1. GENERAL

Saudi Tadawul Group Holding Company (formerly “Saudi Stock Exchange Company”) (the “Company”, “Parent”) 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).

1. GENERAL

The Company’s main activities 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.

كانت الشركة مملوكة بالكامل لحكومة المملكة العربية السعودية ("الحكومة") باعتبارها الطرف المسيطر النهائي من خلال صندوق الاستثمارات العامة. وفي 8 ديسمبر 2021م، استكملت الشركة طرحها العام الأولي وأدرجت أسهمها العادية في السوق المالية السعودية. فيما يتعلق بالطرح العام الأولي، باعت الحكومة من خلال صندوق الاستثمارات العامة 30٪ من حصتها التي تمثل 36 مليون سهم عادي. في 13 نوفمبر 2022، باع صندوق الاستثمارات العامة ما نسبته 10٪ إضافية من حصته التي تمثل 12 مليون سهم عادي. وعليه، يمتلك صندوق الاستثمارات العامة حالياً 60٪ (31 ديسمبر 2023: 60٪) من رأس المال. كما في 31 مارس 2024، بلغ رأسمال الشركة المُصرح به والمُصدر والمدفوع بالكامل 1,200 مليون ريال سعودي (31 ديسمبر 2023: 1,200 مليون ريال سعودي) مقسم إلى 120 مليون سهم (31 ديسمبر 2023: 120 مليون سهم) بقيمة 10 ريال سعودي لكل سهم.

On 7 May 2023, 51% shareholding in Direct Financial Network Company (DFN) was acquired by the Group through one of its subsidiary (Wamid) refer note 1.1, 39 for details.

The Group has established a new wholly owned subsidiary (a Limited Liability Company) called “Tadawul Investment Holding Company” (“TIH”) with authorised share capital of SAR 35 million registered in the Kingdom of Saudi Arabia under Commercial Registration number 1010980736 dated 25/7/1445 H (corresponding to 6 February 2024). This company’s objective is to fully hold investment in another subsidiaries (refer Note 37.1) which will be used as investment vehicle to own Group’s upcoming planned investments in associates and joint ventures. This subsidiary has not yet started its investing activities.

The Group’s main activities through dedicated subsidiaries and associates (given in note 1.1 and 1.2) 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, develop financial technology and engage in any related other activity to achieve the objectives as defined in the Capital Market Law.

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

The Company’s registered office address is as follows:

6897 King Fahd Road - Al Olaya

Unit Number: 15

Riyadh 12211-3388

Kingdom of Saudi Arabia

DFN has following subsidiaries that are involved in developing financial technology and financial content for stakeholders:

1. 1. Details of the Company’s associates:

1. BASIS OF PREPARATION

2.1 Statement of compliance

These interim condensed consolidated interim financial statements for the period ended 31 March 2024 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 consolidated financial statements for the year ended 31 December 2023 except adoption of new standards and amendments to standards effective 1 January 2024 listed in Note 5.

These condensed consolidated 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 Group’s last annual consolidated financial statements for the year ended 31 December 2023. In addition, results for the three-month periods ended 31 March 2024 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2024.

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 put option liability which is 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 Group’s last annual consolidated financial statements for the year ended 31 December 2023.

1. BASIS OF CONSOLIDATION

These condensed consolidated interim financial statements comprise the financial statements of Saudi Tadawul Group Holding Company 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. Specifically, the Group controls an investee if and only if the Group has:

• power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

• exposure, or rights, to variable returns from its involvement with the investee; and

• the ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• the contractual arrangement with the other vote holders of the investee;

• rights arising from other contractual arrangements; and

• the Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the condensed consolidated interim financial statements from the date the Group obtains control until the date the Group ceases to control the subsidiary.

3. BASIS OF CONSOLIDATION (CONTINUED)

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the condensed consolidated interim financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group losses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in the consolidated statement of income. Any investment retained is recognised at fair value.

1. BUSINESS COMBINATION AND GOODWILL

Business combinations are accounted for applying the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred which is measured at fair value on the acquisition date and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed in the condensed consolidated interim statement of profit or loss and other comprehensive income when incurred.

