1. GENERAL

Saudi Tadawul Group Holding Company (formerly “Saudi Stock Exchange Company”) (the Company) is a Saudi joint stock company registered in the Kingdom of Saudi Arabia under Commercial Registration number 1010241733 dated 2/12/1428 H (corresponding to 12 December 2007). The Company was established by the Royal Decree no. M/15 dated 01/03/1428 H (corresponding to 20 March 2007) and the Ministry of Commerce resolution no. 320/k dated 1/12/1428 H (corresponding to 11 December 2007).

The Company was wholly owned by the Government of the Kingdom of Saudi Arabia (the “Government”) as ultimate controlling party through the Public Investment Fund (“PIF”). As at 31 March 2022, the authorized, issued and fully paid-up share capital of the Company is SAR 1,200 million (31 December 2021: SAR 1,200 million) divided into 120 million shares (31 December 2021: 120 million shares) of SAR 10 each.

On 1 June 2021, the Company announced its restructuring which resulted in transforming the Saudi Stock Exchange Company (Tadawul) into a holding company under the name of Saudi Tadawul Group Holding Company, a parent company of four wholly owned subsidiaries; Saudi Exchange Company (Exchange), Securities Clearing Center Company (Muqassa), the Securities Depository Center Company (Edaa), and Tadawul Advance Solution Company (Wamid). The details of these subsidiaries are given in note 1.1. From 1 June 2021, the operations of the Company, that included listing, trading and dissemination of securities information, were transferred to Exchange.

These condensed consolidated interim financial statements comprise the financial statements of the Company and its subsidiaries (collectively referred to as “the Group”).

The Company’s main activities, after becoming a holding company, are managing and supporting subsidiaries or participating in the management of other companies in which it owns shares, investing its funds in shares and other securities, owning real estate and other properties in connection with its businesses, granting loans, guarantees and financing to its subsidiaries, and owning and leasing industrial property rights to its subsidiaries or other companies.

The Group’s main activities through dedicated subsidiaries (given in note 1.1) is to provide a listing service, create and manage the mechanisms of trading of securities, providing depository and registration services for securities ownership, clearing of securities trades, dissemination of securities information and engage in any related other activity to achieve the objectives as defined in the Capital Market Law.

On 8 December, 2021, the Company completed its Initial Public Offering (“IPO”) and its ordinary shares were listed on the Saudi Stock Exchange. In connection with the IPO, the Government through PIF sold 30% of their stake representing 36 million ordinary shares. Accordingly, PIF now holds 70% (2020: 100%) of the share capital.

The Company’s registered address is as follows:

6897 King Fahd Road - Al Olaya

Unit Number: 15

Riyadh 12211-3388

Kingdom of Saudi Arabia

1. GENERAL (CONTINUED)

1.1 Details of the Company’s subsidiaries

1. BASIS OF PREPARATION

2.1 Statement of compliance

These interim condensed consolidated financial statements as at and for the three month period ended 31 March 2022 have been prepared in compliance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting” as endorsed in the Kingdom of Saudi Arabia, other standards and pronouncements issued by the Saudi Organization for Chartered and Professional Accountants (“SOCPA”) and in compliance with the provisions of the Regulations for Companies in the Kingdom of Saudi Arabia and the by-laws of the Company. The accounting policies in these condensed consolidated interim financial statements are consistent with those in the Group’s annual financial statements for the year ended 31 December 2021.

These condensed interim financial statements do not include all information and disclosures required for a complete set of financial statements and should be read in conjunction with the Company’s last annual financial statements as at and for the year ended December 31, 2021.

2.2 Basis of measurement

These condensed consolidated interim financial statements have been prepared on a historical cost basis, except for financial assets measured at fair value through profit or loss and employees’ end-of-service benefits which is using the projected unit credit method and discounted to their present value.

2.3 Functional and presentation currency

These condensed consolidated interim financial statements are presented in Saudi Arabian Riyals (“SAR”), which is the functional and presentational currency of the Group. All amounts have been rounded to the nearest SAR.

