Payton Planar Magnetics Ltd.

Annual Report 2025

1

Payton Planar Magnetics Ltd.

Financial Statements as at December 31, 2025

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

29

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, 2025

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.

As of October 1, 2025, the acquisition of SI Manufacturing Inc.

(“SI”) was completed, and it became a wholly owned subsidiary of Payton America Inc. SI is located in California,

USA, and its principal business includes electronic coils, assembly of power supplies and other custom magnetic

components (see also paragraph B below).

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%

The financial statements as at December 31, 2025 form an integral part thereof.

Payton Planar Magnetics Ltd.

Payton Industries Ltd.

Euronext Brussels

Public

66.2%

33.8%

Payton America Inc.

(Florida, USA)

Himag Planar

Magnetics Ltd. (UK)

PCT Industries Ltd.

(Hong Kong)

SI Manufacturing Inc.

(California, USA)

3

B.

The Group's main fields of activity and changes that occurred in the period from January to December 2025

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.

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 defense.

The Share Purchase Agreement includes additional contingent consideration of up to USD 500 thousand based on

SI’s performance during 2025.

However, as of the date of the completion of the Transaction, the fair value of the

contingent consideration was estimated at zero;

(b) acquiring the real property, for a total amount of USD 4.4 million,

on which SI’s factory is built, [such factory being] owned by RSG Holdings LLC, a corporation incorporated under

the laws of California and partly held by the Chairman of SI who is also a shareholder thereof (45%) as well as by

two of the founders of SI who currently provide consulting services to SI as independent contractors (hereinafter: the

“Real Estate Purchase Agreement”), and (c) entering into employment/consulting agreements with the CEO of SI and

a senior engineering service provider of SI, which become effective as of the closing date including customary terms

for agreements of this type, all in accordance with the provisions of the agreements (the “Transaction”). The

completion of the Transaction was 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 Estate 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). This dividend was paid on June 10, 2025.

On October 1, 2025,

the acquisition of SI shares and the Real Estate Purchase were both completed, following the

fulfillment of all the conditions precedent as set forth in the Transaction agreement.

As stated, and accordingly, upon completion of the Transaction, the shares of SI were transferred to the Purchasing

Company, and the consideration in the amount of USD 5.6 million was paid (net of net financial debt and transaction-

related expenses in a total amount of USD 1.2 million). In addition, the total consideration in the amount of USD 4.4

million was paid for the completion of the Real Estate Purchase Agreement.

In addition, upon completion of the Transaction, various employment/consulting agreements came into effect, as

detailed in the press releases dated March 12, 2025, and October 2, 2025.

4

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

•

In 2025, most of the global trends that characterized the prior year (2024) have remained relevant. Global

economic slowdown, instability, and uncertainty continue to dominate the global business environment,

alongside elevated raw-material prices, higher labor costs, and push-out of scheduled deliveries up on customer’s

needs. In management’s assessment, these trends are expected to continue in the coming months.

Along with the above, additional factors that affected the Group’s operations included the following:

•

Devaluation of the US$

against the NIS, the Euro, and the Pound Sterling. In 2025, the NIS appreciated against

the U.S. dollar by an average rate of approximately 7%. This appreciation, which is primarily reflected in higher

local labor costs and other operating costs in Israel and the UK as a result of the U.S. dollar’s weakening, may

adversely affect the Group’s results (see also the discussion in paragraph N. Risk Factors below).

•

Inflation effects

- given that the Group’s functional currency is the US dollar, and that the Group does not utilize

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.

•

Security situation in Israel

- As of this date, the security situation and the

last military operations had no material

effect on the Group’s ongoing operations. In Israel all production lines are active continuously and shipments

are dispatched on schedule. In parallel, the Group’s subsidiaries in the UK and in USA continue their usual

operation, so that the Group’s global manufacturing planning is fully effective. The diversification of the

Group’s production sites in China, the Philippines, Israel, the UK, and the United States enables the Group to

fulfill its planned supply targets.

Based on the information available to the Group as of the date of approval of the financial statements, the Group

currently estimates that the security situation and the ongoing military operation are not expected to have a

material effect on its operating results. However, due to uncertainty involved and lack of information regarding

the duration of these military operations, the Group is currently unable to foresee and assess their future effects.

