The Tel-Aviv Stock Exchange Reports the Financial Results for the Second Quarter and First Half of 2023

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Aug 08, 2023, 12:24 ET

TASE Closes the Second Quarter of 2023 with Increase of 42% in the Adjusted Profit Comparable to the Corresponding Quarter Last Year

TASE's revenues in the second quarter of 2023 totaled NIS 93 million, an increase of 2% compared to the corresponding quarter last year, despite the five fewer trading days in the quarter compared to last year.
The profit in the second quarter of 2023 totaled NIS 19 million, compared to NIS 14 million in the corresponding quarter last year, an increase of 32%.
The adjusted profit in the second quarter of 2023 totaled NIS 20 million, compared to NIS 14 million in the corresponding quarter last year.
TASE continues to buy back shares and in the second quarter, purchased 5.8 million shares at a cost of NIS 108 million.

Ittai Ben Zeev, CEO of TASE, said today: "The second quarter of the year was characterized by further organic growth in TASE's activity, with core operations continuing to display profitability, as emphasized by the marked increase in trading volumes of government bonds and T-bills and higher revenues from data distribution and connectivity services. We have emphasized continued implementation of TASE's strategic plan, within the framework of which we have begun the process of entering the digital assets arena, which we believe is going to be an additional growth engine for TASE's business activity. In this connection, we conducted a successful pilot issuance of digital government bonds over a dedicated blockchain platform, in collaboration with the Ministry of Finance. This is a cutting-edge project that has attracted considerable interest both in Israel and worldwide."

TEL AVIV, Israel, Aug. 8, 2023 /PRNewswire/ -- The Tel-Aviv Stock Exchange Ltd. (TASE: TASE) today announced its financial results for the second quarter that ended on June 30 2023.

At the close of the first half of 2023 and against the background of the continuing uncertainty surrounding the judicial reform and the rise in interest and inflation, locally and globally, the leading equity indices continue to underperform in comparison to leading international equity indices, IPOs have come to an almost complete standstill and capital raisings by listed companies have slowed down compared to the first half of 2022. At the same time, significant growth has been recorded in the trading volumes of government bonds and T-bills.

Companies are continuing to refinance debt through the marketable bonds market, despite the rise in interest rates, which proves the importance of the bonds market to the companies' growth and the Israeli economy, particularly during the current period. In the first half of 2023, the business sector raised close to NIS 47 billion through offerings and private placements of bonds to institutional investors and the public – similar to the amount raised in the first half of 2022.

The assets under management (AUM) of the TASE equity indices surged in the second quarter of 2023, compensating for the withdrawals in the first quarter of the year. In the first half of the year, the TASE equity indices gained NIS 500 million in AUM, and the volume of OTC assets that track the TASE indices grew by NIS 1 billion. TASE's equity indices currently manage about NIS 41.3 billion of ETFs, tracking funds and OTC transactions. The Israeli economy has a significant growth potential, with its unique demographics and robust economy, acting as a strong growth engine.

Total net share purchases by foreign investors amounted to NIS 4.6 billion from January through May 2023, on top of purchases of NIS 14.1 billion for the whole of 2022. According to the Bank of Israel, net purchases of government bonds by foreign investors on TASE totaled NIS 20 billion, from January through May 2023, compared to net sales of NIS 1 billion for the whole of 2022. These purchases have generated strong trading volumes in the government bonds market.

Implementation of the strategic plan – principal measures

In line with the goals of our strategic plan, TASE has entered into a groundbreaking agreement with Fireblocks for the development and advancement of activities in digital assets. This collaboration will allow TASE to enhance its value proposition to the Israeli market by establishing, for the first time, a secure, dedicated, transparent, and supervised framework for digital asset activities. For example, TASE will be able to offer qualifying institutions custody services for cryptocurrencies and other digital assets.

TASE continues to progress with its trading strategy and liquidity enhancement and has launched a new weekly options series on the TA-35 Index that expires on Tuesdays, in addition to the Thursday expiration series. TASE believes that it will increase investors' engagement in derivatives.

At the beginning of July, TASE launched the Trade Repository, an OTC real-time reporting system, which enables investors instant access to information on transactions executed off the order book, all in alignment with international standards, such as Mifid2. The provision of more direct and transparent access to information will help to optimize trading by both local and foreign investors, putting TASE on par with the leading global capital markets.

