AI assistant
Tel Aviv Stock Exchange Ltd. Earnings Release 2023
7071_rns_2024-03-06_61bcee68-a51e-4874-907c-e30390a5460a.pdf
Earnings Release
Open in viewerOpens in your device viewer
THE TEL-AVIV STOCK EXCHANGE LTD REPORTED FOURTH QUARTER AND YEAR 2023 RESULTS
March 6, 2024 Tel Aviv Stock Exchange Ltd (TASE:TASE) today announced its financial results for the year ended December 31, 2023. 1
1. General
- TASE continue to achieve strong financial results. The revenue in the fourth quarter of 2023 totaled to NIS 101.4 million, and increased by 18% compared to the corresponding quarter of 2022. Adjusted net profit increased significantly by 70% in the fourth quarter of 2023 to NIS 22.7 million, compared to NIS 13.3 million in the corresponding quarter last year and the Adjusted EBITDA amounted in the fourth quarter of 2023 to NIS 40.1 million, increased by 25%, compared to corresponding quarter last year.
- In 2023, TASE purchased appx. 8,308 thousand of its ordinary shares in consideration for NIS 155.3 million.
- On 14.12.2023, the Board of Directors of TASE approved a plan concerning the Arrangement Shares (hereafter: "the plan"). Within the framework of the plan, it was agreed that, subject to the payment by TASE of a special dividend in an amount of NIS 2.5 per shares to all shareholders at TASE (see further details below), the five TASE members that hold 17,156,677 Arrangement Shares will grant an irrevocable power of attorney to Leader & Co. Investment House Ltd. (hereafter: "Leader") for the sale of the aforesaid shares.
On January 2, 2024, a Special dividend of NIS 231.1 million (representing NIS 2.5 per share) was paid (see further details below in section 1.2.2.4).
On 24.1.2024, the book building process was completed for the acquisition of the 17,156,677 Arrangement Shares and TASE received NIS 242 million that was carried directly to the equity (see further details below in section 1.2.2.6).
- Today, March 6, 2024 the Board of Directors decided on the distribution of a dividend to the shareholders of the Company in the amount of NIS 41.6 million (representing NIS 0.45 per share on the date of the resolution).
- In addition, the Board of Directors of the Company approved a dividend distribution policy according to which, starting in its financial statements for 2024 through to its financial statements for 2026 (hereafter: "Dividend Distribution Policy", the Company will work to distribute to its shareholders a cash dividend at a rate of 50% of the annual net profit as per the Company's consolidated annual financial statements, this on the date of approval of the annual financial statements (see section 1.2.2.3 here in after).
1 The Board of Directors of TASE today approved the Consolidated Financial Statement as of December 31, 2023. The consolidated financial statements of TASE were prepared in accordance with IFRS GAAP.
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 April 2024.
1.1 Highlights of TASE's Results for 2023 and Fourth Quarter of 2023
2023 Results:
- TASE revenues amounted to NIS 389.9 million in the year 2023, an increase of 8% compared to the previous year. The increase in revenue is due to the increased activity of TASE, as described below. Eliminating the non-recurring effect of an update to the estimated period of revenue recognition from listing fees recorded in the corresponding period last year, in an amount of NIS 4.3 million. The increase in revenue totals 9%. The increase is comprised of revenue from trading and clearing (4% of total revenue) and revenue other than from trading and clearing (5% of total revenue).
- Net financing income in 2023 totaled NIS 11.3 million, compared to net financing expenses of NIS 13.2 million in 2022. The transition to financing income in the period is due to a positive yield of 3.0% on the Company's investments in Israeli Government bonds managed in marketable securities' portfolios, compared to a negative yield of 7.0% in 2022. In addition, the increase in the interest rate on deposits increased the income by NIS 6.3 million.
- The adjusted EBITDA for 2023 totaled NIS 157.6 million, compared to NIS 135.2 million in 2022, an increase of 17% between the years. The increase is due mainly to an 8% rise in revenue, primarily as a result of the higher volume of activity, as described above, which was counteracted by 3% increase in adjusted expenses, primarily expenses with respect to employee benefits and computer and communication expenses, partly offset by a reduction in marketing expenses.
- The adjusted profit in 2023 totaled NIS 89.3 million, compared to NIS 51.4 million in 2022, an increase of 74%. The increase in profit is due mainly to an 8% rise in revenue and to the transition to financing income as a result of the positive return on the Company's investments in government bonds and an increase in the interest rates on deposits.
- As of December 31, 2023, TASE Group has cash balances of NIS 408.5 million and Israeli government bonds of NIS 90.2 million, total NIS 498.7 million. The TASE Group surplus liquidity amounts to NIS 145.5 million over regulatory liquidity requirements.
- Free cash flow increased in 2023 to NIS 100.9 million compared to NIS 62.5 million in the previous year, an increase of 61% mainly from operating activity.
Fourth Quarter Results
- TASE revenues amounted to NIS 101.4 million, compared to revenue of NIS 86.3 million in the corresponding quarter last year, an 18% increase. The increase in revenue is across all main activities, and consist of a 9% increase in revenue other than from trading and clearing, and a 9% increase in trading and clearing revenue, which was partly due to the 14% increase in the number of trading days compared to the number of trading days in the corresponding quarter last year (see further details below).
- The adjusted EBITDA in the fourth quarter of 2023 totaled NIS 40.1 million, compared to NIS 32.1 million in the corresponding quarter last year, an inter-quarter increase of 25%. The increase is due mainly to an increase in revenue from services, which was partly offset by an increase in expenses.
- The adjusted profit in the fourth quarter of 2023 totaled NIS 22.7 million, compared to an amount of NIS 13.3 million in the corresponding quarter last year, a 70% increase. The increase is due mainly to the increase in revenue and the transition to financing income this quarter, as compared to
financing expenses in the corresponding quarter last year which was partly offset by an increase in expenses.
1.2 Business and Corporate Highlights for the Year 2023
1.2.1 MARKET INDICATORS
- The average daily trading volume of shares in the year 2023 amounted to approximately NIS 2.0 billion, a decrease of 13% compared to the volumes in the previous year. In the fourth quarter of 2023 the average daily trading volume of shares amounted to approximately NIS 1.9 billion, a decrease of 3% over the corresponding quarter of the previous year.
- The average daily trading volume of corporate bonds in the year 2023 amounted to approximately NIS 1.02 billion, a decrease of 3% compared to the volumes in the previous year. The average daily trading volume of government bonds in the year 2023 amounted to approximately NIS 2.9 billion, a 20% increase compared to the volumes in the previous year. In the fourth quarter of 2023 the average daily trading volume of corporate bonds amounted to approximately NIS 0.96 billion, a decrease of 6% over the corresponding quarter of the previous year and the average daily trading volume of government bonds amounted to approximately NIS 3.5 billion, an 47% increase over the corresponding quarter of the previous year.
- The average daily trading volume of derivatives in 2023 amounted to 157.3 thousand units a day similar to previous year.
- The average daily redemptions/creations volume of mutual funds in 2023 amounted to NIS 1.4 billion compared with NIS 0.99 billion in the year of 2022, an increase of 44%. In the fourth quarter of 2023 the average daily redemptions/creations volume of mutual funds amounted to approximately NIS 1.5 billion, an increase of 20% over the corresponding quarter of the previous year.
- The average daily trading volume of T-bills in 2023 amounted to NIS 1.4 billion compared with NIS 0.78 billion in the year of 2022, an increase of 78%. In the fourth quarter of 2023 the average daily trading volume of T-bills amounted to approximately NIS 1.6 million, an increase of 31% over the corresponding quarter of the previous year.
- The leading indices TA-35, TA-90, TA-125 and TA-SME60 have increased by 3.8%, 4.3%, 4.1% and 7% respectively, in the year 2023 and by 1.1%, (0.2%), 0.7% and 4.4% respectively, in the fourth quarter of 2023.
- In the year 2023, NIS 8.5 billion was raised on TASE in shares, a 61% decrease over the previous year, of which a total of NIS 0.1 billion was raised in 1 IPOs (compared to NIS 2.3 billion was raised in 13 IPOs during the year of 2022).
In the year 2023, NIS 100 billion was raised on TASE in corporate bonds, an 9% increase over the previous year and NIS 116.3 billion was raised on TASE in government bonds, an increase of 180% over the previous year.
For information regarding changes in estimates reported in prior reporting periods see section 4.4 below and for information regarding deferred income from listing fees as of December 31,2023 and the forecast for recognition of income, see Appendix hereto– Deferred income from listing fees.
▪ There was no material change in the balance of assets in custodianship at TASE-CH in 2023 which amounted to approximately NIS 2.9 trillion.
1.2.2 BUSINESS HIGHLIGHTS FOR THE YEAR 2023
1.2.2.1 Disclosure on the effects of the "Swords of Iron" War
On 8.10.2023, the Government of Israel declared a state of war, which is still ongoing after the reporting date, in the wake of the terror attack on the State of Israel that took place on 7.10.2023 (hereafter: "the War"). On 8.10.2023, trading on TASE opened on schedule and all of the systems of TASE have been operating without disruption throughout the War. TASE, and the economy as a whole, were shaken, the Fear Index more than doubled, the exchange rate of the dollar surged, breaking the NIS 4 ceiling up to NIS 4.08, price drops were recorded on the equity and the bond markets, which were only curbed close to the end of October 2023, at which time the markets began to recover and the indices regained and even exceeded their pre-War levels. Overall, in 2023 the leading TASE indices: TA-35, TA-90 and TA-125 increased by 4%, each, the U.S. dollar and the Euro appreciated by 3.1% and 6.9% in relation to the NIS, respectively, and the yields of the longterm government bonds, which rose to 5.3% in October 2023, dropped to 4.4% at the end of December 2023.
The War, the duration, intensity and scope of which are uncertain, has adverse effects on the Israeli market and economy, including: economic slowdown, exchange rate fluctuations, disruptions in the manufacturing and supply chain, further rise in food, commodity and energy prices, and increase in the government deficit and in the Debt-GDP ratio.
In response to the rising economic risk, the international credit rating agencies took various actions: Fitch and Moody's announced that Israel's sovereign credit rating is now under "Rating Watch Negative", and S&P reduced the rating outlook from "stable" to "negative".
After the balance-sheet date, on 9.2.2024, Moody's reduced the State of Israel credit rating from A1 to A2. Further to that, Moody's also reduced the credit rating of the five largest Israeli banks from A2 to A3, with a negative outlook.
Alongside the anticipated impact of the Swords of Iron War on Israel's macroeconomic indicators and the growing uncertainty in the market, the War is also expected to affect the operations and profitability of corporations in Israel and increase the occurrence of insolvency proceedings and debt arrangements, which will entail higher credit losses and provisions for credit losses by financiers. Those effects, combined with the macroeconomic effects, could also affect, both indirectly and directly, the operations and profitability of TASE, this, inter alia, as a result of changes in the prices of shares, changes in the prices of government and corporate bonds, changes in the volumes of activity in the various channels, change in the activity of the foreign investors and the institutional investors, and change in the volumes of capital and debt raising on TASE. At this stage, despite the time that has elapsed since the breakout of the war, due to the uncertainty surrounding the intensity and duration of the War, the Company is unable to assess the impact of those changes on its operations and profitability.
1.2.2.2 Dividend
▪ On January 2, 2024, a Special dividend of NIS 231.1 million (representing NIS 2.5 per share) was paid to the shareholders, pursuant to the Board of Directors' resolution from December 14, 2023 (see further details below in section 1.2.2.6).
