Interim report
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1 Quarterly report for the period ended June 30, 2026
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 2 Board of Directors' Report on the state of the company's affairs We are pleased to present to shareholders the report of the Board of Directors of Automated Banking Services Ltd. (hereinafter: "the Company" or " Shva") as of June 30 , 202 6 for the three months and six months then ended (hereinafter: " Reported Period") in compliance with the provisions of Regulation 48 of the Israel Securities Regulations (Periodic and Immediate Reports), 1970. This directors' report presents events and changes that occurred in the Company's position during the reported period and which had material impact on the interim financial statements and the corporation's business report. This report is limited in scope and therefore should be read in conjunction with periodic report for the year ended December 31, 20 25, which was published on March 26, 2026 (reference number 2026-01-027511) "the Company's 2025 Periodic Report"), which is presented in this report by way of reference. 1. Key data from the description of the corporation's business and the explanations of the board of directors for the state of the corporation's business 1.1 General review The Company was incorporated in Israel in 1978 as a private company under the Companies Law. In early June 2019, after completing a public offering of its shares, the Company became listed and a 'reporting corporation', as this term is defined by the Securities Law. Accordingly, as of this date, the Company reports under International Financial Reporting Standards (IFRS) and Israel Security Regulations (Annual Financial Statements), 2010. The Company is managing and operating controlled payment systems constituting critical national infrastructures in charge cards and ATM. These systems allow, inter alia, transferring approvals for charge card transactions, collection of charge card transactions from terminals at businesses, and management of accounting interface and transferring clearing instructions between acquirers and issuers. As part of its operations, the Company operates a two-way communication system between acquirers and issuers and businesses and calculates net activity for charge card activity and also provides services to entities that operate consumer clubs using the Closed Loop Payments model, using the Company's charge card payment system. The Company also manages and operates a switching system that connects ATM networks, enabling the transfer of transaction approvals for cash withdrawals and receipt of information at the various ATMs, regardless of the bank where the customer's account is held. In the field pf technological solutions, the Company has developed "Ashrait software (Web, PC and Android) for executing charge card transactions and has expanded its services with Shva Arena, which offers advanced payment solutions and Shva Insights, which provides access to aggregate and anonymous information. In addition to those, the Company also provides testing and certification services for payment terminals and designated services for discounting and adjustment companies. The payment market in which the Company operates is highly dynamic and growing at an accelerated pace which are reflected in frequent changes in the competitive and business environment. These changes stem, among other things, from the entry of international players, the proliferation and growth of local players along the transaction value chain, as well as regulatory reforms and accelerated technological developments. To the best of the Company's knowledge, it is not currently exposed to significant competition in its central business sector and is a major provider of core services, but it is aware that advanced technological solutions may change the face of the industry and increase competition in the world of payments.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 3 In response to that, the Company is operating on several levels: investment and continuous improvement in technological infrastructure, with special emphasis on information and cyber security aspects; expanding and deepening the range of services and products offered to existing customers; developing advanced cloud-based infrastructures alongside creating new growth engines and diverse value propositions for new customer audiences; and constantly adapting to the changing business environment through systematic and active examination of the business strategy. The Company is continuously examining the effects of the security and geopolitical environment on its operations. In light of the increasing threats and the required level of alertness, the Company invests significant resources to strengthen its information and cyber security systems. These investments which are needed even more at the present time, are intended to strengthen the strict standards already implemented, and to ensure the high level of survivability required of it as a central and critical junction in the Israeli economy that operates critical national infrastructure. The scope and nature of these investments, including the ongoing need to update and upgrade defense systems in accordance with evolving threats, require long-term financial preparedness beyond the Company's current spending framework. The Company's tariff update in July 2026 is intended to enable the financing of the expanded investments required as aforesaid and reflect the actual cost of the adjustments required to maintain the level of security required of a critical national infrastructure operator. At the same time, despite the complex situation, the Company is examining opportunities to integrate complementary activities that constitute a natural development for its operations, with the aim of expanding its value proposition to the market. For further details regarding the services provided by the Company and its area of activity see Chapter A – Description of the Corporation's Business in the Periodic Report for 2025. 