When the Group acquires a business, it assesses the financial assets acquired and financials liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed.

If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed. If the reassessment still results in excess, the gain is recognised in the condensed consolidated interim statement of profit or loss and other comprehensive income.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses, if applicable. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date, allocated to each of the Group’s cash generating units (“CGU”) that are expected to have benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed off, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and portion of CGU retained.

Written put options on non-controlling interest where the Group does not have an unconditional right to avoid the delivery of cash, are recognised as financial liabilities at the present value of the exercise price. Under this method, based on the terms of the agreement and Group’s assessment on case to case basis, non-controlling interest is recognised however while the put option remains unexercised, at the end of each reporting period, the Group:

- determines the amount that would have been recognised for the non-controlling interest, including an update to reflect allocations of profit or loss

- de-recognises the non-controlling interest as if it was acquired at that date

- the difference between the fair value of the non-current liability resulting from the put option and the non-controlling interests is recognized in equity

1. NEW STANDARDS AND AMENDMENTS ISSUED

Standards and amendments adopted as of 1 January 2024

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2023, and the adoption of new standards effective as of 1 January 2024. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. The International Accounting Standard Board (IASB) has issued following accounting standards, amendments, which were effective from periods on or after January 1, 2024. The management has assessed that the amendments have no significant impact on the Group’s interim condensed financial statements.

• Amendments to IAS 1: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants- Clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period and non-current liabilities with covenants.

• Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements - Disclosures to clarify the characteristics of supplier finance arrangements and require additional disclosure of such arrangements.

• Amendments to IFRS 16: Lease Liability in a Sale and Leaseback - Require seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains.

Standards and amendments issued and not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s consolidated financial statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

1. CASH AND CASH EQUIVALENTS

13.1 Commission is earned on deposit with SAMA at the prevailing market rates offered by SAMA with original maturity of less than three months. These funds are restricted and are not available for general operational use of the Group.

13.2 These time deposits are placed with financial institutions in the Kingdom of Saudi Arabia with original maturities of less than three months. Commission is also earned on these time deposits as per the prevailing market rates. These time deposits are sharia compliant.

1. INVESTMENTS

Investment securities portfolios are summarized as follows:

9.1Investments at amortized cost:

This represents investment in Sukuks issued by counterparties in the Kingdom of Saudi Arabia having sound credit ratings. The Sukuks carry an average commission rate of 5% per annum as of 31 March 2024 (2023: 5.21%).

The details of these investments are as follow:

9.1.1 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:

31 March 2024

31 December 2023

9. INVESTMENTS (CONTINUED)

9.2Investments at fair value through profit or loss (“FVTPL”)

This represents investments in units of mutual funds registered in the Kingdom of Saudi Arabia. The cost and fair value of investments held at FVTPL are as follows:

1. ACCOUNTS RECEIVABLE

Receivable balances are non-commission bearing and have payment terms ranging from immediate to thirty days.

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

1. ADVANCES, PREPAYMENTS AND OTHER ASSETS

11.1 This represents an advance paid to Saudi Central Bank (SAMA) as partial payment for purchasing part of a property in King Abdullah Financial District, Riyadh, kingdom of Saudi Arabia.

11.2Other receivable balances are non-commission bearing and have payment terms ranging from immediate to ninety days.

1. CLEARING PARTICIPANT FINANCIAL ASSETS

12.1 Deposits with 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. Commission is earned on such deposits at the prevailing market rates offered by SAMA and clearing members’ share of the commission earned is added to their collateral accounts. These funds are not available for use in the operations of the Group.

12.2 Investment in SAMA Bills:

12.2.1 These represent investment in SAMA Bills from deposits received from clearing participants in the form of initial margin, variation margin and default funds for the equity and derivatives markets. Commission is earned on such Bills at the prevailing market rates offered by SAMA and clearing members’ share of the commission earned is added to their collateral accounts. These funds are not available for use in the operations of the Group.

As of each reporting date, all deposits with SAMA and SAMA Bills are assessed to have low credit risk as these are placed/issued by Government sovereign financial institutions and there has been no history of default with any of the Group’s deposit and investments in bills. Therefore, the probability of default based on forward looking factors and any loss given defaults are considered to be negligible.