▪ On 6.3.2024, the Company's Board of Directors decided on the distribution of a dividend to the shareholders of the Company in the amount of NIS 41.6 million (representing NIS 0.45 per share on the date of the resolution). The record date was set as March 13, 2024 and payment has been scheduled for March 20, 2024.
1.2.2.3 Dividend Distribution Policy
On 6.3.2024, the Board of Directors of the Company approved a dividend distribution policy according to which, starting in its financial statements for 2024 through to its financial statements for 2026 (hereafter: "Dividend Distribution Policy", the Company will work to distribute to its shareholders a cash dividend at a rate of 50% of the annual net profit as per the Company's consolidated annual financial statements, this on the date of approval of the annual financial statements.
To remove any doubt, it is hereby clarified that the approval of the Dividend Distribution Policy does not obligate the Board of Directors of the Company to pass a resolution on the distribution of a dividend. Any resolution on the distribution of a dividend will be passed subject to compliance with the distribution criteria set out in the Companies Law, which would be reviewed on the date of passing of a resolution to distribute a dividend, and in consideration of the current business needs of the Company, the work plan, the liquidity situation of the TASE Group, and of leveraging and liability ratios and covenants (if any), as well as regulatory requirements that apply to companies in the Group (e.g. liquidity, minimum capital requirement etc.), all on the date that such resolution is passed. It is further clarified that the Board of Directors may modify and/or cancel and/or deviate from the Dividend Distribution Policy at any time.
1.2.2.4 Buyback
Buyback Plan
In March 2022, the Board of Directors of the Company instructed the Company to formulate a plan for the buyback of Company shares in an amount of up to NIS 100 million and for a period of up to two years. In May 2022, the Board of Directors of TASE adopted a first plan for the buyback of Company shares in an amount of up to NIS 36 million over a period of close to six months. Following a purchase in an amount of NIS 30.1 million and the expiration of the plan, in November 2022 the Board of Directors of the Company approved an additional, second plan, for the buyback of Company shares in an amount of up to NIS 36 million and for a period of six months. On 3.5.2023, the second plan was completed, with purchases of NIS 36 million, and on 23.5.2023, the Board of Directors of the Company approved an additional plan for the buyback of Company shares in an amount of up to NIS 33.9 million and for a period of six months (hereafter: "the Third Plan"). All of the plans were approved after the Board of Directors established the fulfillment of the profit criterion and the solvency criterion (as these terms are defined in the Companies Law, 1999). In view of their non-revocable nature, the plans impose restrictions and qualifications on the performance of the purchases with regard to the daily volume pf purchases and the purchasing prices. Further to that, the Company entered into an agreement with an outside broker, which is not related to the Company, for the execution of the purchases in accordance with the buyback plans, based on an irrevocable power of attorney that is effective until the end of each of the plan periods. On 10.10.2023, the Third Plan was completed in full.
Within the framework of the aforesaid buyback plans, as of their conclusion, the Company purchased 5,631 thousand shares for a total cost of NIS 100 million, at an average price of NIS 17.76 per share.
Special Buyback Plan
On 23.5.2023, after establishing the fulfillment of the profit criterion and the solvency criterion (as these terms are defined in the Companies Law, 1999), the Board of Directors of the Company approved a special plan, in an amount of up to NIS 90 million, from its approval date to 29.6.2023, which is not subject to the terms of the "safe harbor" protection. On 1.6.2023, after being contacted by a foreign institutional investor that holds shares of the Company but is not an interested party therein (hereafter: "the Shareholder"), the Company purchased the Shareholder's entire holdings in the Company, of close to 4,568 thousand shares, at a price per share of NIS 18.85 and for a total consideration of NIS 86 million.
During the year, the Company purchased on The Tel Aviv Stock Exchange 3,740 thousand of its ordinary shares on TASE and 4,568 thousand of its ordinary shares off TASE, in consideration for NIS 154.9 million, and overall, since the commencement of the buybacks until the conclusion of the aforesaid plans in October 2023, the Company purchased 10,199 thousand shares for a total cost of NIS 186 million and at an average price per share of NIS 18.25, representing 9.9% of the Company's issued and paid up capital.
1.2.2.5 Receipts from Shareholders Within the Framework of Implementing the Ownership Restructuring
As of the Company's IPO date, 22,282,501 shares were held by shareholders that had held them prior to the date of approval of the restructuring in TASE (hereafter: "the Arrangement Shares"). In accordance with the TASE Restructuring Law, and to the extent that the consideration from their sale exceeds the value of the means of control sold pursuant to the Law, the excess consideration (hereafter: "the Excess Consideration") will be transferred to TASE to be used for the purposes stipulated in the Law.
Specified below are the sales made by the holders of Arrangement Shares since the IPO date:
| Number of shares | Excess Consideration | ||
|---|---|---|---|
| Units | NIS, in thousands | ||
| Balance of shares as of the ownership restructuring date |
94,000,000 | ||
| Sale agreement with Manikay | (19,999,999) | 9,907 | |
| Sale agreement with additional investors | (51,717,500) | 15,559 | |
| 2019 | (2,793,528) | 13,782 | |
| 2020 | (340,864) | 3,723 | |
| 2021 | (255,781) | 2,696 | |
| 2022 | (485,401) | 5,524 | |
| 2023 | (989,000) | 12,753 | |
| Total sales of the Arrangement Shares | (76,582,073) | 63,944 | |
| As of 31.12.2023 | 17,417,927 |
For additional information on the disposal of additional Arrangement Shares in January 2024, see section 1.2.2.6 below.
1.2.2.6 Plan for the Sale of the Arrangement Shares
Following the discussions held over the past two years between TASE and the five TASE members that hold the Arrangement Shares, which included controversies in relation to their continued holding of the Arrangement Shares and their entitlement to a dividend and TASE's resolution to discontinue the dividend distribution policy and adoption and execution of buyback plans, on 14.12.2023, the Board of Directors of TASE approved a plan concerning the Arrangement Shares (hereafter: "the Plan"). Within the framework of the Plan, it was agreed that, subject to the payment by TASE of a special dividend in an amount of NIS 2.5 per shares to all shareholders at TASE, the five TASE members that hold 17,156,677 Arrangement Shares (hereafter: "the Selling Shareholders") will grant an irrevocable power of attorney to Leader & Co. Investment House Ltd. (hereafter: "Leader") for the sale of the aforesaid shares, for the duration of 12 months from the payment date of the aforesaid dividend, whereby, for each such sale TASE will receive the Excess Consideration (net of commissions and other related expenses). It should be noted that, on 13.12.2023, the position of the Israel Securities Authority was received, pursuant to which it does not intervene in TASE's position that the Plan does not contradict the provisions of Amendment No. 63.
The Plan included the mutual waiver by the parties of any contention, demand or claim in connection with arguments that had been exchanged between them in relation to the Arrangement Shares, as aforementioned.
After the balance sheet date, on 24.1.2024, the book building process was completed for the acquisition of the 17,156,677 Arrangement Shares by a number of Israeli public institutions and foreign public institutions (hereafter collectively: "the Acquiring Institutions"), at a price of NIS 20.6 per share.
The (gross) consideration for the shares totaled NIS 353.4 million, of which NIS 87 million was paid to the Selling Shareholders and TASE received (net, after deduction of commissions and other related expenses) NIS 242 million. The consideration transferred to TASE was carried directly to the equity of TASE and in accordance with the provisions of Amendment No. 63 of the Securities Law will be used for investment in technological infrastructure of TASE.
For the purpose of the execution of the Plan in connection with the Arrangement Shares, as described above, TASE, Leader and Jefferies LLC (hereafter: "Jefferies") entered into a distribution agreement. As customary in this type of agreements, the distribution agreement includes representations by the parties thereto, including representations by TASE, inter alia, in relation to the appropriateness of the disclosure provided in the reports of TASE and the non-use of insider information. Additionally, TASE has undertaken to Jefferies to indemnify it in the event of a claim being filed by either of the Acquiring Institutions due to violation of TASE's representations or undertakings in the distribution agreements, and a mechanism was set that facilitates suspension of the payment of the indemnification portion exceeding 25% of the equity of TASE (as per the most recent financial statements on the date of such payment), should a concern arise that its payment could compromise the stability of TASE, as shall be determined by the Board of Directors of TASE, until such concern has been lifted.
To complete the picture, it should be noted that, as part of the Plan and despite the existence of sufficient liquid balances, the Board of Directors of TASE approved TASE's engagement in an agreement with a financial institution for the receipt of a loan in an amount of up to NIS 150 million, see further details below in section 1.2.2.7.
Shortly before the date of approval of the financial statements, to the best of the Company's knowledge, 261,250 shares are held by holders of Arrangement Shares. The price of the share as of 4.3.2024 (shortly before the financial statements' approval date) is NIS 25.69. According to the TASE Restructuring Law, in the event that the shareholders realize the shares that they hold, the amount of consideration in excess of NIS 5.08 per share will be transferred to TASE and used for the purposes prescribed in the Law. Such Excess Consideration will be carried directly to the equity of the Company.
1.2.2.7 A loan from a bank
On 28.12.2023, the Company obtained a loan from a bank in an amount of NIS 150 million, bearing annual interest at a rate of Prime+ 0.5%. The loan is repayable in 36 equal principal installments at the end of each month, commencing in January 2024 through to December 2026 (inclusive). The interest on the loan is payable concurrently with the aforesaid principal installments. The Company has made undertakings to the bank as customary in this type of agreement.
Within this framework, the Company has undertaken to the bank not to pledge or mortgage, in any manner and for any purpose whatsoever, and not to sell, transfer or transact in any manner whatsoever in the Company's rights in the real estate that is used for the offices of TASE. The Company has also undertaken to the bank to comply with the following financial covenants:
| Covenant | Description of covenant | Required ratio |
Actual ratio as of 31.12.2023 |
|---|---|---|---|
| Ratio of equity to total assets |
The Company has committed to maintain a minimum ratio of equity to total assets (*) |
45% | 63% (*) |
| Debt coverage ratio |
The Company has committed to maintain a maximum ratio of the balance of its non-subordinated liabilities to banks, financial institutions and other lenders, including shareholders/related parties to the operating profit to debt servicing (**) |
2.5 | 1.6 |
| Debt servicing ratio |
The Company has committed to maintain a minimum ratio of operating profit to debt servicing(*) with the addition of the balance of cash and cash equivalents and financial assets at fair value through profit or loss (T-bills and government bonds), eliminating the balance of the excess consideration that will be transferred to the Company and used for investment in the Company's technological infrastructure and excluding the entitlement dividend() in the debt servicing (current maturities of the loan including financing expenses payable according to the loan's repayment schedule). |
1.25 | 3.6 |
(*) Based on its stand-alone financial statements on the date of review. As of 31.12.2023, the amount of the declared dividend of NIS 231.1 million it to be added to equity.
(**) Based on its stand-alone financial statements on the date of review. Operating profit to debt service - profit before financing, net and taxes with the addition of depreciation and amortization expenses for the past 12 months.
As a condition for the receipt of a loan from a bank, the Company has undertaken not to pledge or mortgage, in any manner and for any purpose whatsoever and not to sell, transfer and not transact in any manner in the Company's rights in the real estate that is used for the offices of the Company known as Block 6920 Parcel 74 and Parcel 71 in Tel Aviv. This undertaking excludes rent transactions in relation to vacant spaces in the real estate property.
1.2.2.8 TASE Members and Clearing
Houses - Shortly before the date of the report, the Board of Directors of TASE approved the application of four entities to be accepted as TASE members (2 as NBMs, 1 as a nostro NBM, and 1 as a remote member), all subject to their fulfillment of various prerequisites for such operations, as set out in the TASE Rules (which to the date of the report have not yet been fulfilled). In addition, the Board of Directors of TASE-CH approved the joining of 2 new Clearing House members (1 as a "custodial member" and 1 as a member of TASE-CH), all subject to their fulfillment of various prerequisites for such operations, as set out in the TASE Rules (which to the date of the report have not yet been fulfilled).
