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Palram Industries (1990) Ltd.

Consolidated Interim Financial Statements
As of March 31, 2026

Board of Directors' Report.
Consolidated interim financial statements as of March 31, 2026.
Report on the effectiveness of internal control over financial reporting and disclosure.

[email protected]
www.palram.com

Palram Industries (1990) Ltd.

Part B - Board of Directors' Report

Imagine,

Build.

Palram

Board of Directors' Report on the State of the Corporation's Affairs

For the period ended March 31, 2026

Board of Directors' Report on the State of the Corporation's Affairs for the period ended March 31, 2026

We are pleased to submit the Board of Directors' Report on the state of the corporation's affairs for the period ended March 31, 2026 (hereinafter: the "First Quarter" or "Report Period" as applicable).

The review presented below is limited in scope and refers to material events and changes that occurred in the state of the corporation's affairs during the report period, the impact of which is material, and it should be read in conjunction with the Company's Periodic report for 2025, including the financial statements and the Company's Board of Directors' report as of December 31, 2025, which was published on March 26, 2026 (Ref No.: 2025-01-028089) ("The 2025 Periodic report"), which is hereby included by way of reference.

1. Board of Directors' explanations on the corporation's business state, results of its operations, its equity, and its cash flows

1.1. Concise description of the corporation, its areas of activity, and its business environment

1.1.1. Palram Industries (1990) Ltd. ("the Company") and its subsidiaries ("the Group"). The Group operates in 4 areas of activity: Polycarbonate, PVC, finished products for the home environment, and points of sale and display, as detailed below:

(a) Polycarbonate - In this area of activity, the Group is primarily engaged in the development, production, and sale of rigid thermoplastic sheets produced by extrusion using polycarbonate polymer, through three plants/sites located in Israel, the USA, and England and their sale through the Group's global distribution network mainly in America, Europe, Australia, South Africa, England, Israel, India, and the Group's websites, which are primarily engaged in the sale of cut-to-size kits (Bespoke) based on polycarbonate sheets for the home environment (BTC). This field also includes the main activities of Mullan, located in England, which is a center for producing cut-to-size kits (Bespoke) based on polycarbonate sheets and serves the Group's aforementioned websites in Europe and other websites not owned by the Group and serves as a logistics center serving primarily the professional installers market. In addition, on March 31, 2025, the subsidiary Century in England acquired the company Abel, a project company, for an immaterial amount, which operates in the public buildings market segment included in this field of activity and was fully consolidated this year.

(b) PVC - In this area of activity, the Group is primarily engaged in the development, production, and sale of thermoplastic sheets produced by extrusion using PVC polymer, through two plants/sites in Israel and England and their sale through the Group's global distribution network mainly in: America, Europe, Australia, England, Israel, and India, and which also includes the activities of Hygienic, which was acquired in 2023 and serves as a service center specializing in the distribution of dedicated PVC sheets produced by the Group and other manufacturers used for sanitary wall cladding, primarily through direct sales to professional installers. Also, in the second quarter of 2024, the Group acquired a DIY market from Onduline NA in North America, thereby increasing the sale of corrugated PVC sheets produced by the Group.

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Board of Directors' Report on the State of the Corporation's Affairs For the period ended March 31, 2026

(c) Finished products for the home environment - In this field of activity, the Group is engaged in the development, production, and sale of self-assembly products for the home environment (such as - greenhouses, sheds, gazebo pergolas, shops, etc.) which are downstream products based on polycarbonate sheets produced by the Group through Palram Canopia Ltd. ("Canopia") located in the Teradion Industrial Park and their sale through logistics sites in the main activity areas where the field operates through subsidiaries, allowing Canopia to get closer to customers, maintain inventories and distribution networks near customers and hold inventory for its customers, allowing for short-term inventory supply directly to the customer's home (Drop shipment), with most of its customers being large retail chains that sell products online. During the report period, the Group experienced a decrease in demand, which began as a result of a change in inventory holding policy in the chains and among distributors, particularly wintry weather in the first quarter, continued competition from the East, a change in consumer tastes since the end of the COVID pandemic, high interest rates, and inflation.

(d) Points of sale and display - In this area of activity, the Group is primarily engaged in the development, production, and sale of point-of-sale (POP) stands and point-of-purchase (POS) stands for various fields, including sales stands ordered by tobacco manufacturers, shelving and sales stands for food and natural products for retail chains, and cabinets for hydroponic vegetable growing which are downstream products based, among other things, on PVC sheets produced by the Group. In March 2025, Palram 4U acquired 70% of the shares of Perfecta, located in Poland, which is also engaged in the sale of point-of-sale (POP) and point-of-purchase (POS) stands mainly to tobacco manufacturers and primarily for the Western European market, thereby expanding its activity to this market.

1.1.2. The business environment in which the Group operates is characterized by six main market segments as follows:

(a) Home environment - including, among others, corrugated and multi-wall sheets for domestic applications - DIY "Do It Yourself", self-assembly pergolas, and cut-to-size pergola cladding kits for installation by professionals, home greenhouses, awnings, carports, gazebos, sheds, and the like; (b) Signage and advertising - including, among others, printing substrates for the signage and advertising field as well as point-of-sale and display stands mainly for the retail market; (c) Industrial construction - including, among others, thermoplastic sheets used for transparent and insulated light openings in green construction of industrial buildings; (d) Public buildings - including, among others, thermoplastic sheets used for lighting solutions for public buildings in Israel and worldwide, such as shopping centers, stadiums and sports centers, educational institutions, museums, etc.; and sanitary wall claddings installed, among others, in food chains and points of sale. (e) Agricultural structures - including, among others, thermoplastic sheets for industrial greenhouses and livestock structures, such as: cowsheds and chicken coops, etc.; (f) Industrial processing - including, among others, thermoplastic sheets used for guards for production lines and industrial machinery, canopies, motorcycles, security glazing, partitions, railings, and many other applications.

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Board of Directors Report on the State of the Corporation's Affairs

For the period ended March 31, 2026

1.2. Description of the business environment and the main impacts on the corporation:

During the report period and thereafter, several events occurred that affected the company's activity in addition to the effects from ongoing activities:

1.2.1. Security situation and its implications -

For about two and a half years, a broad multi-arena campaign has been underway, including confrontations with Iran, Hezbollah, and Iran's proxies in Yemen and Iraq, which led, among other things, to the closing of the Strait of Hormuz. On February 28, 2026, Israel launched Operation "Lion's Roar" against Iran, in strategic cooperation with the USA.

Generally, as of April 8, 2026, a temporary ceasefire agreement has been in effect in the region. Despite this, tensions in the region remain high, and in the past month, several violations of the ceasefire and exchanges of fire were recorded in trade routes, which led to logistical delays and changes in sea transportation routes and volatility in fuel and other commodity prices. During the report period, the Group's activities in Israel and abroad continued as usual.

In light of the above, during the report period, the security situation and its implications did not materially affect the Group's operations and business results. However, as of the date of publication of this report, the closing of the straits as mentioned, together with uncertainty, caused an increase in the prices of the Group's main raw materials, while an increase in demand for the Group's products in the PVC and Polycarbonate fields occurred due to customers' concerns about continued price increases and manufacturers stockpiling raw material inventory, which led the Group to raise prices in markets similarly to its competitors. According to the company's assessment, the final consumer demand remains unchanged, and therefore the stockpiling trend in these fields of activity may reverse in the coming months.

The renewal or continuation of the multi-arena campaign as mentioned over time may lead to continued volatility in oil prices, raw materials, and transport prices to and from Israel; potential shutdown of factories; difficulties in the availability of manpower, raw materials, and inventory; difficulties in sea and air transport as well as in the supply chain; and changes in the cost structure as a result of potential fluctuations in commodity prices or exchange rates.

The company's forecasts, assessments, and expectations regarding the implications of the security situation as mentioned on the company are forward-looking information, as defined in the Securities Law, 1968, based on the information available to the company's management at the date of the report. These forecasts, assessments, and expectations may not materialize, in whole or in part, or may materialize in a materially different way than expected, among other things, given that these are global security events and macro-economic events that are extremely unusual in nature, change constantly, and are not under the company's control. Accordingly, the renewal or continuation of the campaign over time, its intensity, scope, escalation, and its impact on the functioning of the economy and the home front, on the Israeli economy as a whole, and on the company's specific field of activity, may affect the company and its operating results.

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Board of Directors Report on the State of the Corporation's Affairs

1.2.2. The impact of changes in interest rates and inflation -

A. Changes in interest rates

bank of Israel interest for the report period was at a rate of 4%. As of the report period, the Group has no loans, and therefore changes in interest rates have no impact on its operating results in this matter.

B. Changes in inflation rates

In general, given the increase in inflation rates, which led to increases in the minimum wage, the salaries of Group company employees were updated in the various geographies in which they operate.

The company assesses that the rise in inflation, together with high interest rates, cumulatively affects consumers by delaying purchasing decisions, which harms demand in the various fields of activity except for the sales and display stands field of activity. However, the increase in the inflation rate in Israel has no material impact on the company's expenses, given, among other things, the existing linkages in lease agreements in Israel, the manpower services agreement, and the officer services agreement between the company and Kibbutz Ramat Yohanan.

1.2.3. The military conflict between Russia and Ukraine

At the current time, the military conflict between Russia and Ukraine still continues, which has led to damage to infrastructure and paralysis of the economy in Ukraine and the imposition of economic sanctions and significant restrictions on Russia, including trade possibilities with it, restricting its activity in international clearing systems, and imposing restrictions on the transfer of funds to bank accounts outside Russia's borders. The Group's products sold to the Russian market are not covered under these sanctions.

As of the publication date of this report, the Group continues to produce and sell to the Russian market in the sales and display stands field of activity (noting that credit insurance companies do not insure these sales).

During the report period, there was a decrease in the volume of sales in the Russian market in the field of activity, such that the income of the field of activity in the Russian market constitutes about 20% in the report period instead of 40% in 2025, among other things, as a result of the field of activity being project-based and due to tax reforms, which include the cancellation of the VAT exemption for small businesses and increased regulation on them, due to Russia's need to finance heavy war costs, which created a hit to the profitability of small businesses up to the closure of some of them and also led to a decrease in the volume of orders in the report period. As of this date, the company is unable to assess the full impact of the new tax reforms on the results of operations, although according to the company's assessment, tobacco and cigarette sales are not expected to be affected.

It is possible that the results in this field of activity and the Group's results will be adversely affected by the continuation of the military conflict between Russia and Ukraine, as a result of which sanctions on Russia and its banking system and the ability to trade with it will be worsened, and especially as a result of decisions to boycott the Russian market and stopping the possibility of selling to Russia and/or the possibility of transferring receipts from customers in this field of activity.

Board of Directors Report on the State of the Corporation's Affairs

1.2.4. Imposition of customs duties on imports to the USA

In the polycarbonate field, the Group supplies most of the quantities to the USA from its production site in the USA, as opposed to the PVC and finished products for the home environment fields of activity, where products sold in the USA are supplied from the production sites in Israel.

In April 2025, the President of the USA announced a new customs plan, under which variable customs rates were imposed on imports. During the report period, the US Supreme Court ruled that the said plan is illegal, and following said ruling, the President of the USA activated his powers on February 24, 2026, and imposed 10% customs duties under federal law. In light of the above, the company is examining options to receive refunds for duties paid under the first plan. Accordingly, as of this date, the company is unable to assess the overall impact of the two plans on the results of operations as well as the amounts of such refunds, as, among other things, the legal process is in the appeal stage.

Board of Directors Report on the State of the Corporation's Affairs For the period ended March 31, 2026

2. Financial position, equity, and liquidity (Balance Sheet) (in NIS millions)

2.1. Summary of the Balance Sheet and main changes

Assets

	As of 31.03.26	As of 31.03.25	As of 31.12.25	Board of Directors' Explanations
Cash, financial investments, and financial derivatives	426	381	421	Main changes compared to December 2025:
- Increase in a total of approx. NIS 4 million in cash and short-term deposits.
- For further details see section 4.1 below.
Current assets excluding cash and short-term investments	863	974	826	Main changes compared to December 2025:
- Decrease in inventory in a total of approx. NIS 16 million.
- Increase in trade receivables in a total of approx. NIS 48 million mainly due to an increase in activity in the quarter compared to the last quarter of last year, together with a change in the sales mix.
- Increase in debtors and debit balances in a total of approx. NIS 4 million mainly due to prepaid expenses, institutions, and advances to suppliers.
Total current assets net	1,288	1,356	1,247

	As of 31.03.26	As of 31.03.25	As of 31.12.25	Board of Directors' Explanations
Non-current assets	703	761	713	Main changes compared to December 2025:
- Decrease in right-of-use assets, net in a total of approx. NIS 6 million, mainly due to current depreciation.
- Decrease in intangible assets balance in a total of approx. NIS 4 million, mainly as a result of amortization of customer lists and also as a result of translation differences of foreign operations.
Total Assets	1,991	2,117	1,961

Liabilities

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Board of Directors' Report on the State of the Corporation's Affairs

2.2. Financial Ratios

	As of 31.03.26	As of 31.03.25	As of 31.12.25
Equity ratio [out of total assets]	68%	65%	72%
Current ratio	3.4	2.9	4.6
Quick ratio	2.1	1.7	2.7
Financial surplus, net
[Cash, deposits and investment portfolios less liabilities to banks and financial derivatives]	426	381	421
Financial surplus ratio of total assets	21%	18%	21%
Raw materials inventory balance (in NIS millions)	173	198	171
Raw materials inventory months (*)	2.1	2.1	2.3
Finished goods inventory balance (in NIS millions)	326	378	343
Finished goods inventory months (*)	3.8	4.0	4.3
Customer days	66	69	59

(*) On a current quarter basis.

Board of Directors' Report on the State of the Corporation's Affairs

3. Results of Operations

3.1. Summary of Consolidated Statements of Comprehensive Income (in NIS millions and percentages):

	1-3/2026	1-3/2025	1-12/2025	Compared to last year
Sales revenue	402	439	1,726	Sales turnover decreased by approximately 8%, mainly due to the strengthening of the NIS against all the Group's main operating currencies, which led to a decrease of approximately 7% in reported income and affected all areas of activity. (For further explanations, see Section 3.2 below).
Cost of sales	257	262	1,044
Raw materials consumption rate	44%	43%	42%	The increase in the consumption rate stems mainly from an increase in consumption in the PVC and Polycarbonate activity sectors and in PVC also due to US tariffs, and conversely a decrease in the POS and display activity sector due to a change in the product and customer mix and from the change in the mix of activity sectors from consolidated sales.
Gross profit	146	177	682	The decrease in gross profit stems mainly from the decrease in sales along with the increase in material consumption.

	1-3/2026	1-3/2025	1-12/2025	Compared to last year
Rate	36%	40%	40%	The gross profit margin decreased as a result of the decrease in sales, the impact of exchange rate differences, and the increase in the consumption rate as detailed above.
Selling and marketing expenses	78	83	335	The decrease stems mainly from the impact of the exchange rate decline on the translation of foreign subsidiary activities and from the reduction of the order backlog of a company consolidated for the first time last year.
Rate	19.5%	19.0%	19.4%
General and administrative expenses	29	30	120	The decrease stems mainly from the impact of exchange rate declines on the translation of foreign subsidiary activities, which led to a decrease in salary expenses and expenses for professional consultants, as well as a decrease in the provision for doubtful accounts.
Rate	7.2%	6.9%	6.9%
Other expenses (income)	(11)	0	(0)	Decrease in liabilities to purchase shares and subsidiary dividend of 9.3 million NIS and a decrease in contingent consideration liability of 1.7 million NIS.
Operating profit	49	63	227
Rate of revenue	12%	14%	13%	The decrease in the operating profit margin stems mainly from the decrease in sales as explained above and the increase in the material consumption rate as mentioned above, along with the impact of the strengthening NIS, which was partially offset by other income.

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	1-3/2026	1-3/2025	1-12/2025	Compared to last year
Financing income (expenses)	(2)	3	(2)	For further details, see Section 3.6 below.
Profit before taxes on income	47	66	225
Taxes on income	7	11	39	The change in the tax rate stems from a different mix of profit before tax in the various geographies where the company operates and from the revaluation and update of liabilities that are not recognized for tax purposes.
Rate of taxable income	15%	17%	18%

	1-3/2026	1-3/2025	1-12/2025	Compared to last year
Net profit without adjustments from translation of financial statements of foreign operations	40	55	186
Ratio of revenue	10%	13%	11%
( * ) EBITDA	56	81	302	( * ) See explanation below.
Ratio of revenue	14%	18%	18%

(*) EBITDA:

	1-3/2026	1-3/2025	1-12/2025
Operating profit	49	63	227
Neutralizing - depreciation and amortization	18	18	75
Update of liability to purchase shares of a subsidiary and dividend liability	(11)	-	-
EBITDA	56	81	302

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Board of Directors' Report on the State of the Corporation's Affairs

3.2. Sales

Sales turnover decreased by approximately 8%, mainly due to the strengthening of the NIS against all the Group's main operating currencies, which led to a decrease of approximately 7% in reported revenues and affected all sectors of activity. Below are explanations for changes in sales of the sectors of activity excluding exchange rate differences:

In the sector of finished products for the home environment, there was a decrease in sales volumes, continuing the downward trend from 2025. According to the Company's assessment, this trend stems from the postponement of purchase decisions against the backdrop of a high interest rate environment, stagnation in the housing market, an inflationary environment, and increasing competition from manufacturers in the East.