2.4 Critical accounting estimates and judgments

In preparing these condensed consolidated interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group’s accounting policies and

the key sources of estimation uncertainty were the same as those described in the last annual financial statements.

2. BASIS OF CONSOLIDATION

These condensed consolidated interim financial statements comprise the financial statements of Tadawul and its subsidiaries (collectively referred to as “the Group”). Control is achieved when the Group is exposed to or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

In assessing control, the Group considers both substantive rights that it holds and substantive rights held by others. The financial statements of subsidiaries are included in the condensed consolidated interim financial statements from the date that control commences until the date control ceases and it derecognises the assets & liabilities of the subsidiary and any related NCI & other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

Intra-group balances & transactions and any unrealised profit & expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated.

1. NEW STANDARDS AND AMENDMENTS ISSUED

Standards issued but not yet effective

A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2022 and earlier application is permitted. The Group has not early adopted any of the forthcoming new or amended standards in preparing these condensed consolidated interim financial statements.

New standards or amendments for 2022 and forthcoming requirements

A number of standards, amendments and interpretations have been issued. The new requirements that have been issued by the International Accounting Standards Board as at 20 March 2022, and contains two tables, as follows:

– New currently effective requirements: This table lists the recent changes to the Standards that are required to be applied by an entity with an annual reporting period beginning on 1 January 2022.

– Forthcoming requirements: This table lists the recent changes to the Standards that are required to be applied for an annual period beginning after 1 January 2022 and that are available for early adoption in annual periods beginning on 1 January 2022. These requirements are not included in this guide.

Forthcoming requirements:

1. BASIS OF CONSOLIDATION (CONTINUED)

Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

EQUITY-ACCOUNTED INVESTEE

This represents the Group’s share of investment in Tadawul Real Estate Company (“the Associate”), a company incorporated in the Kingdom of Saudi Arabia, where the Company has influence through voting rights. As at 31 March 2022, the Group owns 33.12% (31 December 2021: 33.12%) of the share capital of the Associate. The main activity of the Associate is to develop a commercial office tower in King Abdullah Financial District, Riyadh, where the Group expects to be headquartered.

The Group has recognized its share of loss for the three-month period ended 31 March 2022, based on the quarterly management accounts of the Associate. The financial restructuring of the Associate was completed during 2020. The restructuring involved the conversion of the investment in the Associate in the form of sukuks amounting to SAR 130 million to an equity investment. Furthermore, the Company made an additional equity investment amounting to SAR 210 million. These transactions were approved by the Group's Board of Directors on 19 April 2020. This restructuring has not resulted in the Group gaining control over the Associate.

The movement of investment in the Associate is as follows:

The following table summarizes the financial information of the Associate as included in the management accounts as at 31 March 2022 and audited financial statements as at 31 December 2021:

1. OPERATING REVENUE

20.1 In accordance with the Council of CMA resolution no. (17/270/6) dated 18 January 2017,the operating revenues arrangement between the Group and CMA effective from 1 January 2017 is as follows:

• As mentioned in note 16, The CMA is entitled to receive a financial return equal to 64% of the total trading commission. The Group shall collect this return on behalf of the CMA and deposit into the CMA’s account based on its instructions; However: the CMA share of revenue is not recognized.

• The Group is entitled to keep 100% of operating revenue (except trading commission, which is subject to the above-mentioned financial return sharing arrangement).

20.2In the current year, the Group has updated the disaggregation of revenue as disclosed in the condensed consolidated interim financial statements. In order to provide comparability to the amounts disclosed in the prior year condensed consolidated interim financial statements, a reconciliation is provided below:

1. DEPOSITS WITH SAUDI CENTRAL BANK (SAMA)

This represents cash collateral received from clearing participants in the form of initial margin, variation margin and default funds for the equity and derivatives markets. It also includes SAR 16.5 million deposited by the Group as per CMA guidelines. Commission is earned on such deposits. Part of the commission is booked by the Group and the clearing members’ share of the commission is added to their collateral accounts. These are not available for use by the Group.

9.1 In preparation of equity clearing operations launch on April 3, 2022, clearing participants have deposited cash collateral in the form of initial margin and default funds.

10. CASH AND CASH EQUIVALENTS

1. ACCOUNTS RECEIVABLE

7.1 The movement in the allowance for credit losses is summarized as follows:

1. PREPAID EXPENSES AND OTHER CURRENT ASSETS

8.1 This represents an advance paid to purchase a property for establishing the data center in King Abdullah Financial District.

1. MARGIN DEPOSITS FROM CLEARING PARTICIPANTS

13.1 This represents cash collateral received from clearing members on their own account.

13.2This represents cash collateral received from clearing members on account of their customers.

13.3This represents cash collateral from clearing members with position.

13.4This represents cash collateral from clearing members on Muqassa account. In preparation of equity clearing operations launch on April 3, 2022, clearing participants have deposited cash collateral in the form of initial margin and default funds. Also refer to note 9.1 for details.

2. MEMBERS’ CONTRIBUTION TO CLEARING HOUSE FUNDS

This represents a prefunded default arrangement that is composed of assets contributed by clearing members that may be used by the Group in certain circumstances to cover the losses or liquidity pressure resulting from participant defaults.

1. INVESTMENTS

Investment securities portfolios are summarized as follows:

6.1Investments at amortized cost

This represents investment in Sukuks issued by counterparties operating in the Kingdom of Saudi Arabia having sound credit ratings. The Sukuk carry an average commission rate of 2.5% per annum during the three month period ended 31 March 2022 (2021: 2.4% - 2.5%).

The details of these investments are as follow:

6.1.1 The movement of the expected credit losses on investments held at amortized cost is summarized as follows:

Below is the break-up of investment at amortized cost:

6. INVESTMENTS (CONTINUED)

6.2 Investments at fair value through profit or loss (“FVTPL”)

This represents investments in units of mutual funds, which are governed by the regulation issued by the CMA. These assets are held by the Group for trading due to which it has been classified as current assets. The cost and fair value of investments held at FVTPL are as follows:

1. ACCOUNTS PAYABLE

1. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

1. ZAKAT PAYABLE

Effective 1 January 2021, the Group is subject to Zakat in accordance with the Zakat regulation issued by ZATCA based on Royal Decree 35657 issued on 29/6/1442H.

Movement of Zakat is as follows:

19.1The Group has already filed its consolidated Zakat return for the year ended 31 December 2021 with ZATCA, however the 2020 Zakat assessment is pending finalization.

1. DEFERRED REVENUE

1. BALANCE DUE TO CAPITAL MARKET AUTHORITY (CMA)

The CMA is entitled to receive a financial return equal to 64% of the total trading commission. The Group collects this return on behalf of the CMA and deposits into the CMA’s account based on its instructions.

1. EMPLOYEES’ END-OF-SERVICE BENEFITS LIABILITY

The movement in employees’ end-of-service benefits is as follows:

12. EMPLOYEES’ END-OF-SERVICE BENEFITS LIABILITY (CONTINUED)

12.1 Net end-of-service benefits liability is as follows:

1. STATUTORY RESERVE

In accordance with the Company’s by-law and Saudi Arabian Regulations for Companies in the Kingdom of Saudi Arabia, the Company is required to set aside 10% of its net profit each year as statutory reserve. The shareholder in the extraordinary general assembly held on 17th August 2021 has decided to discontinue setting aside such percentage when said reserve reaches 30% of paid-in capital. Since the Company has reached the required reserve level, therefore, no additional transfers were required to be made as at year end. The Company transferred the net surplus above the 30% requirement from the statutory reserve to the retained earnings at year-end. The statutory reserve in the condensed consolidated interim financial statements is the statutory reserve of the Company. This reserve is currently not available for distribution to the shareholders of the Company.