1.2.2.9 Equity compensation Plan for Officers in the Company
On 26.2.2023, the Board of Directors of the Company, after obtaining the approval of the Compensation Committee, approved an equity compensation plan for the allotment of up to 4,100,000 warrants that are exercisable, each, into one ordinary share of the Company to all the officers in the Company (hereafter: "the Plan" and "the Pool", respectively). On 2.4.2023, out of said Pool 2,980,00 warrants that are exercisable, each, into one ordinary share of the Company were allotted at an exercise price of NIS 24.386 per warrant to 9 officers reporting to the CEO. The cost of the benefit embodied in the warrants granted as above, based on their fair value on the grant date, totaled NIS 10.1 million.
Further to the stated above, on 29.1.2024, further to the framework resolution of the Company's general meeting from 12.1.2022, the Board of Directors of the Company (after obtaining the approval of the Audit Committee in its capacity as Compensation Committee on the same day), approved the grant of 176,342 warrants out of the pool, which are exercisable, each, into one ordinary share of the Company at an exercise price of NIS 23.58 per warrant to the Company's legal counsel.
The cost of the benefit embodied in the warrants granted as aforesaid, based on their fair value on their grant date, amounted to NIS 1.3 million. The warrants were allotted to a trustee pursuant to Section 102 of the Income Tax Ordinance, under the capital gains track.
1.2.2.10 Retention Plan for the Company's CEO
On 4.5.2023, the general meeting approved the retention plan for the CEO of the Company, including the extension of a new retention loan in an amount of NIS 3.5 million and the grant of 544,435 warrants exercisable, each, into one ordinary share of the Company at an exercise price of NIS 40 per warrant. On 1.6.2023, the aforesaid warrants were allotted to the CEO of TASE. The cost of the benefit embodied in the warrants granted as above, based on their fair value on the grant date, totaled NIS 1.5 million.
1.2.2.11 Approval of the appointment of a Chairman for the Company's Board of Directors and of the terms of his employment
On 12.7.2023, further to the approval by the Company's general meeting on 29.6.2023, Prof. Eugene Kandel took office as Chairman of the Board of Directors of TASE. It should be noted that the general meeting of the Company, after obtaining the approval of the Company's Board of Directors and Audit Committee in its capacity as Compensation Committee, approved the nomination and the terms of employment of Prof. Eugene Kandel as Chairman of the Board of Directors, at a 50% appointment percentage. According to the terms of his employment, Prof. Kandel shall be entitled to a monthly salary (gross) of NIS 64.5 thousand, to an annual bonus in an amount of up to 3 times the monthly salary (gross) and to the grant of 319,800 warrants, out of the Pool, which are exercisable, each, into one ordinary share of the Company, at an exercise price of NIS 24.386 per warrant, as well as to related benefits, as customary in the Company. On 13.7.2023, the aforesaid warrants were allotted to the Chairman of the Board of Directors out of the Pool. The cost of the benefit embodied in the warrants granted as above, based on their fair value on the grant date, totaled NIS 1.0 million.
1.2.2.12 Equity compensation to directors
On 15.8.2023, further to the framework resolution of the Company's general meeting from 12.1.2022, the Board of Directors of the Company (after obtaining the approval of the Audit Committee in its capacity as Compensation Committee on the same day), approved the grant, to 6 directors of the Company, of 376,746 warrants out of the pool, which are exercisable, each, into one ordinary share of the Company at an exercise price of NIS 24.386 per warrant. The cost of the benefit embodied in the warrants granted as above, based on their fair value on the grant date, totaled NIS 1.5 million.
It should be noted that, on 27.2.2024, Mr. Yoav Chelouche, a director in the Company, stepped down. Accordingly, 52,011 warrants that had been granted to him were forfeited and returned to the pool.
1.2.2.13 Collective Agreement Relations in the Company
On 14.9.2022, the collective agreements at TASE expired. On 6.11.2022, a labor dispute was declared at TASE. In accordance with the Labor Disputes Law, commencing on November 21, 2022 and subject to obtaining the Labor Federation's consent, the employees shall be entitled to initiate various organizational steps.
Since then, and until the publication date of this report, the management of TASE, TASE's Employees Representation and representatives of the New General Federation of Labor are in advanced states of the discussions towards a new collective agreement, which to the publication date of this report, have not yet evolved into a binding agreement. To remove any doubt, it is hereby clarified that the declaration of a labor dispute at TASE has not yet been withdrawn.
1.2.2.14 Reduction of the Fee to the Israel Securities Authority
On 10.7.2023, the Knesset's Finance Committee approved, in an ad hoc provision, the reduction of the Israel Securities Authority's fees, such that the reduction will be increased to 30% in 2023 and 2024, and in 2025 will be reinstated to 15%. The significance of the reduction of the aforesaid fees is an annual decrease of NIS 1.7 million in expenses.
1.2.2.15 Donations
As part of assistance to the community, from time to time the Company makes donations to various causes and gives back to the community. To the date of this periodic report, the Company does not have a donations policy in place. Nevertheless, during the reporting period the Board of Directors of the Company approved the establishment of a fund, in collaboration with Social Finance Israel (SFI) for the integration of underprivileged populations in the capital market and in other areas of activity. The fund will raise funds for specific ventures using a Career Impact Bond (CIB) model, to allow diverse populations access to training and quality employment in various areas. The Company donated an amount of NIS 300 thousand during the reporting period towards the establishment of the fund.
In addition, the Company runs a program for the integration at TASE of workers with special needs, such as people with high functioning autism, over a period of 24 months, in order to allow additional candidates to partake in the program. As part of the program, the workers fill various positions in the distribution division and in other departments at TASE, depending on their capabilities and skills, to assist in daily tasks and acquire professional skills and experience.
Since the break-out of the Iron Swords War, which is still ongoing, until shortly before the publication date of this report, the Company has made donations by financing volunteering activities and assistance initiatives of its employees for the benefit of victims impacted by the war and by purchasing equipment for those individuals in an amount of NIS 1.1 million.
Overall, in 2023 the Company donated an amount of NIS 1.4 million.
1.2.3 CORPORATE HIGHLIGHTS FOR THE YEAR 2023
1.2.3.1 Objectives and Business Strategy:
At the end of five years of the approval of the Company's previous strategic plan, on 23.10.2022 the Board of Directors of the Company approved a new strategic plan for the years 2023-2027, as described below:
Strategic goals - According to the updated strategic plan, the Company intends to promote four principal strategic goals:
- Further developing and enhancing the value proposition of TASE's core activity
- Strengthening the direct activity and ties with the end customers
- Digital assets strategy
- Export of technological services and solutions to foreign exchanges
Quantitative goals - As part of the approval of the Strategic Plan, the Board of Directors of the Company has set a compounded annual growth rate (CAGR) from organic growth of 10% to 12% in the years 2023-2027. Achievement of the aforesaid goal depends, among others, on the Company's flexibility in determining its tariffs.
Restructuring of the TASE Group - The Board of Directors of the Company approved the advancement of a restructuring in the TASE Group in order to ensure the effective implementation of the strategic plan and to further the continued development and upgrading of the capital market for the benefit of the public. Within this framework, a new public holding company will be established, which will hold 100% in the Company that will become a private company, and at the same time the subsidiaries of the Company will be moved up, becoming subsidiaries of the new holding company and fellow subsidiaries of the Company and of new companies that would be established as part of the implementation of the aforementioned business and strategic plans of the TASE Group. It is hereby emphasized that the implementation of the aforesaid restructuring requires the obtaining of the approval of TASE's shareholders' meeting and various regulatory approvals, including the approval of the Israel Securities Authority.
Mergers and acquisitions - As part of the implementation and advancement of its strategic goals, the Company intends to consider the implementation of a plan for strategic purchases and/or investments in its areas of activity and/or in areas that offer added value to its activity (programmatic M&A). Specific plans will be presented to the Board of Directors of the Company for approval, as necessary.
1.2.3.2 Mutual Hedge Fund
The ad hoc provision published by the Israel Securities Authority concerning assets that may be purchased and held in a mutual hedge fund pursuant to Section 65A of the Joint Investment Trust
Law, 1994 includes the framework for the legal and operational regulation of a mutual hedge fund that makes investment in a hedge fund accessible to the public under the regulated umbrella of a mutual fund. Consequently, the Company has developed a dedicated system that enables TASE-CH to operate and clear mutual hedge funds. In March 2023, the dedicated system for the clearing of mutual hedge funds aired, with the last week of March 2023 set as the first "creation period". During the first creation period, creation orders totaling NIS 20 million were submitted, this in relation to 15 mutual hedge funds, with prospectuses approved by the Israel Securities Authority, that registered at TASE-CH. To the date of the report, 22 mutual hedge funds with an aggregate AUM of NIS 210 million are registered at TASE-CH.
1.2.3.3 Trading platforms for Cryptographic Currency and Use of Distributed Ledger Technology (DLT)
In October 2022, TASE and the Accountant General in the Ministry of Finance, through the Debt Unit of the Financing Division, announced a dedicated joint PoC (Proof of Concept) for examining the issuance and clearing of digital state bonds on a platform that is based on advanced technologies - Blockchain (DLT - Distributer Ledger Technology), smart contracts, and tokenization.
The PoC included the digitalization of a new series of bonds and its (mockup) issuance to the system participants. A live test conducted in May 2023 at TASE included twelve leading international and local banks (primary dealers). As part of the test, the Ministry of Finance issued for the first time (in a mockup issuance) a digital government bond (security token) over a Blockchain platform developed by TASE with the assistance of select technology vendors that are leaders in this field. In light of the success of the PoC, TASE is considering additional moves in this aspect, whether through the incorporation of innovative technologies into traditional processes or by advancing additional innovative PoCs in this field.
In addition, in accordance with TASE's strategic plan, and subject to obtaining the approval of the Israel Securities Authority, TASE-CH intends to offer custody services for digital assets, with emphasis on cryptographic currency. Initially, the service will be provided for select cryptographic currencies, and only to entities that have been granted a permit/license by the applicable regulator and in conformity with the applicable regulation. These services will, for the first time in Israel, make digital assets' custody services accessible to local investors and market participants, by a regulated entity possessing the necessary experience. The Company believes that this will be conducive to the development of proper digital asset trading in Israel, as well as to the adoption of innovative technologies by the major financial infrastructures in Israel. It will give Israeli investors access to quality services in relation to digital assets, while reducing the dependence of local investors on service providers that are not subject to regulation and/or that do not possess the necessary experience. For the purpose of providing the aforesaid services, TASE has engaged with Fireblocks, a company that develops an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Through their collaboration, the Company and Fireblocks plan to make available to the Israeli market a dedicated framework for activity in digital assets that is specialized, secure, transparent and regulated.
To the date of the report, the Company continues to monitor the technological and regulatory developments in this field.
1.2.3.4 The Indices Liquidity Reform
In May 2022, the Board of Directors of TASE approved a new indices' methodology that is designed, inter alia, to enhance the liquidity of the indices' composition and reduce their tracking costs (hereafter: "the Reform"). The Reform incorporates liquidity ratios for the calculation of the weight of securities in the index and changes the indices' rebalancing frequency from monthly to quarterly. In May 2023, the Israel Securities Authority approved the Reform and, on 2.11.2023, TASE launched the Reform.