1. INVESTMENTS IN ASSOCIATES

7.1 Investment in TREC

This represents the Group’s share of investment in TREC, a company incorporated in the Kingdom of Saudi Arabia. As at 31 March 2024, the Group owns 33.12% (31 December 2023: 33.12%) of the share capital of TREC. The main activities of this associate is to develop a commercial office tower in King Abdullah Financial District, Riyadh, where the Group will be headquartered.

During the year ended 31 December 2023, the Group assessed whether there was any indication that an impairment loss recongnised in prior years may no longer exist or may have decreased. Considering the completion of TREC’s building “Tadawul Tower” and committed occupancy, the Group carried out an impairment test and estimated the recoverable amount to be more than the carrying amount and reversed impairment amounting to SAR 20.89 million .

The Group has recognized its share of loss for the three-month period ended 31 March 2024, based on available draft of TREC financial statements at the time of issuance of the Group consolidated interim financial statement.

The movement in carrying value of investment is as follows:

7. INVESTMENT IN ASSOCIATES (CONTINUED)

7.1 Investment in TREC (continued)

The following table summarizes the financial information of the associate as included in the management accounts:

7.2 Investment in RVCMC

This represents the Group’s share of investment in RVCMC, a company incorporated in the Kingdom of Saudi Arabia on 25 October 2022. RVCMC offers guidance and resourcing to support businesses and industries in the region as they play their part in the global transition to net zero, ensuring that carbon credit purchases go above and beyond meaningful emission reductions in value chains. The RVCMC’s capital amounts to SAR 500 million (paid up capital of SAR 175 million), where PIF holds 80% stake and the Company holds 20% stake. RVCMC is headquartered in Riyadh, Kingdom of Saudi Arabia.

The Group has recognized its share of loss for the three-month period ended 31 March 2024, based on available draft of RVCM financial statements at the time of issuance of the Group consolidated interim financial statement.

The movement in carrying value of investment is as follows:

The following table summarizes the financial information of the associate as included in the management accounts:

7. INVESTMENT IN ASSOCIATES (CONTINUED)

1. RIGHT-OF-USE ASSETS

8.1 Deprecation expense is allocated as follows:

8.2On 1 March 2023, the Group signed a lease agreement for its new head quarter with TREC (an associate company). Initial lease term is for five years and is renewable subject to terms and conditions of the agreement. The Group has been provided grace period and it is being utilized to perform fit-out works at the office premises to bring it to condition for its intended use. Consequently, the depreciation and finance cost are considered by the Group as cost directly attributable in bringing the office premises in condition necessary to be capable of operating in the manner as intended by Group’s management. These cost hence are capitalized and currently recorded as capital work-in-progress under property and equipment.

1. INTANGIBLE ASSETS

Intangible assets, net, comprise of the following components as of period / year end :

1. ACCOUNTS PAYABLE

Payables are non-commission bearing and are settled on terms ranging from immediate to sixty days.

1. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Other payables and statutory dues are non-commission bearing and are settled on terms ranging from immediate to sixty days.

1. ZAKAT PROVISION

Zakat is charged at the higher of net adjusted income or Zakat base as required by the ZATCA. The key elements of zakat base primarily includes equity components, adjusted net income and liabilities reduced by non-current assets as adjusted for zakat purpose.

The movements in zakat provision are as follows:

The Group has already filed and paid its consolidated Zakat return for the Company and its wholly-owned subsidiaries with ZATCA for years 2020 till 2023. The Group is subject to Zakat in accordance with the Zakat regulations issued by ZATCA based on Royal Decree 35657 issued on 29/6/1442 effective from 1 January 2020. The Company has not received any assessments till date.

1. DEFERRED REVENUE

Deferred revenue includes balances pertaining to related parties amounting to SAR 22,450,692 (2023: SAR 4,641,968) (Note 33.2).

1. DIVIDENDS

The Board of Directors of the Company in their meeting on 25 February 2023 recommended to the General Assembly which approved the distribution of dividends on 10 May 2023 to the shareholders for the fiscal year ended 31 December 2022 with a total amount of SAR 277.2 million, equivalent to SAR 2.31 per share representing 23.1% of the share par value.

The Board of Directors of the Company in their meeting on 9 March 2024 recommended to the General Assembly which approved the distribution of dividends on 25 April 2024 to the shareholders for the fiscal year ended 31 December 2023 with a total amount of SAR 276 million, equivalent to SAR 2.30 per share representing 23% of the share par value.

1. CLEARING PARTICIPANT FINANCIAL LIABILITIES

19.1 The deposits from clearing participants represents amounts received from clearing participants as collateral in lieu of initial margin, variation margin and default funds for the equity and derivatives markets. These deposits are subject to commission, a portion of which is shared and included in the clearing participant financial assets.

19.2 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.

2. BALANCE DUE TO CAPITAL MARKET AUTHORITY (CMA)

The Group acts as a collection agent on behalf of CMA where their trading commission share is collected and transferred to them on an agreed mechanism. Such portion is not recognized as Group’s revenue. Also includes unpaid CMA fees balance.

1. BORROWINGS

The Group through its subsidiary (DFN) has loan facilities ranging from 1–10 years of SAR 36,431,991 (2023: 36,431,991). These facilities are secured against a mix of promissory notes, corporate guarantees from the related parties and related parties’ real estate properties. The balances, commission rate and repayment terms are as follows:

Long-term financing carries commission rates ranges from 6.59% to 9.35% per annum and overdraft carries commission rate of SIBOR +5.5% (2023: Nil). During the period ended 31 March 2024, DFN secured an Al-Tawarroq facility currently SAR 12.5million (facility limit SAR 20 million at commission rate of SIBOR +2%) which is included in current portion of Islamic financing.

On 20 Rajab1445H corresponding to 1 February 2024, Group has also obtained Islamic Sharia-compliant banking facilities from Al Rajhi Bank amounting to SAR 500 million with the purpose of financing the Group’s mergers and acquisitions. This agreement is aligned with the Group's strategy, objectives, and ambitious aim of revenue growth and diversification. There has been no drawdown from this facility during the period ended 31 March 2024.

1. EMPLOYEES’ END-OF-SERVICE BENEFITS

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

1. STATUTORY RESERVE

During the year ended 2023, the General Assembly in its extra ordinary meeting (EGM) on 29 Jumada al-Awwal 1445H (corresponding to 13 December 2023) approved the amendment of the Company’s By-Laws to transfer the statutory reserve of SAR 360 million to retained earnings and legal formalities for updating By-Laws are completed and the amount has been transferred.

1. NON-CONTROLLING INTEREST PUT OPTION

The Group, through its subsidiary Wamid, acquired 51% of issued share capital of the DFN carrying full voting rights on 7 May 2023 (refer Note 39 for further details). The shareholders’ agreement and put option agreement grants non-controlling interest equity holders in DFN an irrevocable and unconditional right to exercise their put options in respect of the non-controlling interest held in DFN (49% of issued share capital) for cash consideration of SAR 220.5 million by issuing a put notice within 60 days from the put option exercise period. Put option exercise period is earlier of:

• the issuance of the audited financial statements of DFN for the year ending 31 December 2026; or

• 30 June 2027

The Group recognized put option over non-controlling interests and recorded non-current put option financial liability discounted at present value against non-controlling interest and other reserve. At each reporting date, the difference between the fair value of the non-current liability resulting from the put option and the transfer of non-controlling interests is recognized in other reserve.

The movement in the financial liability during the period / year is as follows:

1. OPERATING REVENUE

The Group acts as a collection agent on behalf of CMA where their trading commission share is collected and transferred to them on an agreed mechanism. Such portion is not recognized as Group’s revenue.

1. OPERATING COSTS

26.1 This represents fees payable to the CMA in accordance with the details of the Market Institutions Deputy letter no. (17/268/6) dated 18 January 2017 which includes notification of CMA Board resolution, in addition to CMA Board resolution no. (3-2-2019) dated 7 January 2019.

1. GENERAL AND ADMINISTRATIVE EXPENSES

1. REVERSAL / (ALLOWANCE) FOR EXPECTED CREDIT LOSSES

1. INVESTMENT INCOME

1. FINANCE COSTS