•

President Trump’s U.S. tariff program Implications -

In April 2025, the U.S. administration announced a

program to impose tariffs on goods imported into the United States. The principal exposure relates to sales from

Israel to the Group’s US companies and customers, as well as to purchase of raw materials and of finished parts

from the Far East to the USA. Under the program, the relevant tariff rates are about 10% - 15% on imports from

Israel and approximately 25% on imports from the Far East. It is noted that, under the tariff policy, certain goods

purchased by subcontractors for the government are exempt from tariffs. The Group is taking steps to reduce the

direct impact of the tariffs, including reviewing adjustments to its supply chain. In the Group’s assessment, the

potential impact of the foregoing tariff policy on its business results is expected to be low.

The Group continues to follow-up and monitors all the above-mentioned 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.

5

C.

Sales

The Group’s main customer base is related to the telecom/datacenter, automotive and power electronic market.

Additional markets the Group aims for are the medical, Avionics and Space markets.

During 2025, the Group kept

operating its activities in: North America, Europe, Japan, China, S. Korea, India and UK.

Sales for the year ended December 31, 2025 amounted to USD

47,825

thousand compared with USD 50,826 thousand

for the year ended December 31, 2024, reflecting 6% decrease. The decrease in

sales is generally attributable

to the

global slowdown across the traditional industrial sectors, communications and consumer products and specifically to

a decrease in sales to a high running project of Principal Customer

-

Quanta Computer Inc.

)1(

(see also paragraph D -

Principal Customers).

Revenues for the year ended 2025 consisted of recurring sales to existing customers and sales to new ones.

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

2025

2024

Quanta Computer Inc.

)1(

13%

27%

Customer B

)2(

16%

15%

)1(

Customer related to the Telecom/Datacenter industry, includes sales to its subsidiary

QMB Co. Ltd. A significant

decrease in demand related to the customer’s main project with the Group has led to the decrease (See also

paragraph H - Order Backlog, below).

)2(

Customer related to the Automotive industry.

E.

Marketing

In 2025, the Company focused its marketing efforts on the following principal markets:

• The U.S. market, given its significant potential.

• The Japanese, Indian, and German markets, which have been identified as markets with significant growth potential.

The Company’s marketing activities are carried out through direct marketing via the Company’s agents, distributors,

and sales offices. The Company maintains a network of agents, distributors, and sales offices across Europe, North

America, Japan, Korea, India, and China, which is managed and supervised by the Group’s sales management.

In countries where the Company has a physical presence: in

I

srael

and in certain countries in North America, as well

as in China, Taiwan, Korea, Poland and the United Kingdom

,

marketing is conducted directly by the Group’s sales

force

.

The Company also participates in leading electronic exhibitions focusing on serving Key customers with routine visits

and latest technology development updates.

The Group’s strategy, which enables it to fulfill its mission of gaining worldwide recognition and market share growth,

is:

• Leveraging the Group’s digital marketing channels, with an emphasis on LinkedIn, as a strategic channel for brand-

building in target markets, for focusing on professional audiences, and for expanding the business opportunity funnel

(leads).

6

• Expanding the international presence at selected exhibitions and conferences, as a strategic means to accelerate

growth.

• Strengthening and expanding the technical marketing capabilities (Technical Marketing) as a core competency

supporting the Group’s growth objectives and providing advanced technological solutions to customers.

• Targeting leading companies in their respective fields worldwide, with the aim of encouraging broader market

adoption of advanced technology (primarily planar).

• Maintaining technological leadership and preserving the Company’s position as a leading manufacturer in its field.

• Focusing on growth-oriented customers with significant expansion potential, as well as on customers requiring

advanced technology where the profitability potential is higher.

• Utilizing the network of agents, distributors, and sales offices as a channel for marketing and distribution.

• Supporting research institutes and consultants in order to increase exposure to engineers in the field.

• Retaining existing customers and expanding activity with them.

• Providing engineering solutions tailored to customer requirements.

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 in getting 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 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, 2025, this backlog amounted to USD

17,401

thousand, and as at March 15, 2026 to USD

19,295

thousand (December 31, 2024 - USD 25,165 thousand). The backlog is composed of the Company and its two fully

owned subsidiaries firm orders

including its new sub-subsidiary initially consolidated starting October 1

st

, 2025.