1.2.3.5 Launch of an Additional Weekly Series of Options on the TA-35 Index
In July 2023, TASE launched of a new weekly series of options on the TA-35 Index, this in addition to the current Thursday expiration series. The weekly options on the TA-35 Index were launched at TASE in 2013, and their use is constantly on the rise. Trading in the series that is closest to expiration concentrates more than 60% of the overall trading volume of options on the TA-35 Index. Consequently, these options hold most of the liquidity among the overall series in circulation. Shortterm options are trending globally, under the heading Zero Days to Expiration (0DTE). The launch of the additional weekly series is part of this trend and is designed to diversify the derivatives market and align it with international standards. Shortly before the date of the report, TASE is planning to launch an additional weekly series of options on the TA-35 index that expires on a different day, to allow for three expirations per week, on Sunday, Tuesday and Thursday.
1.2.3.6 Reporting of OTC Transactions
In July 2023, TASE launched a new system for the real-time reporting of OTC transactions. The system will allow investors instant access to information on transactions effected off the order book. This step is in alignment with international standards. As part of the launch of the new system, TASE charges dedicated fees for the publication of the transactions. The real-time, transparent publication of the transactions helps optimize trading by local and foreign investors, on par with the leading global capital markets.
1.2.3.7 Legislation Initiatives for the Encouragement of Capital Market Activity
In 2023, the Government published regulatory directives that may have a positive effect on the trading on TASE: in July 2023 the Securitization Memorandum of Law and the Memorandum of Amendment to the Income Tax Ordinance were published, which are designed to regulate securitization transactions in Israel and to provide legal and financial certainty to ensure the proper operation of the Israeli credit sector, this by encouraging securitization transactions. In addition, in January 2024, the Encouragement of Capital Market Activity Memorandum of Law was published, which incorporates several topics, including expansion of the commercial paper instrument that is used to finance corporate activity, expansion of the ability of companies that listed on a foreign stock exchange with more than one class of shares to dual-list on TASE, this by removing the restriction on the listing of companies with more than one class of shares, expansion of the ability of companies to dual-list on an Israeli stock exchange, and increasing the interest and the activity in the capital market by way of general consulting and, more particularly, analyses that would be provided by licensed individuals or by entities supervised by the Israel Securities Authority.
Additionally, in March 2024, the Constitution, Law and Justice Committee approved the "Exemptions for Foreign Companies and Dual-Listed Companies Concurrently Listed Overseas Regulations", in order to encourage companies to list in Israel and develop the capital market. The exemptions include, inter alia, release from the obligation to obtain a court approval for a share buyback where the company does not meet the profit criterion and raising of the threshold required for the convening of a general meeting, which is designed to prevent the hostile takeover of Israeli companies.
1.2.3.8 Indices' Pricelist
On 21.12.2022, the Company received the resolution of the Israel Securities Authority's Secondary Market Committee concerning amendments to the TASE Rules and the regulations by virtue thereof in connection with indices' activity on TASE (hereafter: "the Authority's Resolution") pursuant to which, inter alia, the Committee has approved the amendment of the pricelist concerning the TASE indices (hereafter: "the Indices' Pricelist"). At the same time, the Committee determined that TASE's engagement in the editing and calculation of the indices will be deemed as an auxiliary service that raises substantial concern for a conflict of interest with its engagement in the management of a securities' trading system, in which it may continue to engage subject to its compliance with certain terms, as set forth in the Authority's Resolution (hereafter: "the Terms for the Indices' Activity"), which was fully achieved after the reporting date. It should be noted that the Terms for the Indices' Activity mainly address the general improvement of corporate governance rules and the implementation of organizational, professional and operational segregation of duties in the Company between the Indices' Activity and the trading management activity and have been set based on discussions with the Company.
It is hereby clarified that the approval of the amendment of the Indices' Pricelist was not conditioned on the fulfillment of the Terms for the Indices' Activity, and therefore the new rates pursuant to the Indices' Pricelist took effect gradually, in two steps - the first at a partial rate of 50% commencing on 1.1.2023, and the second - at the full rate - commencing on 1.1.2024.
1.2.3.9 Connectivity Services (Co-Location)
In 2023, TASE made improvements to infrastructure and connectivity. In addition to the existing point of presence (PoP) in London, in 2023 TASE began to set up an additional PoP in Frankfurt and expects to activate it in 2024.
1.2.3.10 Launch of a Futures Market
To the date of the report, the Israel Securities Authority approved the Board of Directors' resolution that allows TASE to customize its derivatives for various type of customers by way of flexibility in determining the multipliers that are assigned to the various products and flexibility in determining commissions on the futures, which will be relaunched. Accordingly, TASE plans to reduce the multipliers of options on the TA-35 index, the TA-Banks-5 index and the TA-125 index, and to relaunch futures on TA-35, TA-90, TA-Banks-5, the NIS-dollar exchange rate and the NIS-Euro exchange rate, alongside assignment of appropriate commissions.
1.2.3.11 Tailor-Made Indices
On 9.1.2023, TASE entered into an agreement with a public institution for the creation of tailor-made indices that are based on TASE's trading data and customized for the specific needs of the customer. This is the first agreement signed by TASE in the trail of the approval of the amendment to the Indices' Pricelist that permits TASE to receive payment for tailor-made indices, as above. According to the agreement, TASE will create tailor-made indices, based on the specifications that will be provided by the public institution and approved by TASE. TASE will develop and edit the indices using the methodology that it applies in the development and editing of the other TASE indices, and they will be published in the same manner as the other indices. TASE will retain the rights in the tailor-made indices, however the public institution will be granted an exclusive license to use each such tailored index. The overall exclusivity period of each tailored index shall not exceed a cumulative ten years. The consideration to which TASE shall be entitled consists of development fees and usage fees that are calculated as a percentage of the volume of assets of the financial instruments using the tailored index (in immaterial amounts). The Company plans to further pursue the expansion of this line of business in the coming year, inter alia, through the development of tailor-made indices in collaboration with various customers.
1.2.3.12 Distribution of Trading Data Via the Market by Order Protocol, which Includes the Full Order
Book
Since the end of 2022, TASE allows its customers to receive trading data via a new information protocol, Market by Order, which includes the full order book, instead of only the top five price brackets included in the regular transmission. This product, which requires the payment of a commission to TASE, enables market participants to obtain a more complete picture of the supply and demand on the market, both deeper within the order book and in relation to the structure of the presented price brackets. These data are consumed both algorithmically by automated participants and by TASE members, development entities and other market participants. TASE intends to continue working with those entities towards the use of these data by additional market participants, including those operating manually with viewing terminals.
1.2.3.13 Central Lending Platform
The lending of securities is concentrated in the hands of a relatively small number of bodies that provide custodianship services, resulting in low competition in this field. Additionally, bodies that carry out lendings generally operate through a limited number of brokers, with the actual lending being executed via telephone calls, rather than on a central automated platform. Accordingly, the Company worked to develop and launch a product that will enable members of TASE-CH to execute lendings among themselves, on behalf of their clients, using an automated, transparent and efficient Blockchain process. In 2020, the Company launched the product, and to the date of this report no revenue was recognized in respect of the use of the Central Lending Platform. Nevertheless, the Company believes that as more "custodial members" join the Clearing Houses and connect directly to the clearing systems for non-banking Clearing House members, the demand for this product will grow.
1.2.3.14 "Smart Personal Portfolio"
In November 2021, the Company entered into an agreement with a third party (hereafter: "the Vendor") that provides algorithm analysis products and AI services for the analysis of public information on marketable securities (including trading data, investment houses' buy/sell recommendations, analyses and more). The agreement entitles the Company to incorporate the results of the analyses performed by the Vendor into the Company's website (after certain adjustments for the identification and processing of information relating to securities that are listed on TASE), for the benefit of the users of the Company's website. Similar products are available to investors in international exchanges, mainly retail investors, and as such the product is intended to encourage the volumes of activity of those investors in securities (including mutual fund units) that are listed on TASE. The first period of the agreement ends in the third quarter of 2025.
1.2.3.15 Corporate Social Responsibility (ESG)
In December 2023, the Company published a corporate social responsibility (ESG) Report for 2022. The report was published on the Company's website. In addition, in July 2023, Maala published its ESG ratings for 2022, which granted TASE, for the first time, a BB Gold raring.
1.2.3.16 Cooperation Agreements with International Stock Exchanges
From time to time, the Company considers strategic collaborations with other stock exchanges around the world, which are intended to enhance the accessibility to the financial markets of each of the parties to the agreement and to leverage strategic advantages of each of the parties to the agreement, taking into consideration, inter alia, the suitability of companies operating in each of the countries for trading on the counterparty stock exchange.
Additionally, on 6.12.2022, the Company signed a memorandum of understanding with NYSE (hereafter: "the MOU"), concerning the establishment of an agreed framework for potential collaborations between the exchanges in their various areas of activity. To the date of the report, agreements have not yet been reached with regard to such collaborations, realizing the purpose of the MOU.
1.2.3.17 QI (Qualified Intermediary) Agreement with the U.S. Tax Authorities (IRS)
In 2002, TASE-CH entered into a QI agreement as a non-withholding QI. In 2017, the QI agreement was renewed with the IRS until 31.12.2022. Pursuant to the QI agreement, TASE-CH is required to comply with various requirements, including, inter alia, extensive guidelines concerning client documentation, deduction of current taxes, and reporting to the IRS. In April 2023, TASE-CH entered into a QI agreement for the years 2023 to 2028, as a non-withholding QI. Pursuant to the agreement, TASE-CH is required to comply with various requirements, including, inter alia, extensive guidelines concerning client documentation, deduction of current taxes, and reporting to the IRS.
1.2.3.18 Condition of the Economy and Capital Market Condition and Perception Risk
The Group's assessment of the impact of the "Condition of the Economy and Capital Market Condition and Perception" risk factor remains "medium", despite the waning of the reform in the judicial system, both as a result of the breaking out of the "Swords of Iron" War, whose duration and impact on the economy and the capital market, in general, and on the Company's revenues, in particular, including in the mid and long term - are still unknown, and as a result of the uncertainty and volatility of prominent macroeconomic indicators, such as the interest rate, exchange rates, inflation and the State of Israel's sovereign credit rating.
1.2.3.19 Indices' Editing Sector
The Company acts as an indices' editor and maintains the Israeli market's leading indices. This activity is not subject to regulation, is not based on specialized knowhow and does not require the setting up of large-scale infrastructure. Therefore, the entry barriers to this sector are immaterial. Consequently, the Company is exposed to competition from international and local index editors. The Company's success in this sector depends, inter alia, on the preferences of the investors and the investment distributors, the demand for mutual funds and the need for the editing of their indices. To the best of the Company's knowledge: 1) total assets tracking local indices on TASE as of 31.12.2023 is estimated at NIS 108.6 billion (including assets of ETFs and tracking funds on local indices), of which the Company holds a market share of 74.5% as of the same date; 2) total assets tracking international and local indices on TASE as of 31.12.2023 amounted to NIS 199.7 billion, of which the Company holds a market share of 40.5% as of the same date.