1. OPERATING COSTS

Operating costs include direct expenses incurred by the Group to provide services to its customers and the Saudi financial market. A breakdown of operating costs is as follows:

21.1 This represents fees payable to the CMA in relation to services provided to the Group in accordance with the council of CMA resolution no. (17/268/6) dated 18 January 2017 and the CMA Board decision no. (3-2-2020) dated 7 January 2020.

1. GENERAL AND ADMINISTRATIVE EXPENSES

1. INVESTMENT INCOME

1. BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share is computed by dividing profit attributable to the ordinary shareholders of the Company by the weighted average outstanding number of shares for the period ended 31 March 2022, totaling 120 million shares (31 March 2021: 120 million shares).

1. TRANSACTIONS WITH RELATED PARTIES

In the ordinary course of its activities, the Group transacts with its related parties. Related parties include PIF (“the shareholder”), Tadawul Real Estate Company (“the Associate”), the Group’s Board of Directors and key executives. The related parties also include affiliated entities which:

a) Are owned by the shareholders;

b) Have common directors on the Company’s BOD; and

c) Have common directors on the shareholder’s BOD.

26. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)

26.1 The Group has disclosed the transactions with related parties by each Group company. The revenue services provided by each Group company are explained below.

Transactions with Tadawul Holding Services represents the trading services, listing fees and technology & information services which were provided by the parent prior to the Group restructuring. However, from 1 June 2021 these services are being provided by Saudi Exchange Company and are reported under Saudi Exchange Services. Transaction with Securities Depository

Services represents the post trade services, and Securities Clearing Services represents the clearing services of derivatives.

The transactions with related parties during the three-month period ended 31 March 2022 in relation to the Group’s core activities carried out through the companies of the Group are as follows:

26. 1. The account receivables balance arising from the above transactions is as follows:

26. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)

26.2 The transactions with related parties during 2021 in relation to the Group’s core activities carried out through the companies of the Group are as follows:

The receivables balance arising from the above transactions are as follows:

26.3 Other balances with related parties included in investments at “FVTPL” are as follows:

26. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)

26.4Other balances with related parties arising out of services received and included within accounts payables and accrued expenses are as follows:

26.5Key management consists of the non-executive directors and the executive management. The compensation of key management personnel is as follows:

1. SEGMENT INFORMATION

The Group operates solely in the Kingdom of Saudi Arabia. For management purposes, the Group is organized into business units based on services provided. The reportable segments of the Group are:

Capital markets

The activities of this segment include trading commission for securities and derivatives, admission fees from initial listing and further capital raises, annual fees charged for securities traded on the Group’s markets and fees from our secondary market services.

Post trade

The activities of this segment include registration of investment portfolios in the filing and settlement system, register and file its ownership, transfer, settlement, clearing and safekeeping its ownership, registering any restriction of ownership on the file securities, and associate with members of the market and settlement agents to filing and settlement system. Furthermore, linking and managing records of securities issuers, organizing general assemblies for issuers including remote voting service for such assemblies, providing reports, notifications and information in addition to providing any other service relating to its activities according to financial market regulations. This business unit covers revenue from the post trade services.

27. SEGMENT INFORMATION (CONTINUED)

Data & technology services

The activities of this segment are to grow the business of Data &Technology Services which includes offering high-quality real-time trading data, reference data, market indices, financial information to the financial community, financial technology solutions, research & development in the field of engineering & technology and innovative capital market solutions for stakeholders. This business unit covers revenue from the Data and technology services.

Corporate

Corporate manages future corporate development and controls all treasury related functions. All investments are incubated within this category, which also comprises managing strategy for business development, legal, finance, operations, human resources and customer relations management.

27.1Information about reportable segments:

27.2Reconciliation of information on reportable segments to the amounts reported in the financial statements:

i. Net profit for the period