1.2 Economic developments in Israel In the first half of 2026, the CPI increased by approximately 1.2%. The inflation rate in the next four quarters (ending in the second quarter of 2027) is expected to be approximately 1.8%. During the second quarter of 2026, the Bank of Israel interest rate was reduced by 0.25% to 3.75%. In July 2026, the Bank of Israel interest rate was reduced by an additional 0.25% to 3.5%. According to the Bank of Israel forecast from July 2026, the average interest rate in the second quarter of 2027 is expected to be approximately 3%. The main effect of the changes in the inflation and interest rates is on the value of the Company's trading securities portfolio, which is reflected in finance income. During the first half of 2026, the NIS strengthened against the Dollar by about 6.6% and against the Euro by about 9.4%.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 4 1.3 Consequences of Operation "Lion's Roar" After that 2025 ended with a positive growth trend, on February 28, 2026, Operation Lion's Roar struck Israel. The campaign was conducted on two parallel fronts: intense fighting against Iran, which ended in April 2026 and a campaign against Lebanon that remains active and is currently being conducted under a fragile ceasefire that is intermittently violated. In the background of these matters, political uncertainty continues with Iran and there is concern that in the absence of stable understandings or a settlement mechanism, direct fighting against Iran may resume. The period of intense fighting temporarily damaged private consumption. In the first days of the fighting, there was a drop in the volume of use in the leisure and retail sectors, while on the other hand, there was a jump in purchases in food chains and in emergency supplies. With the end of the operation in April 2026 , there was a rapid recovery and the public returned to regular purchases while adapting to the complex security reality. During the second quarter of the year, the security situation remained volatile . In early June 2026, there was another escalation, which included combined launches from Lebanon and Iran, following which a framework for a ceasefire was formulated between Israel, Lebanon and the United States. Throughout the entire period of fighting and the transition to the ceasefire, the national payment systems managed by Shva provided a continuous and complete response, a fact that was critical to the economy's ability to function and return to regular activity quickly. As of the preparation date of this report, the full scope and consequences of Operation "Lion's Roar" had not yet been clarified. The possibilities for further security developments in the various fronts could lead to wide ranging effects on sectors of activity in the economy, on different geographical regions and on the Israeli economy as a whole, including fluctuations in exchange rates, effects on the capital market and workforce challenges. However, in the Company's assessment, it maintains high financial strength and proven operational resilience which are tangibly reflected in significant cash balances, bank deposits and a portfolio of trading securities. The Company's customer base consists of stable entities characterized by long-term engagements, which constitute an anchor of stability even in times of emergency. The Company's operations continue uninterrupted and services are provided regularly to its customers. In view of the foregoing, the Company does not currently or in the near term anticipate an impact on its financial strength. The Company continues to finance its entire activity from its own sources only and does not anticipate the need to raise external credit or rely on foreign financing sources at this stage. This stability allows the Company to maintain full business continuity and provide a response to its customers even under conditions of extreme uncertainty.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 5 The Company's estimate of the consequences of the security situation on its activities is based on public information where such estimate is forward-looking information, as this term is defined by the Israel Securities Law, and is an assessment that relies on the information available to the Company as of the date of publishing the financial statements. This information includes forecasts, assessments, estimates and other information that relate to future events and matters the realization of which is uncertain and not exclusively controlled by the Company ("Forward-Looking Information"). Key facts and data underlying this information concern ing the current position of the Company and its business, are facts and data concerning the war and the current situation in Israel that affects the activity of the Company, various regulatory guidance that apply to the Company and macroeconomic data, all as known to the Company on the date of this report. It is uncertain whether the expectations and assessments of the Company will eventually materialize, and its results of operations may be significantly different than the results that are estimated or implied above, among other factors, due to change in each of the above factors, the intensity, scope, duration of such circumstances, and the ability of the Company to manage them.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 6 1.4 Activity of the Company in the Reported Period Transactions with charge cards Debiting transactions – The number of debiting transactions executed with all credit card companies. Crediting transactions – The number of crediting transactions executed with all credit card companies. Below are the total numbers of debiting and crediting transactions completed using the Ashrait system (in millions of transactions): For the six-month period ended June 30 For the year ended December 31, 2026 2025 2025 Debiting transactions 1,332 1,238 2,583 Crediting transactions 13 12 26 ATM switching services Number of balance checks and withdrawals – The number of times that holders of bank-issued charge cards or non-bank issuer request to check their account balance or makes cash withdrawals on ATM's of the bank that operate it (hereinafter: the “Clearing Bank”). Amount – The cumulative total amount of withdrawal requests that