The Tel-Aviv Stock Exchange Reports the Results of the Financial Statements for the Fourth Quarter and Full Year 2023

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06 Mar, 2024, 18:43 IST

Record Results in 2023 - 8% Revenue Growth to NIS 390 Million and a 74% Leap in Adjusted Net Profit to NIS 89 Million

The adjusted EBITDA Margin reached 40% of Revenues, at a Record Amount of NIS 158 million, Compared to NIS 135 million in 2022, a 17% Increase

TASE will distribute a dividend of NIS 42 million further to a NIS 231 million dividend paid in January 2024 and buybacks of NIS 155 million in 2023

The overall payments to TASE shareholders since January 2023 total NIS 428 million

Revenues in 2023 totaled NIS 390 million, an 8% increase year-over-year.
Revenues in the fourth quarter totaled NIS 101 million, compared to revenues of NIS 86 million in the corresponding quarter last year, an 18% increase.
The adjusted profit in 2023 totaled NIS 89 million, compared to NIS 51 million in 2022, an increase of 74%.
The adjusted profit in the fourth quarter totaled NIS 23 million, compared to NIS 13 million in the corresponding quarter last year, an increase of 70%.
The adjusted EBITDA for 2023 totaled NIS 158 million, compared to NIS 135 million in 2022, an increase of 17%.
The adjusted EBITDA in the fourth quarter of 2023 totaled NIS 40 million, compared to NIS 32 million in the corresponding quarter last year, an increase of 25% between the quarters.
TASE launches a dedicated pilot of crypto-custody services for entities that have been authorized to act for their clients in crypto currencies, whereby, for the first time in Israel, TASE will support custody of digital assets.

Ittai Ben Zeev, CEO of TASE, said today: "The strong results and performance that TASE presents today, despite the extreme events of the past year - the Judicial Reform and the war that broke out on October 7 - are testament to TASE's stability and strength. This year, TASE and the local capital market played a key role in maintaining the economic strength of the State of Israel, and were instrumental to its ability to finance the substantial wartime expenses through successful issuances, primarily on the Tel Aviv Stock Exchange.

In addition to the strong results, we are pleased to announce the sale of the shares held by the banks, which allowed us to bring in new local and international investors as shareholders, as part of our strategy to diversify ownership at TASE and increase its international exposure. The success of the move is a vote of confidence in the Israeli economy, in general, and in TASE, in particular. TASE will dedicate its portion of the consideration from the sale of the banks' shares, of more than NIS 240 million, to the development of technological infrastructure that will allow us to further upgrade the local capital market and increase its attractivity to local and international investors.

Today, more than ever, it is crucial to implement measures that will enable the Israeli capital market to generate investments, which are necessary for renewed economic growth. It is a simple equation - a strong economy and a strong exchange are essential to the well-being of the State of Israel. At this challenges time, we must be active, creative and determined to continue developing and upgrading the local capital market and its attractivity. By joining efforts - the public, institutional investors, TASE and the Government - we can realize this vision."

TEL AVIV, Israel, March 6, 2024 /PRNewswire/ -- The Tel-Aviv Stock Exchange Ltd. (TASE: TASE) today announced its financial results for the fourth quarter ended December 31, 2023 and for 2023.

In 2023, trading on TASE was volatile as a result of the government-proposed Judicial Reform and the war that broke out in the wake of the events of October 7, two extreme events that significantly undermined the performance of TASE's leading indices.

Overall this year, TASE's leading equity indices underperformed their international counterparts, IPOs came to a halt, while capital raised by listed companies declined compared to the previous year. At the same time, debt issuance intensified, with the Israeli Ministry of Finance raising 87 billion shekels on TASE, more than double, the 40 billion shekels raised in 2022, which is not including the issuance in the global market. Corporate debt issuances were also strong with NIS 100 billion raised through corporate bonds and NIS 416 billion raised through T-bills.

This surge in debt issuances is expected to persist in the next two years due to the steep rise in direct war costs, which according to the Bank of Israel's estimates are expected to reach NIS 215 billion by the end of 2025. The strong demand for Israeli government bonds, both locally and internationally is a vote of confidence in the Israeli economy.

The TA-35 index and the TA-125 index rose by an annual average of 4%. It should be noted that, true to their historical resilience, the equity indices quickly recovered and resumed their upward trend - despite the events of October 7 and the ensuing war, the TA-125 index rose by 1.5% during the period from the eve of the war through the end of 2023, and by 7% since the outbreak of the war to date.

Trading volumes in equities averaged NIS 2 billion a day, 13% lower than in 2022, and trading itself was highly volatile and disparate from the global trend, as previously mentioned. Israeli institutional investors increased their exposure to the Israeli capital market in 2023, even during the war, which helped mitigate the declines in the equity market. In contrast, the Israeli public reacted by reducing their investments in local indices and invested instead in international indices, with a material portion of their purchases being executed through international ETF's traded on TASE. In contrast, trading volumes in government bonds averaged NIS 2.9 billion, 20% higher than the average daily trading volume in 2022 and T-bill volumes reached a daily average of NIS 1.4 billion, 78% higher than in 2022.

TASE Core Activities in 2023

In 2023, against the backdrop of exceptional events that had significant impact on the local capital market, TASE continued to implement its strategy of building up core activities and furthering the development and growth of the market. Internationally, TASE delivered organic growth in the demand for its market data products, most notably the connectivity services. Consequently, TASE is set to open a POP in Frankfurt in the next few weeks, similar to its London POP, for easier direct international access to trading on TASE and to market data. The foreign ETFs traded on TASE also enjoyed increased activity, as local investors chose to purchase international indices through TASE. This year, TASE approved two new local TASE members and Blink became active TASE members in 2023. TASE continuously works to bring in additional members as a means of enhancing the competition and creating new investment opportunities for the public through local and international players.

As part of its aim to increase market liquidity, TASE launched a reform of the TASE equity indices in 2023. The proposed change in commissions on indices, which is designed to upgrade the market and align it with international standards, has been approved by the Israel Securities Authority (ISA). TASE launched the first tailor-made indices with a leading Israeli investment house, Yelin Lapidot, and has lined up the launch of additional specialty indices with other investment houses. There has also been a rise in Israeli retail investment in international indices through TASE, which generated revenue that helped offset the diversion of investments from the local indices.

The reform in the bond market is making headway – TASE has reduced the minimum order size for government bonds, corporate bonds and T-bills, further to the reduction of the minimum order size for equities in the previous year. The minimum order size for COCO bonds has also been reduced, increasing average daily trading volume threefold compared to the 90 days prior to the change.

In the derivatives market, TASE launched an additional weekly series of options on the TA-35 index that expires on Tuesdays, in addition to the Thursday expiration series, which has significantly boosted the opening auction of shares on the expiration days. At the beginning of March 2024, TASE launched an additional weekly series that expires on Sundays, thereby assisting with the hedging of the weekend risk. Significant growth was also recorded in revenues from institutional investors' activity in options on single shares.

In 2023, TASE launched a digital system for real-time reporting of OTC transactions, giving investors access to readily available information on transactions executed off the order book. In addition, TASE's proprietary dedicated private market system, which is used, among other purposes, for the operation and clearing of mutual hedge funds, has been activated and most TASE members have already subscribed to it. To date, 22 mutual hedge funds with AUM of NIS 210 million have already registered with the Clearing House.

TASE has recently launched a dedicated pilot of crypto-custody services for entities that have been authorized to act for their clients in crypto currencies. For the first time in Israel, TASE will support custody of digital assets, which will further the advancement of the Israeli crypto market and the adoption of innovative technologies for the benefit of Israeli investors.

Local and international investors purchased TASE shares - the consideration will be dedicated to technological development; and announcement of a dividend distribution -

In December, TASE approved an agreement, which included the payment of a special dividend in an amount of NIS 2.5 per share to all of the shareholders, totaling NIS 231 million, in return for an agreement by the holders to sell these shares. As part of the move and despite the existence of sufficient liquid balances, the TASE Board of Directors approved an agreement with a financial institution for a loan of up to NIS 150 million, which was received in December 2023.

In January 2024, TASE held a successful roadshow in New York with Jefferies and in conjunction with Leader, competed the placement of the legacy shares with domestic and international institutional investors. As prescribed by law, TASE received the excess consideration over NIS 5.08 per share from this sale. TASE is dedicated to bringing in foreign investors and strengthening international standing. Despite of the ongoing war, all of the legacy shares representing almost 18.5% of TASE shares outstanding were placed at a price of NIS 20.6 per share, a mere 2% discount to the market price at the time of sale. The total sale consideration was NIS 353 million, of which NIS 87 million was paid to the selling shareholders and TASE received a net amount of NIS 242 million, which has been credited directly to TASE's equity and is earmarked for the development of TASE's technological infrastructure. The success of the placement especially in these challenging times is a vote of confidence in the Israeli economy, as TASE is a reflection of Israeli economic strength. The sale of the shares ended the disputes between TASE and the banks included in the arrangement.

The TASE Board of Directors approved today the payment of a dividend in an amount of NIS 42 million, representing NIS 0.45 per ordinary share, payable on March 20, 2024. The Board of Directors has also approved an annual dividend distribution policy, starting with its financial statements for 2024 that will remain in effect through to its financial statements for 2026, during which time, the Company will work to distribute to its shareholders a cash dividend at a rate of 50% of the annual net profit. The dividend will be paid soon after the date of the annual financial statements' approval.

Highlights of the results for the fourth quarter of 2023:

Revenue in the fourth quarter of 2023 totaled NIS 101.4 million, compared to revenue of NIS 86.3 million in the corresponding quarter last year, an increase of 18%. Revenue increased across all activities, divided equally between revenue other than from trading and clearing and revenue from trading and clearing.

Revenue from trading and clearing commissions totaled NIS 41.2 million, an increase of 22% compared to the corresponding quarter last year. The increase derived mainly from the increase in the number of trading days this quarter compared to the corresponding quarter last year, which accounted for 14% of the revenue increase in this item. An increase was also recorded in the trading volumes of government bonds between the quarters and in revenue from mutual funds.

Revenue from listing fees and levies increased by 3% and totaled NIS 20.2 million. Revenue from Clearing House services recorded a double-digit increase of 17%, totaling NIS 21 million in the fourth quarter. Revenue from data distribution and connectivity services totaled NIS 18.6 million in the fourth quarter of 2023, a 30% increase compared to the corresponding period last year.

Costs in the fourth quarter of 2023 totaled NIS 76.9 million, compared to costs of NIS 67.5 million in the corresponding quarter last year, 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 totaled 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 this quarter resulted from a positive return of 1.64% on the Company's investments in marketable securities' portfolios comprising Israeli government bonds, compared to a negative return of 0.67% in the corresponding quarter last year, as well as from the raising of the Bank of Israel interest rate, which 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, a 57% increase. The increase in profit was due mainly to the increase in revenue and the transition to financing income, net of the effect of the increase in expenses, as described above.

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 increase of 25% between the quarters. 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 NIS 13.3 million in the corresponding quarter last year, an increase of 70%. The increase is due mainly to the increase in revenue and the transition to financing income in the quarter, net of the increase in expenses, as described above.

Highlights of the results for full fiscal year 2023

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, eliminating the one-time effect of an update to the period of revenue recognition from listing fees recorded in the corresponding period last year, in an amount of NIS 4.3 million. Revenue from listing fees and levies increased by 9%.

Revenue from trading and clearing commissions totaled NIS 155.6 million, an increase of 9% year-over-year. 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, primarily due to the higher trading volumes and the increase in the volumes of creations and redemptions of mutual fund units. At the same time, the reduction in equity 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).

Otherwise in revenue from operations: listing fees and levies totaled NIS 81.1 million, a decrease of 4% compared to 2022, deriving mostly from one-time income of NIS 4.3 million recorded in the first quarter last year. Revenue from Clearing House services grew by 10%, totaling NIS 78.2 million, but the most significant increase was achieved in revenue from data distribution and connectivity services - an increase of 23% year-over-year to a total of NIS 71.2 million.

The expenses in 2023 totaled NIS 291.5 million, compared to expenses 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 amounted to 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 return of 3.0% on the Company's investments in marketable securities' portfolios comprising Israeli government bonds, compared to a negative return 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 rise 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 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, which was partly offset by a 3% increase in adjusted expenses, primarily employee benefit expenses and computer and communication expenses, net of 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 to an 8% rise in revenue and the transition to financing income a result of the positive return on the Company's investments in held-for-trade financial assets and the increase in the interest on deposits.

Click here for the link to the full financial statements for the fourth quarter of 2023 and the full year 2023

Click here for the link to the financial presentation of the fourth quarter of 2023 and the full year 2023

This notification does not supersede the stated in the periodic financial statements of the Company for the fourth quarter of 2023 and the full year 2023, which contain the full and accurate information.

Seasonality

The revenue of the Company from trading and clearing is affected, inter alia, by the number of trading and clearing days. Presented below is information on the quarterly breakdown of trading days: