers, net	-	45,172	110,423
Proceeds from long-term loans	-	120,000	148,500
Repayment of long-term loans from banking corporations and other credit providers	(209,825)	(73,282)	(213,935)
Proceeds from issuance of convertible BONDS	297,272	-	-
Dividend distribution	(579)	(67,830)	(348,745)
Repayment of lease liability	(39,916)	(32,950)	(150,869)
Dividend distribution to non-controlling interests	(6,818)	(35,661)	(146,284)
Repayment of liability for options for non-controlling interests	(8,696)	-	(49,540)
Acquisition of non-controlling interests	(21,740)	-	-
Repayment of BONDS	(33,959)	(33,959)	(67,918)
Net cash used infnancing activities	(24,261)	(78,510)	(718,368)

Translation diferences on cash and cash equivalents balances	(6,549)	12,812	(60,824)
Increase (decrease) in cash and cash equivalents	(195,899)	(90,984)	127,550

or more information, please review the legal disclaimer. .
	For the 3 months ended March 31 2024 Unaudited	For the 3 months ended March 31 2023 Unaudited 8	For the year ended December 31 2023 8
Cash and cash equivalents balance at the beginning of the period	1,207,350	1,079,800	1,079,800
Cash and cash equivalents balance at the end of the period	1,011,451	988,816	1,207,350

The accompanying notes are an integral part of the interim consolidated financial statements.

8 Retrospective classification regarding the merger, see notes 1E and 4A below.

Interim consolidated financial statements

5/19/2026 | 4:12:48 AM | v1.2.5

Matrix I.T. Ltd.

Consolidated Statements of Cash Flows

(In thousands of NIS)

	For the 3 months ended March 31 2026 Unaudited	For the 3 months ended March 31 2025 Unaudited 9	For the year ended December 31 2025 9
(a) Acquisition of companies consolidated for thefrst time
Assets and liabilities of the consolidated companies as of	the date of consolidation:
Working capital (excluding cash and cash equivalents)	1,778	(12,558)	(12,558)
Fixed assets	(476)	(4,394)	(4,394)
Income Tax Authority	-	(2,765)	(2,765)
Deferred tax	-	(3,395)	(3,395)
Inventory	-	(1,401)	(1,401)
Goodwill	(6,409)	(72,270)	(72,270)
Intangible assets	(3,662)	(30,779)	(30,779)
Employee beneft liabilities	-	2,414	2,414
Tax provision	916	7,079	7,079
Liability for put options to minority	-	26,215	26,215
Non-controlling interests	-	-	-
Liability for acquisition of activity	4,356	12,524	12,524
	(3,497)	(79,330)	(79,330)
(b) Signifcant non-cash activities
Dividend distribution declared but not yet paid	73,100	110,698	628
Recognition of right-of-use asset against lease liability	34,012	23,708	137,337

9 Retrospective classification due to the merger, see Notes 1e and 4a below

12 Consolidated Interim Financial Statements

Notes to the Consolidated Interim Financial Statements

Matrix I.T. Ltd.

Note General

1

a. Matrix I.T. Ltd. (hereinafter – the Company or Matrix) is the leading Information Technology (IT) company in Israel. The Company was incorporated in Israel on March 12, 1989 and began its business operations on this date. The Company is a global company operating in the fields of IT service solutions, software products and computing infrastructure, consulting and management in Israel and abroad.
b. The Company's securities are listed for trading on the Tel Aviv Stock Exchange.
c. The Company is a direct subsidiary of Formula Systems (1985) Ltd. (hereinafter - Formula Systems or the controlling shareholder), which is controlled by Asseco Poland S.A.
d. These financial statements were prepared in a condensed format as of March 31, 2026 and for the threemonth period ended on that date (hereinafter - consolidated interim financial statements). The summary of the Group's consolidated financial statements as of March 31, 2026, includes those of the Company and its subsidiaries (hereinafter - the Group), as well as the Company's rights in associates and joint arrangements.
e. In February 2026, the Company completed the acquisition of the entire share capital of Magic Software Enterprises Ltd. ("Magic"), by way of a reverse triangular merger (for details, see also Note 4a). In accordance with accounting rules, the Magic acquisition transaction (which is considered a business combination under common control) was treated in accordance with the As-Pooling approach. Accordingly, starting from the first quarter reports of 2026, Magic's assets and liabilities are consolidated at their value in the controlling shareholder's books. Furthermore, from the date of the first consolidation, comparative figures were presented as if Magic had been consolidated in the Company's books since its acquisition by the controlling shareholder.

13 Consolidated Interim Financial Statements

Matrix I.T. Ltd. Notes to the Consolidated Interim Financial Statements Note 2 Significant Accounting Policies

a. The following is data regarding changes in relevant indices and exchange rates

	As of 31.03.26	As of 31.03.25	As of 31.12.25
Consumer Price Index (Base 2020)
In Israel (Index for)	118.14	116.01	117.8

ore information, please review the legal disclaimer. .
		As of 31.03.26		As of 31.03.25		As of 31.12.25
In Israel (Known index)		117.69		115.44		117.8
Exchange rate vs. NIS
Dollar		3.165		3.718		3.19
Euro		3.636		4.022		3.75

	For 3 months ended on 31.03.26 In percentages		For 3 months ended on 31.03.25 In percentages		For the year ended on 31.12.25 In percentages
Consumer Price Index (Base 2020)
In Israel (Index for)	0.29%		1.05%		2.6%
In Israel (Known index)	(0.10%)		0.28%		2.36%
Exchange rate vs. NIS
Dollar	(0.78%)		1.95%		(12.53%)
Euro	(2.92%)		5.84%		(1.34%)

b. Format of Preparation of the Consolidated Interim Financial Statements

The consolidated interim financial statements are prepared in accordance with International Accounting Standard 34 - "Interim Financial Reporting", and in accordance with the disclosure requirements under Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970.

The accounting policy applied in the preparation of the consolidated interim financial statements is consistent with that applied in the preparation of the annual consolidated financial statements, except in connection with the details described further in this note, below.

c. Business Combinations under Common Control

– The acquisition of Magic (which is considered a business combination under common control see also Note 4a) was treated in accordance with the as-pooling approach, following these principles:

The assets and liabilities of the acquired entity are first recognized in the financial statements at their value in the controlling shareholder's books on the eve of the business combination.
The difference between the consideration determined in the transaction and the book value of the net assets of the acquired entity was recognized directly in equity.

The Company's financial statements reflect the business condition and results of operations also of the acquired entity which is consolidated by way of a business combination, as if the business combination took place on the day these entities came under common control, so that prior periods are restated to reflect said business combination. Therefore, the Company's financial statements include the impact of the merger transaction based on retrospective presentation, starting from the earliest period presented in the reports. In this framework, the allocation of shares to Formula was reflected retrospectively within the comparative figures, while the allocation of shares to non-controlling shareholders was treated within equity at the date of the completion of the transaction (for more details see Notes 1e and 4a).

Consolidated Interim Financial Statements

Notes to the Consolidated Interim Financial Statements

Matrix I.T. Ltd.

Note 2 Significant Accounting Policies

d. Research and Development Costs

Research expenses incurred within a software development process are recognized in profit or loss when incurred. An intangible asset created internally from a software development project or from the development stage of an internal project is recognized when all of the following conditions are met:

o There is technical feasibility to complete the intangible asset so that it will be available for use or sale;

o The Company's intention to complete the asset and use or sell it;

The Company's ability to complete the asset and use or sell it;
The way the asset will generate future economic benefits can be determined;
The existence of available technical, financial and other resources to complete the development and use or sell the asset;
Costs during development that can be attributed to the asset can be measured reliably.

The Company determines technological feasibility upon completion of a detailed program design or a working model.

Capitalized software costs are measured at cost less accumulated depreciation and less accumulated impairment losses, at the product level.

Amortization of capitalized software costs begins when development is complete and the product is available for use or sale. From the moment a product is considered available for use, cost capitalization stops and its amortization begins as an expense under "Cost of sales and services".

Capitalized software costs are amortized for each product separately on a straight-line basis over the estimated useful life of the product (usually 5 years).

The Company continuously examines the recoverability of capitalized software costs by examining the net realizable value of these intangible assets, based on an estimate of expected future revenues, less future costs for completion, distribution, maintenance and customer support over the remaining economic life of the product.

In the years ended December 31, 2023, 2024 and 2025, no non-recoverable amounts were identified.

e. Put Option Granted to Non-Controlling Interests

The Company treats put options granted to non-controlling interests, which do not grant the Company present ownership rights, according to the Partial Recognition approach.

In accordance with the Partial Recognition approach, the Company will measure the value of noncontrolling interests at the date of the business combination and allocate to them in subsequent periods their share in total profit and dividend distributions in accordance with the provisions of IFRS 10. At the end of each reporting period, the Company derecognizes the remaining balance of non-controlling interests and recognizes a financial liability in the amount of the present value of the exercise price for the put option. The difference between the updated value of the derecognized non-controlling interests and the update of the financial liability value is treated at the end of each reporting period as a transaction with noncontrolling interests (i.e., the gap is allocated to a capital reserve).

See Note 2h6, in Chapter B - Financial Statements, for 2025.

15 Consolidated Interim Financial Statements

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Notes to the Condensed Consolidated Interim Financial Statements

Matrix IT Ltd.

Note 3 Segments

A. General

Description of the Company's Activities by Operating Segments

Upon completion of the Magic acquisition (for details, see also Note 4a), the Company updated its reported operating segments. In light of the change in segment structure following the merger transaction, comparative – data for previous periods was reclassified. In accordance with the provisions of IFRS 8 Operating Segments, operating segments are determined according to management's approach, based on the organizational structure and information examined by the Company's chief operating decision maker for the purpose of allocating resources. Therefore, from this date, the Group operates in three (3) reported operating segments.

IT Solutions, Software Products and Services, Consulting and Systems Engineering in Israel

Activity in this segment includes a wide range of technological and other solutions and services, as well as the sale and marketing of software products (including those owned by the Company) in Israel.

Activities in the segment include, among others: solutions and services in the field of enterprise core systems, Data & AI, information security, cyber and digital. This includes: development, implementation and deployment of information systems; execution of computing and software systems integration projects; development of C4ISR systems for defense entities; provision of expert services (staff augmentation) and technological consulting; Offshore/Nearshore services, BPO and Call Center services, training and implementation, software development services, software testing (QA), system upgrading and modernization; solutions in the fields of data, artificial intelligence (AI), digital, cyber and information security. The segment also includes activities: marketing, implementation and support for software products from leading manufacturers, and development, marketing, implementation and maintenance of dedicated software solutions (owned by the Company) for various sectors, such as health and human resources. Furthermore, the segment includes management and engineering consulting services, including management of complex projects, engineering supervision and planning and accompaniment services in the areas of national infrastructure, transportation and environment, and supply chain management and logistics.