2. Presented below is information relating to the results for the fourth quarter of 2023 and for the year ended December 31, 2023 NIS, in thousands)
Three Months Ended December 31, 2023 Compared with Three Months Ended December 31, 2022
Statement of Profit or Loss
| Quarter ended | Difference | |||
|---|---|---|---|---|
| 31.12.2023 | 31.12.2022 | Amount | % | |
| Revenue from services | 101,448 | 86,325 | 15,123 | 18% |
| Expenses | 76,886 | 67,468 | 9,418 | 14% |
| Profit before financing income, net | 24,562 | 18,857 | 5,705 | 30% |
| Financing income (expenses), net | 3,175 | (474) | 3,649 | (770%) |
| Taxes on income | 7,014 | 5,178 | 1,836 | 35% |
| Net profit | 20,723 | 13,205 | 7,518 | 57% |
| % of total revenue from services for the quarter |
20.4% | 15.3% |
- Revenue in the fourth quarter of 2023 amounted to NIS 101.4 million, compared to revenue of NIS 86.3 million in the corresponding quarter last year, an 18% increase. The increase in revenue is across all main activities, and consist of a 9% increase in revenue other than from trading and clearing, and a 9% increase in trading and clearing revenue, which was partly due to the 14% increase in the number of trading compared to the number of trading days in the corresponding quarter last year.
- The costs in the fourth quarter of 2023 totaled NIS 76.9 million, compared to the expenses in the corresponding quarter last year that totaled NIS 67.5 million, an increase of 14%. The increase in the costs is due mainly to the increase in employee benefit expenses, share-based payment expenses, and computer and communication expenses.
- Net financing income in the fourth quarter of 2023 amounted to NIS 3.2 million, compared to net financing expenses of NIS 0.5 million in the corresponding quarter last year. The transition to financing income results from a positive return of 1.64% on the Company's investments in Israeli government bonds managed in marketable securities' portfolios, compared to a negative return of 0.67% in the corresponding quarter last year, as well as from the increase in the Bank of Israel interest rate that increased the interest on deposits.
- The profit in the fourth quarter of 2023 totaled NIS 20.7 million, compared to NIS 13.2 million in the corresponding quarter last year, an increase of 57%. The increase in profit is due mainly to the increase in revenue and the transition to financing income, less the effect of the increase in expenses, as described above.
| Quarter ended | Year ended | |||||
|---|---|---|---|---|---|---|
| 31.12.2023 | 31.12.2022 | Difference | 31.12.2023 | 31.12.2022 | Difference | |
| Weighted average shares used to compute |
||||||
| Basic earnings per share |
92,444,048 | 100,799,078 | (8%) | 96,854,187 | 101,635,280 | (5%) |
| Diluted earnings per share |
94,754,073 | 102,716,615 | (8%) | 99,102,891 | 103,292,078 | (4%) |
| Basic earnings per share in NIS |
0.219 | 0.131 | 67% | 0.859 | 0.500 | 72% |
| Diluted earnings per share in NIS |
0.224 | 0.129 | 74% | 0.840 | 0.492 | 71% |
▪ The revenue in the fourth quarter of 2023 – below is the composition of the quarter's revenue, compared to the corresponding quarter of the previous year:
| Quarter ended | ||||||
|---|---|---|---|---|---|---|
| Revenue from services |
31.12.2023 | % of the Company's total revenues |
31.12.2022 | % of the Company's total revenues |
% change | |
| 41,190 | 41% | 33,761 | 39% | 22% | ||
| Trading and clearing commissions |
14% of the increase in revenue from trading and clearing commissions is due to the increase in the number of trading days this quarter (66 trading days) compared to the corresponding quarter last year (58 trading days), and 8% of the increase in revenue from trading and clearing commissions derives from the effect of the higher trading volumes of government bonds and to the effect of the increase in creations and redemptions of mutual fund units. |
|||||
| 20,186 | 20% | 19,517 | 23% | 3% | ||
| Listing fees and levies |
2% of the increase in revenue from listing fees and levies is due to an increase in revenue from listing fees and 1% of the increase in revenue is due to revenue from annual fees. |
|||||
| 20,966 | 20% | 17,871 | 20% | 17% | ||
| Clearing House services |
The increase in revenue from Clearing House services is due to an increase in revenue from Clearing House services to companies, which increased revenue by 9%. An additional 6% increase is due to an increase in revenue from Clearing House services to members, of which 23% results from the expansion of the services in relation to information on OTC transactions. In addition, an increase of 1% 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 quarter last year. |
|||||
| 18,574 | 18% | 14,278 | 17% | 30% | ||
| Data distribution and connectivity services |
14% of the increase in revenue from data distribution and connectivity services is due to the updating of the index-usage pricelist, and 11% is due to revenue from data distribution, mainly as a result of the increase in the number of business and private customers, the revaluation of the dollar and the linkage of the rates to the CPI. Another 3% increase is due to revenue from connectivity services. |
|||||
| 532 | 1% | 898 | 1% | (41%) | ||
| Other revenue | The decrease in other revenue is due mainly to the suspension of activity at the Conference Center as a result of the Swords of Iron War. |
|||||
| Total revenue from services |
101,448 | 100% | 86,325 | 100% |
Adjusted net profit and adjusted EBITDA data2
| Quarter ended | Difference | |||
|---|---|---|---|---|
| 31.12.2023 | 31.12.2022 | Amount | % | |
| Adjusted EBITDA for the quarter: | ||||
| Profit before financing income, net | 24,562 | 18,857 | 5,705 | |
| Adjustments: | ||||
| Share-based payment expenses | 2,001 | 134 | 1,867 | |
| Depreciation and capital losses | 13,498 | 13,085 | 413 | |
| Adjusted EBITDA for the quarter: | 40,061 | 32,076 | 7,985 | 25% |
| % of total revenue from services for the quarter |
39.5% | 37.2% | ||
| Adjusted profit for the quarter: | ||||
| Profit for the quarter | 20,723 | 13,205 | 7,518 | |
| Adjustments: | ||||
| Share-based payment expenses | 2,001 | 134 | 1,867 | |
| Adjusted profit for the quarter: | 22,724 | 13,339 | 9,385 | 70% |
| % of total revenue from services for the quarter |
22.4% | 15.5% |
- − The adjusted EBITDA in the fourth quarter of 2023 totaled NIS 40.1 million, compared to NIS 32.1 million in the corresponding quarter last year, an inter-quarter increase of 25%. The increase is due mainly to an increase in revenue from services, as described above, which was partly offset by an increase in expenses.
- − The adjusted profit in the fourth quarter of 2023 totaled NIS 22.7 million, compared to an amount of NIS 13.3 million in the corresponding quarter last year, a 70% increase. The increase is due mainly to the increase in revenue and the transition to financing income this quarter, as compared to financing expenses in the corresponding quarter last year, net of an increase in expenses, as described above.
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 to 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.
Year ended December 31, 2023 Compared with Year ended December 31, 2022
Statement of Profit or Loss
| Year ended | ||||
|---|---|---|---|---|
| 31.12.2023 | 31.12.2022 | Difference | % Change | |
| Revenue from services | 389,855 | 361,011 | 28,844 | 8% |
| Costs | 291,516 | 277,813 | 13,703 | 5% |
| Profit before financing income, net | 98,339 | 83,198 | 15,141 | 18% |
| Financing income (expenses), net | 11,307 | (13,225) | 24,532 | |
| Taxes on income | 26,440 | 19,137 | 7,303 | 38% |
| Profit for the year | 83,206 | 50,836 | 32,370 | 64% |
| % of total revenue from services for the year |
21.3% | 14.1% |
- Revenue in 2023 totaled NIS 389.9 million, compared to revenue of NIS 361.0 million in 2022, an increase of 8%. The increase in revenue is due to the increased activity of the Group, as described below. Eliminating the non-recurring effect of an update to the estimated period of revenue recognition from listing fees recorded in the corresponding period last year, in an amount of NIS 4.3 million. The increase in revenue totals 9%. The increase is comprised of revenue from trading and clearing (4% of the increase in total revenue) and revenue other than from trading and clearing (5% of the increase in total revenue).
- The costs in 2023 totaled NIS 291.5 million, compared to costs of NIS 277.8 million in 2022, a 5% increase. The increase in costs is due mainly to the increase in expenses with respect to employee benefits, share-based payment expenses and computer and communication expenses, which was partly offset by a reduction in marketing expenses.
- Net financing income in 2023 totaled NIS 11.3 million, compared to net financing expenses of NIS 13.2 million in 2022. The transition to financing income in the period is due to a positive yield of 3.0% on the Company's investments in Israeli Government bonds managed in marketable securities' portfolios, compared to a negative yield of 7.0% in 2022. In addition, the increase in the interest rate on deposits increased the income by NIS 6.3 million.
- The profit in 2023 totaled NIS 83.2 million, compared to NIS 50.8 million in 2022, an increase of 64%. The increase in profit is due to the increase in revenue from services and to the transition to financing income, which were partly offset by the increase in expenses and the higher tax expenses.
The revenue in Year ended December 31, 2023 below is the composition of the period's revenue, compared to last year:
| Year ended | |||||
|---|---|---|---|---|---|
| Revenue from services |
31.12.2023 | % of the Company's total revenues |
31.12.2022 | % of the Company's total revenues |
% change |
| 155,589 | 40% | 142,490 | 40% | 9% | |
| Trading and clearing commissions |
9% of the increase in revenue from trading and clearing commissions results from the increase in revenue from T-bills, government bonds and mutual funds, mainly due to the increase in trading volumes and in the volumes of creations and redemptions of mutual fund units. At the same time, the decrease in revenue from shares, as a result of the reduced share trading volumes, deducted 2% of the aforesaid increase. In addition, 2% of the increase in revenue from trading and clearing commissions is due to the increase in the number of trading days this year (249 trading days) compared to the number of trading days last year (244 trading days). |
||||
| 81,120 | 21% | 84,489 | 23% | (4%) | |
| Listing fees and levies | decrease. | 5% of the decrease in revenue from listing fees and levies is due to a one time income of NIS 4.3 million recorded in the first quarter last year as a result of the update to the period of revenue recognition from listing fees on shares and ETFs pursuant to International Financial Reporting Standard, "Revenue from Contracts with Customers" (IFRS 15), and 1% of the decrease in revenue is due to the reduction in revenue from the examination of prospectuses. In opposition, an increase in revenue from annual fees, mainly due to the linkage of the fee rates to the CPI, deducted 2% of the aforesaid |
|||
| 78,208 | 20% | 70,908 | 20% | 10% | |
| Clearing House services |
5% of the increase in revenue from Clearing House services is due to an increase in revenue from Clearing House services to companies, half of which is due to the linkage of the clearing rates to the CPI and to the updating of corporate actions' clearing rates during the year. An additional 5% increase is due to an increase in revenue from Clearing House services to members, primarily as a result of the expansion of the services in relation to information on OTC transactions and the linkage of the clearing rates to the CPI. |
||||
| 71,176 | 18% | 58,060 | 16% | 23% | |
| Data distribution and connectivity services |
connectivity services. | 12% of the increase in revenue from data distribution and connectivity services is due to revenues from index-use authorizations, primarily as a result of the updating of rates, and 8% of the increase is due to revenue from data distribution to business and private customers, as a result of the increase in the number of customers, the revaluation of the dollar and the linkage of rates to the CPI, of which 5% relates to data distribution to business customers overseas. Another 2% increase is due to revenue from |
|||
| 3,762 | 1% | 5,064 | 1% | (26%) | |
| Other revenue | The decrease in revenue is due mainly to the reduction in revenue from the sale of technological consulting services provided in the corresponding period last year in an amount of NIS 1.3 million. |
||||
| Total revenue from services |
389,855 | 100% | 361,011 | 100% |
Adjusted net profit and adjusted EBITDA data3
| Year ended | ||||
|---|---|---|---|---|
| 31.12.2023 | 31.12.2022 | Difference | % Change | |
| Adjusted EBITDA for the year: | ||||
| Profit before financing income, net | 98,339 | 83,198 | 15,141 | |
| Adjustments: | ||||
| Share-based payment expenses | 6,140 | 530 | 5,610 | |
| Depreciation and capital losses | 53,103 | 51,466 | 1,637 | |
| Adjusted EBITDA for the year: | 157,582 | 135,194 | 22,388 | 17% |
| % of total revenue from services for the year |
40.4% | 37.4% | ||
| Adjusted profit for the year: | ||||
| Profit for the year | 83,206 | 50,836 | 32,370 | |
| Adjustments: | ||||
| Share-based payment expenses | 6,140 | 530 | 5,610 | |
| Adjusted profit for the year: | 89,346 | 51,366 | 37,980 | 74% |
| % of total revenue from services for the year |
22.9% | 14.2% |
- The adjusted EBITDA for 2023 totaled NIS 157.6 million, compared to NIS 135.2 million in 2022, an increase of 17% between the years. The increase is due mainly to an 8% rise in revenue, primarily as a result of the higher volume of activity, as described above, which was counteracted by 3% increase in adjusted expenses, primarily expenses with respect to employee benefits and computer and communication expenses, partly offset by a reduction in marketing expenses.
- The adjusted profit in 2023 totaled NIS 89.3 million, compared to NIS 51.4 million in 2022, an increase of 74%. The increase in profit is due mainly to an 8% rise in revenue and to the transition to financing income as a result of the positive return on the Company's investments in held-for-trade financial assets and an increase in the interest rates on deposits.
3 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 constitutes a substitute to 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.
Presented below is information relating to the financial position as of December 31, 2023 (NIS, in thousands):
| As of 31.12.2023 |
As of 31.12.2022 |
|||
|---|---|---|---|---|
| NIS, in thousands | Difference | % Change | ||
| Cash and cash equivalents and short term financial assets |
498,666 | 388,627 | 110,039 | 28% |
| Other current assets | 28,048 | 23,591 | 4,457 | 19% |
| Property and equipment and intangible assets |
460,460 | 455,662 | 4,798 | 1% |
| Other non-current assets | 9,391 | 6,991 | 2,400 | 34% |
| Total assets (*) | 996,565 | 874,871 | 121,694 | 14% |
| Current liabilities | 399,390 | 96,092 | 303,298 | 316% |
| Non-current liabilities | 195,455 | 92,331 | 103,124 | 112% |
| Total liabilities (*) | 594,845 | 188,423 | 406,422 | 216% |
| Total equity (***) | 401,720 | 686,448 | (284,728) | (41%) |
| Ratio of equity to total assets (*) | 40% | 78% | ||
| Adjusted ratio of equity to total assets () (*) |
51% | 90% | ||
| Surplus equity over regulatory requirements (in NIS millions) |
318 | 613 | (295) | (48%) |
| Surplus liquidity over regulatory requirements (in NIS millions) |
145 | 257 | (111) | (43%) |
- (*) The total assets and liabilities in the balance sheet as of 31.12.2023 and 31.12.2022, include a balance of assets/liabilities in respect of open derivative positions amounting to NIS 1,695.1 million and NIS 937.3 million, respectively, which for reasons of convenience in analyzing the financial position has been offset against each other.
- (**) Further to the stated in section 1.6.4 below, following the completion of the move for the sale of the Arrangement Shares, the Company received Excess Consideration in the amount of NIS 242 million, which was carried directly to equity. Had the Excess Consideration been received at the balance sheet date, the Company's equity would have totaled NIS 644 million.
- (***) The adjusted equity is with the addition of the total deferred income from listing fees.
- The total assets as of 31.12.2023 amounted to NIS 996.6 million, an increase of 14% compared to 31.12.2022. The increase is due mainly to an increase in cash flows from operating activities.
- Total liabilities as of 31.12.2023 amounted to NIS 594.8 million, an increase of 216% compared to 31.12.2022. Most of the increase is due to a dividend declared in an amount of NIS 231.1 million (which was paid after the balance sheet date) and to a loan in an amount of NIS 150 million obtained by the Company from a bank.
- The equity as of 31.12.2023 totaled NIS 401.7 million, a 41% decrease compared to 31.12.2022. The decrease is due mainly to a dividend declared on 14.12.2023, in an amount of NIS 231.1 million (and paid after the balance sheet date) and to the buyback of Company shares in an amount of NIS 155.3 million, net of the profit for 2023 in the amount of NIS 83 million.
Presented below is Cash flows for the three months ended December 31, 2023 (NIS, in millions):
| Data for the three months ended December |
31 | |||
|---|---|---|---|---|
| Item | 2023 | 2022 | Explanations of the Company | |
| Opening balance | 230.3 | 182.8 | ||
| Net cash | Adjusted EBITDA | 40.1 | 32.1 | The increase in adjusted EBITDA in 2023 compared to 2022 is due mainly to the increase in revenue from services, which was partly offset by an increase in expenses. |
| from operating |
Changes in working capital |
9.9 | (1.5) | The increase in working capital between 2023 and 2022 is due mainly to employee benefits. |
| activities | Financing and tax | (0.4) | (0.8) | |
| Total | 49.6 | 29.8 | Cash flows from operating activities increased by 66% between the quarters. |
|
| Net cash from (for) |
Investments in property and equipment and in intangible assets and capitalized payroll costs |
(16.6) | (8.4) | The increase is due to the timing of implementation of the Group's investment work plan in the quarters. |
| investing activities |
Acquisition of financial assets, net |
0.1 | (8.2) | Acquisition and realization of assets in accordance with the Company's investment policy. |
| Total | (16.5) | (16.6) | ||
| Lease payments | (2.2) | (2.2) | ||
| Net cash (for) from |
Payments for the acquisition of treasury shares |
(1.5) | (0.9) | Buyback of Company shares in accordance with an approved buyback plan, see section 1.2.2.4 above. |
| financing activities |
Loan obtained (repayment of credit) |
149.5 | (0.5) | For information on a loan obtained by the Company from a bank, see section 1.2.2.7 above. |
| Total | 145.8 | (3.6) | ||
| cash equivalents | Total increase in cash and | 178.9 | 9.6 | |
| Effect of changes in exchange rates on cash balances held in foreign currency |
(0.7) | - | ||
| Closing balance | 408.5 | 192.4 |
Presented below is Cash flows for the year ended December 31, 2023 (NIS, in millions):
| Data for the year ended | |||||
|---|---|---|---|---|---|
| Item | 31.12.2023 | 31.12.2022 | 31.12.2021 | Explanations of the Company |
|
| Opening balance | 192.4 | 179.7 | 142.1 | ||
| Net cash from | Adjusted EBITDA | 157.6 | 135.2 | 103.0 | The increase in adjusted EBITDA in 2023 compared to 2022 is due mainly to an increase in revenue from services, which was partly offset by an increase in expenses. |
| operating activities |
Changes in working capital |
11.2 | (7.0) | 13.8 | The increase in working capital between 2023 and 2022 is due mainly to short term liabilities with respect to employee benefits. |
| Financing and tax | (8.5) | (8.6) | (10.4) | ||
| Total | 160.3 | 119.6 | 106.4 | ||
| Net cash for investing |
Investments in property and equipment and in intangible assets and capitalized payroll costs |
(50.6) | (48.3) | (35.6) | The increase is due to the timing of implementation of the Group's investment work plan in the periods. |
| activities | Acquisition of financial assets, net |
107.6 | (4.6) | (4.6) | Realization/acquisition of assets in accordance with the Company's investment policy. |
| Total | 57.0 | (52.9) | (40.2) | ||
| Net Cash (for) from financing activities |
Receipts (payments) carried directly to equity within the framework of implementing the ownership restructuring, net. |
12.8 | 8.2 | (0.8) | Receipts from a shareholder that realized shares that are subject to the provisions of Amendment No. 63, as defined in section 1.6.3. below. In 2021, VAT paid on inputs carried to equity pursuant to an assessments agreement. |
| Lease payments | (8.8) | (8.8) | (9.1) | ||
| Payments for the acquisition of treasury shares |
(155.3) | (31.3) | - | Buyback of Company shares in accordance with an approved buyback plan |
|
| Loan from a bank | 150.0 | - | - | For information on a loan obtained by the Company from a bank, see section 1.2.2.7 above. |
|
| Dividend paid | - | (22.7) | (18.5) | ||
| Total | (1.3) | (54.6) | (28.4) | ||
| Total increase in cash and cash equivalents |
216.0 | 12.1 | 37.8 | ||
| Effect of changes in exchange rates on cash balances held in foreign currency |
0.1 | 0.6 | (0.2) |
3. Presentation and Reclassification of Financial Statements
Seasonality
The Company's revenues from trading and clearing are affected, among other things, by the number of trading and clearing days. The number of trading days in 2022, 2023 and 2024 totaled 244, 249 and 243, respectively. Presented below is information on the quarterly breakdown of trading days:
| Q1 | Q2 | Q3 | Q4 | TOTAL | |
|---|---|---|---|---|---|
| Year | |||||
| 2022 | 64 | 61 | 61 | 58 | 244 |
| 2023 | 64 | 58 | 61 | 66 | 249 |
| 2024 | 63 | 57 | 65 | 58 | 243 |
4. Information relating to the results for the fourth quarter of 2023 and for the year ended December 31, 2023 NIS, in thousands)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (NIS, in thousands)
| December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | 408,484 | 192,416 |
| Financial assets at fair value through profit or loss | 90,182 | 196,211 |
| Trade receivables | 18,671 | 16,021 |
| Other receivables | 9,377 | 7,570 |
| 526,714 | 412,218 | |
| Assets derived from clearing operations in respect to open derivative positions |
1,695,082 | 937,259 |
| Total current assets | 2,221,796 | 1,349,477 |
| Non-current assets | ||
| Cash restricted as to use | - | 720 |
| Other long-term receivables | 4,033 | 5,586 |
| Property and equipment, net | 307,144 | 315,598 |
| Intangible assets, net | 153,316 | 140,064 |
| Deferred tax assets | 5,358 | 685 |
| Total non-current assets | 469,851 | 462,653 |
| Total assets | 2,691,647 | 1,812,130 |
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (NIS, in thousands)- CONT.