In the PVC activity sector, there was a change in the sales mix including an increase in sales volume of foam boards for the signage and advertising market segment which was partially offset by weakness in corrugated boards in the home environment solutions market segment.

In the Polycarbonate activity sector, there was a change in the sales mix, continued weakness in DIY and conversely an increase in sales of flat boards to the distribution network.

In the POS and display sector, the decrease in sales to the Russian market during the report period was partially offset by an increase in sales to Western Europe, due to the consolidation of Perfecta since March of last year.

3.2.1. Sales by geographic regions (in NIS millions)

Sales Destination	1-3.2026		1-3.2025		Change from last year in sales volume
	Sales Volume	% of Total Sales	Sales Volume	% of Total Sales
America	141	35%	162	37%	(13%)
Europe	154	38%	154	35%	(1%)
Israel and rest of the world	107	27%	121	28%	(11%)
Total	402	100%	439	100%	(8%)

3.2.2. Sales to external parties by sectors of activity

Sector of Activity	1-3.2026		1-3.2025		Change from last year in sales volume
	Sales Volume	% of Total Sales	Sales Volume	% of Total Sales
Polycarbonate	196	49%	212	48%	(7%)
PVC	97	24%	103	24%	(6%)
Finished products for the home environment	55	14%	64	15%	(14%)
POS and display	54	13%	59	13%	(8%)
Other and adjustments	0	0%	1	0%	(97%)
Total	402	100%	439	100%	(8%)

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3.3. Gross Profit

Raw materials constitute the most significant component in the cost of sales, and changes in the margins between selling prices and raw material prices are the primary factor for changes in the gross profit margin.

The decrease in gross profit and its margin stems mainly from the decrease in sales together with the increase in material consumption as mentioned above and the impact of exchange rate differences on activities.

3.4. Raw Material Component

Raw material (RM) prices during the report period continued to be stable at their multi-year low level. The increase in the consumption rate in the Polycarbonate and PVC segments results mainly from a change in the product and customer mix, and in the PVC segment also due to US tariffs. In the Point of Sale and Display Stands segment, material consumption decreased mainly due to a change in the product and customer mix, and in the Finished Products for the Home Environment segment, there was no material change.

However, after the report period, raw material prices are on an upward trend mainly due to the closure of the Hormuz Straits (as detailed in section 1.2.1 above). Generally, no contracts are traded that allow for hedging the primary raw materials, Polycarbonate and PVC. The Group occasionally performs increased procurement from suppliers for price reservation purposes, and the Group also has the option to perform hedging transactions for aluminum used in the Finished Products for the Home Environment and Point of Sale and Display Stands segments.

3.4.1. Polycarbonate - The RM cost component in the first quarter of the year was approximately 48% compared to approximately 47% in the corresponding period last year.

3.4.2. PVC - The RM cost component in the first quarter of the year was approximately 49% compared to approximately 43% in the corresponding period last year.

3.4.3. Finished Products for the Home Environment - The RM cost component in the first quarter of the year was approximately 50% compared to approximately 49% in the corresponding period last year.

3.4.4. Point of Sale and Display Stands - The RM cost component in the first quarter of the year was approximately 23% compared to approximately 30% in the corresponding period last year.

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3.5. Operating Profit

The decrease in the operating profit margin stems mainly from the decrease in sales and the increase in the material consumption rate as mentioned above along with the impact of the strengthening of the Shekel and weakness during the report period in the home solutions market, which were partially offset by a decrease in liabilities for the purchase of shares and contingent consideration.

Below is the impact of the various segments on operating profit and its margin:

	1-3.2026	1-3.2026	1-3.2026	1-3.2025	1-3.2025	1-3.2025
	Operating Profit in NIS M	% Operating Profit	Segment Share in Operating Profit (%)	Operating Profit in NIS M	% Operating Profit	Segment Share in Operating Profit (%)
Polycarbonate	22	11%	44%	24	11%	38%
PVC	4	4%	8%	16	16%	26%
Finished Products for the Home Environment	2	4%	5%	5	8%	8%
Point of Sale and Display Stands	12	22%	24%	17	29%	27%
Other and Adjustments	9	-	18%	1	-	1%
Total	49	12%	100%	63	14%	100%

3.6. Financing Income / (Expenses)

3.6.1. Main Components (in NIS millions):

	1-3/2026	1-3/2025	Change from last year
Interest income, net	2	1	1
Bank commissions and clearing	(1)	(1)	0
IFRS16 interest expenses	(3)	(3)	(0)
Profit from financial investments	1	1	1
Gain (loss) from changes in exchange rates offset by gain from hedging transactions	(0)	5	(6)
Revaluation of liability for contingent consideration	(1)	(0)	(1)
Others	(0)	1	(1)
Total financing income/(expenses), net	(2)	3	(6)

3.6.2. Financial investments yielded a positive return of approximately $1\%$ this year, compared to a positive return of approximately $0.5\%$ in the corresponding period last year and similar to the benchmark index return achieved in the market. From the end of the reporting period until the date of preparing the report, financial investments yielded an additional positive return of approximately $3\%$ .
3.6.3. The company's operations are carried out in a variety of currencies, against which the company performs hedges within the framework of a policy set in consultation with professional factors, when the net exposure results mainly from surpluses of financial assets in Dollars, Euros, Pounds, Australian Dollars, and South African Rand.

For the period ended March 31, 2026

3.6.4. The changes in exchange rates, net (less gain from hedging transactions) resulted in an expense of approximately NIS 0.2 million compared to income of approximately NIS 5 million for the corresponding period last year. These changes in both years were mainly caused by the impact of exchange rate changes on the monetary balances of the companies in Israel, offset by net hedging results.

3.6.5. The scope of currency hedges existing for the company at the end of the period for cash flow exposure is approximately 4.5 months of operation on average and approximately 4 months of operation on average, as of the date of preparing this report. During the period, foreign currency exchange rates against the NIS were significantly lower than the rate levels at which the company operated over the years, and as a derivative, some of the hedges that expired were not renewed, and the weighted hedging rate during the period and at the time of the report's preparation is lower than the average hedging rate of the company over the years. For further details, see Appendix A (Linkage Report) and Appendix B (Positions in Derivatives) below.
3.6.6. Below are the changes in the following primary foreign currency exchange rates relative to the NIS:

	In the average exchange rate in the period 1-3/2026 compared to the corresponding period last year
US Dollar	(14%)
Euro	(4%)
Pound	(7%)
Australian Dollar	(4%)
South African Rand	(2%)

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Board of Directors' Report on the State of the Corporation's Affairs

4. Liquidity, Financing Sources and Cash Flow

4.1. Summary of Cash Flow Statement (in NIS millions)

	1-3/2026	1-3/2025	Change vs corresponding period last year
Net profit	40	55	(15)
Adjustments to operating activity and increase (decrease), net in operating assets	(16)	33	(50)
Net cash provided by operating activities	24	89	(65)
Purchase of fixed assets and intangible assets	(11)	(7)	(4)
Proceeds from disposal of fixed assets	0	0	(0)
Acquisition of consolidated companies consolidated for the first time	-	(46)	46
Deferred payment and contingent consideration payment for acquisition of consolidated companies	(0)	(1)	1

	1-3/2026	1-3/2025	Change vs corresponding period last year
Proceeds from disposal (purchase) of securities measured at fair value through profit or loss, net	(2)	3	(4)
Net cash used for investing activities	(13)	(51)	38
Repayment of lease liability	(7)	(6)	(1)
Net cash used for financing activities	(7)	(6)	(1)
Translation differences and exchange rate differences	0	(8)	8
Total increase in cash only	4	23	(20)

The increase in cash this year stems from positive cash flow from operating activities in the amount of NIS 24 million, consisting of a profit in the period of approximately NIS 40 million plus an increase in working capital, net in the amount of approximately NIS 24 million, plus depreciation and amortization in the total amount of approximately NIS 18 million and less other adjustments in the amount of approximately NIS 11 million. Offset by cash flow for investment activity in the amount of approximately NIS 13 million, consisting mainly of the purchase of fixed assets. Offset by cash flow for financing activity in the amount of approximately NIS 7 million which includes repayment of lease liabilities.

4.2. Financing Sources

As of the balance sheet date and the date of publication of the report, the Company does not utilize external financing sources.

5. Exposure to Market Risks and Their Management

5.1. During the report period, no material changes occurred compared to the disclosure provided in the 2025 Periodic report.

5.2. Linkage basis report - see Appendix A below.

5.3. Regarding information on derivative positions - see Appendix B below.

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6. Corporate Governance Disclosures

6.1. Donations

The company has a donation policy that includes, among others, donations to charitable institutions, needy populations, culture, and sports. The corporation's donations in the first quarter of 2026 totaled approximately NIS 190 thousand (approximately NIS 149 thousand in the corresponding period last year).

7. Disclosures regarding Financial Reporting

Material events that occurred during and after the reporting period

7.1 For details regarding the impact of the security situation and its consequences on the company's activities, see section 1.2.1 above.

7.2 On January 1, 2026, a special general meeting of the company's shareholders was held which approved the following topics: (a) renewal of the company's compensation policy; (b) extension of the agreement for providing services of officers between the company and Kibbutz Ramat Yochanan; and (c) approval of the terms of office of Mr. Avishai Zamir as the company's CEO starting from January 1, 2026. For further details, see the company's immediate reports from November 27, 2025, and January 1, 2026 (reference nos: 2025-01-093832 and 2026-01-000560).

7.3 On March 26, 2026, the company's board of directors approved a dividend distribution in the amount of NIS 90 million (approximately NIS 3.5 per share). The dividend was paid on April 27, 2026.

7.4 On May 28, 2026, the company's board of directors approved (after receiving the approval of the audit committee), as a non-extraordinary and non-negligible transaction, the company's engagement with the Kibbutz in a framework lease agreement that consolidates and extends the period of the existing lease agreements between the parties for 3 buildings used for storage purposes (warehouse building with an area of approx. 1,400 sq.m.; warehouse building with an area of 500 sq.m. and an operational yard with an area of 400 sq.m. and a warehouse building with an area of 800 sq.m.), for a period of two years, starting from August 1, 2026, until July 31, 2028 (where the company is granted the right to shorten the lease period at any time for each of the leased properties separately upon 90 days' prior written notice) in accordance with the consideration detailed below: (a) in consideration for the 1,400 building, the company will pay monthly rent in the amount of NIS 50,400, plus VAT, index-linked for the month of August 2026, reflecting a total of NIS 36 per sq.m. (plus VAT as required by law); (b) in consideration for the 500 building, the company will pay monthly rent in the amount of NIS 20,500, plus VAT, index-linked for the month of August 2026, reflecting a total of NIS 41 per sq.m. (plus VAT as required by law); and (c) in consideration for the 800 building, the company will pay monthly rent in the amount of NIS 28,800, plus VAT, index-linked for the month of August 2026, reflecting a total of NIS 36 per sq.m. (plus VAT as required by law) ('Rent').

Page 16

The company's board of directors thanks the company's employees and managements worldwide for their dedicated work and for their efforts in developing and promoting the company.

Date: May 28, 2026

	Signatories' Names		Role		Signature
	Ido Rodoy		Chairman of the Board
	Avishai Zamir		CEO

Appendix A to the Board of Directors' Report - Linkage Balance Sheet as of March 31, 2026 (NIS in millions)

	ILS	USD	GBP	EUR	ZAR	AUD	OTHER	Non-Financial Items	TOTAL
Assets
Cash	147	85	14	26	2	6	25		305
S.T. Investments	111	-	-	-	-	-	-		111
Trade receivables	71	108	19	83	5	15	7		308
Other account receivables	4	4	7	3	-	1	11		30
Income taxes receivable	21	2	2	-	-	-	-		26
Long term loans granted	-	-	1	-	-	3	-		4
Liabilities
Trade payables	(72)	(41)	(22)	(17)	-	-	(6)		(159)
Income tax payables	(8)	-	(2)	(1)	-	(1)	-		(12)
Other account payables	(136)	(12)	(9)	(9)	-	(5)	(5)		(175)
Financial derivatives	103	(18)	-	(75)	-	-	-		10
Provisions	(1)	(1)	(1)	-	-	-	-		(3)
Ramat Yochanan	(2)	-	-	-	-	-	-		(2)
Lease liabilities	(187)	(2)	(13)	(8)	(2)	(18)	(7)		(237)
Contingent liability	-	(2)	(4)	-	-	-	-		(6)
Other liabilities	(1)	-	-	(2)	-	-	(11)		(14)
Total	49	122	(7)	2	5	1	14		186
Inventory								498	498
Goodwill								135	135
Other assets, Net								53	53
Employee benefit assets, Net								(2)	(2)
Fixed Assets, Net								269	269
Deferred Taxes, Net								(9)	(9)
Right of use assets, Net								224	224
Share Capital								(1,356)	(1,356)
Balance	49	122	(7)	2	5	1	14	(186)	-

Appendix A to the Board of Directors' Report - Linkage Balance Sheet as of December 31, 2025 (NIS in millions)

	ILS	USD	GBP	EUR	ZAR	AUD	OTHER	Non-Financial Items	TOTAL
Assets
Cash	125	98	17	22	3	20	17		302
S.T. Investments	108	-	-	-	-	-	-		108
Trade receivables	59	85	13	70	6	13	16		260
Other account receivables	7	-	5	3	-	1	9		25
Income taxes receivable	20	4	2	-	-	-	-		26
Restricted deposits and debit balances due from others	-	-	1	-	-	3	-		4
Liabilities
Trade payables	(67)	(39)	(13)	(14)	-	-	(10)		(143)
Income tax payables	(8)	-	(2)	(1)	-	(1)	(2)		(14)
Other account payables	(37)	(13)	(9)	(9)	-	(4)	(1)		(74)
Financial derivatives	143	-	(2)	(129)	-	-	-		12
Provisions	(1)	-	(1)	-	-	-	-		(3)
Ramat Yochanan	(5)	-	-	-	-	-	-		(5)
Lease liabilities	(191)	(2)	(13)	(8)	(2)	(18)	(8)		(243)
Contingent liability	-	(2)	(5)	-	-	-	-		(7)
Other liabilities	(1)	-	(23)	-	-	(1)		(25)
Total	152	130	(9)	(89)	7	13	20	-	224
Inventory								514	514
Goodwill								137	137
Other assets, Net								56	56
Employee benefit assets, Net								(2)	(2)
Fixed Assets, Net								269	269
Deferred Taxes, Net								(9)	(9)
Right of use assets, Net								231	231
Share Capital								(1,419)	(1,419)
Balance	152	130	(9)	(89)	7	13	20	(224)	-

The above data represent the group's total linkage balance sheet; however, since the activity of companies abroad is considered activity of autonomous units, the treatment of foreign currency exposure is carried out in the Israel area and the England area only, since the exchange rate differences in them are those that affect financing expenses/income in the profit and loss statement (the rest is attributed to the equity fund).

Page 19

5/28/2026 (2:45:02 PM) v1.2.5

Appendix B to the Board of Directors' Report Positions in Derivatives

As of March 31, 2026 (NIS thousands)
Transaction	Currency	par value LONG	par value SHORT	Fair Value
Forward transactions	EUR/ILS	3,272	83,083	9,517
	GBP/ILS	0	837	74
	USD/ILS	0	18,357	(18)

The maximum holding in currency transactions in the period 1-3/2026 is:

LONG positions - 3,324 NIS thousands

SHORT positions - 102,277 NIS thousands

Measurement is performed once a month.

As of December 31, 2025 (NIS thousands)

Transaction	Currency	par value LONG	par value SHORT	Fair Value
Forward transactions	EUR/ILS	3,371	137,460	11,386
	GBP/ILS	-	3,218	353

The maximum holding in currency transactions in the period 1-12/2025 is:

LONG positions - 24,099 NIS thousands

SHORT positions - 329,946 NIS thousands

Measurement is performed once a month.

Page 20

Palram Industries (1990) Ltd.

Consolidated Interim Financial Statements

As of March 31, 2026

[email protected]

www.palram.com

Palram Industries (1990) Ltd.

Consolidated Interim Financial Statements as of March 31, 2024

Unaudited

Palram Industries (1990) Ltd.

Consolidated Interim Financial Statements as of March 31, 2026

Unaudited

Table of Contents

Section	Page
Review of Consolidated Interim Reports	2
Consolidated Statements of Financial Position	3
Consolidated Statements of Profit or Loss and Other Comprehensive Income	5
Consolidated Statements of Changes in Equity	6
Consolidated Statements of Cash Flows	8
Notes to the Consolidated Interim Financial Statements	10

5/28/2026 | 2:45:04 PM | v1.2.5

Tel. +972-4-8654000
East Forer Gabbay & Kasierer
Fax +972-3-5633433
2 Pal'yam Blvd., Brosh Building
ey.com
Haifa 3309502

Auditors' Review Report to the Shareholders of Palram Industries (1990) Ltd

Introduction

We have reviewed the accompanying financial information of Palram Industries (1990) Ltd (the "Company") and its consolidated companies (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 this interim financial information in accordance with International Accounting Standard IAS 34 - "Interim Financial Reporting", and they are also responsible for the preparation of this interim financial information according to Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970. Our responsibility is to express a conclusion on this interim financial information based on our review.

We did not review the condensed interim financial information of consolidated companies whose assets included in the consolidation constitute approximately 21% of total consolidated assets as of March 31, 2026, and whose revenues included in the consolidation constitute approximately 41% of total consolidated revenues for the three-month period then ended. The condensed interim financial information of those companies was reviewed by other accountants whose review reports were furnished to us and our conclusion, insofar as it relates to the financial information for those companies, is based on the review reports of the other accountants.

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 and the review reports of other accountants, 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 above, based on our review and the review reports of other accountants, 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 provisions of Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970.

Haifa,
May 28, 2026
Kost Forer Gabbay & Kasierer
Accountants

Palram Industries (1990) Ltd

Consolidated Statements of Financial Position

| | As of March 31
2026
Unaudited
NIS in thousands | As of March 31
2025
Unaudited
NIS in thousands | As of December 31
2025
Audited
NIS in thousands |
| --- | --- | --- | --- |
| Current Assets | | | |
| Cash and cash equivalents | 305,256 | 279,066 | 301,501 |
| Short-term investments | 110,835 | 102,356 | 108,190 |
| Financial derivatives | 9,573 | - | 11,739 |
| Current taxes receivable | 25,882 | 13,897 | 26,112 |
| Trade receivables, net | 308,464 | 350,489 | 260,098 |
| Other receivables and debit balances | 29,787 | 33,560 | 25,464 |
| Inventories | 498,454 | 576,179 | 514,292 |
| Total current assets | 1,288,251 | 1,355,547 | 1,247,396 |
| Non-current Assets | | | |
| Pledged deposits and debit balances | 4,477 | 3,865 | 4,200 |
| Property, plant and equipment, net | 268,897 | 277,955 | 268,719 |
| Right-of-use assets, net | 224,172 | 241,787 | 230,575 |
| Goodwill | 135,370 | 142,618 | 136,652 |
| Intangible assets, net | 53,304 | 72,294 | 56,172 |
| Employee benefit assets | 3,195 | 2,952 | 3,197 |
| Deferred taxes | 13,520 | 19,806 | 13,956 |
| Total non-current assets | 702,935 | 761,277 | 713,471 |
| Total assets | 1,991,186 | 2,116,824 | 1,960,867 |

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

Palram Industries (1990) Ltd

Consolidated Statements of Financial Position

	As of March 31	As of March 31	As of December 31
	2026	2025	2025
	Unaudited	Unaudited	Audited
	NIS in thousands	NIS in thousands	NIS in thousands
Current Liabilities
Trade payables	158,983	208,886	142,829
Current taxes payable	12,088	16,832	13,915
Other payables and credit balances	81,368	90,556	79,020
Dividend payable to Company shareholders	90,000	100,000	-
Dividend payable to non-controlling interests	5,585	8,675	-
Provisions for legal and other claims	3,126	3,362	3,143
Financial derivatives	-	306	-
Contingent consideration liability	5,195	7,892	6,816
Current maturity of lease liability	24,258	25,289	25,323
Total current liabilities	380,603	461,798	271,046
Non-current Liabilities
Other non-current liabilities	3,484	5,946	5,935
Employee benefit liabilities and adjustment pay	4,754	4,814	4,990
Contingent consideration liability	461	1,770	655
Liability for acquisition of subsidiary shares	10,933	17,549	18,630
Deferred taxes	22,104	26,382	23,280
Lease liability	213,074	225,408	217,402
Total non-current liabilities	254,810	281,869	270,892
Total liabilities	635,413	743,667	541,938
Equity attributable to Company shareholders
Share capital	43,548	43,548	43,548
Share premium	161,456	161,456	161,456
Reserve from transactions with non-controlling interests	(814)	(814)	(814)

	As of March 31	As of March 31	As of December 31
	2026	2025	2025
	Unaudited	Unaudited	Audited
	NIS in thousands	NIS in thousands	NIS in thousands
Capital reserve from cash flow hedge transactions	169	(259)	576
Retained earnings	1,151,465	1,077,104	1,203,728
Adjustments from translation of financial statements of foreign operations	(128,761)	(43,209)	(121,160)
	1,227,063	1,237,826	1,287,334
Non-controlling interests	128,710	135,331	131,595
Total equity	1,355,773	1,373,157	1,418,929
	1,991,186	2,116,824	1,960,867

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

May 28, 2026	Ido Rodoy	Avishai Zamir	Eran Goldman
Date of approval of the financial statements	Chairman of the Board of Directors	CEO	CFO

Palram Industries (1990) Ltd	Consolidated Statements of Profit or Loss and Other Comprehensive Income
	For the 3 months ended March 31 2026	For the 3 months ended March 31 2025	For the year ended December 31 2025
	Unaudited NIS in thousands (Except net earnings data)	Unaudited NIS in thousands (Except net earnings data)	Audited NIS in thousands (Except net earnings data)
Sales revenue	402,235	438,725	1,725,552
Cost of sales	256,516	261,876	1,043,893
Gross profit	145,719	176,849	681,659
Selling and marketing expenses	78,313	83,449	335,252
General and administrative expenses	28,881	30,239	119,725
Other expenses (income), net	(10,946)	141	(444)
Operating profit	49,471	63,020	227,126
Finance income	7,058	14,115	32,100
Finance expenses	(9,545)	(10,778)	(34,180)

	For the 3 months ended March 31 2026	For the 3 months ended March 31 2025	For the year ended December 31 2025
	Unaudited NIS in thousands (Except net earnings data)	Unaudited NIS in thousands (Except net earnings data)	Audited NIS in thousands (Except net earnings data)
Profit before taxes on income	46,984	66,357	225,046
Taxes on income	(6,851)	(11,066)	(39,372)
Net profit	40,133	55,291	185,674
Other comprehensive income (loss) (after tax effect):
Amounts that will be reclassified or are reclassified to profit or loss when specific conditions are met:
Loss from cash flow hedge transactions	(407)	(1,372)	(537)
Adjustments from translation of financial statements of foreign operations	(8,307)	20,750	(64,696)
Other comprehensive income (loss)	(8,714)	19,378	(65,233)
Total comprehensive income	31,419	74,669	120,441

Net profit attributable to:
Company shareholders	37,737	51,861	176,279
Non-controlling interests	2,396	3,430	9,395
	40,133	55,291	185,674

Total comprehensive income attributable to:
Company shareholders	29,729	69,515	116,817
Non-controlling interests	1,690	5,154	3,624
	31,419	74,669	120,441

Net earnings per share attributable to Company shareholders (in NIS)
Basic and diluted net earnings	1.47	2.02	6.85

5/28/2026 | 2:45:05 PM | v1.2.5

Consolidated Statements of Changes in Equity

	Attributable to the Company's shareholders							Non-controlling interests	Total equity
	Share capital	Share premium	Capital reserve for transactions with non-controlling interests	Capital reserve for cash flow hedging transactions	Retained earnings	Adjustments from translation of financial statements of foreign operations	Total
	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands
Balance as of January 1, 2026 (Audited)	43,548	161,456	(814)	576	1,203,728	(121,160)	1,287,334	131,595	1,418,929
Net profit	-	-	-	-	37,737	-	37,737	2,396	40,133
Other comprehensive income (loss) (after tax effect):
Adjustments from translation of financial statements of foreign operations	-	-	-	-	-	(7,601)	(7,601)	(706)	(8,307)
Capital reserve for cash flow hedging transactions	-	-	-	(407)	-	-	(407)	-	(407)
Total comprehensive income (loss)	-	-	-	(407)	37,737	(7,601)	29,729	1,690	31,419
Dividend to company shareholders	-	-	-	-	(90,000)	-	(90,000)	-	(90,000)
Dividend to non-controlling interests	-	-	-	-	-	-	-	(4,575)	(4,575)
Balance as of March 31, 2026	43,548	161,456	(814)	169	1,151,465	(128,761)	1,227,063	128,710	1,355,773
	Attributable to the Company's shareholders							Non-controlling interests	Total equity
---	---	---	---	---	---	---	---	---	---
	Share capital	Share premium	Capital reserve for transactions with non-controlling interests	Capital reserve for cash flow hedging transactions	Retained earnings	Adjustments from translation of financial statements of foreign operations	Total
	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands
Balance as of January 1, 2025 (Audited)	43,548	161,456	(814)	1,113	1,125,243	(62,235)	1,268,311	138,852	1,407,163
Net profit	-	-	-	-	51,861	-	51,861	3,430	55,291
Other comprehensive income (loss) (after tax effect):
Adjustments from translation of financial statements of foreign operations	-	-	-	-	-	19,026	19,026	1,724	20,750
Capital reserve for cash flow hedging transactions	-	-	-	(1,372)	-	-	(1,372)	-	(1,372)
Total comprehensive income (loss)	-	-	-	(1,372)	51,861	19,026	69,515	5,154	74,669
Dividend to company shareholders	-	-	-	-	(100,000)	-	(100,000)	-	(100,000)
Dividend to non-controlling interests	-	-	-	-	-	-	-	(8,675)	(8,675)
Balance as of March 31, 2025	43,548	161,456	(814)	(259)	1,077,104	(43,209)	1,237,826	135,331	1,373,157

Consolidated Statements of Changes in Equity

	Attributable to the Company's shareholders							Attributable to non-controlling interests	Attributable to the Company's shareholders
	Share capital	Share premium	Capital reserve for transactions with non-controlling interests	Capital reserve for cash flow hedging transactions	Retained earnings	Adjustments from translation of financial statements of foreign operations	Total
	Audited	Audited	Audited	Audited	Audited	Audited	Audited	Audited	Audited
	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands
Balance as of January 1, 2025	43,548	161,456	(814)	1,113	1,127,449	(62,235)	1,270,517	136,646	1,407,163
Net profit	-	-	-	-	176,279	-	176,279	9,395	185,674
Other comprehensive income (loss) (after tax effect):
Adjustments from translation of financial statements of foreign operations	-	-	-	-	-	(58,925)	(58,925)	(5,771)	(64,696)
Capital reserve for cash flow hedging transactions	-	-	-	(537)	-	-	(537)	-	(537)
Total comprehensive income (loss)	-	-	-	(537)	176,279	(58,925)	116,817	3,624	120,441
Dividend to company shareholders	-	-	-	-	(100,000)	-	(100,000)	-	(100,000)
Dividend to non-controlling interests	-	-	-	-	-	-	-	(8,675)	(8,675)
Balance as of December 31, 2025	43,548	161,456	(814)	576	1,203,728	(121,160)	1,287,334	131,595	1,418,929

Consolidated Statements of Cash Flows

	For the 3 months ended March 31	For the 3 months ended March 31	For the year ended December 31
	2026	2025	2025
	Unaudited	Unaudited	Audited
	NIS thousands	NIS thousands	NIS thousands
Cash flows from operating activities
Net profit	40,133	55,291	185,674
Adjustments required to present cash flows from operating activities:
Adjustments to profit or loss items:
Exchange rate differences on cash and cash equivalent balances in foreign currency	38	(1,944)	1,587

	For the 3 months ended March 31	For the 3 months ended March 31	For the year ended December 31
	2026	2025	2025
	Unaudited	Unaudited	Audited
	NIS thousands	NIS thousands	NIS thousands
Depreciation of property, plant and equipment	7,463	7,293	30,909
Depreciation of right-of-use assets	7,995	7,356	31,179
Financing expenses (income), net	1,697	(280)	7,198
Amortization of intangible assets	2,504	3,210	12,847
Impairment of property, plant and equipment	-	-	415
Decrease (increase) in value of derivative financial instruments, net	(4,690)	5,634	(16,703)
Proceeds from realization of derivative financial instruments, net	6,417	3,909	15,104
Loss on disposal of property, plant and equipment and right-of-use assets	12	5	30
Taxes on income	6,438	(2,402)	34,111
Deferred taxes, net	(569)	(482)	3,453
Change in employee benefit liabilities, net	(210)	(203)	118
Update of liability for contingent consideration and other long-term liabilities due to passage of time and revaluation	59	451	446
Update of liability for contingent consideration	(1,650)	-	(547)
Update of liability to purchase subsidiary shares and dividend liability due to passage of time and revaluation	333	1,446	3,133
Update of liability to purchase subsidiary shares and dividend liability	(9,284)	-	-
Increase in value of securities measured at fair value through profit or loss	(1,127)	(584)	(12,435)
	15,426	23,409	110,845
Changes in asset and liability items:
Decrease (increase) in trade receivables	(49,584)	(25,796)	39,710
Decrease (increase) in receivables, debit balances and taxes receivable	(4,503)	14,353	7,478
Decrease in inventory	10,882	2,873	20,987
Increase in long-term receivables	(258)	(49)	(771)
Increase (decrease) in trade and service providers payables	18,712	6,513	(55,082)
Increase in payables and credit balances, taxes payable, provisions and other long-term liabilities	1,008	9,401	5,663
	(23,743)	7,295	17,985
Cash paid and received during the period for:
Interest paid	(3,532)	(3,305)	(13,973)
Interest received	1,835	3,585	6,775
Taxes paid	(6,438)	(9,111)	(49,140)
Taxes received	-	11,513	15,029

Palram Industries (1990) Ltd.
Consolidated Statements of Cash Flows

5/28/2026 | 2:45:06 PM | v1.2.5

Palram Industries (1990) Ltd

Notes to the Condensed Consolidated Interim Financial Statements

(b) Acquisition of consolidated companies for the first time:

On March 3, 2025, Palram 4U Ltd acquired 70% of the shares of Perfecta. On March 31, 2025, the subsidiary Century, which is a distribution company in England, acquired 100% of the shares of ABLE in England.

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

Palram Industries (1990) Notes to the Condensed Consolidated Interim Financial Statements

Note 1: - General

These financial statements were prepared in a condensed format as of March 31, 2026, and for the three-month period ended on that date (hereinafter - condensed consolidated interim financial statements). These statements should be read in conjunction with the company's annual financial statements as of December 31, 2025, and for the year ended on that date and the accompanying notes (hereinafter - the consolidated annual financial statements).

Imposition of customs duties on imports to the USA

In the Polycarbonate segment, the Group supplies most of its quantities to the USA from its production site in the USA, compared to the PVC and Finished Products for the Home Environment segments, where products sold in the USA are supplied from production sites in Israel.

During April 2025, the President of the United States announced a new customs plan, under which varying customs rates were imposed on imports. During the reporting period, the US Supreme Court ruled that the said plan is illegal, and following that ruling, on February 24, 2026, the US President exercised his powers and imposed 10% customs duties under federal law. In view of the above, the company is examining the possibility of receiving refunds for customs duties paid under the first plan. Accordingly, at this time, the company is unable to estimate the overall impact of the two plans on the results of operations and the amounts of such refunds, as, among other things, the legal process is in the appeal stage.

The security situation and its implications

For about two and a half years, a broad multi-arena campaign has been underway, including confrontations with Iran, Hezbollah, and Iran's proxies in Yemen and Iraq, which led, among other things, to the closure of the Straits of Hormuz. On February 28, 2026, Israel launched Operation "Lion's Roar" against Iran, in strategic cooperation with the USA.

Generally, as of April 8, 2026, a temporary ceasefire agreement has been in effect in the region. Nevertheless, tension in the region remains high, and in the last month, several violations of the ceasefire and exchanges of fire in trade routes were recorded, leading to logistical delays and changes in sea transport routes and volatility in fuel prices and other commodities. During the reporting period, the Group's operations in Israel and abroad continued as usual.