IT Solutions, Software Products and Services Abroad

Activity in this segment includes a wide range of technological and other solutions and services, as well as the sale and marketing of software products (including those owned by the Company) abroad.

Activities in the segment include, among others: provision of advanced IT solutions and services, including software development, integration and expert services (staff augmentation); solutions in the fields of Data & AI; digital customer experience, organizational systems and managed services; consulting services, development and implementation of solutions in the fields of regulation, risk management and compliance (GRC), including fraud and money laundering prevention, and cyber risk mitigation; cloud solutions and application development. In addition, the segment includes development, marketing, licensing and support of software products and technological platforms owned by the Company, including Low-Code platforms and platforms for application development and integration between systems (Magic xpa, Magic xpi and others), as well as dedicated software solutions for various sectors, such as logistics and distribution and communication and media, marketed to international customers.

Activity in the segment is carried out through Group companies in the USA and North America, Europe, Japan, and dozens of other countries around the world, and constitutes the Group's international activity arm.

Condensed Consolidated Interim Financial Statements

Matrix IT Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

Note 3 Segments (continued)

Cloud Solutions, Computing Infrastructure and Systems in Israel and Abroad

This segment includes the Group's activity in the field of cloud, computing infrastructure, hardware and technological equipment. Activity in the segment includes, among others: providing solutions and services in the field of cloud computing, including consulting, architecture planning, development, implementation and management of public, private and hybrid cloud environments (IaaS, PaaS, SaaS); managed services, operational support and FinOps services supported by advanced AI processes; digital transformation services, modernization of DevOps systems, and optimization of cloud infrastructures; computing infrastructure solutions, communication, multimedia and command and control centers for smart offices; cyber and information security; marketing and sale of hardware, software licenses and peripheral equipment; office automation and printing solutions; test and measurement equipment, communication, cyber and RF solutions; as well as import, sale and service of automated production machines for component assembly and automated testing in the fields of industrial, medical, military instrumentation, lasers and sensors, optical communication and non-destructive testing.

B. Composition

For the 3 months ended March 31, 2026 unaudited (in thousands of NIS)

	IT solutions, software products and services, consulting and systems engineering in Israel	IT solutions, software products and services, consulting and systems engineering in Israel	Cloud solutions, computer infrastructure and systems in Israel and abroad	Cloud solutions, computer infrastructure and systems in Israel and abroad	IT solutions, software products and services abroad	IT solutions, software products and services abroad	Adjustments	Adjustments	Total	Total
External revenues	1,273,093		512,345		342,143		-		2,127,581
Inter- segment revenues	30,430		17,648		2,519		(50,597)		-
Total revenues	1,303,523		529,993		344,662		(50,597)		2,127,581

Segment results		126,613		42,737		37,812		(4,092)		203,070
Financing expenses										(31,771)
Financing income										7,992
Taxes on income										(42,451)
Net proft										136,840

Matrix IT Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

Note 3 Segments (continued) 17

Condensed Consolidated Interim Financial Statements

	IT solutions, software products and services, consulting and systems engineering in Israel	Cloud solutions, computer infrastructure and systems in Israel and abroad	IT solutions, software products and services abroad	Adjustments	Total
External revenues	1,239,025	488,045	349,968	-	2,077,038
Inter-segment revenues	22,414	7,551	159	(30,124)	-
Total revenues	1,261,439	495,596	350,127	(30,124)	2,077,038

Segment results	105,180	46,254	34,957	(3,525)	182,866
Financing expenses					(28,195)
Financing income					7,669
Taxes on income					(36,550)
Company's share in losses of associates					(455)
Net proft					125,335

Condensed Consolidated Interim Financial Statements 18

Matrix IT Ltd.

Notes to the Condensed Consolidated Interim Financial Statements Note 3 Segments (continued)

For the year ended December 31, 2025 audited (in thousands of NIS)

	IT solutions, software products and services, consulting and systems engineering in Israel	Cloud solutions, computer infrastructure and systems in Israel and abroad	IT solutions, software products and services abroad	Adjustments	Total
External revenues	5,027,547	1,921,432	1,438,003	-	8,386,982
Inter-segment revenues	67,260	43,708	982	(111,950)	-
Total revenues	5,094,807	1,965,140	1,438,985	(111,950)	8,386,982

Segment results	431,230	172,652	145,706	(19,634)	729,954
Financing expenses					(122,258)
Financing income					28,075
Taxes on income					(149,582)
Company's share in losses of associates					(1,050)
Net proft 17			Condensed Consolidated Interim Fina		485,139 ncial Statements

	IT solutions, software products and services, consulting and systems engineering in Israel	Cloud solutions, computer infrastructure and systems in Israel and abroad	IT solutions, software products and services abroad	Adjustments	Total

Additional information
Cost of sales	4,323,588	1,647,356	1,001,084	(111,950)	6,860,078
Depreciation and amortization	185,611	47,977	39,016	-	272,604

19 Condensed Consolidated Interim Financial Statement

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Condensed Consolidated Interim Financial Statements

Notes to the Condensed Interim Consolidated Financial Statements

Matrix IT Ltd.

Material Events during the Period

Note 4

A. Completion of the merger transaction with Magic

On February 24, 2026, the merger transaction between the Company and Magic Software Enterprises Ltd. ("Magic") was completed following the fulfillment of the conditions precedent set forth in the merger agreement. As part of the merger, which was performed by way of a reverse triangular merger, the Company acquired the full issued and paid-up share capital of Magic, and as of the merger completion date, Magic became a wholly owned subsidiary (100%) of the Company. Upon completion of the transaction, Magic's shares were delisted from trading on NASDAQ and the Tel Aviv Stock Exchange, and Magic ceased to be a public company.

B. Signing of a Put/Call option agreement with a minority shareholder in Comblack

In November 2025, an option agreement was signed between Magic and a minority shareholder in Comblack IT Ltd. ("Comblack"), a subsidiary of the Company, in connection with the granting of a Put option / Call option for the sale / purchase of all the shares of the minority shareholder in Comblack (approx. 19.76%). The consideration for the exercise of the PUT option (or the Call with the necessary changes as stated) is calculated based on a company value to be determined according to the future results of the subsidiary.

C. Issuance of Convertible BONDS (Series 2)

On February 4, 2026, the Company completed the issuance of Convertible BONDS (Series 2) of approx. 297 million NIS, for a gross consideration of approx. 300.6 million NIS. The BONDS bear an annual interest rate of 0.5% and are due for repayment in one installment on February 1, 2031. The BONDS (Series 2) are convertible on any trading day such that every 178.4 NIS par value of the BONDS shall be convertible into one share of the Company (after adjustment for dividend distribution). For details regarding the issuance of Convertible BONDS (Series 2), see Note 25A to the annual financial statements.

Most of the proceeds from the issuance of BONDS (Series 2) were used, after the completion of the Magic transaction (see below), to repay existing bank debts of Magic, in a total amount of approx. 200 million NIS.

D. Acquisition of Savana

On December 1, 2025, the Company completed, through CommIT (a subsidiary of the Company), the acquisition of 75% of the share capital of Savana Solutions Ltd., which specializes in building development teams for startups by recruiting and employing developers from African countries on an outsourcing basis. The basic purchase consideration amounted to approx. 3.75 million NIS, plus additional contingent consideration depending on the future financial results of the company.

As of the date of the report, the valuation underlying the Purchase Price Allocation (PPA) to assets and liabilities has not yet been completed, and accordingly, this allocation is provisional, according to management's estimate, and may be updated in future periods after the completion of the valuation. According to the provisional allocation, the excess cost of the acquisition in the amount of approx. 5.2 million NIS will be attributed to intangible assets in the amount of approx. 1.4 million NIS, and the balance was attributed to goodwill. As stated above, the Group recognized the fair value of the assets acquired and liabilities assumed within the business combination based on a provisional measurement. Therefore, the acquisition consideration and the fair value of the assets and liabilities acquired are subject to final adjustment up to 12 months from the acquisition date.

Condensed Interim Consolidated Financial Statements

Notes to the Condensed Interim Consolidated Financial Statements

Matrix IT Ltd.

Material Events during the Period (Cont.) Note 4

E. Acquisition of Martin Control Systems

On March 12, 2026, the Company completed, through the subsidiary Magic Software Enterprises, the acquisition of 100% of the share capital of Martin Control Systems for a total of approx. 3 million dollars. Martin Control Systems is an American System Integrator company specializing in providing industrial automation and control systems integration services. The company provides industrial manufacturers with end-to-end solutions, including consulting, planning, engineering, development, integration, installation, and commissioning of industrial control systems. The operating results of Martin Control Systems will be consolidated in the Company's financial statements (within the IT solutions and services and software product sales abroad segment) starting from the second quarter of 2026.

As of the date of the report, the valuation underlying the Purchase Price Allocation (PPA) to assets and liabilities has not yet been completed, and accordingly, this allocation is provisional, according to management's estimate, and may be updated in future periods after the completion of the valuation. According to the provisional allocation, the excess cost of the acquisition in the amount of approx. 2.94 million dollars will be attributed to intangible assets in the amount of approx. 0.9 million dollars, and the balance was attributed to goodwill. As stated above, the Group recognized the fair value of the assets acquired and liabilities assumed within the business combination based on a provisional measurement. Therefore, the acquisition consideration and the fair value of the assets and liabilities acquired are subject to final adjustment up to 12 months from the acquisition date.

F. Acquisition of minority rights in the subsidiary Integrity Software Ltd.

In March 2026, the Company acquired the full minority rights (35%) in the subsidiary Integrity Software Ltd., for a total of approx. 30 million NIS, so that the Company currently holds the full share capital of the subsidiary.

21 Condensed Interim Consolidated Financial Statements

==> picture [758 x 388] intentionally omitted <==

Chapter C

Financial data from the Condensed Interim Consolidated Financial Statements attributed to the Company As of March 31, 2026 Unaudited

Table of Contents
Special report of the independent auditor (accountant) to the shareholders of Matrix IT	3
Ltd.
Special report according to Regulation 38D	4
Financial data from the consolidated balance sheets attributed to the company	5
Financial data from the consolidated statements of comprehensive income attributed to	7
the company

Financial data from the consolidated statements of cash flows attributed to the company 8

Additional information 10

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Special report of the auditor to the shareholders of Matrix IT Ltd.

On separate interim financial information according to Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970

Introduction

We have reviewed the separate interim financial information presented according to Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970 of Matrix IT Ltd. (hereinafter - the Company), as of March 31, 2026, and for the three-month period then ended. The separate interim financial information is the responsibility of the Company's Board of Directors and management. Our responsibility is to express a conclusion on the separate interim financial information for this interim period based on our review.

