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
Short-term deposits and marketable securities
4
Trade accounts receivable
5
Other accounts receivable
6
Inventory
7
Total current assets
Non-current assets
Investment in equity accounted investee
8
Other investment
8
Property, plant and equipment
9
Intangible assets
Total non-current assets
Total assets
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
Other payables
10
Current income tax liability
Total current liabilities
Non-current liabilities
Employee benefits
12
Deferred tax liabilities
13D
Total non-current liabilities
Total liabilities
Equity
Share capital
15
Share premium
Reserve from transaction with controlling shareholder
Retained earnings
Total equity
Total liabilities and equity
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
Cost of sales
16B
(28,709 )
(30,753 )
Gross profit
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
(245 )
Operating profit
Finance income
16F
Finance expenses
16F
(64 )
(142 )
Finance income, net
Share of profits of equity accounted investee
Profit before taxes on income
Taxes on income
13F
(2,810 )
(3,234 )
Net Profit
Other comprehensive income (loss) items that
will not be transferred to profit and loss
Remeasurement of defined benefit plan
12B
Share of other comprehensive loss of equity accounted
investee
(17 )
(6 )
Total other comprehensive
income, net of tax
Total comprehensive income
Earnings per share
Basic and diluted earnings per share (in $)
18
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
Net profit
-
Other comprehensive income
-
Total comprehensive income
-
Transactions with owners,
recognized directly in equity
Dividend to owners
-
(8,482 )
(8,482 )
Balance at December 31, 2023
Net profit
-
Other comprehensive income
-
Total comprehensive income
-
Transactions with owners,
recognized directly in equity
Dividend to owners
-
(10,072 )
(10,072 )
Equity component of transaction
with controlling shareholder
(Note 1C(3))
-
Balance at December 31, 2024
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
Adjustments:
Depreciation
9
Taxes on income
13F
Share of profits of equity accounted investee
8
(235 )
(218 )
Loss (gain) on sale of property, plant and equipment, net
16E
(7 )
Impairment loss of an option in an equity accounted investee
8,16E
Share-based compensation provided by controlling
shareholder
1C(3)
Finance income, net
16F
(2,205 )
(1,779 )
Decrease in trade accounts receivable
5
Decrease (increase) in other accounts receivable
6
(541 )
Decrease in inventory
7
Increase (decrease) in trade payables
(2,492 )
Increase (decrease) in other payables
10
(128 )
Change in employee benefits
12
Interest received
16F
Interest paid
16F
(32 )
(23 )
Income taxes paid, net
13
(3,304 )
(2,552 )
Cash flows generated from operating activities
Investing activities
Investments in deposits, net
4
(6,149 )
(2,321 )
Dividend received from an equity accounted investee
8
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
Proceeds from sale of marketable securities
4
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 )
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash and cash equivalents
(168 )
Cash and cash equivalents at end of the year
The accompanying notes are an integral part of these consolidated financial statements.
PAYTON PLANAR MAGNETICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
28
GENERAL
A.
Reporting entity
in Israel
The address of the Company’s registered office is 3 Ha’avoda Street, Ness
The Company is a subsidiary of Payton Industries Ltd.
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”).
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.
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
PAYTON PLANAR MAGNETICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
30
ACCOUNTING POLICIES
The following accounting policies have been applied consistently in the financial statements for
all periods presented, unless otherwise stated.
Basis of presentation of the financial statements
("IFRS") and its interpretations adopted by the International Accounting Standards Board
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.
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
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
Property, plant and equipment
lives of each part of the assets, as follows:
% | ||
Buildings (except land component) | 2-15 | (mainly 2%) |
Land under finance lease | 1.5 | |
Machinery and equipment | 15-33 | (mainly 15%) |
Motor vehicles | 15 | |
Office equipment | 7-33 | (mainly 7%) |
Computers | 20 -33 |
NOTE 2: -
ACCOUNTING POLICIES (Cont.)
Revenue
The Group applies International Financial Reporting Standard 15 (“IFRS 15” or “the
standard”) which
provides guidance on revenue recognition. According to IFRS 15, the Group
recognizes revenue from goods with no alternative use over time.
The standard describes a five step model for recognizing revenue from contracts with
customers:
(1)
Identifying the contract with the customer.
(2)
Identifying distinct performance obligations in the contract.
(3)
Determining the transaction price.
(4)
Allocating the transaction price to distinct performance obligations.
(5)
Recognizing revenue when the performance obligations are satisfied.
Identifying the contract
The Group accounts for a contract with a customer only when the following conditions are
met:
(a)
The parties to the contract have approved the contract (in writing, orally or according to
other customary business practices) and they are committed to satisfying the obligations
attributable to them;
(b) The Group can identify the rights of each party in relation to the goods that will be
transferred;
(c)
The Group can identify the payment terms for the goods that will be transferred;
(d)
The contract has a commercial substance (i.e. the risk, timing and amount of the entity’s
future cash flows are expected to change as a result of the contract); and
(e)
It is probable that the consideration, to which the Group is entitled to in exchange for the
goods transferred to the customer, will be collected.
Identifying performance obligations
In accordance with the standard, the Group should identify distinct performance obligations in
contract with customers
.
The Group is characterized by transactions with a one performance
obligation in each contract.
Determining the transaction price
The transaction price is the amount of the consideration to which the Group expects to be
entitled in exchange for the goods promised to the customer.
NOTE 2: -
ACCOUNTING POLICIES (Cont.)
Satisfaction of performance obligations
Revenue is recognized when the Group satisfies a performance obligation by transferring
control over promised goods to the customer.
The Group’s
revenue is generated from the sale of goods manufactured according to customer
specifications and based mainly on NCNR terms (non-cancelable and non-refundable). The
Group is entitled to reimbursement of the costs incurred to date, including a reasonable
margin. Customer-specific goods cannot be sold to any other customer and therefore have no
alternative use.
Contract asset
A contract asset is recognized when the Group may recognize revenue but still has a
contractual obligation to perform, such as delivery, before it can receive consideration for
goods sold to the customer.
Contract assets are classified as receivables when the rights in their respect become
unconditional. In the following year, as the contractual obligation is completed, contract assets
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
PAYTON PLANAR MAGNETICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
33
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
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
PAYTON PLANAR MAGNETICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
34
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 | - | - | - | - | - |
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
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 | |
INVESTMENTS IN INVESTEES AND OTHER
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
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
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
.
PAYTON PLANAR MAGNETICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
37
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 |
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
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
PAYTON PLANAR MAGNETICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
39
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
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.
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
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate as a result of changes in foreign currency exchange rates.
Since most of the Group's sales are in U.S. dollar, the Group's gross profit is exposed to
the changes in exchange rates of the U.S. dollar in relation to the NIS and GBP, with
regards to local labor costs and other operating costs, and in relation to the Chinese
currency, with regards to costs of raw materials. The Group uses derivatives, from time to
time, as a tool for economic hedging, especially in order to hedge labor costs and other
costs paid in NIS.
NOTE 11: -
FINANCIAL INSTRUMENTS (Cont.)
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) |
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
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
NOTE 11: -
FINANCIAL INSTRUMENTS (Cont.)
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
EMPLOYEE BENEFIT ASSETS AND LIABILITIES
Post-employment benefits
According to the labor laws and Severance Pay Law in Israel, the Company is required to pay
compensation to an employee upon dismissal or retirement or to make current contributions in
defined contribution plans pursuant to section 14 of the Severance Pay Law, as specified below.
The Group's liability is accounted for as a post-employment benefit. The computation of the
Group's employee benefit liability is made according to the current employment contract based on
the employee's salary and employment term which establish the entitlement to receive the
compensation.
A.
Defined contribution plans
Section 14 to the Severance Pay Law, 1963 applies to part of the compensation payments,
pursuant to which the fixed contributions paid by the Group into pension funds and/or policies
of insurance companies release the Group from any additional liability to employees for
whom said contributions were made. These contributions and contributions for benefits
represent defined contribution plans.
Year ended December 31 , | ||
2024 | 2023 | |
$ thousands | $ thousands | |
Expenses in respect of defined contribution plans | 506 | 481 |
B.
Defined benefit plans
The Group accounts for that part of the payment of compensation that is not covered by
contributions in defined contribution plans, as above, as a defined benefit plan for which an
employee benefit liability is recognized and for which the Group deposits amounts in
severance pay funds and in qualifying insurance policies. The net liability for the defined
benefit plan is presented under non-current liabilities.
Risks associated
with the Group’s liability for defined benefit obligations refer to deviations
in salary increases, deviations in assets performances from the expectation, as well as changes
in the interest rate environment.
For sensitivity analyses, reflecting the effect of changes in salary increase assumptions and
interest rate, see 4 hereinafter.
December 31, | |||
2024 | 2023 | ||
$ thousands | $ thousands | ||
Present value of defined benefit obligation * ) | 2,329 | 2,008 | |
Fair value of plan assets | 1,856 | 1,627 | |
Net recognized liability for defined benefit obligations | 473 | 381 | |
* ) Including benefits in respect of adaption grants | |||
NOTE 12: -
EMPLOYEE BENEFIT ASSETS AND LIABILITIES (Cont.)