In view of the above, during the report period, the security situation and its implications did not materially affect the Group's activities and business results. However, as of the date of publication of this report, the closure of the straits as mentioned, together with the uncertainty, caused an increase in the prices of the Group's main raw materials, while increasing the demand for the Group's products in the PVC and Polycarbonate segments due to customers' fear of further price increases and manufacturers stocking up on raw material inventories, which led the Group to raise prices in the markets similarly to its competitors. In the company's estimation, the final consumer demand remained unchanged, and therefore it is possible that the stockpiling trend in these activity segments will reverse in the coming months.

The renewal or continuation of the multi-arena campaign over time may lead to continued volatility in oil, raw material, and transport prices to and from Israel; potential shutdown of factories; difficulties in the availability of personnel, raw materials, and inventories; difficulties in sea and air transport as well as in the supply chain; changes in the cost structure as a result of potential fluctuations in commodity prices or exchange rates.

Note 2: - Significant Accounting Policies

Format of preparation of the condensed consolidated interim financial statements

The condensed 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 policies applied in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the preparation of the consolidated annual financial statements.

Notes to the Condensed Consolidated Interim Financial Statements

Note 3: - Operating Segments

a. General

As stated in the consolidated annual financial statements, the Group has four operating segments as follows:

Segment	Products
PVC Segment	- PVC products - thermoplastic sheets produced by extrusion using PVC polymer.
Polycarbonate Segment	- Polycarbonate products - rigid thermoplastic sheets produced by extrusion using polycarbonate polymer.
Finished Products for the Home Environment Segment	- Downstream products - DIY products for the home environment (such as - greenhouses, sheds, gazebos, carports, etc.) which are downstream products based on polycarbonate sheets.
Point of Sale and Display Segment	- Downstream products - Point of Sale (POP) and Point of Sale (POS) stands for various fields including display stands ordered by tobacco manufacturers, display stands for food and natural products for retail chains, cabinets for hydroponic growing of vegetables, which are downstream products based on PVC sheets.

b. Report on Operating Segments

	PVC Segment	Polycarbonate Segment	Finished Products for the Home Environment Segment	Point of Sale and Display Segment	Other and Adjustments	Total
	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands	NIS thousands
For the three-month period ended March 31, 2026
Total revenue from external customers	96,916	196,252	54,934	54,099	34	402,235
Inter-segment revenues	1,468	1,304	558	-	(3,330)	-
Total revenues	98,384	197,556	55,492	54,099	(3,296)	402,235
Segment profit	4,058	21,909	2,402	12,051	(232)	40,188
Unallocated income (expenses):
Update of liability to purchase subsidiary shares and dividend liability						9,283
Finance expenses, net						(2,487)
Profit before taxes on income						46,984

Note 3: - Operating Segments (continued)

b. Report on Operating Segments (continued)

For the three-month period ended March 31, 2025

	PVC Segment Unaudited NIS thousands	Polycarbonate Segment Unaudited NIS thousands	Finished Products for the Home Environment Segment Unaudited NIS thousands	Point of Sale and Display Segment Unaudited NIS thousands	Other and Adjustments Unaudited NIS thousands	Total Unaudited NIS thousands
Total revenue from external customers	103,400	211,912	63,846	58,549	1,018	438,725
Inter-segment revenues	2,922	2,844	587	-	(6,353)	-
Total revenues	106,322	214,756	64,433	58,549	(5,335)	438,725
Segment profit	16,346	23,774	5,084	17,172	644	63,020
Unallocated income:
Finance income, net						3,337
Profit before taxes on income						66,357

For the year ended December 31, 2024

	PVC Segment Audited NIS thousands	Polycarbonate Segment Audited NIS thousands	Finished Products for the Home Environment Segment Audited NIS thousands	Point of Sale and Display Segment Audited NIS thousands	Other and Adjustments Audited NIS thousands	Total Audited NIS thousands
Total revenue from external customers	397,874	848,854	217,100	258,304	3,420	1,725,552
Inter-segment revenues	11,846	9,785	1,630	42	(23,303)	-
Total revenues	409,720	858,639	218,730	258,346	(19,883)	1,725,552
Segment profit	40,594	88,274	19,466	77,540	1,252	227,126
Unallocated expenses:
Finance expenses, net						(2,080)
Profit before taxes on income						225,046

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Notes to the Consolidated Interim Financial Statements

C. Geographical Information

Note 3: - Operating Segments (continued)

Revenues reported in the financial statements were generated in the company's country of residence (Israel) and outside it, based on the location of the customers, as follows:

	For the three-month period ended March 31	For the three-month period ended March 31	For the year ended December 31
	2026	2025	2025
	Unaudited	Unaudited	Audited
	NIS thousands	NIS thousands	NIS thousands
Europe	153,781	155,387	569,822
America	141,045	162,310	644,590
Rest of the World	67,735	80,197	338,660
Israel	39,675	40,831	172,480
	402,235	438,725	1,725,552

A. Financial liability measured at fair value

Note 4: - Financial Instruments

The liability for the purchase of shares of a subsidiary (see also Note 5 to the consolidated annual reports) is classified as Level 3 in the fair value hierarchy.

Following is a reconciliation for fair value measurements classified as Level 3 of the fair value hierarchy:

	2026	2025
	Unaudited	Unaudited
	NIS thousands	NIS thousands
Balance as of January 1 (Audited)	23,110	-
Liability for purchase of shares and dividend at the acquisition date	-	19,977
Dividend payment	(1,010)	-
Financing expenses due to the passage of time and revaluation (1)	333	1,794
Update of liability for dividend according to actual results (2)	(1,320)	-
Update of liability according to updated valuation (2)	(7,964)	-
Balance as of March 31	13,149	21,771
	2025
---	---
	Audited
	NIS thousands
Balance as of January 1, 2025	-
Liability for purchase of shares and dividend at the acquisition date	19,977
Financing expenses due to the passage of time (1)	3,133
Balance as of December 31, 2025	23,110

Notes to the Consolidated Interim Financial Statements

Note 4:- Financial Instruments (continued)

B. Valuation technique

The fair value of the liability was estimated using the Expected Value Approach by an external appraiser who took into account the expired option period along with management's estimates for the expected future performance of the company, which require making assumptions regarding unobservable data included in the model. The cost of equity discount rate in the valuation is 19.1%.

Note 5: - Material events during and after the reporting period

A. On January 1, 2026, a special general meeting of the company's shareholders was held, which approved the following matters: (a) renewal of the company's compensation policy; (b) extension of the agreement for the provision of services by officers between the company and Kibbutz Ramat Yohanan; and (c) approval of the terms of service of Mr. Avishai Zamir as the company's CEO starting January 1, 2026 (see also Note 27.B.4 to the consolidated annual reports).

B. On March 26, 2026, the company's board of directors approved a dividend distribution in the amount of NIS 90 million (approximately NIS 3.5 per share). The dividend was paid on April 27, 2026.

C. On March 26, 2026, the board of directors of a subsidiary approved a dividend distribution in the amount of NIS 18.3 million; the share of non-controlling interests is NIS 4.575 million. The dividend will be paid on June 4, 2026.

On May 28, 2026, the company's board of directors approved (after receiving the approval of the audit committee), as a transaction that is not unusual and not negligible, the company's entry into a framework lease agreement with the Kibbutz that aggregates and extends the period of the existing lease agreements between the parties for 3 buildings used for storage purposes (a warehouse building with an area of approximately 1,400 sq.m.; a warehouse building with an area of 500 sq.m. and an operational yard with an area of 400 sq.m. and a warehouse building with an area of 800 sq.m.), for a period of two years, from August 1, 2026 to July 31, 2028 (with the company having the right to shorten the lease period at any time for each of the leased properties separately with a written notice of 90 days in advance) and this in accordance with the consideration detailed below: (a) in consideration for building 1,400, the company will pay monthly rent in the amount of NIS 50,400, plus VAT linked to the index for August 2026 and reflecting a total of NIS 36 per sq.m. (plus VAT as required by law); (b) in consideration for building 500, the company will pay monthly rent in the amount of NIS 20,500, plus VAT linked to the index for August 2026 and reflecting a total of NIS 41 per sq.m. (plus VAT as required by law); and (c) in consideration for building 800, the company will pay monthly rent in the amount of NIS 28,800, plus VAT linked to the index for August 2026 and reflecting a total of NIS 36 per sq.m. (plus VAT as required by law).

First quarter report for the year 2026 regarding the effectiveness of internal control over financial reporting and disclosure according to Regulation 38C(a) of the Securities Regulations (Periodic and Immediate Reports), 1970 ("Reporting Regulations"):

Report on the effectiveness of internal control over financial reporting and disclosure

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Attached hereto is the first quarter report for the year 2026 regarding the effectiveness of internal control over financial reporting and disclosure according to Regulation 38C(a) of the Report Regulations:

Management, under the supervision of the Board of Directors of Palram Industries (1990) Ltd. (hereinafter – the Corporation), is responsible for the determination and existence of adequate internal control over financial reporting and disclosure in the Corporation.