Additionally, TASE is continuing to buy back shares under the buyback plan. Since the initiation of the plan in May 2022 until shortly after the reporting date, TASE had purchased a total of 5 million shares at an average price of NIS 17.6 per share, amounting to NIS 88 million in total. In the second quarter, TASE executed a special buyback of 4.6 million shares at a cost of NIS 86 million, which was not subject to the prescribed restrictions and the "safe harbor" protection terms. In total, TASE has purchased 9.6 million shares at an overall cost of NIS 174 million and at an average price of NIS 18.1 per share. The remaining balance of the buyback plan is NIS 12 million.

Highlights of the results for the second quarter and first half of 2023:

Revenue in the second quarter of 2023 totaled NIS 92.9 million, compared to revenue of NIS 91.0 million in the corresponding quarter last year, an increase of 2%. The increase in revenue is due mainly to revenue from data distribution and connectivity services, resulting from growth in activity and from updating the data usage tariffs. Revenue from trading and clearing fell by 1% due to there having been five fewer trading days in the quarter compared to last year.
Revenue in the first half of 2023 totaled NIS 192.9 million, compared to revenue of NIS 188.7 million in the corresponding half last year, an increase of 2%. Increasing revenue is due to the higher activity of the Company and the Group, including a 3% increase in revenue from trading and clearing commissions, which totaled NIS 77.5 million in the half, and 7% growth in revenue from clearing services, which totaled NIS 38 million in the half. Eliminating the one-time effect of changing the estimate of the period over which registration from listing fees is recognized, which took place in the corresponding period last year and amounted to NIS 4.3 million, the increase in revenue amounted to 5%, despite there having been 2% fewer trading days than last year.
Costs in the second quarter of 2023 totaled NIS 72.6 million, compared to costs of NIS 68.1 million in the corresponding quarter last year, an increase of 7%. The increase in costs is due mainly to increases in computer and communication expenses, share-based payment expenses (following the grant of options to management) and marketing expenses.
Costs in the first half of 2023 totaled NIS 142.6 million, compared to costs of NIS 141.6 million in the corresponding half last year, an increase of 1%.
Net financing income in the second quarter of 2023 totaled NIS 3.6 million, compared to net financing expenses of NIS 3.4 million in the corresponding quarter last year. The transition to financing income this quarter resulted from a positive return of 0.9% on the Company's investments in marketable securities' portfolios comprising Israeli government bonds, compared to a negative return of 1.9% in the corresponding quarter last year. In addition, the raising of the interest rate by the Bank of Israel led to raising the interest rate on deposits.
Net financing income in the first half of 2023 totaled NIS 6.1 million, compared to net financing expenses of NIS 8.6 million in the corresponding half last year. The transition to financing income in the half resulted from a positive return of 1.4% on the Company's investments in the marketable securities' portfolios comprising Israeli government bonds, compared to a negative return of 4.3% in the corresponding half last year, as well as from higher interest income on deposits.
The profit in the second quarter of 2023 totaled NIS 18.8 million, compared to NIS 14.2 million in the corresponding quarter last year, an increase of 32%. The increase in profit was due mainly to the transition to financing income.
The profit in the first half of 2023 totaled NIS 44.3 million, compared to NIS 28.9 million in the corresponding quarter last year, an increase of 53%. The increase in profit is due to the higher revenue from services and the transition to financing income.
The adjusted profit in the second quarter of 2023 totaled NIS 20.4 million, compared to NIS 14.3 million in the corresponding quarter last year, an increase of 42%. The increase is due mainly to the transition to financing income as a result of the positive yield on the Company's investments in the marketable securities' portfolios comprising Israeli government bonds and from higher interest income on deposits.
The adjusted profit in the first half of 2023 totaled NIS 46.5 million, compared to NIS 29.2 million in the corresponding half last year, an increase of 59%. The increase is due mainly to the rise in revenue and the transition to financing income as a result of the positive yield on the Company's investments in financial assets held for trading.
The adjusted EBITDA in the second quarter of 2023 totaled NIS 35.6 million, similar to that in the corresponding period last year.
The adjusted EBITDA in the first half of 2023 totaled NIS 79.1 million, compared to NIS 72.6 million in the corresponding half last year, an increase of 9%. 6% of the increase is due to the rise in revenue, while 3% is attributable to the decrease in adjusted expenses, primarily marketing expenses.

Click here for the link to the full financial statements for the second quarter of 2023>

Click here for the link to the financial presentation for the second quarter of 2023>

This notification does not supersede that stated in the periodic financial statements of the Company, 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. In the second quarter of 2023, there were 58 trading days, compared to 61 trading days in the corresponding quarter last year, a 4.9% reduction. In the first six months of 2023, there were 122 trading days, compared to 125 trading days in the corresponding period last year, a 2.4% reduction. Presented below is information on the quarterly breakdown of trading days: