Payton Planar

Annual Report (ESEF) • Mar 27, 2025

Payton Planar Magnetics Ltd. 254900LLIROXU0TDYG54 2024-12-31 254900LLIROXU0TDYG54 2023-12-31 254900LLIROXU0TDYG54 2023-01-01 2023-12-31 254900LLIROXU0TDYG54 2024-01-01 2024-12-31 254900LLIROXU0TDYG54 2022-12-31 254900LLIROXU0TDYG54 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember 254900LLIROXU0TDYG54 2023-01-01 2023-12-31 ifrs-full:SharePremiumMember 254900LLIROXU0TDYG54 2023-01-01 2023-12-31 pay:ReserveFromTransactionWithControllingShareholderMember 254900LLIROXU0TDYG54 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 254900LLIROXU0TDYG54 2024-01-01 2024-12-31 ifrs-full:IssuedCapitalMember 254900LLIROXU0TDYG54 2024-01-01 2024-12-31 ifrs-full:SharePremiumMember 254900LLIROXU0TDYG54 2024-01-01 2024-12-31 pay:ReserveFromTransactionWithControllingShareholderMember 254900LLIROXU0TDYG54 2024-01-01 2024-12-31 ifrs-full:RetainedEarningsMember 254900LLIROXU0TDYG54 2022-12-31 pay:ReserveFromTransactionWithControllingShareholderMember 254900LLIROXU0TDYG54 2022-12-31 ifrs-full:RetainedEarningsMember 254900LLIROXU0TDYG54 2022-12-31 ifrs-full:SharePremiumMember 254900LLIROXU0TDYG54 2022-12-31 ifrs-full:IssuedCapitalMember 254900LLIROXU0TDYG54 2023-12-31 ifrs-full:IssuedCapitalMember 254900LLIROXU0TDYG54 2023-12-31 ifrs-full:SharePremiumMember 254900LLIROXU0TDYG54 2023-12-31 pay:ReserveFromTransactionWithControllingShareholderMember 254900LLIROXU0TDYG54 2023-12-31 ifrs-full:RetainedEarningsMember 254900LLIROXU0TDYG54 2024-12-31 ifrs-full:IssuedCapitalMember 254900LLIROXU0TDYG54 2024-12-31 ifrs-full:SharePremiumMember 254900LLIROXU0TDYG54 2024-12-31 pay:ReserveFromTransactionWithControllingShareholderMember 254900LLIROXU0TDYG54 2024-12-31 ifrs-full:RetainedEarningsMember iso4217:USD xbrli:shares iso4217:USD xbrli:shares Payton Planar Magnetics Ltd. Annual Report 2024 1 Payton Planar Magnetics Ltd. Financial Statements as at December 31, 2024 Contents Page Board of Directors Report 2 Independent Auditors’ Report 19 Consolidated Financial Statements: Statements of Financial Position 23 Statements of Profit or Loss and Other Comprehensive Income 25 Statements of Changes in Equity 26 Statements of Cash Flows 27 Notes to the Financial Statements 28 2 The Board of Directors' Report 1 on Corporate Affairs We are pleased to present the Board of Directors' report on the affairs of Payton Planar Magnetics Ltd. and its consolidated subsidiaries for the year ended on December 31, 2024 Notice : This report contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Management of the Company as well as assumptions made by and information currently available to the Management of the Company. Such statements reflect the current views of the Company with respect to future events. Management emphasizes that the assumptions do not in any way imply commitment towards realization. The outcome of which is subject to certain risks and other factors, which may be outside of the Company’s control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as projected, anticipated, believed, estimated, expected or intended. Reference in this report to forward looking statement shall be by stating that such information is given by way of estimation, evaluation, assessment, intentions, expectations, beliefs and similar terms, but it is possible that such information shall be given under other phrases. 1. A concise description of the corporation and its business environment A. The Group The Group includes Payton Planar Magnetics Ltd. ("the Company"), its consolidated subsidiaries and its Investee. The Company holds two fully owned subsidiaries: (1) Payton America Inc., in Florida, USA, which mainly engages in the manufacture and marketing of transformers for the US domestic market; and (2) Himag Planar Magnetics Ltd., in the UK, which mainly engages in the development, manufacture and marketing of transformers and serves as the Group base for the UK and the European markets. The Company also holds an affiliated company, a strategic investment of 20% in a Hong-Kong holding company, PCT Industries Limited ( " PCT " ), that fully owns a manufacturing subsidiary in China. The Chinese manufacturing subsidiary mentioned above is engaged in manufacturing and assembly, serves as one of Payton's major Manufacturing Partners. 100% 100% 20% 1 The financial statements as at December 31, 2024 form an integral part thereof. Payton Planar Magnetics Ltd. Payton Industries Ltd. Euronext Brussels Public 66.2% 33.8% Payton America Inc . Himag Planar Magnetics Ltd. PCT Industries Limited 3 B. The Group's main fields of activity and changes that occurred in the period from January to December 2024 The Company, an Israeli high-tech enterprise, develops, manufactures and markets Planar and Conventional transformers worldwide. The Company was founded in order to revolutionize the traditional approach to the design and manufacture of transformers through the concept of planar transformers. The Company completed its initial public offering in 1998 on the EuroNext Stock Exchange. Global Environment changes and External factors effect on the Group’s activity  In 2024 the global slowdown environment continued. It seems that, decrease in demand, excess inventory levels and the high interest rate are factors influencing customers’ activity and sometimes resulting in push -out of scheduled deliveries up on their needs. High prices of raw materials and high manpower costs remain relevant too. Management estimates these trends are going to continue in the coming months.  Additional factors that affect the Group's activity are: the revaluation of the US$ against the local NIS, the Euro and the Pound, which mainly decreases local labor costs and other operating costs in Israel and the United Kingdom. Inflation effects - Since the functional currency of the Group's activity is the US dollar, and since the Group does not use bank loans, management believes there is no material effect of the inflation in Israel and/or worldwide on the Group’s business activity, except for some adjustments needed in payroll. Increase of global interest rate - since the Company does not hold loans, the Group is not expected to have a material negative impact due to the increase in the global interest rate, on the contrary, deposits’ income increased.  On October 7 th , 2023, a war broke out in the state of Israel ("the War"). The War consequences have not significantly affected the Group's day-to-day operations. The Group's local facility, located in the center area of Israel, rapidly adapted a working routine and continued its ongoing business . As of this date , the Group's local facility is fully operative providing products and services on a regular basis to its customers. Thanks to the Group’s financial and operational strength, wide business diversification, global dispersion of production sites and raw material suppliers, the Group's management believes it should be able to continue its ongoing business fully and continuously . Based on the information the Group has at the date of approval of these financial statements, this War is not expected to have a material impact on the Group's activity and results. However, due to uncertainty involved and lack of information regarding the duration of the War, the Group is currently unable to foresee and assess the future effects of the War. The Group continues to follow-up and monitors all the abovementioned global developments trying to minimize any impact including maintaining its close contacts with its subcontractors, suppliers and customers, all in order to adjust its operations in the best possible way. It is noted that the above statement is a forward-looking statement as defined above. On January 24, 2024 , the Company's Board of Directors decided to pay to its shareholders a dividend for the financial year 2023 in the amount of USD 10,072 thousand, USD 0.57 per share (paid on March 5, 2024). 4 On February 14, 2024 , the Parent Company, Payton Industries Ltd. (" the Parent Company "), entered into an agreement with FIMI ISRAEL OPPORTUNITY 7, a Limited Partnership, and FIMI Opportunity 7, LP a Limited Partnership (together hereinafter: "FIMI"), to allocate 1,468,057 ordinary shares of the Parent Company (hereinafter: "Allocated Shares") which, subject to their allocation, dluow constitute approximately 17.76% of the Parent Company's issued and outstanding share capital and voting rights (hereinafter: the "Share Purchase Agreement"), all conditional upon the occurrence of certain precedent conditions. Simultaneously Mr. David Yativ, the controlling shareholder of the Parent Company (hereinafter: "Yativ" ) has entered into an agreement to sell to FIMI 1,000,000 shares of the Parent Company, constituting around 12.09% of the Parent Company's share capital. Furthermore, FIMI and Yativ agreed on the terms of a shareholders' rights agreement ol be executed on the closing of the transaction. [It is noted that the completion of the Share Purchase Agreement and the other transactions described above (hereinafter: " the FIMI Transaction ") were subject, inter alia, to the approval of the Parent Company’s Shareholders' meeting, resolved on April 8, 2024]. On March 7, 2024 , the Company's remuneration committee and the Board of Directors examined the updated remuneration policy, found it fair, logical and appropriate and decided to approve it. In addition the above mentioned quorums approved the Company's participation in the service fee of FIMI for the consulting services to be provided to Payton Group as part of the FIMI Transaction, for a period of 3 years, for a monthly payment of NIS 40 thousand (about USD 11 thousand) to be shared equally between the Company and the Parent Company (the participation amount shall be examined and adjusted on a yearly basis according to the actual services). The above resolutions were subject to the approval of the Company's shareholders' meeting, resolved on April 15, 2024. On April 21, 2024 , the Company reported that according to the information provided by its Parent Company and by Yativ, all precedent conditions to the FIMI Transaction had been fulfilled on April 21, 2024, and the closing of the FIMI Transaction was consummated immediately thereafter ("the Closing Date"). Simultaneously, the transaction for the sale of the shares of Yativ was also completed, in such a manner that as of the Closing Date, each of Yativ and FIMI holds approximately 29.85% of the Parent Company's issued and outstanding share capital and voting rights (ea ch approximately 29.28% of the Parent Company’s issued and outstanding share capital on a fully diluted basis). Additionally, on the Closing Date, Yativ and FIMI have also entered into a shareholders' agreement pursuant to which the Parent Company considers them, as of the Closing Date, as joint controlling shareholders of the Parent Company due to their joint holdings of approximately 59.7% of the Parent Company's issued and outstanding share capital. In addition, on the Closing Date, the Parent Company has granted non-marketable options to purchase shares of the Parent Company according to the Parent Company's incentive option plan ("the Options") to certain key-employees and officers of the Parent Company's subsidiaries, as follows: 80,000 Options to 4 (four) employees of the Parent Company's subsidiaries, 30,000 Options to Mr. Doron Yativ 2 , 20,000 Options to Mr. Amir Yativ 3 and 30,000 Options to Mrs. Michal Lichtenstein 4 (See also Note 1C(3) to 2024 yearly report). On March 12, 2025 , after the report gni date, the Company’s US subsidiary entered into agreements aiming at: (a) acquiring 100% of the issued and paid up share capital of SI Manufacturing, Inc., a corporation incorporated under the laws of California (hereinafter: “SI”), which manufactures a nd sells electronic coils, assembling power supplies 2 David Yativ’s son serves as a director and the CEO of the Company. 3 David Yativ’s son serves as an engineering and development manager. 4 Michal Lichtenstein serves as the CEO of the Parent Company and V.P. Finance & C.F.O of Payton Group. 5 and custom magnetic components for customers in various industrial sectors including transportation, aviation, space and defence (hereinafter: the “Share Purchase Agreement”); (b) acquiring the real property on which the SI’s factory is built, [such factory being] owned by RSG Holdings LLC, a corporation incorporated under the laws of California (hereinafter: “RSG Holdings”) and partly held by the Chairman of the SI who is also a shareholder thereof (45%) as well as by two of the founders of the Target Company who currently provide consulting services to SI as independent contractors (hereinafter: the “Real Property Purchase Agreement”), and (c) entering into employment/consulting agreements with the CEO of SI and a senior engineering service provider of SI, which will come into effect as of the closing date and include customary terms for agreements of this type, all in accordance with the provisions of the agreements (the “Transaction”). The completion of the Transaction is subject to the fulfillment of several conditions precedent detailed in the Share Purchase Agreement, including, among others, the transfer of ownership of the real property in accordance with the Real Property Purchase Agreement, as well as the provision of notices and obtainment of required regulatory approvals in the United States and certain other third party consents. (For more detailed information see also press release dated March 12, 2025). On March 27, 2025 - the Company’s Board of Directors decided to pay the shareholders a dividend for the financial year 2024, in the amount of USD 5,301 thousand (USD 0.3 per share), expected to be paid in June 2025. C. Sales The Group ’s main customer base is related to the telecom/datacenter, automotive and power electronic market. Additional markets Group aims for are the Industrial and medical markets. During 2024, the Group kept operating its activities in: North America, Europe, Japan, China, S. Korea, India and UK. Sales for the year ended December 31, 2024 amounted to USD 50,826 compared with USD 54,856 thousand for the year ended December 31, 2023 reflecting 7% decrease which is reasonable in light of the global slowdown. Revenues for the year ended 2024 consisted of recurring sales to existing customers and sales to new ones. The Sales were generated primarily from telecom/datacenter, automotive companies and industrial companies. D. Principal customers The consolidated sales revenues include sales to major customers (which make up in excess of 10% of the sales of the Group). For the year ended December 31 For the year ended December 31 2024 2023 Quanta Computer Inc. ( 1 ) 27% ( 3 ) 15% ( 3 ) Customer B ( 2 ) * 16% Customer C ( 2 ) 15% 14% ( 1 ) Customer related to the Telecom/Datacenter industry. ( 2 ) Customer related to the Automotive industry. (3) Includes sales to its subsidiaries: QMB Co., Ltd, and Tech-Front (Shanghai) Computer Co., Ltd. * Less than 10% of the Group’s consolidated sales. 6 E. Marketing The Group participates in leading electronic exhibitions. Company is focusing on serving Key customers with routine visits and latest technology development updates. The Company strategy, which enables fulfilling the mission of gaining worldwide recognition and market share growth, is: * Targeting world leaders in their fields. Having these leaders as our customers is convincing other second tier companies to adopt the Planar Technology. * Focusing on high-growth-potential customers with a need for advanced technology. * To use the Group ’s own sales team as well as its sales representatives’ network as sales channels. * Expanding our activity in Japan, Europe, North America, India and South Korea markets. * Supporting Research & Development institutes and Engineering Consultants in order to increase exposure to engineers in the field. * Deepening activity with existing customers. * Maintaining the wide presence and global recognition. F. Manufacturing The Group intends to expand and diversify its manufacturing capacity and capabilities, through manufacturing partners in the Far East, especially in China and the Philippines. The objective of this initiative is to increase flexible production capacity, to enable mass production quantities, lower product costs and increase competitiveness. G. Competition In recent years there has been an increasing interest of magnetics manufacturers to get into the Planar field. We can note that there are more and more companies that are trying to design and manufacture the planar components. However, the Company believes in its technology advantage know-how and capabilities. It estimates it could generally benefit from an increasing competition in the market due to greater exposure of the technology. The Company cannot estimate its future market share. The following companies are considered as its potential competitors: Pulse, Standex and Coilcraft - from the U.S.A. and Premo - from Spain. 7 H. Order Backlog As at December 31, 2024 this backlog amounted to USD 25,165 thousand, and as at March 13, 2025 to USD 25,712 thousand (December 31, 2023 - USD 30,765 thousand). The backlog is composed of the Company and its two fully owned subsidiaries firm orders. Order Backlog US$ in thousands March 13, 2025 December 31, 2024 3,180 10,771 Delivery due date within first quarter of 2025 9,658 8,414 Delivery due date within second quarter of 2025 7,911 3,114 Delivery due date within third quarter of 2025 4,363 2,332 Delivery due date within fourth quarter of 2025 600 534 Delivery due date is after 1.1.2026 25,712 25,165 Total It should be noted that in light of global slowdown sometimes customers tend to postpone scheduled deliveries up on their needs. Such changes of delivery dates may lead to a different sales volume than indicated above according to the quarterly order backlog split. It is noted that the above statement is a forward-looking statement as defined above. I . Framework agreements that do not constitute binding orders As of December 31, 2024 and the date of signing the financial statements, the Group has no material framework agreements . J. Human Resources A factor of importance to the Company’s success is its ability to attract, train and retain highly skilled technical, and more specifically, qualified electronics engineers with experience in high frequency magnetics and with a comprehensive understanding of high frequency magnetics, managerial, sales and marketing personnel. Competition for such personnel is intense. The Company constantly improves its personnel and has so far succeeded in recruiting the appropriate personnel as required. This personnel is important in maintaining the pace in research, design and technical customer support. The Company is confident however, that the challenges inherent to its operations will satisfy its future recruitment needs. By the end of 2024, the Group employed about 170 people. The Company retains employment contracts with most of its key employees and is of the opinion that relations with its employees are satisfactory. K. Quality Control Payton Group has the ISO9001:2015 certification for its quality system. It has UL recognition for the use of several Electrical Insulation Systems classes B, F and H in its products, also has recognition for the construction of a family of magnetic components as complying with the requirements of UL and IEC 60950 standards of safety. Payton is authorized by an accredited testing agency to apply the CE mark to many of its commercial transformers. Payton also meets recognized international safety standards and conforms to MIL-T, CSA VDE and other standards. The Company is certified with ISO14001:2015 (Environmental standard). Payton is a Lead Free company as required by the 2015/863/EU RoHS directive. 8 The Company is certified with two important International Quality Management Standards: for Automotive - IATF 16949:2016 and for Space & Avionic - AS9100 (at Payton America only). L. Objective and Business Strategy Since its incorporation, Payton has provided innovative and affordable Planar Magnetic solutions to the Power Electronic Industry. By doing so, it has become the undisputable worldwide market leader in the Planar Magnetics Technology, with a customer base of leading technology-driven OEMs. Payton plans to maintain its lead and continue to facilitate the transition of the Magnetics market to the Planar Technology by: 1. Constantly looking for business opportunities to expand its core business with synergetic product lines. 2. Increasing the R&D team, in order to keep technological superiority through innovative designs, patents, and minimization of components. 3. Maintaining business efficiency, operational efficiency and constant search for cost saving solutions. 4. Maintaining and strengthening its current customer base. This will enable Payton to build a track record as a reliable high-volume Planar component supplier to leading OEM's. 5. Selectively developing additional key strategic customers, especially in Japan, North America, India, South Korea to further propagate Payton Planar unique technology. 6. Aiming at and focusing on new high growth segments such as Automotive (EV/HEV) in addition to the present Telecom and industrial markets. 7. Continuing to educate the Power Electronics industry about Planar technology. 8. Continuing to develop its mass production expertise and capacities to a level that will enable Payton to address the large price-sensitive segments and mass production quantities segments of the global Magnetics market. It is noted that the above statement is a forward-looking statement as defined above. M. Coming year outlook In 2025, the Group plans to complete and integrate the purchase of SI MANUFACTURING, INC. (see also paragraph B above and Note 20 to 2024 yearly report ( , in order to expand Group activity and global presence. Furthermore, the Group will continue its ongoing search for business and M&A opportunities synergetic to its core business. The Group is also preparing, in 2025, to continue coping with current slowdown of global markets. There are some push-out of scheduled deliveries based on customer needs, and great caution needs to be taken with regard to purchase forecast and inventory planning. The raw materials prices are high and no significant price reduction is expected in coming future. At this stage, it is not possible to assess the extent of the impact of the trends described above on the Group's activities. With regards to the War, currently, there is no material impact on the Group's activity and results. However, it is still impossible to foresee and assess long future effects. The Group plans to continue investing efforts to improve and efficient its production capacity as well as integration of automation. In addition to its normal course of business, the Group will continue its ongoing search for new 9 markets as well as other business opportunities providing innovative solutions and new technologies in order to keep expanding its customer base, core business, enlarging its market share and maximize business opportunities to the greatest possible extent. It is noted that the above statement is a forward-looking statement as defined above. N. Risk Factors Major Impact Medium Impact Small Impact Macro Risks The global business environment changes have many implications including the following:  Raw material high costs.  Difficulties in recruiting manpower and increase of labor costs.  Changes and push-out of scheduled deliveries by customers.  Geopolitical, regulations and international tariffs changes.  Currency exposure during credit term period with regards to invoices issued in local currency.  Evaluation/Devaluation of the local currencies, NIS and GBP, reflects an increase/decrease in labor costs and other operating costs. Market Risks  Metals prices fluctuations especially: Copper, Aluminum, Tin and Silver, which are part of the transformers bill of materials.  Automotive industry - alongside the opportunity for a large growth there is an inherent risk in this industry, especially during a period of economic uncertainty where a decrease in demand could be material. In addition, the growing competition in this industry creates a constant pressure to reduce prices and margins. Specific Risks Manufacturing partners dependency. O. Current Shareholders position Shareholder name Number of shares Percentage of the outstanding shares Comments Payton Industries Ltd. 11,694,381 66.2% Israeli company traded in the Tel Aviv stock exchange. Public 5,976,394 33.8% Listed on the EuroNext since June 1998. Total 17,670,775 100.0% Total outstanding shares. 10 2. Financial position A. Statement of Financial Position as at December 31, 2024 Cash and cash equivalents, Short-term Deposits and marketable securities - these items amounted to a total of USD 58,088 thousand as at December 31, 2024 compared to USD 56,186 thousand as at December 31, 2023. Despite the dividend payment during the year 2024, the Company presents increase in Cash and cash equivalents attributed ma inly to Company’s profitability. The Group's management believes a solid financial position is an important factor in order to successfully overcome times of crisis. Trade accounts receivable - these amounted to USD 7,925 thousand as December 31, 2024, compared with USD 9,546 thousand as at December 31, 2023. The decrease in this item is in line with the sales volume near the reports dates. Other investment - as at December 31, 2024 this amounted to USD 2,733 thousand compared with USD 900 thousand as at December 31, 2023. This item representing the Company’s investment in shares of CaPow Technologies Ltd. (hereinafter: “CaPow”) , an Israeli startup in the field of wireless charging solution. In May 2024, the Company exercised its warrants to purchase additional 4,489 Shares, and keep its holding share, against payment of USD 333 thousand (representing 1.2 times the original purchase price). In September 2024, the Company participated in a second fundraising round with an additional investment of USD 1.5 million. The Company holds about 7% of the shares of CaPow and following the additional investment, the Company was granted representation on CaPow’s Board of Directors. The Company has a professio nal and business interest in being involved in new developments in this area and sees CaPow as a strategic investment. Trade payables - amounted to USD 1,261 thousand as at December 31, 2024 compared with USD 3,663 thousand as at December 31, 2023. The decrease in this item resulted mainly from an increase in advance payment to a principal subcontractor in addition to a decrease caused by purchases decrease near the report dates which was in line with the business activity. Other payables - amounted to USD 3,010 thousand as at December 31, 2024 compared with USD 2,532 thousand as at December 31, 2023. The increase in this item resulted mainly from a provision, initially recorded for employees’ incentives relating to the current year (2024) r esults. B. Interest rate, Currency and Market exposure - Data and Policy Interest rate exposure The Group’s interest rate exposure relates mainly to its balance of cash equivalents and bank deposits. These balances are mostly held in USD bearing interest rates given by banks (during 2024, about 6%). Data on linkage terms The financial statements of the Company reflect the functional currency of the Company, which is the USD. 11 Most of the Group's sales (93%) in the reported periods were in USD or were linked to the USD. Approximately 2 % of the Group’s sales in 2024 were in Euro, 1% were in NIS, and about 4% were in GBP. During 2024, approximately 96% of the costs of raw material and finished goods purchased by the Group were in USD or were linked to the USD. During 2024, approximately 82% of the Group’s salaries were in New Israeli Shekel ("NIS") and about 6% were in GBP. Currency exposure risks Since most of the Group's sales and purchases were in USD or linked to the USD, the Group's gross profit was exposed to the changes in exchange rates of the USD in relation to the Euro, the GBP and to the local New Israeli Shekel ("NIS") mostly with regard to labor costs and other operating costs (see also Data on linkage terms, above). The Group is exposed to erosion of the USD in relation to the NIS and the GBP . Most of the Group’s salaries and other operating costs are fixed in the local currencies. Devaluation of the USD in relation to the NIS and the GBP increases the Group’s labor costs and thus influences its operating results. Devaluation of the USD in relation to the Euro and the GBP leads to a decrease in Group’s assets held in those currencies. The Company is subcontracting in China. Devaluation of the USD with relation to the Chinese currency has an indirect effect on the Group’s cost of goods sold. Market risks During 2024 the Company mostly used ‘limit orders’ for exchanging currency mainly in order to cover its labor costs paid in NIS. With regard to all other operating costs, there is no need to use derivatives since hedging is being kept inherently as part of the operational activity. 12 C. Operating results Summary of Consolidated Statements of Income US Dollars in thousands Payton Planar Magnetics Ltd. Consolidated Comprehensive Income Statements Total Total Quarter Quarter Quarter Quarter 2024 2023 10-12/24 7-9/24 4-6/24 1-3/24 Revenues 50,826 54,856 9,611 12,695 15,878 12,642 Cost of sales (28,709) (30,753) (5,357) ) 7,291 ( ) 9,015 ( (7,046) Gross profit 22,117 24,103 4,254 5,404 6,863 5,596 Development costs (1,672) (1,442) (412) (404) (487) (369) Selling & marketing expenses (2,203) (2,152) (615) (432) (599) (557) General & administrative expenses (4,703) (3,863) (1,115) (1,088) (1,453) (1,047) Other income (expenses), net 7 (245) - (3) - 10 Operating profit 13,546 16,401 2,112 3,477 4,324 3,633 Finance income, net 2,340 1,881 557 744 501 538 Share of profits (losses) of equity accounted investee 235 218 14 75 152 (6) Profit before taxes on income 16,121 18,500 2,683 4,296 4,977 4,165 Taxes on income (2,810) (3,234) (529) (732) (875) (674) Net profit for the year/period 13,311 15,266 2,154 3,564 4,102 3,491 Other comprehensive income (loss) items that will not be transferred to profit &loss Remeasurement of defined benefit plan 41 27 41 - - - Share of other comprehensive income (loss) of equity accounted investee (17) (6) (8) 3 (2) (10) Total other comprehensive income (loss), net of tax 24 21 33 3 (2) (10) Total comprehensive income for the year/period 13,335 15,287 2,187 3,567 4,100 3,481 General Note : The Group is exposed to abrasion of the USD in relation to the NIS, Euro (€) and the Pound (£). Most of the Group’s salaries and other operating costs are fixed in local currencies. Revaluation/devaluation of the local currencies drives to an increase/decrease in labor costs and other operating costs, thus, affects the operating results of the Company. Sales revenues - The Group’s sales revenues for the year ended December 31, 2024 were USD 50,826 thousand compared with USD 54,856 thousand for the year ended December 31, 2023, reflecting 7% decrease mainly explained by the global economic slowdown and deliveries pushouts. 13 Gross profit - The Group’s gross results for the year ended December 31, 2024 were USD 22,117 thousand (44%), compared with USD 24,103 thousand (44%), in the year ended December 31, 2023. The gross margin is mainly affected by sales product mix and production sites. Development costs - Payton’s strategy is aimed at maintaining the leadership of Planar Technology. The Engineering Department works in conjunction with the engineering departments of the forerunn ers of today’s global technology. Development costs are mainly incurred to design and customize products for specific orders. These development costs, mainly engineering labor costs, are based upon time expended by the department’s employees. The Group’s d evelopment costs for the year ended December 31, 2024 were USD 1,672 thousand compared with USD 1,442 thousand in the year ended December 31, 2023. The increase in this item resulted mainly from enlargement of the engineering team as well as increase of labor cost and other employees’ benefits . Selling & marketing expenses - The Group’s selling & marketing expenses are mainly comprised of: (1) commissions to the Group's reps’ and Marketing Personnel, which are calculated as a portion of sales, however it is further explained that not all the sales are subject to reps’ commissions and (2) other selling expenses (fixed) based on management policy. The Group’s marketing efforts are concentrated through participation in major power electronic shows around the world and by collaborating with its worldwide reps’ Network . The Group’s selling & marketing expenses for the year ended December 31, 2024, amounted to USD 2,203 thousand (4%) compared with USD 2,152 thousand (4%) in the year ended December 31, 2023. General & Administrative expenses - The Group’s General & Administrative expenses for the year ended December 31, 2024 amounted to USD 4,703 thousand compared with USD 3,863 thousand in the year ended December 31, 2023. The increase relates mainly to an increase in management & administration employer costs, benefits and other incentives, as well as an increase in computing and data security expenses. Finance income, net - The Group’s finance income for the year ended December 31, 2024 amounted to USD 2,340 thousand compared with USD 1,881 thousand for the year ended December 31, 2023. Most of the finance income stemmed from interest on bank deposit balances. Increase resulted mainly from interest received and from exchange rate differences. 14 D. Information regarding transactions with related parties (pursuant to note 17 to the Consolidated Financial Statements as at December 31, 2024) D.1 Balances with key management personnel and interested and related parties December 31, 2024 Equity accounted investee The Parent Company Key management personnel employed by the Group Key management personnel not employed by the Group Directors and interested parties not employed by the Group $ thousands $ thousands $ thousands $ thousands $ thousands Payables: Short-term employment Benefits - - 151 - - Post-employment benefits - - 118 - - Trade payables 463 - - - - Other payables - - - 7 59 29 December 31, 2023 Equity accounted investee The Parent Company Key management personnel employed by the Group Key management personnel not employed by the Group Directors not employed by the Group $ thousands $ thousands $ thousands $ thousands $ thousands Payables: Short-term employment benefits - - 99 - - Post-employment benefits - - 27 - - Trade payables 152 - - - - Other payables - - - 723 9 D2. Transactions with related parties Equity accounted investee Year ended December 31, 2024 2023 $ thousands $ thousands Purchases 11,284 9,504 Other investment Year ended December 31, 2024 2023 $ thousands $ thousands Sales 82 36 15 D3. Compensation to key management personnel and interested parties For the year ended December 31, 2024 Key management personnel employed by the Group Key management personnel not employed by the Group () Directors and interested parties not employed by the Group () $ thousands $ thousands $ thousands Short-term employee benefits 545 - - Post-employment benefits 245 - - Share-based compensation 97 58 - Other - 1,669 108 Total 887 1,727 108 Number of people 5 2 8 For the year ended December 31, 2023 Key management personnel employed by the Group Key management personnel not employed by the Group () Directors not employed by the Group $ thousands $ thousands $ thousands Short-term employee benefits 510 - - Post-employment benefits 51 - - Other - 1,604 38 Total 561 1,604 38 Number of people 3 2 3 () Management fees and related benefits to Wichita Ltd. (see Note 14A) and to Yaarh-Looking To The Future Ltd. (see Note 14B) include an amount of USD 189 (year ended December 31, 2023: USD 184 thousand) and an amount of USD 264 (year ended December 31, 2023: USD 251 thousand), respectively, recorded as selling and marketing expenses. () Includes management fees to FIMI (see Note 14C) in the amount of USD 36 thousand recorded as selling and marketing expenses. 3. Liquidity A. Operating activities Cash flows generated from operating activities for the year ended December 31, 2024, amounted to USD 13,831 thousand, compared with the cash flows generated from operating activities of USD 19,204 thousand for the year ended December 31, 2023. The decrease in cash flows from operating activities generated mainly from decrease in the net profit and in trade payables as well as from other non-cash adjustments and changes in assets and liabilities. 16 B. Investing activities Cash flows used for investing activities in the year ended December 31, 2024 amounted to USD 7,540 thousand compared with cash flows used for investing activities of USD 2,636 thousand in the year ended December 31, 2023. In 2024 cash flows were mostly used for investment in bank deposits and in CaPow Technologies Ltd. (see also paragraph 2.A- other investment above), which was partly financed by the sale of all marketable securities. C. Financing activities Cash flows used for financing activities for the year ended December 31, 2024, amounted to USD 10,072 thousand, representing a dividend payment (announced January 24, 2024) that was paid in March 2024. Cash flows used for financing activities for the year ended December 31, 2023, amounted to USD 8,482 thousand, representing a dividend payment (announced March 28, 2023) that was paid in June 2023. 4. Financing sources The Group financed its activities during the reported periods from its own resources. 5. Subsequent Events On March 12, 2025 , the Company’s US subsidiary entered into agreements aiming at: (a) acquiring 100% of the issued and paid-up share capital of SI Manufacturing, Inc., a corporation incorporated under the laws of California (hereinafter: “SI”) in exchange for payment of total consideration of approximately USD 5.6 million (hereinafter: the “Share Purchase Agreement”). SI manufactures and sells electronic coils, assembling power supplies and custom magnetic components for customers in various industrial sectors including transportation, aviation, space and defence. The Share Purchase Agreement includes additional contingent consideration of up to USD 500 thousand based on SI performance during 2025; (b) acquiring the real property, for a total amount of USD 4.4 million, on which the SI’s factory is built, [such factory being] owned by RSG Holdings LLC, a corporation incorporated under the laws of California (hereinafter: “RSG Holdings”) and partly held by the Chairman of the SI who is also a shareholder thereof (45%) as well as by two of the founders of the Target Company who currently provide consulting services to SI as independent contractors (hereinafter: the “Real Property Purchase Agreement”), and (c) entering into employment/consulting agreements with the CEO of SI and a senior engineering service provider of SI, which will come into effect as of the closing date and include customary terms for agreements of this type, all in accordance with the provisions of the agreements (the “Transaction”). The completion of the Transaction is subject to the fulfillment of several conditions precedent detailed in the Share Purchase Agreement, including, among others, the transfer of ownership of the real property in accordance with the Real Property Purchase Agreement, as well as the provision of notices and obtainment of required regulatory approvals in the United States and certain other third-party consents. The financing of this acquisition will be through a loan between the Company and its fully owned US subsidiary, as well as from the subsidiary’s own equity . (For more detailed information see also press release dated March 12, 2025). On March 27, 2025 , the Company's Board of Directors decided to pay its shareholders a dividend for the financial year 2024 at the amount of USD 5,301 thousand (USD 0.3 per share), expected to be paid in June 2025. 17 6. External factors effects - Global business environment - see paragraph 1.B above. - For the effect of ‘ Risk Factors ’ - see paragraph 1N above. To the best of the Board of Directors’ and management’s knowledge, except the above -mentioned, there have been no significant changes in external factors that may materially affect the Company’s financial position or results of operations. 7. Statement by senior management in accordance with article 12, § 2 ( 3 ° ( of the Royal Decree per 14.11.2007 Pursuant to article 12 § 2, 3° of the Royal Decree of 14 November 2007, David Yativ Chairman of the Board of Directors declares, on behalf of and for the account of Payton Planar Magnetics that, as far as is known to him, a) The consolidated financial statements at December 31, 2024 are drawn up in accordance with IFRS-reporting as adopted by the European Union and present a true and fair view of the equity, financial situation and results of the company and the companies included in the consolidation. b) The annual report gives a true and fair view of the company’s development and results for the financial year 2024, the position of the company and the companies included in the consolidation, the main risk factors and uncertainties, as well as the main transactions with related parties and their possible impact on the financial statements. The Company's Board of Directors wishes to thank our shareholders for their continuance trust and belief. The Company's Board of Directors wishes to express its sincere thanks to the entire personnel for their efforts and contribution to the Group's affairs. Ness-Ziona, March 27, 2025. David Yativ Chairman of the Board of Directors Doron Yativ Director and C.E.O. 18 PAYTON PLANAR MAGNETICS LTD. CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 I N D E X Page Independent Auditor's Report 19-22 Consolidated Statements of Financial Position 23-24 Consolidated Statements of Profit or Loss and Other Comprehensive Income 25 Consolidated Statements of Changes in Equity 26 Consolidated Statements of Cash Flows 27 Notes to the Consolidated Financial Statements 28-60 - - - - - - - - - - - - - - - - - - - - - 19 Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com Independent Auditor's Report To the Shareholders of Payton Planar Magnetics Ltd. Opinion We have audited the consolidated financial statements of Payton Planar Magnetics Ltd. (“the Company”), which comprise the consolidated statement of financial position as at December 31, 202 4, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Stand ards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) and we have fulfilled our ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying consolidated financial statements. 20 Revenue recognition As discussed in Notes 2E and 16A to the consolidated financial statements, revenues for the year ended December 31, 2024, are USD 50.8 million. According to IFRS 15, the Company recognizes revenue from goods with no alternative use over time. The Company’s revenues are generated from the sale of goods manufactured according to customer specifications and based mainly on non- cancelable and non-refundable terms. The Company is entitled to reimbursement of the costs incurred to date, including a reasonable margin. Customer-specific goods cannot be sold to any other customer and therefore have no alternative use. Furthermore, and due to the materiality of revenue to the financial statements of the Company, and the significant management judgment involved in the revenue recognition process, we identified revenue recognition as a key audit matter. How our audit addressed the key audit matter With respect to this audit matter, our main audit procedures included obtaining an understanding of the design and implementation of key internal controls surrounding the recording of revenues. We sampled revenues while focusing on transactions recorded close to the year-end and in the beginning of the subsequent period, and checked that such transactions were included in the appropriate period. Our testing included sampling of source documents such as purchase orders and reviewing terms of contracts with customers to obtain evidence that revenues recorded meet the criteria of IFRS 15. We also checked if any credit notes were issued in the subsequent period in order to obtain evidence of proper revenue recognition in 2024. Other Information in the Company's 2024 Annual Report Other information consists of the information included in the Annual Report, other than the consolidated financial statements and our auditor's report thereon. Management is responsible for the other information. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. 21 Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiv eness of the Company’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.  Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 22 We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. European Uniform Electronic Format (ESEF) In accordance with the draft standard on the audit of compliance of the Financial Statements with the European Single Electronic Format (hereafter “ESEF”), we have audited as well whether the ES EF- format is in accordance with the regulatory technical standards as laid down in the EU Delegated Regulation nr. 2019/815 of 17 December 2018 (hereafter “Delegated Regulation”). The Board of Directors is responsible for the preparation, in accordance with the ESEF requirements, of the consolidated financial statements in the form of an electronic file in ESEF format (hereafter “digital consolidated financial statements”) included in the annual financial report. It is our responsibility to obtain sufficient and appropriate information to conclude whether the format and the tagging of the digital consolidated financial statements comply, in all material respects, with the ESEF requirements under the Delegated Regulation. In our opinion, based on our work performed, the format of and the tagging of information in the official English version of the digital consolidated financial statements as per March 27, 202 5, included in the annual financial report of Payton Planar Magnetics Ltd., are, in all material respects, prepared in compliance with the ESEF requirements under the Delegated Regulation. The partner in charge of the audit resulting in this independent auditor's report is Mr. Shahar Zvulun. Tel-Aviv, Israel KOST FORER GABBAY & KASIERER March 27, 2025 A Member of Ernst & Young Global 23 PAYTON PLANAR MAGNETICS LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31, 2024 2023 Note $ thousands $ thousands Current assets Cash and cash equivalents 3 23,148 26,921 Short-term deposits and marketable securities 4 34,940 29,265 Trade accounts receivable 5 7,925 9,546 Other accounts receivable 6 2,027 2,804 Inventory 7 3,922 3,932 Total current assets 71,962 72,468 Non-current assets Investment in equity accounted investee 8 1,545 1,409 Other investment 8 2,733 900 Property, plant and equipment 9 9,611 9,830 Intangible assets 22 22 Total non-current assets 13,911 12,161 Total assets 85,873 84,629 The accompanying notes are an integral part of these consolidated financial statements. 24 PAYTON PLANAR MAGNETICS LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31, 2024 2023 Note $ thousands $ thousands Liabilities and equity Current liabilities Trade payables 1,261 3,663 Other payables 10 3,010 2,532 Current income tax liability 1,244 1,520 Total current liabilities 5,515 7,715 Non-current liabilities Employee benefits 12 473 381 Deferred tax liabilities 13D 1,089 1,311 Total non-current liabilities 1,562 1,692 Total liabilities 7,077 9,407 Equity Share capital 15 4,836 4,836 Share premium 8,993 8,993 Reserve from transaction with controlling shareholder 311 - Retained earnings 64,656 61,393 Total equity 78,796 75,222 Total liabilities and equity 85,873 84,629 David Yativ Doron Yativ Michal Lichtenstein Chairman of the Board of Directors Chief Executive Officer V.P. Finance & CFO Date of approval of the financial statements: March 27, 2025 The accompanying notes are an integral part of these consolidated financial statements. 25 PAYTON PLANAR MAGNETICS LTD. CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Year ended December 31, 2024 2023 Note $ thousands $ thousands Revenues 16A 50,826 54,856 Cost of sales 16B (28,709) (30,753) Gross profit 22,117 24,103 Development costs (1,672) (1,442) Selling and marketing expenses 16C (2,203) (2,152) General and administrative expenses 16D (4,703) (3,863) Other income (expenses), net 16E 7 (245) Operating profit 13,546 16,401 Finance income 16F 2,404 2,023 Finance expenses 16F (64) (142) Finance income, net 2,340 1,881 Share of profits of equity accounted investee 235 218 Profit before taxes on income 16,121 18,500 Taxes on income 13F (2,810) (3,234) Net Profit 13,311 15,266 Other comprehensive income (loss) items that will not be transferred to profit and loss Remeasurement of defined benefit plan 12B 41 27 Share of other comprehensive loss of equity accounted investee (17) (6) Total other comprehensive income, net of tax 24 21 Total comprehensive income 13,335 15,287 Earnings per share Basic and diluted earnings per share (in $) 18 0.75 0.86 The accompanying notes are an integral part of these consolidated financial statements. 26 PAYTON PLANAR MAGNETICS LTD. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Share capital Share Reserve from transactions with controlling Retained Number of premium shareholder earnings Total shares $ thousands $ thousands $ thousands $ thousands $ thousands Balance at January 1, 2023 17,670,775 4,836 8,993 - 54,588 68,417 Net profit - - - - 15,266 15,266 Other comprehensive income - - - - 21 21 Total comprehensive income - - - - 15,287 15,287 Transactions with owners, recognized directly in equity Dividend to owners - - - - (8,482) (8,482) Balance at December 31, 2023 17,670,775 4,836 8,993 - 61,393 75,222 Net profit - - - - 13,311 13,311 Other comprehensive income - - - - 24 24 Total comprehensive income - - - - 13,335 13,335 Transactions with owners, recognized directly in equity Dividend to owners - - - - (10,072) (10,072) Equity component of transaction with controlling shareholder (Note 1C(3)) - - - 311 - 311 Balance at December 31, 2024 17,670,775 4,836 8,993 311 64,656 78,796 The accompanying notes are an integral part of these consolidated financial statements. 27 PAYTON PLANAR MAGNETICS LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, 2024 2023 Note $ thousands $ thousands Operating activities Net Profit 13,311 15,266 Adjustments: Depreciation 9 768 828 Taxes on income 13F 2,810 3,234 Share of profits of equity accounted investee 8 (235) (218) Loss (gain) on sale of property, plant and equipment, net 16E (7) 145 Impairment loss of an option in an equity accounted investee 8,16E - 100 Share-based compensation provided by controlling shareholder 1C(3) 311 - Finance income, net 16F (2,205) (1,779) 14,753 17,576 Decrease in trade accounts receivable 5 1,621 828 Decrease (increase) in other accounts receivable 6 769 (541) Decrease in inventory 7 10 587 Increase (decrease) in trade payables (2,492) 2,275 Increase (decrease) in other payables 10 478 (128) Change in employee benefits 12 142 1 15,281 20,598 Interest received 16F 1,886 1,181 Interest paid 16F (32) (23) Income taxes paid, net 13 (3,304) (2,552) Cash flows generated from operating activities 13,831 19,204 Investing activities Investments in deposits, net 4 (6,149) (2,321) Dividend received from an equity accounted investee 8 77 128 Investment in other investment 8 (1,833) - Acquisition of property, plant and equipment 9 (479) (536) Investments in marketable securities 4 (303) (57) Proceeds from sale of property, plant and equipment 9, 16E 27 14 Proceeds from sale of marketable securities 4 1,120 136 Cash flows used for investing activities (7,540) (2,636) Financing activities Dividend paid 15B (10,072) (8,482) Cash flows used for financing activities (10,072) (8,482) Net increase (decrease) in cash and cash equivalents (3,781) 8,086 Cash and cash equivalents at beginning of the year 26,921 19,003 Effect of exchange rate fluctuations on cash and cash equivalents 8 (168) Cash and cash equivalents at end of the year 23,148 26,921 The accompanying notes are an integral part of these consolidated financial statements. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 28 NOTE 1: - GENERAL A. Reporting entity Payton Planar Magnetics Ltd. (“the Company”) was incorporated in Israel in December 1992. The address of the Company’s registered office is 3 Ha’avoda Street, Ness -Ziona. The Company is a subsidiary of Payton Industries Ltd. (the “Parent Company”) and its ultimate joint controlling shareholders are Mr. David Yativ and FIMI (Fimi Israel opportunity 7, limited partnership and Fimi Opportunity 7, LP, a limited partnership). The securities of the Company are registered for trade on the Euronext stock exchange in Brussels. The consolidated financial statements of the Group comprise the Company and its subsidiaries (together referred to as the “Group”). The Group develops, manufactures and markets mainly planar transformers and operates abroad through its subsidiaries and distributors. B. Definitions: In these financial statements: 1. The Company - Payton Planar Magnetics Ltd. 2. The Group - The Company and its subsidiaries. 3. Payton Industries Ltd. - Parent company, traded on the Tel Aviv Stock Exchange. 4. Subsidiaries - Companies, the financial statements of which are fully consolidated, directly or indirectly, with the financial statements of the Company. 5. Investee companies - Subsidiaries and companies, the Company's investment in which is stated, directly or indirectly, on the equity basis. 6. Related party - Within its meaning in IAS 24 (2009), “Related Party Disclosures”. 7. Israeli CPI - The Consumer Price Index as published by the Central Bureau of Statistics in Israel. 8. NIS - New Israeli Shekel. 9. $ or USD - U.S. Dollar. 10. GBP - Great Britain Pound. C. Material events in the reporting period 1. On February 14, 2024, the Parent Company entered into an agreement with FIMI ISRAEL OPPORTUNITY 7, a Limited Partnership, and FIMI Opportunity 7, LP a Limited Partnership (together hereinafter: "FIMI"), to allocate 1,468,057 ordinary shares of the Parent Company (hereinafter: "Allocated Shares") which, subject to their allocation, would constitute approximately 17.76% of the Parent Company's issued and outstanding share capital and voting rights (hereinafter: the "Share Purchase Agreement"), all conditional upon the occurrence of certain precedent conditions. Simultaneously Mr. David Yativ, the controlling shareholder of the Parent Company (hereinafter: "Yativ") has entered into an agreement to sell to FIMI 1,000,000 shares of the Parent Company, constituting around 12.09% of the Parent Company's share capital. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 29 NOTE 1: - GENERAL (Cont.) Furthermore, FIMI and Yativ agreed on the terms of a shareholders' rights agreement to be executed on the closing of the transaction. It is noted that the completion of the Share Purchase Agreement and the other transactions described above (hereinafter: "the FIMI Transaction") were subject, inter alia, to the approval of the Parent Company’s Shareholders' meeting, resolved on April 8, 2024 (see 3 hereinafter). 2. On March 7, 2024, the Company's remuneration committee and the Board of Directors have examined the updated remuneration policy, found it fair, logical and appropriate and decided to approve it. In addition the above mentioned quorums approved the Company's participation in the service fee of FIMI for the management services to be provided to Payton Group as part of the FIMI Transaction, for a period of 3 years, for a monthly payment of NIS 40 thousand (about USD 11 thousand) to be shared equally between the Company and the Parent Company (the participation amount shall be examined and adjusted on a yearly basis according to the actual services). The above resolutions were subject to the approval of the Company's shareholders' meeting, resolved on April 15, 2024 (see 3 hereinafter). 3. On April 21, 2024, the Company reported that according to the information provided from its Parent Company and from Mr. David Yativ, the controlling shareholder of the Parent Company ("Yativ"), all precedent conditions to the FIMI Transaction had been fulfilled on April 21, 2024, and the closing of the FIMI Transaction was consummated immediately thereafter ("the Closing Date"). Simultaneously, the transaction for the sale of the shares of Mr. Yativ was also completed, in such a manner that as of the Closing Date, each of Yativ and FIMI holds approximately 29.85% of the Parent Company's issued and outstanding share capital and voting rights (each approximately 29.28% of the Parent Company’s issued and outstanding share capital on a fully diluted basis). Additionally, on the Closing Date, Yativ and FIMI have also entered into a shareholders' agreement pursuant to which the Parent Company considers them, as of the Closing Date, as joint controlling shareholders of the Parent Company due to their joint holdings of approximately 59.7% of the Parent Company's issued and outstanding share capital. In addition, on the Closing Date, the Parent Company has granted non-marketable options to purchase shares of the Parent Company according to the Parent Company's incentive option plan ("the Options") to certain key-employees and officers of the Parent Company's subsidiaries, as follows: 80,000 Options to 4 (four) employees of the Parent Company's subsidiaries, 30,000 Options to Mr. Doron Yativ ( David Yativ’s son serves as a director and the CEO of the Company), 20,000 Options to Mr. Amir Yativ ( David Yativ’s son serves as an engineering and development manager) and 30,000 Options to Mrs. Michal Lichtenstein (serves as the CEO of the Parent Company and V.P. Finance & C.F.O of Payton Group). The total fair value of the options granted to these employees on the date of grant amounts to USD 1,238 thousand. In accordance with IFRS 2, the Company records the share-based compensation in respect of these employees over the vesting period (4 years) with a corresponding credit to equity (reserve from transactions with controlling shareholder). PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 30 NOTE 2: - ACCOUNTING POLICIES The following accounting policies have been applied consistently in the financial statements for all periods presented, unless otherwise stated. A. Basis of presentation of the financial statements These financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") and its interpretations adopted by the International Accounting Standards Board (“IASB”). The Group's financial statements have been prepared on a cost basis, except for: financial assets and liabilities which are presented at fair value through profit or loss, provisions, employee benefit assets and liabilities and investment in equity accounted investee. The Group has elected to present the profit or loss items using the function of expense method. The consolidated financial statements were authorized for issue by the Company’s Board of Directors on March 27, 2025. B. Functional currency and presentation currency The functional currency of the Group is the USD and it represents the primary economic environment in which the Group operates. The presentation currency of the financial statements is the USD. C. Inventories Inventories are measured at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase and costs incurred in bringing the inventories to their present location and condition. The Group periodically evaluates the condition and age of inventories and makes provisions for slow moving inventories accordingly. Cost of inventories is determined as follows: Raw materials - at cost of purchase on the basis of weighted average Work in progress and finished goods - on the basis of average costs including materials, labor and other direct and indirect manufacturing costs Purchased merchandise and products - at cost of purchase on the basis of weighted average D. Property, plant and equipment Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of the assets, as follows: % Buildings (except land component) 2-15 (mainly 2%) Land under finance lease 1.5 Machinery and equipment 15-33 (mainly 15%) Motor vehicles 15 Office equipment 7-33 (mainly 7%) Computers 20 -33 PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 31 NOTE 2: - ACCOUNTING POLICIES (Cont.) E. Revenue The Group applies International Financial Reporting Standard 15 (“IFRS 15” or “the standard”) which provides guidance on revenue recognition. According to IFRS 15, the Group recognizes revenue from goods with no alternative use over time. The standard describes a five step model for recognizing revenue from contracts with customers: (1) Identifying the contract with the customer. (2) Identifying distinct performance obligations in the contract. (3) Determining the transaction price. (4) Allocating the transaction price to distinct performance obligations. (5) Recognizing revenue when the performance obligations are satisfied. Identifying the contract The Group accounts for a contract with a customer only when the following conditions are met: (a) The parties to the contract have approved the contract (in writing, orally or according to other customary business practices) and they are committed to satisfying the obligations attributable to them; (b) The Group can identify the rights of each party in relation to the goods that will be transferred; (c) The Group can identify the payment terms for the goods that will be transferred; (d) The contract has a commercial substance (i.e. the risk, timing and amount of the entity’s future cash flows are expected to change as a result of the contract); and (e) It is probable that the consideration, to which the Group is entitled to in exchange for the goods transferred to the customer, will be collected. Identifying performance obligations In accordance with the standard, the Group should identify distinct performance obligations in contract with customers . The Group is characterized by transactions with a one performance obligation in each contract. Determining the transaction price The transaction price is the amount of the consideration to which the Group expects to be entitled in exchange for the goods promised to the customer. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 32 NOTE 2: - ACCOUNTING POLICIES (Cont.) Satisfaction of performance obligations Revenue is recognized when the Group satisfies a performance obligation by transferring control over promised goods to the customer. The Group’s revenue is generated from the sale of goods manufactured according to customer specifications and based mainly on NCNR terms (non-cancelable and non-refundable). The Group is entitled to reimbursement of the costs incurred to date, including a reasonable margin. Customer-specific goods cannot be sold to any other customer and therefore have no alternative use. Contract asset A contract asset is recognized when the Group may recognize revenue but still has a contractual obligation to perform, such as delivery, before it can receive consideration for goods sold to the customer. Contract assets are classified as receivables when the rights in their respect become unconditional. In the following year, as the contractual obligation is completed, contract assets are classified as trade accounts receivable. F. Disclosure of new standards in the period prior to their adoption IFRS 18, "Presentation and Disclosure in Financial Statements" In April 2024, the International Accounting Standards Board ("the IASB") issued IFRS 18, "Presentation and Disclosure in Financial Statements" ("IFRS 18") which replaces IAS 1, "Presentation of Financial Statements" . IFRS 18 is aimed at improving comparability and transparency of communication in financial statements. IFRS 18 retains certain existing requirements of IAS 1 and introduces new requirements on presentation within the statement of profit or loss, including specified totals and subtotals. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information. IFRS 18 does not modify the recognition and measurement provisions of items in the financial statements. However, since items within the statement of profit or loss must be classified into one of five categories (operating, investing, financing, taxes on income and discontinued operations), it may change the entity's operating profit. Moreover, the publication of IFRS 18 resulted in consequential narrow scope amendments to other accounting standards, including IAS 7, "Statement of Cash Flows" , and IAS 34, "Interim Financial Reporting" . IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, and is to be applied retrospectively. Early adoption is permitted commencing from January 1, 2025, subject to disclosure. The Group is evaluating the effects of IFRS 18, including the effects of the consequential amendments to other accounting standards, on its consolidated financial statements. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 33 NOTE 3: - CASH AND CASH EQUIVALENTS December 31, 2024 2023 $ thousands $ thousands Cash for immediate withdrawal 22,317 23,900 Cash equivalents - short-term deposits 831 3,021 23,148 26,921 The Group’s exposure to currency risk and sensitivity analysis concerning cash and cash equivalents is disclosed in Note 11 on financial instruments. NOTE 4: - SHORT-TERM DEPOSITS AND MARTKETABLE SECURITIES December 31, 2024 2023 $ thousands $ thousands Bank deposits () 34,940 28,517 Marketable securities: Shares - 329 Mutual funds - 419 - 748 34,940 29,265 () Include short-term deposits, mainly in dollars, bearing interest at an average annual rate of approximately 5.8% (December 31, 2023: 6%). The Group’s exposure to currency risk concerning deposits and marketable securities is disclosed in Note 11 on financial instruments. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 34 NOTE 5: - TRADE ACCOUNTS RECEIVABLE A. Trade accounts receivable, net: December 31, 2024 2023 $ thousands $ thousands Trade receivables 7,925 9,546 Less provision for doubtful debts - - Trade accounts receivable, net 7,925 9,546 The Company grants its customers interest-free credit for periods of 30 up to EOM+90 days. As at December 31, 2024, and 2023, there is no provision for expected credit losses as there are no amounts that are significantly past due. B. Following is information about the credit risk exposure of the Group's trade accounts receivable: December 31, 2024: Past due Not past due < 30 days 31- 120 days > 120 days Total $ thousands Gross carrying amount 6,897 745 283 - 7,925 Allowance for ECLs - - - - - December 31, 2023: Past due Not past due < 30 days 31- 120 days > 120 days Total $ thousands Gross carrying amount 7,642 1,442 462 - 9,546 Allowance for ECLs - - - - - PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 35 NOTE 6: - OTHER ACCOUNTS RECEIVABLE December 31, 2024 2023 $ thousands $ thousands Contract assets 665 2,204 Government institutions 88 130 Current tax assets - 8 Prepaid expenses 373 290 Other receivables 901 172 2,027 2,804 The Group’s exposure to currency risk concerning other accounts receivable is disclosed in Note 11 on financial instruments. NOTE 7: - INVENTORY December 31, 2024 2023 $ thousands $ thousands Raw and packing material 2,590 2,575 Work-in-process 635 754 Finished products 697 603 3,922 3,932 NOTE 8: - INVESTMENTS IN INVESTEES AND OTHER A. Details of the subsidiaries, their activities and the Company's interest therein as at December 31, 2024: 1. Payton America Inc. (hereinafter “Payton America”): Payton America, a fully owned U.S. subsidiary, located in Florida, manufactures and sells Planar transformers and inductors. 2. Himag Planar Magnetics Ltd. (hereinafter “Himag Planar”): Himag Planar, a fully owned UK subsidiary, incorporated for the purpose of the business activity acquisition of Himag Solutions Ltd. The investment in Himag Planar constitutes capital notes in USD which do not bear any interest. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 36 NOTE 8: - INVESTMENTS IN INVESTEES AND OTHER (Cont.) B. Investment in Equity Accounted Investee In October 2018 the Company acquired 20% of the rights in a Hong-Kong holding company - PCT Industries Limited (hereinafter - “PCT”), holding a fully owned manufacturing subsidiary in Dongguan, China, engaging in manufacturing and assembly, which currently serves as one of the Company’s major manufacturing partners. In accordance with the investment agreement, the Company was granted an option to increase its share of the rights in PCT by 15% (up to 35%) (hereinafter - "the option"). The option expired in 2023 without being exercised. As a result, as at December 31, 2023, the Company recognized an impairment loss in the amount of USD 100 thousand that is recorded in profit or loss under other expenses, net (see Note 16E, hereinafter). During 2024 PCT decided to pay the shareholders a dividend at the amount of USD 383 thousand, of which the Company received an amount of USD 77 thousand. During 2023 PCT decided to pay the shareholders a dividend at the amount of USD 640 thousand, of which the Company received an amount of USD 128 thousand. C. Other Investment In September 2022, the Group acquired shares and options of CaPow Technologies Ltd. (hereinafter: “CaPow”) , an Israeli startup in the field of wireless charging solutions, for a consideration of USD 900 thousand. In May 2024, the Company exercised its warrants to purchase additional 4,489 shares of CaPow, and keep its holding share, against payment of USD 333 thousand. In September 2024, the Company participated in a second fundraising round with an additional investment of USD 1,500 thousand. The Company holds about 7% of the shares of CaPow and following the additional investment, the Company was granted representation on Ca Pow’s Board of Directors . The investment is measured at fair value designated to profit or loss. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 37 NOTE 9: - PROPERTY, PLANT AND EQUIPMENT A. Composition and movement Year 2024: Machinery Computers and Motor and Office Land and equipment vehicles equipment Buildings Total $ thousands Cost Balance as of January 1, 2024 4,507 713 2,102 12,140 19,462 Acquisitions 132 65 372 - 569 Disposals (7) (53) - - (60) Balance as of December 31, 2024 4,632 725 2,474 12,140 19,971 Accumulated depreciation Balance as of January 1, 2024 3,599 234 1,482 4,317 9,632 Depreciation for the year 240 105 154 269 768 Disposals (4) (36) - - (40) Balance as of December 31, 2024 3,835 303 1,636 4,586 10,360 Carrying amounts as of December 31, 2024 797 422 838 7,554 9,611 Year 2023: Machinery Computers and Motor and Office Land and equipment vehicles equipment Buildings Total $ thousands Cost Balance as of January 1, 2023 4,679 703 1,845 12,131 19,358 Acquisitions 170 68 258 9 505 Disposals (342) (58) (1) - (401) Balance as of December 31, 2023 4,507 713 2,102 12,140 19,462 Accumulated depreciation Balance as of January 1, 2023 3,480 184 1,351 4,031 9,046 Depreciation for the year 308 102 132 286 828 Disposals (189) (52) (1) - (242) Balance as of December 31, 2023 3,599 234 1,482 4,317 9,632 Carrying amounts as of December 31, 2023 908 479 620 7,823 9,830 PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 38 NOTE 9: - PROPERTY, PLANT AND EQUIPMENT (Cont.) B. Details on land rights used as property, plant and equipment by the Group The land on which the Company’s premises in Israel are built, ha d a carrying amount of USD 1,163 thousand as at December 31, 2024 (December 31, 2023: USD 1,183 thousand) and is leased from the Israel Lands Administration under a capital lease ending on June 30, 2032. The Company has the right to extend the lease period by another 49 years under certain circumstances. C. Acquisition of property, plant and equipment on credit As at December 31, 2024, the Group acquired property, plant and equipment on credit in the amount of USD 108 thousand (December 31, 2023: USD 18 thousand). As of the date of signing these financial statements, the majority of this amount has been paid. D. Additional information The Group has assets that have been fully depreciated and are still in use. As at December 31, 2024 the original cost of such assets was USD 4,968 thousand (December 31, 202 3: USD 4,561 thousand). NOTE 10: - OTHER PAYABLES December 31, 2024 2023 $ thousands $ thousands Employees and related benefits 873 789 Short-term employee benefits 880 493 Government institutions 49 46 Other payables and accrued expenses () 1, 208 1, 204 3,010 2,532 () See Note 17A - balances with related parties The Group’s exposure to currency and liquidity risks concerning other payables is disclosed in Note 11 on financial instruments. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 39 NOTE 11: - FINANCIAL INSTRUMENTS A. Fair value Management believes that the carrying amount of cash and cash equivalents, short-term deposits, trade accounts receivable, other accounts receivable, trade payables and other payables approximate their fair value . Financial assets presented in the Statement of Financial Position at fair value are measured according to inputs that are not based on observable market data (Level 3). B. Financial risk management objectives and policies: The Group's principal financial assets include cash and cash equivalents, short-term deposits and receivables that derive directly from its operations. The Group's principal financial liabilities are comprised payables. The Group is exposed to market risk, credit risk and liquidity risk. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of Directors defines principles for overall risk management, as well as the specific policy for certain risk exposures and also the use of financial instruments and excess liquidity investments. The Group's risk management framework focuses on actions to minimize possible negative effects on the Group's financial performance. 1. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises currency risk. The Group's normal course of business is being managed in U.S. dollar, thus, most of the market risks are hedged. The Group uses, from time to time, derivatives as a tool for hedging, in order to neutralize fluctuations in profit or loss. 2. Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in foreign currency exchange rates. Since most of the Group's sales are in U.S. dollar, the Group's gross profit is exposed to the changes in exchange rates of the U.S. dollar in relation to the NIS and GBP, with regards to local labor costs and other operating costs, and in relation to the Chinese currency, with regards to costs of raw materials. The Group uses derivatives, from time to time, as a tool for economic hedging, especially in order to hedge labor costs and other costs paid in NIS. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 40 NOTE 11: - FINANCIAL INSTRUMENTS (Cont.) The Group’s exposure to foreign currency risk was as follows based on notional amounts: December 31, 2024 Dollar NIS Euro GBP Other Total $ thousands Current financial assets: Cash and cash equivalents 21,291 1,030 206 589 32 23,148 Deposits 34,109 831 - - - 34,940 Trade and other receivables 7,816 229 99 448 - 8,592 Current financial liabilities: Trade payables (685) (486) (11) (79) - (1,261) Other payables (961) (217) (30) - - (1,208) 61,570 1,387 264 958 32 64,211 December 31, 2023 Dollar NIS Euro GBP Other Total $ thousands Current financial assets: Cash and cash equivalents 26,347 107 58 403 6 26,921 Deposits and Marketable securities 25,188 4,077 - - - 29,265 Trade and other receivables 11,068 313 15 356 - 11,752 Current financial liabilities: Trade payables (3,139) (400) (20) (104) - (3,663) Other payables (1,006) (174) (17) - (7) (1,204) 58,458 3,923 36 655 (1) 63,071 Information regarding significant exchange rates: 1 US Dollar December 31 Rate of change December 31 Rate of change December 31 Rate of change NIS % Euro % GBP % 2024 3.647 0.55 0.961 6. 31 0.797 1.53 2023 3.627 3.07 0.904 (3.62) 0.785 (5.42) PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 41 NOTE 11: - FINANCIAL INSTRUMENTS (Cont.) Foreign currency sensitivity analysis: The following table demonstrates the sensitivity test to a reasonably possible change in NIS, Euro and GBP exchange rates, with all other variables held constant. The impact on the Group's income before tax is due to changes in the fair value of monetary assets and liabilities. The Group's exposure to foreign currency changes for all other currencies is immaterial. Profit or loss December 31, 2024 2023 $ thousands $ thousands Increase in the exchange rate of: 5% in the NIS 69 196 5% in the Euro 13 2 5% in the GBP 48 33 A strengthening of the USD against the above currencies as at December 31 would have had an equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant. 3. Credit risk Credit risk is the risk that counterparty will not meet its obligations as a customer or under a financial instrument leading to a loss for the Group. The Group is exposed to credit risk from its operating activity (primarily trade accounts receivable) and from its financing activity, including deposits with banks. The Group’s revenues are derived from sales to customers in Israel, Asia, Europe, America and other countries around the world. The Company’s Management regularly monitors the customers’ balance s and includes specific provisions for doubtful debts in the financial statements that adequately reflect, in the opinion of management, the loss inherent in debts the collection of which is doubtful. The Group has credit risk insurance for most of its Israeli and other customers, whose yearly activity exceeds USD 5 thousand and USD 10 thousand, respectively. The Group’s cash surpluses are invested in banks. The Group has a surplus cash investment policy for the purpose of reducing risk or maintaining liquidity. This policy is reviewed and updated from time to time according to market changes. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 42 NOTE 11: - FINANCIAL INSTRUMENTS (Cont.) 4. Liquidity risk The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The following are the contractual maturities of financial liabilities based on the actual rates at the reporting date: December 31, 2024 6 months or less Total $ thousands $ thousands Trade payables 1,261 1,261 Other payables 1,208 1,208 2,469 2,469 December 31, 2023 6 months or less Total $ thousands $ thousands Trade payables 3,663 3,663 Other payables 1,204 1,204 4,867 4,867 PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 43 NOTE 12: - EMPLOYEE BENEFIT ASSETS AND LIABILITIES Post-employment benefits According to the labor laws and Severance Pay Law in Israel, the Company is required to pay compensation to an employee upon dismissal or retirement or to make current contributions in defined contribution plans pursuant to section 14 of the Severance Pay Law, as specified below. The Group's liability is accounted for as a post-employment benefit. The computation of the Group's employee benefit liability is made according to the current employment contract based on the employee's salary and employment term which establish the entitlement to receive the compensation. A. Defined contribution plans Section 14 to the Severance Pay Law, 1963 applies to part of the compensation payments, pursuant to which the fixed contributions paid by the Group into pension funds and/or policies of insurance companies release the Group from any additional liability to employees for whom said contributions were made. These contributions and contributions for benefits represent defined contribution plans. Year ended December 31 , 2024 2023 $ thousands $ thousands Expenses in respect of defined contribution plans 506 481 B. Defined benefit plans The Group accounts for that part of the payment of compensation that is not covered by contributions in defined contribution plans, as above, as a defined benefit plan for which an employee benefit liability is recognized and for which the Group deposits amounts in severance pay funds and in qualifying insurance policies. The net liability for the defined benefit plan is presented under non-current liabilities. Risks associated with the Group’s liability for defined benefit obligations refer to deviations in salary increases, deviations in assets performances from the expectation, as well as changes in the interest rate environment. For sensitivity analyses, reflecting the effect of changes in salary increase assumptions and interest rate, see 4 hereinafter. December 31, 2024 2023 $ thousands $ thousands Present value of defined benefit obligation * ) 2,329 2,008 Fair value of plan assets 1,856 1,627 Net recognized liability for defined benefit obligations 473 381 * ) Including benefits in respect of adaption grants PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 44 NOTE 12: - EMPLOYEE BENEFIT ASSETS AND LIABILITIES (Cont.) 1. Changes in the defined benefit obligation 2024 2023 $ thousands $ thousands Defined benefit obligations as at January 1 2,008 1,944 Expenses recognized in profit or loss: Current service costs 1 79 75 Past service cost 3 16 Interest costs 85 72 Loss (gain) from remeasurement in other comprehensive income: Actuarial gain arising from changes in financial assumptions - (36) Return on plan assets (excluding amounts included in net interest expenses) 42 1 Other actuarial loss 23 21 Changes in respect of foreign exchange differences 3 12 Other adjustments: Benefits paid (3) (29) Changes in respect of foreign exchange differences (11) (68) Defined benefit obligation as at December 31 2, 329 2,008 2. Changes in the fair value of plan assets Plan assets comprise assets held by a long-term employee benefit fund or qualifying insurance policies. 2024 2023 $ thousands $ thousands Fair value of plan assets as at January 1 1,627 1,530 Income recognized in profit or loss: Interest income 40 35 Gain (loss) from remeasurement in other comprehensive income: Return on plan assets (excluding amounts included in net interest expenses) 117 37 Other actuarial loss - (5) Changes in respect of foreign exchange differences 1 - Other adjustments: Contributions by employer 78 74 Changes in respect of foreign exchange differences (7) (44) Fair value of plan assets as at December 31 1,856 1,627 PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 45 NOTE 12: - EMPLOYEE BENEFIT ASSETS AND LIABILITIES (Cont.) 3. The principal assumptions underlying the defined benefit plan 2024 2023 % % Discount rate () 3.12 3.11 Expected rate of salary increase 3 3 () The discount rate is the yield at the reporting date on high quality NIS-denominated corporate debentures that have maturity dates approximating the terms of the Group’s obligations. Assumptions regarding future mortality are based on published statistics and mortality tables. 4. Sensitivity analysis Below are reasonably possible changes at the end of the reporting period in each actuarial assumption assuming that all other actuarial assumptions are constant: Change in defined benefit obligation $ thousands December 31, 2024: Sensitivity test for changes in the expected rate of salary increase The change as a result of: Salary increase of 1% 82 Salary decrease of 1% (52) Sensitivity test for changes in the discount rate of the plan assets and liability The change as a result of: Increase of 1% in discount rate (51) Decrease of 1% in discount rate 81 5. Effects of the Group's defined benefit plan on its future expected cash flows The expected contributions to the plan in 2025 are USD 81 thousand. The average weighted life of the plan as of December 31, 2024 is 7.60 years (as of December 31, 2023: 8.06 years). PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 46 NOTE 13: - TAXES ON INCOME A. Tax laws applicable to the Group ’s companies 1. The Dollar regulations The Company, being a "foreign investment company", elected to be taxed as from the year 2009, based upon its results in dollars and according to applicable income tax regulations (hereinafter - "the Dollar regulations"). 2. Tax benefits under the Law for the Encouragement of Capital Investments - 1959 ("the Investment Law") The Company is subject to the Law for the Encouragement of Capital Investments - 1959 which was amended last in 2010 (hereinafter - “the Amendment to the Law”). The Amendment to the Law provisions applies to preferred income derived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms in the Amendment to the Law. The Amendment provides that only companies in Development Area A will be entitled to the grants track and that they will be entitled to receive benefits under this track and under the tax benefits track at the same time. In addition, a preferred enterprise track was introduced, which mainly provides a uniform and reduced tax rate for all the company’s income entitled to benefits. On August 5, 2013 the Knesset passed the Law for Changes in National Priorities (Legislative Amendments for Achieving Budget Objectives in the Years 2013 and 2014) - 2013, which raised the tax rates on preferred income as from the 2014 tax year as follows: 9% for Development Area A and 16% for the rest of the country. As stated in Note 1, the Company's factory is not located in Development Area A, and therefore the Company's tax rate on preferred income is 16%. The Amendment to the Law also provides that no tax will apply to a dividend distributed out of preferred income to a shareholder that is a company, for both the distributing company and the shareholder. A tax rate of 20% shall apply to a dividend distributed out of preferred income to an individual shareholder or foreign resident, subject to double taxation prevention treaties. The Company complies with the conditions provided in the amendment to the Law for the Encouragement of Capital Investments for inclusion in the scope of the tax benefits track. On November 15, 2021 the Economic Efficiency Law (Legislative Amendments for the 2021 and 2022 Budget Years) - 2021 (hereinafter: "the Economic Efficiency Law") was published as well as a Temporary Order to the Law for the Encouragement of Capital Investments - 1959 (hereinafter: "the temporary order"), which offers a reduced tax rate arrangement to companies that received an exemption from corporate tax under the aforesaid law. The temporary order provided that companies that choose to apply the temporary order, which is effective until November 14, 2022, will be entitled to a reduced tax rate on the "release" of exempt profits (hereinafter: "the beneficiary corporate tax rate"). The release of exempt profits makes it possible to distribute them at a reduced rate of corporate tax at the company level based on the rate of the profits being distributed pursuant to the conditions set forth in the Amendment. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 47 NOTE 13: - TAXES ON INCOME (Cont.) The reduced corporate tax rate will be determined according to the rate of exempt profits the company chooses to release from its entire exempt profits, and will be between 40% and 70% of the corporate tax rate that would have applied to the revenue in the year it was produced if it had not been exempt, but in any event no less than 6%. Furthermore, a company that chooses to release its exempt profits and pay a beneficiary corporate tax rate will be required to invest in its enterprise, within a period of 5 years beginning from the tax year it elected, an amount calculated according to a formula provided in the temporary order (30% of the exempt income multiplied by the corporate tax rate and multiplied by the release rate). The investment will be made in productive assets (with the exclusion of buildings), research and development in Israel and salaries to new employees of the enterprise. Failure to comply with this condition will require the company to pay additional corporate tax. In addition, according to the Economic Efficiency Law an amendment was made to Section 74 of the Law for the Encouragement of Capital Investments - 1959 with respect to identifying the sources of dividend distributions as of August 15, 2021. The Company applied the temporary order in 2022. 3. Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969 The Company currently qualifies as an “Industrial Company” as defined in the Law for the Encouragement of Industry (Taxes) - 1969 and accordingly it is entitled to benefits, of which the most significant one is higher rates of depreciation than those prescribed in the Israeli tax ordinance. B. Tax rates applicable to the Group 1. The Israeli corporate income tax rate was 23% in 2024 and 2023. Current taxes for the reported periods and deferred tax balances as at December 31, 2024 and 2023 are calculated according to the tax rate presented above. See also Note 13A(2) above. 2. The principal tax rates applicable to the subsidiaries whose place of incorporation is abroad are: A. A company incorporated in the U.S. - Payton America is subject to the tax rate of its country of domicile. The primary tax rates applicable to the subsidiary are 21% Federal Tax and 5.5% State Tax. B. A company incorporated in the UK - Himag Planar is subject to the tax rate of its country of domicile. The primary tax rate applicable to the subsidiary is 19%. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 48 NOTE 13: - TAXES ON INCOME (Cont.) C. Final tax assessments The Company has final tax assessments up to and including the 2018 tax year. With few exceptions the U.S. subsidiary is no longer subject to U.S. Federal income tax examinations by tax authorities for years before 2021. D. Deferred tax assets and liabilities Composition: Statements of Statements of financial position profit or loss December 31, Year ended December 31, 2024 2023 2024 2023 $ thousands Deferred tax liabilities: Property, plant and equipment (1,091) (1,121) 30 62 Investment in investees ( 153 ) (104) (54) (50) Others (97) (246) 149 (93) (1,341) (1,471) Deferred tax assets: Employee benefits 252 160 101 (11) 252 160 Deferred tax income (expenses) 226 (92) Deferred tax liabilities, net (1,089) (1,311) Deferred taxes in respect of companies in Israel are calculated according to the tax rate anticipated to be in effect on the date of reversal as stated above. Deferred taxes in respect of foreign subsidiary are calculated according to the relevant tax rates. As at December 31, 2024 a deferred tax liability in the amount of USD 920 thousand (2023: USD 786 thousand) for temporary differences in the amount of USD 4,000 thousand (2023: USD 3,419 thousand) related to investment in subsidiaries was not recognized because the Company is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. As at December 31, 2024 deferred tax assets have not been recognized mainly for capital tax losses in the amount of USD 672 thousand (year ended December 31, 2023: USD 722 thousand), since currently their utilization in the foreseeable future is not probable. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 49 NOTE 13: - TAXES ON INCOME (Cont.) E. Taxes on income relating to items recorded in other comprehensive income Year ended December 31 , 2024 2023 $ thousands $ thousands Actuarial gain from defined benefit plans (9) (7) Company's share of other comprehensive loss of equity accounted investee 5 2 (4) (5) F. Taxes on income included in profit or loss Year ended December 31 , 2024 2023 $ thousands $ thousands Current taxes 3,036 3,142 Deferred taxes (see also D above) (226) 92 2,810 3,234 PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 50 NOTE 13: - TAXES ON INCOME (Cont.) G. Theoretical tax The reconciliation between the tax expense, assuming that all the income, expenses, gains and losses in profit or loss were taxed at the statutory tax rate and the taxes on income recorded in profit or loss is as follows: Year ended December 31, 2024 2023 $ thousands $ thousands Profit before taxes on income 16,121 18,500 Statutory tax rate 23% 23% Tax computed at the statutory tax rate 3,708 4,255 Increase (decrease) in taxes on income resulting from the following: Tax benefit arising from preferred income tax rates by virtue of the Encouragement Law (867) (1,004) Non-deductible expenses and tax-exempt income, net 74 64 Tax saving in respect of foreign subsidiaries (62) (79) Others (43) (2) 2,810 3,234 NOTE 14: - COMMITMENTS A. According to a Management Services Agreement signed between the Company and Wichita Ltd., a management company under the full control of Mr. David Yativ (approved by the Company's General meeting dated September 20, 2023), David Yativ will continue to provide management services as the Active Chairman of the Company for a period of 3 years, as of November 1, 2023. For providing these management services, Wichita Ltd. will be entitled to a monthly management fee of USD 54 thousand (linked to the Israeli consumer price index according to the base index known on April 15, 2023) and an annual bonus calculated as 3.4% of the Company’s annual profit before taxes on income and before any other profit based bonus. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 51 NOTE 14: - COMMITMENTS (Cont.) B. According to a Management Services Agreement signed between the Company and Yaarh - Looking To The Future Ltd., a management company under the full control of Mr. Doron Yativ (approved by the Company's General meeting dated September 20, 2023), Doron Yativ will continue to provide management services as the Company's C.E.O., for a period of 3 years, as of November 1, 2023. For providing these management services, Yaarh - Looking To The Future Ltd. will be entitled to a monthly management fee of USD 29 thousand (linked to the Israeli consumer price index according to the base index known on April 15, 2023) which shall be raised by 3% in April each year, and an annual bonus calculated as 2% of the Company’s annual profit before taxes on income and before any other profit based bonus. C. On March 7, 2024, the Company's remuneration committee and the Board of Directors, approved the Company's participation in the service fee of FIMI for the management services to be provided to Payton Group as part of the FIMI Transaction, for a period of 3 years, as of the Closing Date of the FIMI Transaction - April 21, 2024. The above resolutions were approved by the Company's shareholders' meeting, resolved on April 15, 2024. For providing these management services, FIMI will be entitled to a monthly management fee in the total amount of USD 11 thousand, to be shared equally between the Company and the Parent Company (the participation amount shall be examined and adjusted on a yearly basis according to the actual services). NOTE 15: - EQUITY A. Share capital - Composition Number of shares Authorized Issued and paid December 31, 2024 and 2023 Ordinary shares of NIS 1 each 20,000,000 17,670,775 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to Company’s residual assets. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 52 NOTE 15: - EQUITY (Cont.) B. Dividends The following dividends were paid by the Company: Year ended December 31, 2024 2023 $ thousands $ thousands USD 0.570 per ordinary share 10,072 - USD 0.480 per ordinary share - 8,482 After the reporting date, on March 27, 2025, the Company declared a dividend for the financial year 2024 in the amount of USD 5,301 thousand (USD 0.30 per share, expected to be paid during June 2025). This amount was not recognized as distribution to the owners in the period and no liability was recorded in its respect. (See Note 20) NOTE 16: - ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS A. Additional information on revenues Year ended December 31, 2024 2023 $ thousands $ thousands Export 49,487 53,567 Israel 1,339 1,289 50,826 54,856 Revenues from principal customers which each accounts for 10% or more of total revenues reported in the financial statements: Year ended December 31, 2024 2023 % % Customer A 2 7 15 Customer B * 16 Customer C 15 14 * Less than 10% of the sales of the Group PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 53 NOTE 16: - ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS (Cont.) Geographical information Segment revenue based on the geographical location of customers: Year ended December 31, 2024 2023 $ thousands $ thousands Israel 2,238 2,200 Europe 9,208 11,652 America 8,603 10,772 Asia 30,777 30,232 50,826 54,856 B. Cost of sales Year ended December 31, 2024 2023 $ thousands $ thousands Materials consumed 21,312 23,616 Salaries and related benefits 5,618 5,272 Depreciation 462 543 Other manufacturing expenses 1,292 1,236 Change in inventory of finished products and work in process 25 86 28,709 30,753 * Includes inventory write-off of USD 83 thousand and USD 142 thousand for the years ended December 31, 2024 and 2023, respectively. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 54 NOTE 16: - ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS (Cont.) C. Selling and marketing expenses Year ended December 31, 2024 2023 $ thousands $ thousands Salaries and related benefits 1,068 975 Sales commissions 652 777 Advertising and marketing 82 70 Exhibits and travel abroad 314 173 Other 87 157 2,203 2,152 * Includes expenses related to related parties in the amount of USD 489 and USD 435 thousand for the years ended December 31, 2024 and 2023, respectively (see Note 17C). D. General and administrative expenses Year ended December 31, 2024 2023 $ thousands $ thousands Salaries and related benefits 1, 517 1,230 Share-based compensation provided by controlling shareholder (see note 1C(3)) * * 311 - Maintenance and communications 479 316 Depreciation 306 285 Professional services 314 295 Management fees and related benefits to related parties (see note 17) 1,190 1,134 Other 586 603 4,703 3,863 ** Includes compensation to key management personnel and interested parties in the amount of USD 155 thousand for the year ended December 31, 2024 (see Note 17C). PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 55 NOTE 16: - ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS (Cont.) E. Other income (expenses), net Year ended December 31, 2024 2023 $ thousands $ thousands Capital gain (loss) on sale of property, plant and equipment, net 7 (145) Impairment loss of an option in an equity accounted investee (see note 8B) - (100) 7 (245) F. Finance income (expenses) Year ended December 31, 2024 2023 $ thousands $ thousands Finance income Interest income from bank deposits and cash 2,209 1,947 Income from marketable securities, net 82 76 Net profit from change in exchange rates 112 - Other 1 - 2,404 2,023 Finance expenses Bank charges and others 32 33 Interest for delayed tax payments 32 23 Net loss from change in exchange rates - 77 Other - 9 64 142 PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 56 NOTE 17: - BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES A. Balances with key management personnel and interested and related parties December 31, 2024 Key Key Directors and management management interested Equity personnel personnel not parties not accounted The Parent employed by employed by employed by investee Company the Group the Group the Group $ thousands $ thousands $ thousands $ thousands $ thousands Payables: Short-term employment benefits - - 151 - - Post-employment benefits - - 118 - - Trade payables 463 - - - - Other payables - - - 7 59 29 December 31, 2023 Key Key management management Equity personnel personnel not Directors not accounted The Parent employed by employed by employed by investee Company the Group the Group the Group $ thousands $ thousands $ thousands $ thousands $ thousands Payables: Short-term employment benefits - - 99 - - Post-employment benefits - - 27 - - Trade payables 152 - - - - Other payables - - - 723 9 B. Transactions with related parties Equity accounted investee Year ended December 31, 2024 2023 $ thousands $ thousands Purchases 11,284 9,504 Other investment Year ended December 31, 2024 2023 $ thousands $ thousands Sales 82 36 PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 57 NOTE 17: - BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES (Cont.) C. Compensation to key management personnel and interested parties For the year ended December 31, 2024 Directors and Key Key interested management management parties not personnel personnel not employed by employed by employed by the Group the Group the Group () () $ thousands $ thousands $ thousands Short-term employee benefits 545 - - Post-employment benefits 245 - - Share-based compensation 97 58 - Other - 1,669 108 Total 887 1,727 108 Number of people 5 2 8 For the year ended December 31, 2023 Key Key management management personnel personnel not Directors not employed by employed by employed by the Group the Group () the Group $ thousands $ thousands $ thousands Short-term employee benefits 510 - - Post-employment benefits 51 - - Other - 1,604 38 Total 561 1,604 38 Number of people 3 2 3 () Management fees and related benefits to Wichita Ltd. (see Note 14A) and to Yaarh- Looking To The Future Ltd. (see Note 14B) include an amount of USD 189 (year ended December 31, 2023: USD 184 thousand) and an amount of USD 264 (year ended December 31, 2023: USD 251 thousand), respectively, recorded as selling and marketing expenses. () Includes management fees to FIMI (see Note 14C) in the amount of USD 36 thousand recorded as selling and marketing expenses. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 58 NOTE 17: - BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES (Cont.) Inter-company transactions between the Company and its two fully owned subsidiaries (Payton America Inc. and Himag Planar Magnetics Ltd.) include, inter alia, the following: engineering support, purchasing and subcontracting, marketing, administrative and management services. All the inter-company transactions are being eliminated within these consolidated financial statements. D. Commitments Regarding agreements with related parties and shareholders - see Note 14A, 14B and 14C. NOTE 18: - NET EARNINGS PER SHARE Details of the number of shares and income used in the computation of net earnings per share: Year ended December 31, 2024 2023 Net profit attributable to equity holders of the Company ($ thousands) 13,311 1 5 , 266 Weighted number of shares () 17,671 17,671 Basic and diluted earnings per ordinary share (in US$) 0.75 0.86 () The Company has no dilutive instruments. Data relates to the computation of basic and dilutive earnings per share. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 59 NOTE 19: - OPERATING SEGMENTS The Group has one operating segment, the transformer segment. The Group’s chief operating decision maker (hereinafter: "CODM") makes decisions and allocates resources with respect to all the transformers as a whole. Geographical information Non-current assets (property, plant and equipment and intangible assets) are based on the geographical location of the assets: December 31, 2024 2023 $ thousands $ thousands Israel 8,479 8,6 46 Europe 5 38 561 America 616 645 9,633 9,852 NOTE 20: - EVENTS AFTER THE REPORTING DATE A. On March 12, 2025, the Company’s US subsidiary entered into agreements aiming at: (a) acquiring 100% of the issued and paid-up share capital of SI Manufacturing, Inc., a corporation incorporated under the laws of California (hereinafter: “SI”) in exchange for payment of total consideration of approximately USD 5.6 million (hereinafter: the “Share Purchase Agreement”). SI manufactures and sells electronic coils, assembling power supplies and custom magnetic components for customers in various industrial sectors including transportation, aviation, space and defence. The Share Purchase Agreement includes additional contingent consideration of up to USD 500 thousand based on SI performance during 2025; (b) acquiring the real property, for a total amount of USD 4.4 million, on which the SI’s factory is built, [such factory being] owned by RSG Holdings LLC, a corporation incorporated under the laws of California (her einafter: “RSG Holdings”) and partly held by the Chairman of the SI who is also a shareholder thereof (45%) as well as by two of the founders of the Target Company who currently provide consulting services to SI as independent contractors (hereinafter: the “Real Property Purchase Agreement”), and (c) entering into employment/consulting agreements with the CEO of SI and a senior engineering service provider of SI, which will come into effect as of the closing date and include customary terms for agreements of this type, all in accordance with the provisions of the agreements (the “Transaction”). The completion of the Transaction is subject to the fulfillment of several conditions precedent detailed in the Share Purchase Agreement, including, among others, the transfer of ownership of the real property in accordance with the Real Property Purchase Agreement, as well as the provision of notices and obtainment of required regulatory approvals in the United States and certain other third-party consents. The financing of this acquisition will be through a loan between the Company and its fully owned US subsidiary, as well as from the subsidiary’s own equity. PAYTON PLANAR MAGNETICS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 60 NOTE 20: - EVENTS AFTER THE REPORTING DATE B. On March 27, 2025, the Company's Board of Directors decided to pay the shareholders a dividend for the financial year 2024, in the amount of USD 5,301 thousand (USD 0.30 per share, expected to be paid in June 2025).