Order Backlog

US$ in thousands

March 15, 2026

December 31, 2025

2,586

6,787

Delivery due date within first quarter of 2026

8,684

5,275

Delivery due date within second quarter of 2026

4,898

2,758

Delivery due date within third quarter of 2026

2,016

2,365

Delivery due date within fourth quarter of 2026

1,111

216

Delivery due date is after 1.1.2027

19,295

17,401

Total

The main reasons for the decrease in backlog are attributed to the global economic slowdown of the electronic market

and to a specific reduction in orders from Principal Customer - Quanta Computer Inc.

)1(

that, in contrary to previous

years, have not placed any new orders for the coming months.

)1(

Customer related to the Telecom/Datacenter industry, includes sales to its subsidiary

QMB Co. Ltd. A significant decrease in

demand related to the customer’s main project with the Group has led to the decrease (See also paragraph D - Principal Customer,

above).

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, 2025 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 2025, the Group employed about 205 people including the 36

employees of SI, the new sub-subsidiary initially consolidated to Payton Group. 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.

8

The Company is certified with ISO14001:2015 (Environmental standard). Payton is a Lead-Free company as required

by the 2015/863/EU RoHS directive.

The Company is certified with two important International Quality Management Standards: for Automotive - IATF

16949:2016 and for Space & Avionic - AS9100 (at Payton America only).

L.

Objective and Business Strategy

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

Electronic Industry.

By doing so, it has become the undisputable worldwide market leader in the Planar Magnetics Technology, with a

customer base of leading technology-driven OEMs.

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

Technology by:

1.

Constantly looking for business opportunities to expand its core business with synergetic product lines.

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 and South

Korea to further propagate Payton Planar unique technology.

6.

Aiming at and focusing on new high growth segments such as Avionics, Space and 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 2026, the Group expects to continue integrating the operations of SI Manufacturing Inc. (see also paragraph B

above and Note 1.C. to 2025 yearly report) and to continue evaluating expansion opportunities through collaborations

and acquisitions in synergistic areas.

As of 2026 and as of the date of signing these reports, a global slowdown continues in the Group’s traditional end-

markets (consumer products and communications). Management notes more conservative ordering patterns, including

ordering of minimum required quantities and deferrals of delivery dates, and accordingly exercises increased caution

in procurement planning. Raw material prices are generally unchanged compared to the prior year. At this stage,

management is unable to assess the impact of the above-mentioned trends on the Group’s results of operations.

With respect to the security situation in Israel and the ongoing military operation, as of the reporting date management

has not identified a material impact on the Group’s operations and results; however, the duration and potential long-

term effects cannot be assessed at this time.

9

The Group intends to continue investing to enhance production capacity and efficiency, including further automation.

In addition to its ordinary course of business, the Group will continue to pursue new markets and other opportunities,

including through conferences and exhibitions, while offering innovative solutions and leveraging new technologies

to expand its customer base and core business, increase market share and maximize opportunities to the extent

practicable.

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

regard 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

-

opportunities

in

this

segment are declining due

to strong competition from

China; in addition to the

inherent

risks

of

this

industry, continued price

erosion adversely affects

the economic viability of

entering new projects.

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, 2025

Cash and cash equivalents and Short-term Deposits

-

these items amounted to a total of USD 58,248 thousand as at

December 31, 2025, compared to USD 58,088 thousand as at December 31, 2024.

The Company succeeded in maintaining these cash balances at stable levels, mainly thanks to its operating

profitability. This stability was maintained despite a dividend distribution of USD 5.3 million in June 2025 and the

acquisition of its sub-subsidiary (SI) and its related real estate asset on October 1, 2025, for a total consideration of

approximately USD 10 million.

The Group's management believes that a stable and solid financial position is an important factor in order to

successfully overcome times of crisis.

Inventory

-

amounted to USD 5,339 thousand as at December 31, 2025, compared with USD 3,922 thousand as at

December 31, 2024. The inventory increase mainly reflects the consolidation of a sub-subsidiary’s inventory

amounting to approximately USD 1.9 million.

Property, plant and equipment

-

amounted to USD 13,992 thousand as at December 31, 2025, compared with USD

9,611 thousand as at December 31, 2024.

The increase in this item was attributable mainly to the acquisition of a real

-

estate property in Anaheim, California, by the Company’s subsidiary, Payton America, at an aggregate cost of

approximately USD 4.4 million for the land and building. The acquired sub-subsidiary (SI) conducts its business

operations in this facility.

Intangible assets

-

amounted to USD 3,901 thousand as at December 31, 2025, compared with USD 22 thousand as

at December 31, 2024. The increase in intangible assets was attributable mainly to two factors: an increase in goodwill

of approximately USD 2.7 million and an increase in production files of approximately USD 1.2 million. These

amounts arose from the acquisition of the sub-subsidiary (SI) and were measured based on a purchase price allocation

(PPA) performed by an independent external valuation expert.

Trade payables

-

amounted to USD

2,521 thousand as at December 31, 2025, compared with USD 1,261 thousand as

at December 31, 2024. The increase in these balances was attributable mainly to higher balances with the principal

subcontractors, resulting from both a decrease in advance payments and revised credit terms.

Other payables

-

amounted to USD 3,917 thousand as at December 31, 2025, compared with USD 3,010 thousand as

at December 31, 2024. The increase in this item was mainly attributable to an increase in employee-related provisions,

as well as the recognition of a liability payable to the shareholders of the acquired sub-subsidiary.

11

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 2025, about 5%).

Data on linkage terms

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

Most of the Group's sales (91%) in the reported period were in USD or were linked to the USD.

Approximately 2%

of the Group’s sales in 2025 were in Euro, 3% were in NIS, and about 4% were in GBP.

During 2025, approximately 94% of the costs of raw material and finished goods purchased by the Group were in

USD or were linked to the USD.

During 2025, approximately 80% 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 2025 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

202

5

202

4

10-12/2

5

7-9/2

5

4-6/2

5

1-3/2

5

Revenues

47,825

50,826

11,591

13,225

11,364

11,645

Cost of sales

(

26,460

)

(28,709)

(

7,123

)

(

6,578

)

(

6,319

)

(

6,440

)

Gross profit

2

1,365

22,117

5,

Development costs

(1,

967

)

(1,672)

(

579

)

(4

71

)

(48

4

)

(

433

)

Selling & marketing expenses

(2,

448

)

(2,203)

(

774

)

(

534

)

(

624

)

(

516

)

(

5,724

)

(4,703)

(1,

517

)

(1,

487

)

(1,4

10

)

(1,

310

)

(

501

)

7

-

(

501

)

-

-

Operating profit

10,725

13,546

3,

Finance income, net

2,

842

2,340

427

534

1,277

604

Share of profits (loss) of equity

accounted investee

(

22

)

235

(

16

)

(

13

)

18

(

11

)

Profit before taxes on income

13,545

16,121

4,

Taxes on income

(2,

471

)

(2,810)

(

375

)

(7

25

)

(

744

)

(6

27

)

Net profit for the year/period

11,074

13,311

3,

Other comprehensive income

(loss) items that will not be

transferred to profit &loss

Remeasurement of defined

benefit plan

123

41

123

-

-

-

Share of other comprehensive

income (loss) of equity

accounted investee

15

(17)

6

3

3

3

Total other comprehensive

income, net of tax

138

24

129

3

3

3

Total comprehensive income

for the year/period

11,212

13,335

3,

3,

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, 2025, were USD 47,825 thousand

compared with USD 50,826 thousand for the year ended December 31, 2024, reflecting 6% decrease. The decrease

in

sales is generally attributable

to the global slowdown across the traditional industrial sectors, communications and

consumer products, and specifically to a decrease in sales to a high-running project of principal customer (see also

paragraph D - Principal Customers, above).

13

Gross profit

-

The Group’s gross results for the year ended December 31, 2025, were USD 21,365 thousand (45%),

compared with USD 22,117 thousand (44%), in the year ended December 31, 2024. The Group succeeded in

improving its gross margin ratio despite the sales decrease. The gross margin is mainly affected by the sales product

mix and production sites.

Development costs -

Payton’s strategy is aimed at maintaining the leadership of Planar Technology. The Engineering

Department works in conjunction with the engineering departments of the forerunners of today’s global technology.

Development costs are mainly incurred to design and customize products for specific orders. These development

costs, mainly engineering labor costs, are based upon time expended by the department’s employees. The Group’s

development costs for the year ended December 31, 2025, were USD 1,967 thousand compared with USD 1,672

thousand in the year ended December 31, 2024. The increase in these expenses was mainly attributable to the

expansion of the engineering team, as well as to the increase in labor cost which are fixed in local currency.

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, 2025, amounted to USD 2,448 thousand (5%) compared with USD 2,203

thousand (4%) in the year ended December 31, 2024. The increase in selling and marketing expenses was mainly

driven by expansion of the technical marketing team, enhanced digital marketing, and increased participation in

exhibitions and marketing travels.

General & Administrative expenses -

The Group’s General & Administrative expenses for the year ended December

31, 2025, amounted to USD 5,724 thousand compared with USD 4,703 thousand in the year ended December 31,

2024.

The increase in these expenses was attributable to various factors inter alia: higher labor costs fixed in local

currency translated into USD, increased share-based compensation, computing upgrades and the initial consolidation

of SI’s expenses.

14

D.

Information regarding transactions

with related parties

(pursuant to note 18 to the Consolidated Financial

Statements as at December 31, 2025)

D.1

Balances with key management personnel and interested and related parties

December 31, 2025

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

-

-

161

-

-

Post-employment benefits

-

-

126

-

-

Trade payables

880

-

-

-

-

Other payables

-

-

-

791

21

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

-

-

-

772

16

D.2 Transactions with related parties

Equity accounted investee

Year ended December 31,

2025

2024

$ thousands

$ thousands

Purchases

8,007

11,284

Other investment

Year ended December 31,

2025

2024

$ thousands

$ thousands

Sales

101

82

15

D3. Compensation to key management personnel and interested parties

For the year ended December 31, 2025

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

553

-

-

Post-employment benefits

56

-

-

Share-based compensation

150

90

-

Other

-

1,867

81

Total

759

1,957

81

Number of people

5

3

5

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

-

1,714

63

Total

887

1,772

63

Number of people

5

3

7

(*)

Management fees and related benefits to Wichita Ltd.

(see Note 15A to the Consolidated Financial Statements as at

December 31, 2025)

and to Yaarh-Looking To The Future Ltd.

(see Note 15B to the Consolidated Financial Statements

as at December 31, 2025)

include an amount of USD 214 thousand (year ended December 31, 2024: USD 189 thousand)

and an amount of USD 305 thousand (year ended December 31, 2024: USD 264 thousand), respectively, recorded as

selling and marketing expenses.

In addition, management fees to FIMI

(see Note 15C to the Consolidated Financial Statements as at December 31, 2025)

include an amount of USD 56 thousand (year ended December 31, 2024: USD 36 thousand) recorded as selling and

marketing expenses.

16

3.

Liquidity

A.

Operating activities

Cash flows generated from operating activities for the year ended December 31, 2025, amounted to USD 15,697

thousand, compared with the cash flows generated from operating activities of USD 13,831 thousand for the year

ended December 31, 2024. The increase in cash flows from operating activities generated mainly from increase in

trade payables as well as from other non-cash adjustments and changes in assets and liabilities.

B.

Investing activities

Cash flows used for investing activities in the year ended December 31, 2025, amounted to USD 3,521 thousand

compared with cash flows used for investing activities of USD 7,540 thousand in the year ended December 31, 2024.

In 2025 cash flows were mostly used for investment in the acquisition of SI and the real estate it is located on

.

These

outflows were partially funded by proceeds from bank deposits.

C.

Financing activities

Cash flows used for financing activities for the year ended December 31, 2025, amounted to USD 5,301 thousand,

representing a dividend payment (announced on March 27, 2025) paid in June 2025.

Cash flows used for financing activities for the year ended December 31, 2024, amounted to USD 10,072 thousand,

representing a dividend payment (announced on January 24, 2024) that was paid in March 2024

.

4.

Financing sources

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

5.

External factors effects

-

Global business environment - see paragraph 1.B above.

-

For the effect of ‘Risk Factors’ - see paragraph 1.N 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.

17

6.

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, 2025, 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 2025,

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 continued 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 26, 2026.