In this regard, the members of management are:

Avishai Zamir – General Manager;
Eran Goldman – CFO;
Rotem Tsoref – EMEAP Region Manager;
Amon Wertheim – North America Region Manager;
Eliezer Yarden – CEO of Palram Canopia Ltd.;
Roi Rimon – CEO of Palram 4U;
Yifat Licht – VP HR and Internal Enforcement Officer;
Adam Bouhbot – VP R&D and Technologies;
Oren Taharlev – VP Information Systems.
Omri Yaakovovich – CEO of Trade Pro;

Internal control over financial reporting and disclosure includes controls and procedures existing in the Corporation that were designed by the General Manager and the most senior officer in the field of finance or under their supervision or by those who actually perform the said roles, under the supervision of the Corporation's Board of Directors, and which are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the reports in accordance with the provisions of the law, and to ensure that information that the Corporation 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 Corporation is required to disclose as stated is accumulated and transferred to the Corporation's management, including to the General Manager and the most senior officer in the field of finance or to whoever actually performs the said roles, in order to allow decision-making at the appropriate time, regarding the disclosure requirements.

Due to its structural limitations, internal control over financial reporting and disclosure is not intended to provide absolute assurance that a misrepresentation 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 disclosure which was attached to the Periodic report for the period ended December 31, 2025 (hereinafter – the last Annual Internal Control Report), the Board of Directors and Management evaluated the internal control in the Corporation; based on this evaluation, the Board of Directors and Management of the Corporation reached the conclusion that the said internal control, as of December 31, 2025, is effective.

Up to 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 Internal Control Report;

As of the date of the report, based on the evaluation of the effectiveness of the internal control in the last Annual Internal Control Report, and based on information brought to the attention of Management and the Board of Directors as stated above: the internal control is effective.

Report regarding the effectiveness of internal control over financial reporting and disclosure – Page 1

Management Statements:

Statement by General Manager

Pursuant to Regulation 38(c)(1) of the Report Regulations

I, Avishai Zamir, declare that:

I have examined the quarterly report of Palram Industries (1990) Ltd. (hereinafter - the Corporation) 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 reports 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 Corporation for the dates and periods to which the Reports relate.
I have disclosed to the Corporation's accountant, to the Board of Directors, and to the Audit and Financial Reports Committee of the Corporation, based on my most recent evaluation of the internal control over financial reporting and disclosure:

A. All significant deficiencies and material weaknesses in the determination or operation of internal control over financial reporting and disclosure that could reasonably adversely affect the Corporation'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 reports in accordance with the provisions of the law; and also -

B. Any fraud, whether material or immaterial, involving the General Manager or those directly subordinate to him or involving other employees who have a significant role in the internal control over financial reporting and disclosure;

I, alone or together with others in the Corporation:

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

C. No event or matter occurring during the period between the date of the Periodic report for December 31, 2025, 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 the internal control over financial reporting and disclosure of the Corporation.

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

May 28, 2026

Avishai Zamir

CEO

Report regarding the effectiveness of internal control over financial reporting and disclosure - Page 2

Statement by the most senior officer in the field of finance according to Regulation 38C(d)(2) of the Report Regulations

I, Eran Goldman, declare that:

I have examined the interim financial reports and the other financial information included in the reports for the interim period of Palram Industries (1990) Ltd. (hereinafter - the Corporation) for the first quarter of the year 2026 (hereinafter - "the Reports" or "the Interim Reports").
To 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 my knowledge, the interim financial reports and the other financial information included in the reports for the interim period fairly reflect, in all material respects, the financial position, results of operations, and cash flows of the Corporation for the dates and periods to which the reports relate.
I have disclosed to the Corporation's accountant, to the Board of Directors, and to the Audit and Financial Reports Committee of the Corporation, based on my most recent evaluation of the internal control over financial reporting and disclosure:

A. All significant deficiencies and material weaknesses in the determination or operation of internal control over financial reporting and disclosure, as it relates to the interim financial reports and other financial information included in the reports for the interim period, which could reasonably adversely affect the Corporation'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 reports in accordance with the provisions of the law; and also

I, alone or together with others in the Corporation:

Established controls and procedures, or ensured the establishment and existence under my supervision of controls and procedures, designed to provide reasonable assurance as to the reliability of the financial reporting and the preparation of the financial reports in accordance with the provisions of the law, including in accordance with accepted accounting principles;

C. No event or matter occurring during the period between the date of the Periodic report for December 31, 2025, and the date of this report, relating to the interim financial reports and any other financial information included in the reports for the interim period, has been brought to my knowledge, which would change, in my evaluation, the conclusion of the Board of Directors and Management regarding the effectiveness of the internal control over financial reporting and disclosure of the Corporation.

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

May 28, 2026

Eran Goldman

CFO

Part E - Report regarding the effectiveness of internal control over financial reporting and disclosure - Page 3

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AI assistant

Palram Industries (1990) Ltd. — Interim / Quarterly Report 2026

6972_rns_2026-05-28_305e06a5-2437-41a2-bb61-1cd103ecded5.pdf

Palram Industries (1990) Ltd.

Table of Contents

Palram Industries (1990) Ltd.

Board of Directors' Report on the State of the Corporation's Affairs for the period ended March 31, 2026

1. Board of Directors' explanations on the corporation's business state, results of its operations, its equity, and its cash flows

1.1. Concise description of the corporation, its areas of activity, and its business environment

Board of Directors' Report on the State of the Corporation's Affairs For the period ended March 31, 2026

Board of Directors Report on the State of the Corporation's Affairs

1.2. Description of the business environment and the main impacts on the corporation:

1.2.1. Security situation and its implications -

1.2.2. The impact of changes in interest rates and inflation -

A. Changes in interest rates

B. Changes in inflation rates

1.2.3. The military conflict between Russia and Ukraine

1.2.4. Imposition of customs duties on imports to the USA

Board of Directors Report on the State of the Corporation's Affairs For the period ended March 31, 2026

2. Financial position, equity, and liquidity (Balance Sheet) (in NIS millions)

2.1. Summary of the Balance Sheet and main changes

Liabilities

Board of Directors' Report on the State of the Corporation's Affairs

2.2. Financial Ratios

Board of Directors' Report on the State of the Corporation's Affairs

3. Results of Operations

3.1. Summary of Consolidated Statements of Comprehensive Income (in NIS millions and percentages):

Board of Directors' Report on the State of the Corporation's Affairs

3.2. Sales

3.2.1. Sales by geographic regions (in NIS millions)

3.2.2. Sales to external parties by sectors of activity

3.3. Gross Profit

3.4. Raw Material Component

3.5. Operating Profit

3.6. Financing Income / (Expenses)

3.6.1. Main Components (in NIS millions):

For the period ended March 31, 2026

4. Liquidity, Financing Sources and Cash Flow

4.1. Summary of Cash Flow Statement (in NIS millions)

4.2. Financing Sources

5. Exposure to Market Risks and Their Management

6. Corporate Governance Disclosures

6.1. Donations

7. Disclosures regarding Financial Reporting

Material events that occurred during and after the reporting period

Appendix B to the Board of Directors' Report Positions in Derivatives

The maximum holding in currency transactions in the period 1-3/2026 is:

The maximum holding in currency transactions in the period 1-12/2025 is:

Palram Industries (1990) Ltd.

Auditors' Review Report to the Shareholders of Palram Industries (1990) Ltd

Introduction

Scope of Review

Conclusion

Palram Industries (1990) Ltd

Imposition of customs duties on imports to the USA

The security situation and its implications

Note 2: - Significant Accounting Policies

Format of preparation of the condensed consolidated interim financial statements

a. General

b. Report on Operating Segments

C. Geographical Information

A. Financial liability measured at fair value

Note 4:- Financial Instruments (continued)

B. Valuation technique

Note 5: - Material events during and after the reporting period

Attached hereto is the first quarter report for the year 2026 regarding the effectiveness of internal control over financial reporting and disclosure according to Regulation 38C(a) of the Report Regulations:

Management Statements:

Statement by General Manager

Statement by the most senior officer in the field of finance according to Regulation 38C(d)(2) of the Report Regulations

More from Palram Industries (1990) Ltd.

Palram Industries (1990) Ltd. Interim / Quarterly Report 2026