Scope of Review

We conducted our review in accordance with Israel Review Standard (2410) of the Institute of Certified Public Accountants in Israel, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of separate interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the above separate financial information is not prepared, in all material respects, in accordance with the provisions of Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970.

Tel Aviv, Ziv Haft May 18, 2026 Accountants

3 Special report according to Regulation 38D

Special report according to Regulation 38D Financial data and financial information from the consolidated interim financial reports attributed to the Company

Below are separate financial data and financial information attributed to the Company from the Group's consolidated interim financial reports as of March 31, 2026, published as part of the periodic reports (hereinafter - consolidated reports), presented in accordance with Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970.

4 Special report according to Regulation 38D

Financial data from the consolidated balance sheets attributed to the Company

(In thousands of NIS)

Matrix IT Ltd.

or more information, please review the legal disclaimer. .
	As of March 31 2026	As of March 31 2025 1	As of December 31 2025 1
	Unaudited	Unaudited

Current assets
Cash and cash equivalents	4,233	4,939	7,767
Customers	73,783	79,347	20,640
Current account balances with subsidiaries	18,555	83,497	28,983
Income tax receivable	9,589	10,675	15,350
Debtors and debit balances	12,100	13,472	11,146
	118,260	191,930	83,886

Non-current assets
Balance in respect of subsidiaries, net	3,666,985	3,016,412	3,164,248
Capital notes and loans to subsidiaries	225,430	24,660	24,659
Excess of assets over liabilities due to employee benefts, net	-	-	1,027
Right-of-use assets	164,004	174,541	166,136
Deferred taxes	6,296	5,028	5,949
	4,062,715	3,220,641	3,362,019
	4,180,975	3,412,571	3,445,905

The attached additional information forms an integral part of the financial data and the separate financial information.

1 Retroactive classification due to the merger, see Notes 1E and 4A to the financial report

Special report according to Regulation 38D

Financial data from the consolidated balance sheets attributed to the Company Matrix IT Ltd. (In thousands of NIS)

	As of March 31 2026	As of March 31 2025 1	December 31 2025 1
	Unaudited	Unaudited	Audited
Current liabilities
Credit from banking corporations and other credit providers	301,153	301,265	311,943
Current maturities of BONDS liability	77,576	79,078	78,597
Current maturities of lease liability	16,595	11,376	16,392

or more information, please review the legal disclaimer. .
	As of March 31 2026		As of March 31 2025 1		As of	December 31 2025 1
		Unaudited		Unaudited		Audited
Trade payables and service providers		46,929		48,395		50,106
Employees and institutions for wages		33,179		48,779		33,075
Creditors and credit balances		92,959		65,741		24,897
Current account balances with subsidiaries		1,029,182		917,867	1,060,425
		1,597,573		1,472,501	1,575,435
Non-current liabilities
BONDS liability		194,082		259,866	230,187
Convertible BONDS liability		249,387		-	-
Lease liability		159,322		169,019	161,388
Tax reserve		11,224		-	-
Liabilities due to employee benefts, net		306		139	-
		614,321		429,024	391,575
Equity attributed to the Company's shareholders
Paid-up share capital and capital funds		929,270		594,329	488,645
Retained earnings		1,039,811		916,717	990,250
		1,969,081		1,511,046	1,478,895
	4,180,975		3,412,571		3,445,905

The attached additional information forms an integral part of the financial data and the separate financial information.

May 18, 2026 Approval date of the Guy Bernstein Motti Gutman Nevo Brenner separate financial information Chairman of the Board Chief Executive Officer Executive VP Finance

1 Retroactive classification due to the merger, see Notes 1E and 4A to the financial report Special report according to Regulation 38D

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Financial data from the consolidated reports on the comprehensive income attributed to the company

Matrix IT Ltd.

(In thousands of NIS)

	For the 3 months ended March 31	For the 3 months ended March 31	For the year ended on December 31
	2026	2025 1	2025 1
	Unaudited	Unaudited
Turnover	67,517	65,790	206,363
Cost of sales and services	15,765	23,186	61,561
Gross proft	51,752	42,604	144,802
Selling and marketing expenses	2,887	2,418	22,417
General and administrative expenses	9,320	9,182	61,140
Operating proft	39,545	31,004	61,245
Financing expenses	13,233	10,890	63,996
Financing income	845	193	132
Proft from held companies, net	99,657	75,920	367,712
Proft before income taxes	126,814	96,227	365,093
Income taxes	6,078	3,741	369
Net proft attributed to the company	120,736	92,486	364,724
Actuarial gains in held companies	1,925	1,335	5,596
Adjustments arising from translation offnancial reports	(8,963)	13,863	(85,675)
Total comprehensive income attributed to the company	113,698	107,684	284,645

The attached additional information forms an integral part of the financial data and the separate financial information.