| December 31, | |||
|---|---|---|---|
| 2023 | 2022 | ||
| Liabilities and Equity | |||
| Current liabilities | |||
| Current maturities of a loan from a bank | 49,946 | - | |
| Current maturities of lease liabilities | 4,740 | 8,473 | |
| Trade payables | 13,063 | 13,864 | |
| Other payables | 5,204 | 3,036 | |
| Dividend declared | 231,110 | - | |
| Deferred income from listing fees and levies | 28,734 | 28,412 | |
| Current tax liabilities | 11,196 | 4,743 | |
| Short-term liabilities for employee benefits | 55,397 | 37,564 | |
| 399,390 | 96,092 | ||
| Liabilities derived from clearing operations in respect to open derivative positions |
1,695,082 | 937,259 | |
| Total current liabilities | 2,094,472 | 1,033,351 | |
| Non-current liabilities | |||
| Loan from a bank | 99,888 | - | |
| Lease liabilities | 9,009 | 6,572 | |
| Deferred income from listing fees and levies | 77,058 | 78,459 | |
| Non-current liabilities for employee benefits | 9,500 | 6,580 | |
| Other liabilities | - | 720 | |
| Total non-current liabilities | 195,455 | 92,331 | |
| Equity | |||
| Remeasurement reserve of net liabilities in respect to defined benefit | 4,745 | 5,207 | |
| Capital reserve in respect to share-based payment transactions | 39,927 | 33,787 | |
| Other capital reserves | 66,975 | 54,222 | |
| Retained earnings | 290,073 | 593,232 | |
| Total equity | 401,720 | 686,448 | |
| Total liabilities and equity | 2,691,647 | 1,812,130 |
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
(NIS, in thousands)
| Year ended | |||
|---|---|---|---|
| 2023 | December 31, 2022 |
2021 | |
| Revenue from services: | |||
| Trading and clearing commissions | 155,589 | 142,490 | 131,116 |
| Listing fees and levies | 81,120 | 84,489 | 69,056 |
| Clearing House services | 78,208 | 70,908 | 65,505 |
| Distribution of data and connectivity services | 71,176 | 58,060 | 52,268 |
| Other revenue | 3,762 | 5,064 | 5,712 |
| Total revenue from services | 389,855 | 361,011 | 323,657 |
| Cost of revenue: | |||
| Employee benefits expenses (*) | 153,643 | 147,325 | 146,821 |
| Expenses in respect to share-based payments | 6,140 | 530 | 739 |
| Computer and communications expenses (*) | 38,559 | 30,533 | 29,397 |
| Property taxes and building maintenance expenses | 13,732 | 13,798 | 13,190 |
| Other operating expenses (**) | 2,470 | 2,548 | 1,483 |
| General and administrative expenses (**) | 9,389 | 9,100 | 9,400 |
| Marketing expenses | 5,693 | 13,171 | 11,203 |
| Fee to the Israel Securities Authority | 8,098 | 9,341 | 9,123 |
| Depreciation and amortization | 52,412 | 51,335 | 47,618 |
| Other expenses | 1,380 | 132 | 262 |
| Total costs | 291,516 | 277,813 | 269,236 |
| Profit before financing income (expenses), net | 98,339 | 83,198 | 54,421 |
| Financing income | 11,952 | (12,802) | 5,488 |
| Financing expenses | 645 | 423 | 948 |
| Total financing income (expenses), net | 11,307 | (13,225) | 4,540 |
| Profit before taxes on income | 109,646 | 69,973 | 58,961 |
| Taxes on income | 26,440 | 19,137 | 13,491 |
| Profit for the year | 83,206 | 50,836 | 45,470 |
| Basic earnings per share (NIS) | 0.859 | 0.500 | 0.449 |
| Diluted earnings per share (NIS) | 0.840 | 0.492 | 0.436 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (NIS in thousands)
| Capital reserve in respect to share-based payment transactions |
Remeasure ment reserve of net liability in respect to defined benefit |
Other capital reserves |
Retained earnings |
Total | |
|---|---|---|---|---|---|
| Balance as of January 1, 2023 | 33,787 | 5,207 | 54,222 | 593,232 | 686,448 |
| Profit for the year | - | - | - | 83,206 | 83,206 |
| Other comprehensive loss for the year | - | (462) | - | - | (462) |
| Total comprehensive income (loss) for the year |
- | (462) | - | 83,206 | 82,744 |
| Dividend declared | - | - | - | (231,110) | (231,110) |
| Share-based payment | 6,140 | - | - | - | 6,140 |
| Acquisition of Treasury shares | - | - | - | (155,255) | (155,255) |
| Receipts from shareholders within the framework of implementing the |
|||||
| ownership restructuring, net | 12,753 | 12,753 | |||
| Balance as of December 31,2023 | 39,927 | 4,745 | 66,975 | 290,073 | 401,720 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (NIS, in thousands)
| Year ended December 31, |
|||
|---|---|---|---|
| 2023 | 2022 | 2021 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Profit for the year | 83,206 | 50,836 | 45,470 |
| Share-based payments expenses | 6,140 | 530 | 739 |
| Tax expenses recognized in profit or loss | 26,440 | 19,137 | 13,491 |
| Net financing expense (income) recognized in profit or loss | (11,307) | 13,225 | (4,540) |
| Depreciation and amortization | 52,412 | 51,335 | 47,618 |
| Loss from disposal of property and equipment and intangible assets | 691 | 131 | 262 |
| 157,582 | 135,194 | 103,040 | |
| Changes in asset and liability items: | |||
| Decrease (increase) in trade receivables and other receivables | (9,130) | (532) | (5,000) |
| increase in receivables in respect to open derivative positions | (757,823) | (271,988) | (312,078) |
| Decrease (increase) in trade payables and other payables | 1,212 | (2,320) | 5,719 |
| Increase (decrease) in deferred income from listing fees and levies | (1,079) | (4,156) | 11,317 |
| Increase in payables in respect to open derivative positions | 757,823 | 271,988 | 312,078 |
| Increase in liabilities for employee benefits | 20,152 | 14 | 1,725 |
| 168,737 | 128,200 | 116,801 | |
| Interest received | 10,564 | 5,297 | 4,300 |
| Interest paid | (567) | (417) | (726) |
| Tax receipts (payments) - operating activities | (18,461) | (13,498) | (13,993) |
| (8,464) | (8,618) | (10,419) | |
| Net cash provided by operating activities | 160,273 | 119,582 | 106,382 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||
| Purchase of property and equipment | (10,138) | (14,841) | (6,239) |
| Proceeds from the disposal of property and equipment | - | - | 16 |
| Acquisitions of intangible assets | (20,836) | (14,666) | (13,457) |
| Payments in respect to costs capitalized to property and equipment and to intangible assets |
(19,591) | (18,751) | (15,953) |
| Acquisition of financial assets at fair value through profit or loss, net | 107,589 | (4,632) | (4,591) |
| Net cash used in investing activities | 57,024 | (52,890) | (40,224) |
| CASH FLOW FROM FINANCING ACTIVITIES: | |||
| Lease payments | (8,848) | (8,815) | (9,125) |
| Company's share in the first-time listing of the shares | (155,255) | (31,318) | - |
| Dividend paid | - | (22,735) | (18,450) |
| Receipts (payments) carried directly to equity within the framework of implementing the TASE Restructuring Law, net |
12,753 | 8,220 | (800) |
| Loan from a bank | 150,000 | - | - |
| Net cash provided by (used in) financing activities | (1,350) | (54,648) | (28,375) |
| Net increase in cash and cash equivalents | 215,947 | 12,044 | 37,783 |
| Cash and cash equivalents, beginning of the year | 192,416 | 179,768 | 142,154 |
| Effect of changes in exchange rates on cash balances held in foreign currency |
121 | 604 | (169) |
| Cash and cash equivalents, end of the year | 408,484 | 192,416 | 179,768 |
| Quarterly statements of profit or loss for 2023 and for the fourth quarter of 2022 (NIS, in thousands) |
|---|
| -------------------------------------------------------------------------------------------------------- |
| Jan-Mar 2023 |
Apr-Jun 2023 |
Jul-Sep 2023 |
Oct-Dec 2023 |
2023 | Oct-Dec 2022 |
|
|---|---|---|---|---|---|---|
| Item | (Unaudited) | (Audited) | (Unaudited) | |||
| Revenue from services: | ||||||
| Trading and clearing commissions |
41,923 | 35,528 | 36,948 | 41,190 | 155,589 | 33,761 |
| Listing fees and levies | 20,302 | 20,143 | 20,489 | 20,186 | 81,120 | 19,517 |
| Clearing House services | 19,113 | 18,974 | 19,155 | 20,966 | 78,208 | 17,871 |
| Distribution of data and connectivity services |
17,124 | 17,367 | 18,111 | 18,574 | 71,176 | 14,278 |
| Other revenue | 1,554 | 891 | 785 | 532 | 3,762 | 898 |
| Total revenue from services |
100,016 | 92,903 | 95,488 | 101,448 | 389,855 | 86,325 |
| Cost of revenue | ||||||
| Expenses in respect of employee benefits, net (*) |
38,171 | 37,067 | 38,071 | 40,334 | 153,643 | 35,131 |
| Share-based payment expenses |
611 | 1,645 | 1,883 | 2,001 | 6,140 | 134 |
| Computer and communication expenses(*) |
9,013 | 8,914 | 10,183 | 10,449 | 38,559 | 8,430 |
| Property taxes and building maintenance expenses |
3,227 | 3,234 | 3,836 | 3,435 | 13,732 | 3,486 |
| General and administrative expenses(**) |
2,245 | 2,357 | 2,166 | 2,621 | 9,389 | 2,424 |
| Marketing expenses | 863 | 2,428 | 820 | 1,582 | 5,693 | 1,545 |
| Fee to the Israel Securities Authority |
2,429 | 2,428 | 1,242 | 1,999 | 8,098 | 2,335 |
| Other operating expenses(**) |
534 | 599 | 760 | 577 | 2,470 | 916 |
| Depreciation and amortization expenses |
12,868 | 13,040 | 13,046 | 13,458 | 52,412 | 13,061 |
| Other expenses | 15 | 879 | 56 | 430 | 1,380 | 6 |
| Total cost of revenue | 69,976 | 72,591 | 72,063 | 76,886 | 291,516 | 67,468 |
| Profit before financing income (expenses), net |
30,040 | 20,312 | 23,425 | 24,562 | 98,339 | 18,857 |
| Financing income | 2,648 | 3,696 | 2,128 | 3,480 | 11,952 | (362) |
| Financing expenses | 120 | 80 | 140 | 305 | 645 | 112 |
| Total financing income (expenses), net |
2,528 | 3,616 | 1,988 | 3,175 | 11,307 | (474) |
| Profit before taxes on income |
32,568 | 23,928 | 25,413 | 27,737 | 109,646 | 18,383 |
| Taxes on income | 7,087 | 5,153 | 7,186 | 7,014 | 26,440 | 5,178 |
| Net profit | 25,481 | 18,775 | 18,227 | 20,723 | 83,206 | 13,205 |
(*) Reclassified
(**) Classification for elaboration purposes
ABOUT TASE
The Company, including by means of the companies consolidated in its financial statements (collectively, "the Group"), is engaged in the area of securities trading and securities clearing .
Within this framework, the Group is engaged in setting rules regarding the TASE companies, rules for listing securities on TASE (including the obligations that apply to companies whose securities are listed) and rules regarding trading on TASE. The Group operates trading systems and provides clearing services for both listed and non-listed securities. In addition, the Group operates a derivatives clearing house that writes derivatives that are traded on TASE, clears them and serves as a central counterparty for transactions in them. The Group provides central counterparty (CCP) services for transactions in securities and derivatives that are executed on TASE and also provides central securities depository (CSD) services for securities. The Group engages in calculating security indices, in authorizing the use of indices for the creation of financial instruments that track the indices, and in distributing TASE trading data. In addition, since January 2018, the Group has operated a nominee company as defined in the Securities Law (securities traded on TASE are registered in the nominee company's name). The Company has one area of activity that is reported as a business segment in the Company's consolidated financial statements – trading and clearing transactions in securities
CONTACTS
| Yehuda Ben Ezra | Orna Goren | ||||
|---|---|---|---|---|---|
| EVP, CFO | Head of Communication and Public Relations Unit | ||||
| Email: | [email protected] | Email: | [email protected] | ||
| Tel: | +972-76-8160442 | Tel: | +972-76-8160405 |
Appendix-transactional Metrics
| Quarter Ended | Year Ended | ||||
|---|---|---|---|---|---|
| December 31, | December 31, | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| Number of trading days | 66 | 58 | 249 | 244 | |
| SHARES | |||||
| Market cap of Shares (ex. ETFs) | 952 | 949 | 952 | 949 | |
| Market cap of ETFs on share indices | 102 | 71 | 102 | 71 | |
| Total market cap (in NIS billions) | 1,055 | 1,020 | 1,055 | 1,020 | |
| Shares ADV (ex. ETFs) | 1,515 | 1,635 | 1,598 | 1,874 | |
| ETFs on share indices ADV | 411 | 355 | 400 | 421 | |
| Total average daily volume (in NIS millions) | 1,926 | 1,990 | 1,998 | 2,295 | |
| Average commissions | 0.01147% | 0.01083% | 0.01129% | 0.01044% | |
| Revenue (in NIS thousands) | 14,579 | 12,496 | 56,176 | 58,469 | |
| BONDS | |||||
| Market cap of government bonds -unlinked | 308 | 287 | 308 | 287 | |
| Market cap of government bonds - linked | 304 | 300 | 304 | 300 | |
| Market cap of corporate bonds | 447 | 409 | 447 | 409 | |
| Market cap of bonds (ex. ETFs) | 1,059 | 996 | 1,059 | 996 | |
| Market cap of ETFs on bond indices | 29 | 27 | 29 | 27 | |
| Total market cap (in NIS billions) | 1,088 | 1,023 | 1,088 | 1,023 | |
| Government bonds - unlinked ADV (in NIS millions) | 2,406 | 1,569 | 1,902 | 1,476 | |
| Government bonds - linked ADV (in NIS millions) | 1,121 | 825 | 1,009 | 955 | |
| Corporate bonds ADV excluding ETFs (in NIS millions) | 861 | 903 | 902 | 916 | |
| ETFs on bond indices ADV | 95 | 109 | 114 | 130 | |
| Total Average daily volume (in NIS millions) | 4,483 | 3,406 | 3,927 | 3,477 | |
| Government bonds unlinked - average commissions | 0.00212% | 0.00198% | 0.00202% | 0.00195% | |
| Government bonds linked - average commissions | 0.00315% | 0.00297% | 0.00303% | 0.00290% | |
| Corporate bonds - average commissions | 0.00713% | 0.00707% | 0.00705% | 0.00707% | |
| Government bonds - unlinked (in NIS thousands) | 3,372 | 1,804 | 9,579 | 7,010 | |
| Government bonds - linked (in NIS thousands) | 2,327 | 1,421 | 7,615 | 6,760 | |
| Corporate bonds (in NIS thousands) | 4,499 | 4,150 | 17,833 | 18,036 | |
| Other (MTS) (in NIS thousands) | 33 | 37 | 227 | 208 | |
| Revenue (in NIS thousands) | 10,231 | 7,412 | 35,254 | 32,014 | |
| TREASURY BILLS | |||||
| Market cap (in NIS billions) | 305 | 209 | 305 | 209 | |
| Treasury bills ADV (in NIS millions) | 1,568 | 1,194 | 1,397 | 783 | |
| Average commissions | 0.00302% | 0.00463% | 0.00379% | 0.00334% | |
| Revenue (in NIS thousands) | 3,123 | 3,205 | 13,170 | 6,375 | |
| MUTUAL FUNDS | |||||
| Market cap (in NIS billions) | 330 | 272 | 330 | 272 | |
| Average daily value of creation/ redemptions (in NIS millions) | 1,474 | 1,232 | 1,424 | 987 | |
| Average commissions | 0.00779% | 0.00838% | 0.00813% | 0.01027% | |
| Revenue (in NIS thousands) | 7,576 | 5,992 | 28,819 | 24,732 | |
| DERIVATIVES |
| Quarter Ended December 31, |
Year Ended December 31, |
|||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Derivatives on indices | 110.8 | 107.4 | 108.5 | 114.6 |
| Derivatives on foreign currency | 31.5 | 39.3 | 36.1 | 40.3 |
| Derivatives on individual shares | 10 | 3.5 | 12.7 | 4.3 |
| Total derivative contracts (in '000 units) | 152.3 | 150.2 | 157.3 | 159.2 |
| Options on indices - Average commissions | 0.58 | 0.58 | 0.58 | 0.58 |
| Derivatives on FX -Average commissions | 0.36 | 0.36 | 0.36 | 0.36 |
| Derivatives on single shares- Average commissions | 1.00 | 1.00 | 1.00 | 1.00 |
| Revenue (in NIS thousands) | 5,681 | 4,656 | 22,170 | 20,900 |
| Total revenue from trading and clearing commissions | 41,190 | 33,761 | 155,589 | 142,490 |
| Quarter Ended | Year Ended | |||
|---|---|---|---|---|
| December 31, | December 31, | |||
| 2023 | 2022 | 2023 | 2022 | |
| CLEARING HOUSE SERVICES | ||||
| Average Monthly Market value of assets (in NIS billions) | 2,908 | 2,865 | 2,890 | 2,983 |
| Avg. commissions from Custodian Fees | 0.00110% | 0.00109% | 0.00110% | 0.00109% |
| Revenue from: (in NIS thousands) | ||||
| Custodian Fees | 7,986 | 7,841 | 31,711 | 32,460 |
| Clearing House services for members events | 7,365 | 6,362 | 25,823 | 22,549 |
| Clearing House services for company events | 4,280 | 2,436 | 15,120 | 10,799 |
| Other | 1,335 | 1,232 | 5,554 | 5,100 |
| Total revenue from Clearing House services | 20,966 | 17,871 | 78,208 | 70,908 |
| LISTING FEES AND LEVIES | ||||
| Weighted avg. number of companies / funds | ||||
| Companies | 612 | 608 | 621 | 612 |
| Mutual funds and ETFs | 2,300 | 2,345 | 2,314 | 2,314 |
| Avg. revenue from levies (in NIS thousands) | ||||
| Companies | 5.6 | 5.7 | 22.0 | 22.8 |
| Mutual funds and ETFs | 2.0 | 1.9 | 8.0 | 7.6 |
| Revenue from Annual Levies from: (in NIS thousands) | ||||
| Companies | 3,414 | 3,479 | 13,670 | 13,966 |
| Mutual funds and ETFs | 4,628 | 4,541 | 18,682 | 17,778 |
| Nominee Company and others | 1,868 | 1,621 | 7,399 | 6,381 |
| Total revenue from Annual levies | 9,910 | 9,641 | 39,751 | 38,125 |
| The value of issuance used to calculate Listing fees (in NIS millions) |
||||
| Companies – Shares, Bonds and ETFs | 41,655 | 29,659 | 139,052 | 143,732 |
| Government bonds (including swap transactions) | 51,953 | 9,338 | 116,323 | 41,501 |
| Treasury-bills | 99,602 | 106,376 | 403,460 | 231,158 |
| Number of issuances | ||||
| Number of public offerings of shares on TASE (including on TASE UP) |
14 | 16 | 66 | 78 |
| Number of new issuers of shares | - | - | 1 | 13 |
| Number of new (dual-listed) companies | - | 1 | 2 | 2 |
| Number of Offerings and Volumes Raised | ||||
| Amount raised in share IPOs of new issuers (in NIS millions) | - | - | 145 | 2,342 |
| Amount raised in bond offerings by new issuers (in NIS millions) | 1,186 | 231 | 2,049 | 967 |
| Number of corporate bond offerings to the public | 30 | 25 | 137 | 165 |
| Number of corporate bond offerings to the public by new companies |
2 | 2 | 9 | 8 |
| Average revenue from Examination and Listing Fees | ||||
| Companies – shares, bonds and ETFs | 0.0168% | 0.0167% | 0.0166% | 0.0175% |
| Revenue from Examination and Listing Fees (in NIS thousands) |
||||
| Examination fees | 1,582 | 1,661 | 7,048 | 8,245 |
| Quarter Ended December 31, |
Year Ended December 31, |
|||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Receipts from listing Fees | ||||
| Listing fees - shares, bonds & ETF's | 6,989 | 4,941 | 23,152 | 25,183 |
| Listing fees - government bonds | 1,566 | 1,488 | 6,266 | 5,952 |
| Listing of T-bills | 697 | 745 | 2,824 | 1,618 |
| Levies and examination fees from members | 55 | - | 226 | 850 |
| Other | 170 | 106 | 490 | 236 |
| Total | 9,477 | 7,280 | 32,958 | 33,839 |
| Accounting adjustments to revenue recognition | (783) | 935 | 1,363 | 4,280 |
| Total revenue from listing Fees | 8,694 | 8,215 | 34,321 | 38,119 |
| Total revenue from examination and listing fees (in NIS thousands) |
10,276 | 9,876 | 41,369 | 46,364 |
| Total revenue from listing fees and levies | 20,186 | 19,517 | 81,120 | 84,489 |
| DATA DISTRIBUTION AND CONNECTIVITY SERVICES (*) | ||||
| Average number of data terminals | ||||
| Domestic business clients | 7,446 | 7,221 | 7,345 | 7,419 |
| Overseas business clients | 5,955 | 5,514 | 5,892 | 5,447 |
| Non-display data | 287 | 284 | 261 | 288 |
| Revenue from distribution and connectivity services (in NIS thousands) |
||||
| Domestic business clients | 4,516 | 4,082 | 17,800 | 16,693 |
| Overseas business clients | 3,211 | 2,444 | 12,330 | 9,251 |
| Private clients | 2,260 | 1,798 | 8,584 | 8,254 |
| Derivative date and non-display data | 1,275 | 1,137 | 4,613 | 4,775 |
| Data files and other data | 1,203 | 1,093 | 4,656 | 4,147 |
| Authorization for indices usage | 2,735 | 763 | 10,181 | 3,202 |
| Connectivity services | 3,374 | 2,961 | 13,012 | 11,738 |
| Total revenue from Data distribution and Connectivity services |
18,574 | 14,278 | 71,176 | 58,060 |
Presented below are details regarding the velocity of trading (1) in Israel in the reported period:
| Quarter Ended December 31, |
Year Ended December 31, |
% Change |
||||
|---|---|---|---|---|---|---|
| % Change | ||||||
| 2023 | 2022 | 2023 | 2022 | |||
| Velocity of trading | ||||||
| Shares | 41.8% | 39.9% | 5% | 42.5% | 43.1% | (1%) |
| Corporate bonds (2) | 54.2% | 59.4% | (9%) | 57.6% | 60.9% | (5%) |
| Government bonds – shekel (3) | 147.6% | 110.6% | 33% | 132.4% | 95.2% | 39% |
| Government bonds – linked (4) | 80.3% | 61.6% | 30% | 72.2% | 66.6% | 8% |
| Treasury bills | 115.7% | 142.7% | (19%) | 110.8% | 115.4% | (4%) |
(1) The velocity of trading does not include off-exchange transactions.
(2) The velocity of trading does not include data of TASE UP institutional-traded corporate bonds.
(3) Including "Shahar" fixed-interest shekel bonds and short-term government bonds.
(4) Includes CPI-linked bonds and "Gilon" variable-interest shekel bonds.
Appendix – Deferred income from listing fees
Forecast for recognition of income
| Deferred income from listing fees as of |
Total receipts in |
Total income recognized |
Deferred income from listing fees as of |
Income recognition in Twelve months ended |
Deferred income from listing fees as of |
|||
|---|---|---|---|---|---|---|---|---|
| 31.12.2022 | 2023 | 2023 | 31.12.2023 | 31.12.2024 | 31.12.2025 | 31.12.2026 | 31.12.2026 | |
| Listing of | ||||||||
| Shares | 28.9 | 2.8 | 6.2 | 25.5 | 5.6 | 4.9 | 4.1 | 10.9 |
| Corporate bonds |
40.0 | 17.2 | 14.2 | 43.0 | 13.0 | 9.6 | 6.8 | 13.6 |
| ETF | 24.6 | 3.1 | 5.0 | 22.7 | 4.8 | 4.2 | 3.4 | 10.3 |
| Government bonds |
11.4 | 6.3 | 5.2 | 12.5 | 3.6 | 3.2 | 2.9 | 2.8 |
| T-bills | 1.0 | 2.8 | 2.5 | 1.3 | 1.3 | - | - | - |
| Total | 105.9 | 32.2 | 33.1 | 105.0 | 28.3 | 21.9 | 17.2 | 37.6 |