Clearing Bank or non -bank operator submitted through the Company to the issuing bank and when relevant to the non-bank issuer. Below are total numbers of account balance checks and withdrawals (in thousands of transactions) and total amounts of withdrawal requests (in millions of NIS): For the six-month period ended June 30 For the year ended December 31, 2026 2025 2025 Total numbers of account balance checks and withdrawals (in thousands of transactions) 28,221 29,461 60,053 Total amounts of withdrawal requests (in millions of NIS) 26,073 25,711 53,090 Material events during the Reported Period • On May 7, 2026 and June 23, 2026 (Reference (Supplementary Report) 2026 -01-059140), the Company reported an outline for equity compensation plan for the Chairman of the Board of Directors, the CEO, officers and other employees. On June 30, 2026, the general meeting of the Company's shareholders approved, among other things, the equity compensation plan for the Chairman of the Board of Directors, the CEO and officers, as well as the update of the Company's compensation policy. After the reporting period, the restricted shares and options were issued to the offerees in accordance with the aforementioned equity compensation plan. • On June 30, 2026, the Company reported (Reference No. 2026 -01-061794) that the Company's general meeting of shareholders approved the reappointments of the Company's auditors. • On June 30, 2026, the Company reported (Reference No. 2026 -01-061758) regarding the date of full implementation of the Company's tariff, as well as the gradual implementation of the updated tariff. • The information contained in the aforementioned reports is included herein by way of reference.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 7 Updates in the Description of the Corporation's Business in the Company's Periodic Report for 202 5: Update to Section 3.1.1 in the chapter of description of the Corporation's Business RAPYD has completed its connection to the payment system and commenced operations as the first global acquirer. In the first quarter of 2026, approval was received from the Bank of Israel's Payment Systems Supervision Department to begin the entry of Grow Payments Ltd. into the system. The Company continues to add new participants in a gradual and controlled manner, while ensuring a high level of service, promoting rapid and tailored growth in the field of information security and full compliance with all regulatory requirements. Update to sections 8.2 and 8.3 in the chapter of description of the Corporation's Business The Company has developed support for transactions aimed at transferring funds - AFT (Account Funding Transaction). The service is used for various solutions such as transferring funds to prepaid cards or digital wallets. In the second quarter, the Company completed the development of a cash withdrawal capability using TAP ATMs that enables de-tokenization when attaching a credit card or digital wallet to a designated component for the purpose of making the withdrawal. This is an innovative solution that, for the first time in Israel, allows cash withdrawals without the need to insert the physical card into the device. The development joins a broad trend of payment solutions and is part of the Company's continued positioning as a leading and innovative player in the field of infrastructure and technology in Israel. In addition, the Company worked to significantly shorten the opening times of terminals with the acquirers, a move that allows new businesses to begin credit card clearing activities within one business day. The improvement is a direct response to the market's need to short en the times for joining clearing activities and contributes to driving the economic activity of new businesses and reducing the friction involved in the establishment processes. The move was carried out in close cooperation with the acquirers and reflects the Company's ongoing commitment to streamlining work processes with the various players in the clearing market, while fully maintaining the required level of control and security. Update to sections 8.23 in the chapter of description of the Corporation's Business The Company's board of directors approved the update of the Company's pricing policy and price list, in light of the large-scale investments required in the worlds of technology, information security and cyber, infrastructures that constitute the backbone of the Company's activities. In an era of geopolitical volatility and given the complex security situation in the country, the Company sees utmost importance in investing in advanced protection solutions to ensure the business continuity of services and the resilience of systems. The Company's goal is to enable all of its customers to continue their development at the forefront of technology in the world of payments, knowing that they are relying on a secure, reliable and advanced system adapted to the challenges of the hour. The Company has worked to update the Bank of Israel with details of the update of the Company's pricing policy and price list. In May 2026, t he Company published the latest price list, which entered into force and effect in July 2026, after the report period.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 8 In accordance with a further decision of the Board of Directors, the price list entered into force gradually, so that discounts will apply to the additional price list until January 1, 2027, when the price list is expected to enter into force at the full rate. For details, see immediate report dated June 30, 2026 (reference: 2026 -01-061758). The foregoing regarding the expected date for the publication and entry into force of an updated price list is forward-looking information within the meaning of this term in the Securities Law, 1968 and is an estimate based on the information available to the Company at the time of publication of the financial statements and which also includes forecasts, assessments, estimates relating to future events and matters, the realization of which is not certain and is not under the control of the Company ("forward-looking information"). The key facts and data used as a basis for this information are the existing contracts of the Company and the price list that was approved by the Company's board of directors. The Company is uncertain whether its expectations and estimates will be realized, and the results of the Company's activity may differ substantially from the results estimated or implied from the above, among other things, due to a change in regulation, the security situation or actions taken by the other party to the contract.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 9 1.5 Financial position and results of activity The following presents key information from the financial statements of the Company and explanations of main changes in statement of financial position items as of June 30, 2026 compared to December 31, 2025 (NIS in thousands): As of June 30, As of December 31 Change Comments and explanations 2026 2025 (Unaudited) (Audited) Assets Cash and cash equivalents 13,825 15,537 )1,712( Current flow less dividend distributed Marketable securities 110,920 135,330 )24,410( Trade receivables 31,902 27,922 3,980 The timing of receiving funds from customers Other accounts receivable 10,381 10,268 113 Current tax assets 3,776 1,271 2,505 Increase in view of paying current tax advances Excess plan assets for post- retirement employee benefits 2,706 2,689 17 Property, plant and equipment, net 29,848 31,063 )1,215( Self-developed software, software and licenses, net 50,702 49,794 908 Right-of-use assets 17,281 17,995 )714( Prepaid expenses 8,575 9,145 )570( Liabilities and equity Current maturities of lease liabilities 2,766 2,519 247 Trade payables 4,311 6,462 )2,151( Timing of payments to suppliers Other accounts payable 20,492 24,027 )3,535( Long term deferred income 1,702 2,675 )973( Lease liabilities 16,023 16,890 )867( Liabilities for deferred taxes 730 1,386 )656( Employee benefits liabilities 1,347 1,309 38 Equity attributed to the Company's' shareholders 232,545 245,746 )13,201( The change is due to a special dividend that was paid in the reported period less profits for the period.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 10 1.6 Results of operations The following are the key changes in profit and loss items as of June 30, 2026 compared to June 30, 2025 (NIS in thousands): For the six-month period ended June 30, For the year ended December 31 Change compared to June 30 Comments and explanations compared to corresponding period last year 2026 2025 2025 2025 (Unaudited) (Audited) Revenue from services provided to acquirers and issuers 67,479 65,485 134,335 1,994 Increase mainly from transaction-based revenues alongside the end of multi- brand card service in light of the completion of full transition to EMV. Revenue from services provided to others 11,440 11,047 22,642 393 Increase in new revenues for existing products and growth engines alongside a decrease in ATM switch revenues in light of the impact of the "Lion's Roar" campaign. Total revenues 78,919 76,532 156,977 2,387 Operational, general and administrative expenses 61,895 52,010 110,195 9,885 Increase mainly from the continued strengthening of the technological system, information security, depreciation and ongoing maintenance expenses Operating income 17,024 24,522 46,782 )7,498( Finance income, net 4,361 6,103 11,732 )1,742( The change is due to market volatility Income before income tax 21,385 30,625 58,514 )9,240( Provision for income tax 4,844 6,906 13,256 )2,062( Net income attributed to shareholders 16,541 23,719 45,258 )7,178( Net basic and diluted earnings per share 0.41 0.59 1.13 EBITDA less equity compensation for the six months ended June 30, 2026 amounted to NIS 25.7 million compared to NIS 32.2 million in the corresponding period last year and NIS 62.7 million in 2025.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 11 1.7 Liquidity and sources of financing The following are the key changes in cash flow items as of June 30, 2026 compared to June 30, 2025 (NIS in thousands): For the six-month period ended June 30 For the year ended December 31 Comments and explanations compared to corresponding period last year 2026 2025 2025 (Unaudited) (Audited) Net income for the period 16,541 23,719 45,258 Adjustments to income 9,153 8,377 17,252 Cash flows before changes in asset and liability items and before finance and taxes 25,694 32,096 62,510 Changes in asset and liability items, net )10,212( )2,620( )774( The difference between the periods results from an increase in trade receivables and a decrease in trade payables Cash flow from taxes and finance, net )6,766( )1,752( )7,911( In the corresponding period last year, a tax refund was received Net cash provided by operating activity 8,716 27,724 53,825 The difference between the periods results from the above Net cash provided by (used in) investing activity 20,857 )8,056( )18,643( Net proceeds from the sale of securities, less acquisitions and investments in growth engines Net cash used in financing activity )31,285( )31,108( )62,348( The negative cash flow stems from dividend distribution and repayment of a lease liability 1.8 Financing sources The Company finances all activity from using its own resources. 2. Exposure to and management of market risks Market risk exposure of the Company In the first half of 2026, there were no material changes in the Company's risk assessment and risk profile. For more details regarding the description of the market risks to which the Company is exposed, see section 2 of the Company's board of directors and management report attached to the Company's periodic report for 202 5. The marketable securities portfolio as of June 30, 2026 amounted to NIS 110,920 thousand, compared to NIS 135,330 thousand as of December 31, 20 25. Cash and bank deposits as of June 30, 2026 amounted to NIS 13,825 thousand, compared to NIS 15,537 thousand as of December 31, 20 25. The value of the marketable securities portfolio, cash and bank deposits as of June 30, 2026 amounted to NIS 124,745 thousand compared to NIS 150,867 thousand as of December 31, 2025. Officer responsible for market risk of the Company The officer responsible for market risk of the Company is Mr. Eitan Lev Tov, CEO of the Company.
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 12 Market risk management policy of the Company The overall responsibility for market risk management and oversight is of the Company's board of directors. For information about risk management policy, investment policy and oversight of market risk, see the Company's board of directors and management report in the Company's 2025 periodic report. 2.1 Fair value of financial instruments and sensitivity tests 2.1.1 Fair value of financial instruments As of June 30, 2026 NIS in thousands Israeli currency Foreign currency Unlinked Linked US dollar Other Total Assets Cash and cash equivalents 11,668 - 1,955 162 13,825 Marketable securities 68,012 40,745 2,163 - 110,920 Trade receivables 31,902 - - - 31,902 Other accounts receivable 228 - - - 228 Total financial assets 111,810 44,521 4,158 162 160,651 Current maturities of lease liabilities - 2,766 - - 2,766 Trade payables 4,254 - 52 5 4,311 Other accounts payable 12,760 - - - 12,760 Liabilities for current taxes - - - - - Lease liabilities - 16,023 - - 16,023 Total financial liabilities 17,014 18,789 52 5 35,860 Net fair value of financial instruments 94,796 25,732 4,106 157 124,791 As of June 30, 2025 NIS in thousands Israeli currency Foreign currency Unlinked Linked US dollar Other Total Assets Cash and cash equivalents 16,829 - 14,642 345 31,816 Marketable securities 84,213 57,606 4,772 - 146,591 Trade receivables 28,298 - - - 28,298 Other accounts receivable 396 - - - 396 Total financial assets 129,736 57,606 19,414 345 207,101 Current maturities of lease liabilities - 2,208 - - 2,208 Trade payables 5,836 - 42 4 5,882 Other accounts payable 16,434 - - - 16,434 Income tax payable - 242 - - 242 Lease liabilities - 17,429 - - 17,429 Total financial liabilities 22,270 19,879 42 4 42,195 Net fair value of financial instruments 107,466 37,727 19,372 341 164,906
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 13 2.1.1 Fair value of financial instruments (Cont.) As of December 31, 2025 NIS in thousands Israeli currency Foreign currency Unlinked Linked US dollar Other Total Assets Cash and cash equivalents 12,680 - 2,615 242 15,537 Marketable securities 80,640 51,714 2,976 - 135,330 Trade receivables 27,922 - - - 27,922 Other accounts receivable 1,777 - - - 1,777 Current tax assets - 1,271 - - 1,271 Total financial assets 123,018 52,985 5,592 242 181,836 Current maturities of lease liabilities - 2,519 - - 2,519 Trade payables 5,037 - 1,176 249 6,462 Other accounts payable 15,858 - - - 15,858 Lease liabilities - 16,890 - - 16,890 Total financial liabilities 20,895 19,409 1,176 249 41,729 Net fair value of financial instruments 102,123 33,576 4,416 )7( 140,108 2.1.2 Impact of hypothetical changes in interest rate on net fair value of financial instruments: As of June 30, 2026 NIS in thousands Net fair value of financial instruments considering change in interest rate Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 1% 92,410 24,391 4,077 157 121,035 (3,756) (3.01) Immediate increase of 0.1% 94,559 25,597 4,103 157 124,416 (375) (0.30) Immediate decrease of 1% 97,184 27,070 4,135 157 128,546 3,756 3.01 Immediate decrease of 0.1% 95,034 25,866 4,108 157 125,165 375 0.30 As of June 30, 2025 NIS in thousands Net fair value of financial instruments considering change in interest rate Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 1% 104,352 35,887 19,324 341 159,904 )5,002( )3.03( Immediate increase of 0.1% 107,154 37,543 19,368 341 164,406 )500( )0.30( Immediate decrease of 1% 110,581 39,566 19,420 341 169,908 5,002 3.03 Immediate decrease of 0.1% 107,777 37,911 19,377 341 165,406 500 0.30
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 14 2.1.2 Impact of hypothetical changes in interest rate on net fair value of financial instruments (Cont.): As of December 31, 2025 NIS in thousands Net fair value of financial instruments considering change in interest rate Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 1% 98,883 31,939 4,379 )7( 135,194 )4,914( )3.51( Immediate increase of 0.1% 101,800 33,412 4,412 )7( 139,617 )491( )0.35( Immediate decrease of 1% 105,363 35,213 4,453 )7( 145,022 4,914 3.51 Immediate decrease of 0.1% 102,446 33,740 4,420 )7( 140,599 491 0.35 2.1.3 Impact of hypothetical changes in prices of marketable shares on net fair value of financial