1 Retroactive classification regarding the merger, see notes 1E and 4A to the financial report

7 Special report according to regulation 38D

Matrix IT Financial data from the consolidated reports on the cash flows attributed to the Ltd. company

(In thousands of NIS)

	For the 3 months ended on March 31	For the 3 months ended on March 31	For the year ended on December 31
	2026	2025 1	2025 1
	Unaudited	Unaudited
Cashfows from operating activities of the company

or more information, please review the legal disclaimer. .	or more information, please review the legal disclaimer. .
		For the 3 months ended on March 31	For the 3 months ended on March 31	For the year ended on December 31
		2026	2025 1	2025 1
		Unaudited	Unaudited
Net proft attributed to the company		120,736	92,486	364,724
Adjustments required to present cashfows from operating activities of the company :
	Adjustments to proft and loss items of the company
	Proft from held companies, net	(99,657)	(75,920)	(367,712)
	Income taxes	6,078	3,741	369
	Depreciation and amortization	4,646	4,231	18,545
	Change in liabilities for employee benefts	1,333	(22)	(1,188)
	Otherfnancing expenses, net	23,615	10,661	38,824
	Share-based payment	1,377	3,021	8,213
		(62,608)	(54,288)	(302,949)
	Changes in asset and liability items of the company
	Decrease (increase) in trade receivables	(53,143)	24,345	83,052
	Decrease (increase) in debtors and debit balances	(954)	8,315	10,641
	Increase (decrease) in liabilities to suppliers and service providers	(3,177)	11,593	13,304
	Increase (decrease) in creditors and credit balances	(18,606)	6,997	(2,415)
	Increase (decrease) in current intercompany balances with held companies	(20,815)	8,188	205,260
		(96,695)	59,438	309,842
Cash paid and received during the year in the company for :
Interest paid		(22,183)	(13,298)	(26,965)
Interest received		50	35	50
Taxes paid		(1,017)	(1,926)	(542)
Taxes received		-	-	-
		(23,150)	(15,189)	(27,457)
Net cash provided by (used in) operating activities of the company		(61,717)	82,447	344,160

The attached additional information forms an integral part of the financial data and the separate financial information.

1 Retroactive classification regarding the merger, see notes 1E and 4A to the financial report

Special report according to regulation 38D

Matrix IT Ltd.

Financial data from the consolidated reports on the cash flows attributed to the company

(In thousands of NIS)

	For the 3 months ended on March 31 2026	For the 3 months ended on March 31 2025 1	For the year ended on December 31 2025 1
	Unaudited	Unaudited
Cashfows fromfnancing activities of the company
Repayment of lease liabilities	(4,376)	-	(7,785)
Loans to a held company	(200,771)	-	-
Dividend distribution	-	(48,277)	(269,065)
Dividend distribution from a subsidiary	-	-	3,680
Receipt from convertible BONDS	297,272	-	-
Repayment of BONDS	(33,959)	(33,959)	(67,918)
Net cash provided by (used in)fnancing activities of the company	58,166	(82,236)	(341,088)
Translation diferences on cash and cash equivalents	17	1	(32)
Increase (decrease) in cash and cash equivalents	(3,534)	212	3,040
Balance of cash and cash equivalents at the beginning of the period	7,767	4,727	4,727
Balance of cash and cash equivalents at the end of the period	4,233	4,939	7,767

Signifcant non-cash activities
Declared dividend not yet paid	73,100	52,161	-
Recognition of right-of-use asset against lease liability	2,514	268	6,177

The attached additional information forms an integral part of the financial data and the separate financial information.

1 Retroactive classification regarding the merger, see notes 1E and 4A to the financial report

Special report according to regulation 38D

Matrix IT Ltd.

Additional Information

1. General

This separate financial information of Matrix IT Ltd. (hereinafter - the Company) is prepared in a condensed format as of March 31, 2026 and for the three-month period ended on that date, in accordance with the provisions of Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970. This separate financial information should be read in the context of the separate financial information on the annual financial reports of the company as of December 31, 2025 and for the year ended on that date and the additional information accompanying them.

2. Signifcant Accounting Policies

The accounting policy applied in the preparation of this separate financial information is consistent with that applied in the preparation of the separate financial information as of December 31, 2025.

3. Business combination transactions under the same control

For details, see Note 2C and Note 4A to the financial report.

Special report according to regulation 38D

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Chapter D

Quarterly report regarding the effectiveness of internal control over financial reporting and over disclosure according to regulation 38C (a)

s an unofcial AI generated translation of the ofcial Hebrew version and has no binding force. The only binding version is the ofcial Hebrew on. For more information, please review the legal disclaimer. .	s an unofcial AI generated translation of the ofcial Hebrew version and has no binding force. The only binding version is the ofcial Hebrew on. For more information, please review the legal disclaimer. .	s an unofcial AI generated translation of the ofcial Hebrew version and has no binding force. The only binding version is the ofcial Hebrew on. For more information, please review the legal disclaimer. .

Table of Contents Quarterly report regarding the efectiveness of internal control overfnancial reporting and over disclosure according to regulation 38C (a) 3 CEO Declaration 4 Declaration of the senior ofcer in thefeld offnance 5

==> picture [758 x 73] intentionally omitted <==

Attached herewith is a quarterly report regarding the effectiveness of internal control over financial reporting and over disclosure according to regulation 38C (a):

Management, under the supervision of the Board of Directors of Matrix IT Ltd. (hereinafter: "the Company"), is responsible for the determination and existence of adequate internal control over financial reporting and over disclosure in the Company.

In this regard, the members of management are:

Moti Gutman, CEO
Nevo Brenner, CFO
Gali Katan, Accountant

Internal control over financial reporting and over disclosure includes controls and procedures existing in the Company, which were designed by the CEO and the senior officer in the field of finance or under their supervision, or by those who actually perform the said functions under the supervision of the Company's Board of Directors, which are intended to provide a reasonable degree of assurance regarding the reliability of the financial reporting and the preparation of the reports in accordance with the provisions of the law, and to ensure that information the Company is required to disclose in the reports it publishes according to the provisions of the law is collected, processed, summarized, and reported at the time and in the format prescribed by law.

The internal control includes, among other things, controls and procedures designed to ensure that information that the Company is required to disclose as stated, is accumulated and transferred to the Company's management, including the CEO and the senior officer in the field of finance or to those who actually perform the said functions, in order to allow decision-making at the appropriate time, with reference to the disclosure requirement.

Due to its structural limitations, internal control over financial reporting and over disclosure is not intended to provide absolute assurance that a misstatement or omission of information in the reports will be prevented or detected.

In the annual report regarding the effectiveness of internal control over financial reporting and over disclosure which was attached to the Periodic report for the period ended December 31, 2025 (hereinafter: "the last annual report regarding internal control"), the Board of Directors and management evaluated the internal control in the Company. Based on this evaluation, the Board of Directors and the Company's management reached the conclusion that the internal control as stated, as of December 31, 2025, is effective.

Until the date of the report, no event or matter has been brought to the attention of the Board of Directors and management that would change the evaluation of the effectiveness of the internal control, as presented in the last annual report regarding internal control.

As of the date of the report, based on the evaluation of the effectiveness of the internal control in the last annual report regarding internal control, and based on information brought to the attention of management and the Board of Directors as stated above, the internal control is effective.

Quarterly report regarding the effectiveness of internal control over financial reporting and over disclosure according to regulation 38C (a) 3

Executive Declarations:

(A1) CEO Declaration according to Regulation 38C (d) (1) of the Reports Regulations

Executive Declaration

CEO Declaration

I, Moti Gutman, declare that:

I have examined the quarterly report of Matrix IT Ltd. (hereinafter "the Company") for the first quarter of the year 2026 (hereinafter "the Reports").
To my knowledge, the Reports do not include any misrepresentation of a material fact and do not lack a representation of a material fact necessary so that the representations included in them, in light of the circumstances in which those representations were included, will not be misleading with respect to the period of the Reports.
To my knowledge, the financial statements and other financial information included in the Reports fairly reflect, in all material respects, the financial position, results of operations and cash flows of the Company for the dates and periods to which the Reports relate.
I have disclosed to the Company's auditing accountant, to the Company's Board of Directors, to the Audit Committee and to the Financial Statements Review Committee, based on my most recent assessment of the internal control over financial reporting and over disclosure:
a. All significant deficiencies and material weaknesses in the determination or operation of the internal control over financial reporting and over disclosure that are reasonably likely to adversely affect the Company's ability to collect, process, summarize or report financial information in a manner that casts doubt on the reliability of the financial reporting and the preparation of the financial statements in accordance with the provisions of the law, and-
b. Any fraud, whether material or not material, involving the CEO or those directly subordinate to him or involving other employees who have a significant role in the internal control over financial reporting and over disclosure.

5. I alone or together with others in the Company:

a. Determined controls and procedures, or ensured the determination and existence of controls and procedures under my supervision, designed to ensure that material information relating to the Company, including its consolidated companies as defined in the Securities Regulations (Annual Financial Statements), 2010, is brought to my knowledge by others in the Company and in the consolidated companies, particularly during the preparation period of the Reports, and-
b. Determined controls and procedures, or ensured the determination and existence of controls and procedures under my supervision, designed to reasonably ensure the reliability of financial reporting and the preparation of the financial statements in accordance with the provisions of the law, including in accordance with accepted accounting principles.

No event or matter that occurred during the period between the date of the last report (periodic) and the date of this report has been brought to my knowledge, which would change the conclusion of the Board of Directors and management regarding the effectiveness of internal control over financial reporting and over disclosure of the Company.

Nothing in the above shall derogate from my responsibility or the responsibility of any other person, according to any law.

May 18, 2026

Moti Gutman, CEO

4 Quarterly report regarding the effectiveness of internal control over financial reporting and over disclosure according to regulation 38C (a)

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Management Declarations:

(B) Declaration of the most senior officer in the field of finance according to Regulation 38C(d)(2)

Management Declarations

Declaration of the Most Senior Officer in Finance

I, Nevo Brenner, declare that:

I have examined the interim financial reports and the other financial information included in the reports for the interim period of Matrix IT Ltd. (hereinafter "the Company") for the first quarter of 2026 (hereinafter "the Reports").
To the best of my knowledge, the interim financial reports and the other financial information included in the reports for the interim period do not include any misrepresentation of a material fact and do not lack a representation of a material fact necessary so that the representations included in them, in light of the circumstances in which those representations were included, will not be misleading with respect to the period of the reports.
To the best of my knowledge, the interim financial reports and the other financial information included in the reports fairly reflect, in all material respects, the financial position, results of operations, and cash flows of the Company for the dates and periods to which the reports relate.
I have disclosed to the Company's auditing accountant, the Company's board of directors, the audit committee, and the committee for examining financial reports, based on my most current evaluation of the internal control over financial reporting and disclosure:
a. All significant deficiencies and material weaknesses in the determination or operation of the internal control over financial reporting and disclosure, as it relates to the interim financial reports and the other financial information included in the reports for the interim period, which could reasonably adversely affect the Company's ability to collect, process, summarize, or report financial information in a way that casts doubt on the reliability of the financial reporting and the preparation of the financial reports in accordance with the provisions of the law, and also-
b. Any fraud, whether material or immaterial, involving the CEO or his direct subordinates or involving other employees who have a significant role in the internal control over financial reporting and disclosure.

5. I, alone or together with others in the Company:

a. Established controls and procedures, or ensured the establishment and existence of controls and procedures under my supervision, designed to ensure that material information relating to the Company, including its consolidated companies as defined in the Securities Regulations (Preparation of Annual Financial Reports), 2010, is brought to my knowledge by others in the Company and in the consolidated companies, particularly during the period of preparation of the reports, and also-
b. Established controls and procedures, or ensured the establishment and existence of controls and procedures under my supervision, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial reports in accordance with the provisions of law, including accepted accounting principles.

Quarterly report on the effectiveness of internal control over financial reporting and disclosure according to Regulation 38C(a) 5

c. No event or matter has come to my attention that occurred during the period between the date of the last report (periodic report) and the date of this report, and which would change my conclusions regarding the effectiveness of the internal control over financial reporting and disclosure, as it relates to the financial reports and the other financial information included in the reports presented before the management and the board of directors and integrated into this report.

Nothing in the above derogates from my responsibility or the responsibility of any other person, according to any law.

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May 18, 2026 Nevo Brenner, CFO
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Quarterly report on the effectiveness of internal control over financial reporting and disclosure according to Regulation 38C(a) 6

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AI assistant

Matrix IT Ltd. — Interim / Quarterly Report 2026

6905_rns_2026-05-19_a15a32d2-1a17-4a41-badd-05df8dee185d.pdf

Matrix IT Ltd. Quarterly Financial Reports March 31, 2026

Table of Contents

Chapter A

Table of Contents

1. Board of Directors' Explanations on the Corporation's Business

Position

1.1. Main Data from the Description of the Corporation's Business

1.1.1. General

1.1.2. Description of Activity Segments

1

1.1.3. Business Environment

B. The Economic Environment in Israel

C. The Security Situation

D. Economic Indicators

2) Exchange Rates

E. Impact on the Company's Operating Results

1.1.4. Material events during the period

A. Completion of the merger transaction with Magic

B. Signing of a Put/Call option agreement regarding a minority shareholder in Comblack

C. Issuance of Convertible BONDS (Series 2)

D. Acquisition of Savannah Company

E. Acquisition of Martin Control Systems

F. Acquisition of minority rights in the subsidiary Integrity Software Ltd.

1.1.5 Highlights of Results for the First Quarter of 2026

Growth rates of the operating segments, on a Constant Currency basis:

1.1.6. Summary of Consolidated Statements of Profit for the three months ended March 31, 2026 and 2025

1.2. Analysis of Results of Operations

1.2.1. Seasonality

1.2.2. Analysis of Consolidated Profit and Loss Results

1) Revenues

2) Gross Profit

~~3) Research and Development Expenses~~

4) Selling, Marketing, General and Administrative Expenses

5) Operating Profit

6) Financing expenses / income (net)

7) Taxes on income

8) Net profit

9) Net profit attributable to company shareholders

10) Comprehensive income (in thousands of NIS)

– 11) Earnings before interest, taxes, depreciation and amortization EBITDA (in thousands of NIS)

Below is the EBITDA index and adjusted EBITDA index, neutralizing IFRS 16:

12) Earnings per share attributable to company shareholders (in NIS)

1.2.3. Analysis of the impact of the dollar exchange rate erosion relative to the NIS on results of operations (on a Constant Currency basis)

Reported results (in thousands of NIS):

Company results on a Constant Currency basis (in thousands of NIS):

1.2.4. Summary of consolidated profit and loss results by quarter for the year 2025 and for the first quarter of 2026 (thousands of NIS)

1.2.5. Summary of consolidated profit and loss results by operating segments for the three months ended March 31, 2026 and 2025 (NIS thousands)

1.2.6. Analysis of results of operations by operating segments on a Constant Currency basis

IT solutions, products and software services abroad

Segment results on a Constant Currency basis (in NIS thousands):

Reported results (in NIS thousands):

Segment results on a Constant Currency basis (in NIS thousands):

Dividend distribution

Credit rating upgrade

1.3. Financial position, liquidity and sources of financing

Summary of cash flow statements (in NIS thousands)

Cash flow from operating activities

Cash flows from investing activities

Cash flows from financing activities

Summary of reports on the changes in equity (in thousands of NIS)

2. Disclosure Instructions regarding the corporation's financial reporting

2.1. Goodwill

– Appendix A Details regarding debt certificates issued by the Company and held by the public as of the date of the report

– 1) Below are details regarding the BONDS Series 2' and the convertible BONDS Series 2 data in thousands of NIS

(2) Details regarding the trustee for the BONDS holders (Series 2')

(3) Details regarding the rating of the BONDS (Series 2') and regarding the convertible BONDS (Series 2)

– 4) Financial Covenants BONDS (Series 2') and Convertible BONDS (Series 2)

Part B

Consolidated Interim Financial Statements As of 31.03.2026 Unaudited

Scope of Review

Conclusion

Emphasis of Matter

Matrix IT Ltd.

Consolidated Statements of Financial Position

Consolidated Statements of Profit or Loss and Other Comprehensive Income

Matrix IT Ltd.

Consolidated Statements of Changes in Equity

Matrix IT Ltd. Interim / Quarterly Report 2026

3) Research and Development Expenses