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, 2025

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

27-28

Notes to the Consolidated Financial Statements

29-60

- -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

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

5,

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, 2025, and its

consolidated financial performance and its consolidated cash flows for the year then ended in

accordance with IFRS Accounting Standards.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the

Auditors’ Responsibilities for the Audit

of the Consolidated Financial Statements

section of our report. We are independent of the Company in

accordance with the International Ethics Standards Board for Accountants’

International Code of Ethics

for Professional Accountants (including International Independence Standards)

(IESBA Code), as

applicable to audits of financial statements of public interest entities, 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 2F and 17A to the consolidated financial statements, revenues for the year ended

December 31, 2025, are USD 47.8 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-cancellable 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 2025.

Other Information in the Company's 2025 Annual Report

Other information consists of the information included in the Annual Report, other than the consolidated

financial statements and our auditor's report thereon. Management is responsible for the other

information.

Our opinion on the consolidated financial statements does not cover the other information and we do

not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the

other information and, in doing so, consider whether the other information is materially inconsistent

with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears

to be materially misstated. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report in

this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated

Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with IFRS Accounting Standards, and for such internal control as management

determines is necessary to enable the preparation of consolidated financial statements that are free from

material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the

Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless management either intends to liquidate

the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting

process.

21

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements

as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with ISAs will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the

basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain

professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk

of not detecting a material misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the

override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events

or conditions that may cast significant doubt on the Company’s ability to continue as a going

concern. If we conclude that a material uncertainty exists, we are required to draw attention in our

auditor's report to the related disclosures in the consolidated financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence

obtained up to the date of our auditor's report. However, future events or conditions may cause the

Company to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.

•

Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the

financial information of the entities or business units within the group as a basis for forming an

opinion on the consolidated financial statements. We are responsible for the direction, supervision

and review of the audit work performed for the purposes of the group audit. We remain solely

responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

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 ESEF-

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 26,

6

202

, 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 26, 2026

A Member of Ernst & Young Global

23

PAYTON PLANAR MAGNETICS LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

December 31,

2025

2024

Note

$ thousands

$ thousands

Current assets

Cash and cash equivalents

3

30,315

23,148

Short-term deposits

4

27,933

34,940

Trade accounts receivable

5

7,875

7,925

Other accounts receivable

6

1,534

2,027

Inventory

7

5,339

3,922

Total current assets

72,996

71,962

Non-current assets

Investment in equity accounted investee

8

1,388

1,545

Other investment

8

2,733

2,733

Property, plant and equipment

9

13,992

9,611

Intangible assets

10

3,901

22

Deferred taxes

14D

70

-

Total non-current assets

22,084

13,911

Total assets

95,080

85,873

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

24

PAYTON PLANAR MAGNETICS LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

December 31,

2025

2024

Note

$ thousands

$ thousands

Liabilities and equity

Current liabilities

Trade payables

2,521

1,261

Other payables

11

3,917

3,010

Current income tax liability

1,694

1,244

Total current liabilities

8,132

5,515

Non-current liabilities

Employee benefits

13

537

473

Deferred tax liabilities

14D

1,223

1,089

Total non-current liabilities

1,760

1,562

Total liabilities

9,892

7,077

Equity

Share capital

16

4,836

4,836

Share premium

8,993

8,993

Reserve from transaction with controlling shareholder

792

311

Retained earnings

70,567

64,656

Total equity

85,188

78,796

Total liabilities and equity

95,080

85,873

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 26, 2026

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,

2025

2024

Note

$ thousands

$ thousands

Revenues

17A

47,825

50,826

Cost of sales

17B

(26,460)

(28,709)

Gross profit

21,365

22,117

Development costs

(1,967)

(1,672)

Selling and marketing expenses

17C

(2,448)

(2,203)

General and administrative expenses

17D

(5,724)

(4,703)

Other income (expenses), net

17E

(501)

7

Operating profit

10,725

13,546

Finance income

17F

2,877

2,404

Finance expenses

17F

(35)

(64)

Finance income, net

2,842

2,340

Share of profits (loss) of equity accounted investee

(22)

235

Profit before taxes on income

13,545

16,121

Taxes on income

14F

(2,471)

(2,810)

Net Profit

11,074

13,311

Other comprehensive income (loss) items that

will not be transferred to profit and loss

Remeasurement of defined benefit plan

13B

123

41

Share of other comprehensive income (loss) of equity

accounted investee

15

(17)

Total other comprehensive

income, net of tax

138

24

Total comprehensive income

11,212

13,335

Earnings per share

Basic and diluted earnings per share (in $)

19

0.63

0.75

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, 2024

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

-

-

-

311

-

311

Balance at December 31, 2024

17,670,775

4,836

8,993

311

64,656

78,796

Net profit

-

-

-

-

11,074

11,074

Other comprehensive income

-

-

-

-

138

138

Total comprehensive income

-

-

-

-

11,212

11,212

Transactions with owners,

recognized directly in equity

Dividend to owners

-

-

-

-

(5,301)

(5,301)

Equity component of transaction

with controlling shareholder

-

-

-

481

-

481

Balance at December 31, 2025

17,670,775

4,836

8,993

792

70,567

85,188

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,

2025

2024

Note

$ thousands

$ thousands

Operating activities

Net Profit

11,074

13,311

Adjustments:

Depreciation and amortization

9, 10

921

768

Taxes on income

14F

2,471

2,810

Share of loss (profits) of equity accounted investee

8

22

(235)

Gain on sale of property, plant and equipment, net

17E

-

(7)

Share-based compensation provided by controlling

shareholder

481

311

Finance income, net

17F

(2,354)

(2,205)

12,615

14,753

Decrease in trade accounts receivable

5

1,074

1,621

Decrease in other accounts receivable

6

550

769

Decrease in inventory

7

454

10

Increase (decrease) in trade payables

404

(2,492)

Increase in other payables

11

443

478

Change in employee benefits

13

216

142

15,756

15,281

Interest received

17F

2,300

1,886

Interest paid

17F

-

(32)

Income taxes paid, net

14

(2,359)

(3,304)

Cash flows generated from operating activities

15,697

13,831

Investing activities

Proceeds from (investments in) deposits, net

4

6,769

(6,149)

Dividend received from an equity accounted investee

8

154

77

Investment in other investment

8

-

(1,833)

Acquisition of initially consolidated subsidiary (a)

(5,239)

-

Acquisition of property, plant and equipment

9

(5,205)

(479)

Investments in marketable securities

-

(303)

Proceeds from sale of property, plant and equipment

9, 17E

-

27

Proceeds from sale of marketable securities

-

1,120

Cash flows used for investing activities

(3,521)

(7,540)

Financing activities

Dividend paid

16B

(5,301)

(10,072)

Cash flows used for financing activities

(5,301)

(10,072)

Net increase (decrease) in cash and cash equivalents

6,875

(3,781)

Cash and cash equivalents at beginning of the year

23,148

26,921

Effect of exchange rate fluctuations on cash and cash equivalents

292

8

Cash and cash equivalents at end of the year

30,315

23,148

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

28

PAYTON PLANAR MAGNETICS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended December 31,

2025

2024

$ thousands

$ thousands

(a)

Acquisition of initially consolidated subsidiary:

The subsidiary's assets and liabilities at date of acquisition:

Working capital (excluding cash and cash equivalents)

(1,841)

-

Property, plant and equipment

(171)

-

Intangible assets

(1,193)

-

Goodwill

(2,717)

-

Deferred taxes

322

-

Payables for acquisition of investment in subsidiary

361

-

(5,239)

-

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

PAYTON PLANAR MAGNETICS LTD.

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PAYTON PLANAR MAGNETICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

32

amendments to other accounting standards, on its consolidated financial statements.

PAYTON PLANAR MAGNETICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

35

disclosed in Note 12 on financial instruments.

instruments.

financial instruments.

PAYTON PLANAR MAGNETICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

37

PAYTON PLANAR MAGNETICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8: -

INVESTMENTS IN INVESTEES AND OTHER (Cont.)

38

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

thousand).

PAYTON PLANAR MAGNETICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

40

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December 31, 2024: 7.60 years).

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services).

C.

Reserve from transaction with controlling shareholder

On April 21, 2024, upon the closing of the transaction resulting in the a change of control of

the Parent Company (the FIMI transaction), the Parent Company 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 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 amounted 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)

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Regarding agreements with related parties and shareholders - see Note 15A, 15B and 15C.

earnings per share.

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60