Tel Aviv Stock Exchange : Financial results for the Second quarter ended June 30, 2022

August 8, 2022

411333.docx

THE TEL-AVIV STOCK EXCHANGE LTD REPORTED SECOND QUARTER 2022 RESULTS

August 8, 2022 (Tel Aviv) -Tel Aviv Stock Exchange Ltd (TASE:TASE) today announced its financial results for the Second quarter ended June 30, 2022.1

General

TASE concludes a second consecutive quarter with over 90 million in revenues. In addition, the adjusted EBITDA in the quarter totaled approximately NIS 36 million, 36% over the corresponding quarter last year, and the EBITDA margin reached a new record of 39% in the quarter.

1.1 Highlights of TASE's Results for the Second Quarter of 2022

Second Quarter Results

• TASE revenues amounted to NIS 91 million in the Second quarter of 2022, an increase of 8% compared to the corresponding quarter last year. Revenue increased in the quarter across all operations. In the second quarter of 2021, following the signing of an agreement between TASE and the Ministry of Finance, one-time income in an amount of NIS 3.8 million was included with respect to listing fees for government bonds listed in the lending pool.
• Adjusted EBITDA increased in the second quarter of 2022 to NIS 35.8 million compared to NIS 26.2 million in the corresponding quarter last year, an inter-quarter increase of 36%. The increase is due to an 8% rise in revenue as a result of the increase across all operations and a decrease of 4% in expenses, primarily with respect to the timing of marketing costs.

Adjusted net profit amounted to NIS 14.3 million in the second quarter of 2022, compared to NIS 12.3 million adjusted net profit in the corresponding quarter last year, an increase of 16%. The increase is due both to an 8% rise in revenue as a result of the higher volume of activity and to a 3% decrease in expenses with respect to the timing of marketing costs, and was partly offset by the transition to financing expenses as a result of a negative return on the Company's investments in financial assets held for trade and an increase in the tax expense.

1.2 Business and Corporate Highlights for the Second Quarter and the first half of 2022

BUSINESS HIGHLIGHTS

• The average daily trading volume of shares in the second quarter of 2022 amounted to approximately NIS 2.4 billion, an increase of 27% compared to the volumes in the corresponding quarter in the previous year.
• The average daily trading volume of corporate bonds in the second quarter of 2022 amounted to approximately NIS 1.3 billion, a 40% increase compared to the volumes in the corresponding quarter in the previous year. The average daily trading volume of government bonds in the Second quarter of 2022 amounted to approximately NIS 2.3 billion, a 19% decrease compared to the volumes in the corresponding quarter in the previous year.

1 The Board of Directors of TASE today approved the Consolidated Financial Statement as of June 30, 2022. The consolidated financial statements of the Company were prepared in accordance with IFRS. This is an English translation of parts of the information included in the approved financial statements. In the event of any discrepancy between the original Hebrew and the translation to English, the Hebrew version alone will prevail. The consolidated financial statements in the English Version will be published on the website by the end of September 2022.

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• The average daily trading volume of derivatives in the second quarter of 2022 amounted to 161 thousand units a day, compared with 145 thousand units in the corresponding quarter in the previous year., an increase of 11%.
• The average daily trading volume of mutual funds in the second quarter of 2022 amounted to NIS 874 million compared with NIS 864 million in the corresponding quarter in the previous year.
• In the Second quarter of 2022, NIS 6.8 billion was raised on TASE in shares, a decrease of 14% over the corresponding quarter in the previous year, of which NIS 0.025 billion was raised in 1 IPO's (compared to NIS 4.7 billion raised in 30 IPOs during the second quarter of 2021). In the first half of 2022, NIS 14.4 billion was raised on TASE in shares, a decrease of 17% over the corresponding period in the previous year, of which a total of NIS 1.4 billion was raised in 9 IPOs (94 IPOs in total during the entire year of 2021).
• In the second quarter of 2022, NIS 20.2 billion was raised on TASE in corporate bonds, an increase of 39% over the corresponding quarter in the previous year and NIS 9.9 billion was raised on TASE in

government bonds, a decrease of 72% over the corresponding quarter in the previous year.

• The leading indices TA-35,TA-90,TA-125 and TA-SME60 have decreased by 9.5%, 11.6%, 10.2% and 15.3% respectively, in the second quarter of 2022 and decreased by 7.5%, 9.6% ,8.4% and 18.7% respectively, in the first half of 2022.
• A 3% decrease in the balance of assets in custodianship at TASE-CH in 2022 to an amount of NIS 2.9 trillion, compared to the balance of assets in the corresponding period.
• The marketing and distribution expenses of the Company totaled NIS 1.6 million in the second quarter of 2022, a decrease of 72% over the corresponding quarter in the previous year. The marketing and distribution expenses of the Company totaled NIS 7.3 million in the first half of 2022, similar to the first half of the previous year. The company intends to launch new marketing campaign in approximately NIS 3.5 million during the third quarter of 2022.
• Net financing expenses in the first half of 2022 of the Company totaled NIS 8.6 million, as compared to net financing income of NIS 1.5 million in the corresponding period last year. The transition to financing expenses this quarter resulted from a negative return of approximately 4.25% on the
  Company's investments in marketable securities' portfolios comprising of Israeli Government bonds, as compared to a positive return of approximately 0.75% in the corresponding period last year.
• TASE to initiate the first stage of its declared buyback intention in an amount of up to NIS 36 million over six months. For additional information, see Section 4.2 below.
• TASE announces joining of Jump Trading - one of Europe's top-tier international trading entities, which operates as a provider of liquidity and trades on multiple exchanges around the world - as a remote member on TASE.

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2. Presented below is information relating to the results for the second quarter of 2022 (NIS, in thousands)

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021 Statement of Profit or Loss

	Quarter ended	Difference
	30.06.2022		30.06.2021		Amount	%
Revenue from services	90,986		84,592		6,394	8%
Expenses	68,145		70,422		(2,277)	(3%)
Profit before financing income, net	22,841		14,170		8,671	61%
Financing income (expenses)	(3,416)		1,338		(4,754)	-
Taxes on income	5,220		3,435		1,785	52%
Net profit	14,205		12,073		2,132	18%
% of total revenue from services	15.6%		14.3%
for the quarter

• Revenue in the second quarter of 2022 amounted to NIS 91.0 million, compared to revenue of NIS 84.6 million in the corresponding quarter last year, an increase of 8%. Revenue increased in the quarter across all operations. In the second quarter of 2021, following the signing of an agreement between TASE and the Ministry of Finance, one-time income in an amount of NIS 3.8 million was included with respect to listing fees for government bonds listed in the lending pool.
• The costs in the second quarter of 2022 totaled approximately NIS 68.1 million, compared to costs of NIS 70.4 million in the corresponding quarter last year, a decrease of 3%. The decrease in the costs is due mainly to a decrease in marketing expenses (approx. 5% of total costs), as a result of the timing of performance of campaigns, which was partly offset by an increase in employee benefits expenses and an increase in depreciation expenses (approx. 2% of total costs).
• Net financing expenses in the second quarter of 2022 totaled NIS 3.4 million, as compared to net financing income of NIS 1.3 million in the corresponding quarter last year. The transition to financing expenses this quarter resulted from a negative return of approximately 1.86% on the Company's investments in marketable securities' portfolios comprising of Israeli Government bonds, as compared to a positive return of approximately 0.73% in the corresponding quarter last year.
• Tax expenses, net in the second quarter of 2022 totaled NIS 5.2 million, as compared to NIS 3.4 million in the corresponding quarter last year. The increase in expenses was due to the higher pre-tax profit and the reduction in the fair value of the Company's investments in government bonds for which deferred taxes were not created.
• The net profit in the second quarter of 2022 totaled NIS 14.2 million, compared to NIS 12.1 million in the corresponding quarter last year, an increase of 18%. The increase in profit was due to higher revenue from services and to a decrease in costs, which were partly offset by the transition to financing expenses and the increase in the tax expense, as described above.

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		Quarter ended
	30.06.2022	30.06.2021	Difference
	%
Weighted average number of ordinary shares
used to compute
Basic earnings per share	102,513,222	101,224,600	1.3%
Diluted earnings per share	104,696,078	104,642,251	0.1%
Basic earnings per share in NIS	0.139	0.119	17%
Diluted earnings per share in NIS	0.136	0.115	18%

The revenue in the second quarter of 2022-

below is the composition of the second quarter's revenue, compared to the corresponding quarter last year:

Revenue from services

Trading and clearing commissions

	Quarter ended
	% of the		% of the
30.06.2022	Company's	30.06.2021	Company's	% change
total	total
	revenues		revenues
35,872	39%	31,649	37%	13%

18% of the increase in revenue from trading and clearing commissions is due to an increase in the trading volumes between the periods, particularly with respect to shares (10% increase in revenue) and corporate bonds (5% increase in revenue). In opposition, a reduction in the effective commission rate, primarily in shares and mutual funds (mainly as a result of the increase in the volume of transactions that are affected by the existence of a maximum commission), deducted 5% from the increase in revenue.

Listing fees and levies

20,256

22%

18,347

22%

10%

7% of the increase in revenue from listing fees and levies is due to an increase in revenue from annual levies, mainly as a result of an increase in the number of companies and funds that pay an annual levy compared to the corresponding period last year, as well as an increase of 5% in revenue from listing fees. In opposition, revenue from examination fees decreased by 2%, mainly as a result of the reduction in the number of IPO compared to the corresponding quarter last year.

Clearing House services

18,345

20%

16,945

20%

8%

6% of the increase in revenue from Clearing House services is due to an increase in revenue from Clearing House services to members. In addition, 1% of the increase in revenue is due to the rise in revenue from custodian fees as a result of the increase in the value of assets that are held in custodianship at TASE-CH compared to the corresponding period last year and an increase of 1% in revenue from Clearing House services to companies.

Data distribution and connectivity services

15,076

17%

13,195

16%

14%

7% of the increase in revenue from data distribution and connectivity services is due to a rise in revenue from connectivity services (of which 3% with respect to prior periods) and 4% of the increase is due to an increase in revenue from the distribution of trading data and derivative information to business customers outside Israel, as a result of the increase in the volume of activity and the updating of the pricelist in the second quarter of 2022. In addition, 2% of the increase in revenue is due to an increase in revenue from the sale of information through TASE's API service.

1,437

2%

4,456

5%

(68%)

The revenue for the quarter includes revenue of NIS 0.5 million from the sale of technological consulting services, revenue of NIS 0.5 million from the Conference Center

Other revenue and trade openings, and revenue of NIS 0.3 million from the rent of an office floor. The reduction in revenue is due to the effect of an agreement signed between TASE the Ministry

of Finance in May 2021, which provides for the payment to the Company of a settlement amount of NIS 3.8 million in respect of government bonds that were listed in the lending pool in the period up to December 31, 2020.

	Total revenue		90,986		100%		84,592		100%		8%
	from services
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Adjusted net profit and adjusted EBITDA data2

Quarter ended	Difference
30.06.2022	30.06.2021	Amount	%

Adjusted EBITDA for the quarter:

Profit before financing income (expenses), net

Adjustments:

Share-based payment expenses

Depreciation and capital losses

Adjusted EBITDA for the quarter:

• of total revenue from services for the quarter

Adjusted profit for the quarter:

Profit for the quarter

Adjustments:

22,841	14,170	8,671
132	236	(104)
12,782	11,821	961
35,755	26,227		9,528	36%
39.3%	31.0%
14,205	12,073	2,132

Share-based payment expenses

Adjusted profit for the quarter:

• of total revenue from services for the quarter

132	236	(104)
14,337	12,309		2,028	16%
15.8%	14.6%

• The adjusted EBITDA in the second quarter of 2022 totaled NIS 35.8 million, compared to NIS 26.2 million in the corresponding quarter last year, an increase of 36%. The increase is due to an 8% rise in revenue as a result of the increase across all operations and a decrease of 4% in expenses, primarily with respect to the timing of marketing.
• The adjusted profit in the second quarter of 2022 totaled NIS 14.3 million, compared to NIS 12.3 million in the corresponding quarter last year, an increase of 16%. The increase is due both to an 8% rise in revenue as a result of the higher volume of activity and to a 3% decrease in expenses with respect to the timing of marketing costs, and was partly offset by the transition to financing expenses as a result of a negative return on the Company's investments in financial assets held for trade and an increase in the tax expense.

2 Adjusted data for the profit and EBITDA (operating profit before interest, tax, depreciation and amortization): These data are based on the data in the Company's financial statements for the reported periods, after eliminating the effects of certain events and factors, as explained above, that are not typical of the Company's operating activities.

It is hereby clarified that the data presented above are not presented in accordance with generally accepted accounting principles and do not reflect the Company's cash flows from operating activities or its operating profits and net profit and, accordingly do not constitute a substitute for the data in the Company's financial statements regarding the operating profit and/or the net profit. Nevertheless, in the Company's opinion, these data enable a better comparison to be made of the Company's performance in the reported periods.

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