1.
Changes in the defined benefit obligation
2024 | 2023 | |
$ thousands | $ thousands | |
Defined benefit obligations as at January 1 | 2,008 | 1,944 |
Expenses recognized in profit or loss: | ||
Current service costs | 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 |
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
PAYTON PLANAR MAGNETICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
46
TAXES ON INCOME
A.
Tax laws applicable to the Group
’s
companies
1.
The Dollar regulations
The Company, being a "foreign investment company", elected to be taxed as from the year
2009, based upon its results in dollars and according to applicable income tax regulations
(hereinafter - "the Dollar regulations").
2.
Tax benefits under the Law for the Encouragement of Capital Investments - 1959 ("the
Investment Law")
The Company is subject to the Law for the Encouragement of Capital Investments - 1959
which was amended last in 2010 (hereinafter -
“the Amendment to the Law”). The
Amendment to the Law provisions applies to preferred income derived or accrued in 2011
and thereafter by a preferred company, per the definition of these terms in the Amendment
to the Law.
The Amendment provides that only companies in Development Area A will be entitled to
the grants track and that they will be entitled to receive benefits under this track and under
the tax benefits track at the same time. In addition, a preferred enterprise track was
introduced, which mainly provides
a uniform and reduced tax rate for all the company’s
income entitled to benefits. On August 5, 2013 the Knesset passed the Law for Changes in
National Priorities (Legislative Amendments for Achieving Budget Objectives in the
Years 2013 and 2014) - 2013, which raised the tax rates on preferred income as from the
2014 tax year as follows: 9% for Development Area A and 16% for the rest of the country.
As stated in Note 1, the Company's factory is not located in Development Area A, and
therefore the Company's tax rate on preferred income is 16%.
The Amendment to the Law also provides that no tax will apply to a dividend distributed
out of preferred income to a shareholder that is a company, for both the distributing
company and the shareholder. A tax rate of 20% shall apply to a dividend distributed out
of preferred income to an individual shareholder or foreign resident, subject to double
taxation prevention treaties.
The Company complies with the conditions provided in the amendment to the Law for the
Encouragement of Capital Investments for inclusion in the scope of the tax benefits track.
On November 15, 2021 the Economic Efficiency Law (Legislative Amendments for the
2021 and 2022 Budget Years) - 2021 (hereinafter: "the Economic Efficiency Law") was
published as well as a Temporary Order to the Law for the Encouragement of Capital
Investments - 1959 (hereinafter: "the temporary order"), which offers a reduced tax rate
arrangement to companies that received an exemption from corporate tax under the
aforesaid law. The temporary order provided that companies that choose to apply the
temporary order, which is effective until November 14, 2022, will be entitled to a reduced
tax rate on the "release" of exempt profits (hereinafter: "the beneficiary corporate tax
rate"). The release of exempt profits makes it possible to distribute them at a reduced rate
of corporate tax at the company level based on the rate of the profits being distributed
pursuant to the conditions set forth in the Amendment.
NOTE 13: -
TAXES ON INCOME (Cont.)
The reduced corporate tax rate will be determined according to the rate of exempt profits
the company chooses to release from its entire exempt profits, and will be between 40%
and 70% of the corporate tax rate that would have applied to the revenue in the year it was
produced if it had not been exempt, but in any event no less than 6%.
Furthermore, a company that chooses to release its exempt profits and pay a beneficiary
corporate tax rate will be required to invest in its enterprise, within a period of 5 years
beginning from the tax year it elected, an amount calculated according to a formula
provided in the temporary order (30% of the exempt income multiplied by the corporate
tax rate and multiplied by the release rate). The investment will be made in productive
assets (with the exclusion of buildings), research and development in Israel and salaries to
new employees of the enterprise. Failure to comply with this condition will require the
company to pay additional corporate tax.
In addition, according to the Economic Efficiency Law an amendment was made to
Section 74 of the Law for the Encouragement of Capital Investments - 1959 with respect
to identifying the sources of dividend distributions as of August 15, 2021.
The Company applied the temporary order in 2022.
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%.
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.
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
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 | |
NOTE 13: -
TAXES ON INCOME (Cont.)
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 | |
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.
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
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
Dividends
The following dividends were paid by the Company:
Year ended December 31, | ||
2024 | 2023 | |
$ thousands | $ thousands | |
USD | 10,072 | - |
USD | - | 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
ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS
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
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 | |
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
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).
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
NOTE 16: -
ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS (Cont.)
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) | |
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
BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES
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 |
NOTE 17: -
BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES
(Cont.)
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.
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
D.
Commitments
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
PAYTON PLANAR MAGNETICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
59
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 | |
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.
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