instruments: As of June 30, 2026 NIS in thousands Net fair value of financial instruments considering change in prices of marketable shares Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 10% 96,085 25,732 4,252 157 126,226 1,436 1.15 Immediate increase of 5% 95,442 25,732 4,179 157 125,510 719 0.58 Immediate decrease of 10% 93,506 25,732 3,960 157 123,355 (1,436) (1.15) Immediate decrease of 5% 94,149 25,732 4,033 157 124,071 (719) (0.58) As of June 30, 2025 NIS in thousands Net fair value of financial instruments considering change in prices of marketable shares Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 10% 109,315 37,727 19,728 341 167,111 2,205 1.34 Immediate increase of 5% 108,391 37,727 19,550 341 166,009 1,103 0.67 Immediate decrease of 10% 105,616 37,727 19,017 341 162,701 )2,205( )1.34( Immediate decrease of 5% 106,540 37,727 19,195 341 163,803 )1,103( )0.67(
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 15 2.1.3 Impact of hypothetical changes in prices of marketable shares on net fair value of financial instruments (Cont.): As of December 31, 2025 NIS in thousands Net fair value of financial instruments considering change in prices of marketable shares Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 10% 103,882 33,576 4,599 )7( 142,050 1,942 1.39 Immediate increase of 5% 103,003 33,576 4,507 )7( 141,079 971 0.69 Immediate decrease of 10% 100,364 33,576 4,233 )7( 138,166 )1,942( )1.39( Immediate decrease of 5% 101,244 33,576 4,324 )7( 139,137 )971( )0.69( 2.1.4 Impact of changes in the Israel Consumer Price Index on net fair value of financial instruments: As of June 30, 2026 NIS in thousands Net fair value of financial instruments considering change in the Israel Consumer Price Index Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 2% 94,796 26,247 4,106 157 125,306 515 0.41 Immediate increase of 1% 94,796 25,989 4,106 157 125,048 257 0.21 Immediate decrease of 2% 94,796 25,217 4,106 157 124,276 (515) (0.41) Immediate decrease of 1% 94,796 25,474 4,106 157 124,533 (257) (0.21) As of June 30, 2025 NIS in thousands Net fair value of financial instruments considering change in the Israel Consumer Price Index Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 2% 107,466 38,482 19,372 341 165,661 755 0.46 Immediate increase of 1% 107,466 38,104 19,372 341 165,283 377 0.23 Immediate decrease of 2% 107,466 36,972 19,372 341 164,151 )755( )0.46( Immediate decrease of 1% 107,466 37,350 19,372 341 164,529 )377( )0.23(
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 16 2.1.4 Impact of changes in the Israel Consumer Price Index on net fair value of financial instruments (Cont.): As of December 31, 2025 NIS in thousands Net fair value of financial instruments considering change in the Israel Consumer Price Index Israeli currency Foreign currency Change in fair value Unlinked Linked US dollar Other Total NIS in thousands % Immediate increase of 2% 102,123 34,248 4,416 )7( 140,780 672 0.48 Immediate increase of 1% 102,123 33,912 4,416 )7( 140,444 336 0.24 Immediate decrease of 2% 102,123 32,904 4,416 )7( 139,436 )672( )0.48( Immediate decrease of 1% 102,123 33,240 4,416 )7( 139,772 )336( )0.24(
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 17 3. Disclosure regarding financial reporting of the Company 3.1 Dividend distributions Distribution of dividend to shareholders of the Company is subject to the provisions of the statute and the Company's articles, as well as the rules and conditions for dividend distribution in the Companies Law. On March 27, 2025, the Company's Board of Directors updated the earnings distribution policy, according to which the Company will distribute to its shareholders an annual dividend at a rate of at least 50% and no more than 70% of the net annual income in the previous year as reflected in the Company's annual audited financial statements, excluding one-time profits that are not from operating activities , subject to the existence of earnings that are eligible for distribution in accordance with the provisions of the Companies Law and subject to the provisions of any law, including the provisions of the Competition Commissioner and the provisions of the Company's Articles of Association. Dividend distribution subject to the above restrictions will be made provided that there is no significant harm to (a) the Company's cash flow and/or (b) the Company's business plans and investment plans, as approved and defined by its Board of Directors from time to time. It is clarified that this policy should not be considered an obligation of the Company to distribute a dividend or regarding the rate of the dividend to be distributed, and that any actual distribution will be subject to the approvals required under any la w, including individual approval by the Board of Directors to carry out the distribution at its discretion, and subject to compliance with the provisions of the law applicable to dividend distribution, inter alia, under the Companies Law. The Board of Dire ctors will be entitled to review the dividend distribution policy from time to time and to decide at any time, taking into account business considerations and the provisions of the law, on changes to the dividend policy, including the rate of the dividend to be distributed and may also decide not to distribute a dividend at all. On March 24, 2026, the Company's Board of Directors decided to distribute a dividend in the amount of NIS 30,000 thousand (approximately NIS 0.75 per share), which constitutes approximately 66% of the income for 202 5 in accordance with the updated distribution policy approved by the Company's Board of Directors. The dividend was distributed on April 2 7, 2026. For additional details, see immediate report published by the Company on March 26, 2026 (reference number: 2026-01-027648). 3.2 Liabilities by maturity For information about liabilities of the Company, please refer to an immediate report regarding the liabilities as published in the distribution website of the Israel Securities Authority at http:// www.magna.isa.gov.il. 4. Corporate governance On June 30, 2026, the Company's general meeting of shareholders approved the reappointments of the Company's auditors, until the next annual meeting. Senior officers: On April 30, 2026, the Company published a preliminary notice regarding an annual general meeting and announced that shareholders who meet the conditions set forth in the Company's Articles of Association may propose candidates for office as directors of the Company until May 21, 2026 (Reference No. 2026-01-040128). On May 31, 2026, Mr. Ofer Eden, the Company's Chief Financial Officer, retired. For details, see immediate report dated February 19, 2026 (Reference No. 2026-01-016274).
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Report of the Board of Directors and Management for the quarter ended June 30, 2026 18 On June 1, 2026, Mr. Asael Ben Yaakov began serving as the Company's CFO, after the Payment Systems Supervision at the Bank of Israel did not express its objection to the appointment. For details, see immediate report dated May 1, 2026 (Reference No. 2026-01-040389). On June 29, 2026, Ms. Shani Federman Terem ceased to serve as a director of the Company. For details, see immediate report dated April 30, 2026 (Reference No. 2026-01-039714). On June 30, 2026, the Company's general meeting of Shareholders approved the tenure of Mr. Yitzhak (Tsachi) Lotti as a director for a period of three years (Reference No. 2026 -01-061794). His tenure will commence upon receipt of the approval of the Payment Systems Supervision at the Bank of Israel or after his non-objection within 60 days from the date of filing the request for approval to Supervision. For details, see report dated June 30, 2026 (reference no. 2026-01-061794). 5. Legal proceedings See note 3b to the financial statements. 6. Internal auditor For details regarding the internal auditor, including the manner of his appointment, the work plan and the scope of the internal audit, see section 5 of the Company's Board of Directors' Report for 2025, which is attached to the Company's Periodic Report for 2025 the information contained therein is by reference. 7. Critical accounting estimates In the reported period, no changes have taken place in critical accounting estimates as discussed in note 2 to the financial statements of the Company as of December 31, 2025. 8. Events after the reported period: For additional details, see Note 5 to the financial statements. Sharon Haran Chairman of the Board of Directors Eitan Lev Tov Chief Executive Officer Date of approving the financial statements: August 13, 2026.
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19 AUTOMATED BANKING SERVICES LTD. INTERIM FINANCIAL INFORMATION (UNAUDITED) AS OF JUNE 30, 2026
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20 AUTOMATED BANKING SERVICES LTD. CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) AS OF JUNE 30, 2026 TABLE OF CONTENTS Page Review report of the independent auditor to shareholders 21 Condensed interim financial information Condensed statement of financial position 22-23 Condensed statement of profit or loss 24 Condensed statement of comprehensive income 25 Condensed statement of changes in equity 26-28 Condensed statement of cash flows 29-31 Notes to the condensed financial statements 32-39
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21 Auditors’ review report to the shareholders of Automated Banking Services Ltd. Introduction We have reviewed the attached financial information of Automated Bank ing Services Ltd. (hereinafter - “the Company”), which is comprised of the condensed consolidated statement of financial position as of June 30, 2026 and the condensed consolidated statements of profit or loss, comprehensive income, changes in shareholder's equity and cash flows for the six-month and three-months periods ended on that date. The Board of Directors and management are responsible for the preparation and presentation of the financial information for these interim periods in accordance with the provisions of IAS 34 "Interim Financial Reporting" and are also responsible for preparing financial information for these interim periods in accordance with Chapter D of the Securities Regulations (Periodic and Immediate Reports), -1970. Our responsibility is to express a conclusion with respect to the financial informati on for these interim periods, based on our review. Scope of review Our review was conducted in accordance with the provisions of Review Standard (Israel) 2410 of the Institute of Certified Public Accountants in Israel concerning "Review of financial information for interim periods undertaken by the entity's auditor". A review of financial information for interim periods consists of making enquiries, in particular, of those officials responsible for financial and accounting matters, and of the application of analytical and other review procedures. A review is substant ially lesser in scope than an audit conducted in accordance with auditing standards generally accepted in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the above financial information is not prepared, in all material respects, in accordance with IAS 34. Further to the preceding paragraph, based on our review, nothing has come to our attention that causes us to believe that the above financial information is not in compliance, in all material respects, with the disclosure provisions in Chapter D of Israel Security Regulations (Periodic and Immediate Reports), 1970. Emphasis of matter paragraph Without qualifying our opinion, we draw attention to note 3 to the financial statements which describes a decision by the Commissioner of Competition to grant a conditioned exemption from recognition as a restrictive arrangement. Tel Aviv Kesselman & Kesselman August 13, 2026 Certified Public Accountants Member firm of PricewaterhouseCoopers International Limited
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Condensed Interim Financial Statements as of June 30, 2026 22 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENTS OF FINANCIAL POSITION Amounts in thousand NIS As of June 30 As of December 31, 2026 2025 2025 (Unaudited) (Audited) A s s e t s CURRENT ASSETS: Cash and cash equivalents 13,825 31,816 15,537 Marketable securities 110,920 146,591 135,330 Trade receivables 31,902 28,298 27,922 Other accounts receivable 10,381 9,236 10,268 Current tax assets 3,776 - 1,271 Total current assets 170,804 215,941 190,328 NON-CURRENT ASSETS: Excess plan assets for post-retirement employee benefits, net 2,706 2,093 2,689 Property, plant and equipment, net 29,848 21,425 31,063 Self-developed software, software and licenses, net 50,702 39,602 49,794 Right-of-use assets 17,281 18,326 17,995 Prepaid expenses 8,575 3,884 9,145 Total non-current assets 109,112 85,330 110,686 Total assets 279,916 301,271 301,014
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Condensed Interim Financial Statements as of June 30, 2026 23 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENT OF FINANCIAL POSITION Amounts in thousand NIS As of June 30 As of December 31, 2026 2025 2025 (Unaudited) (Audited) Liabilities and equity CURRENT LIABILITIES: Current maturities of lease liabilities 2,766 2,208 2,519 Trade payables 4,311 5,882 6,462 Other accounts payable 20,492 17,880 24,027 Liabilities for current taxes - 242 - Total current liabilities 27,569 26,212 33,008 NON-CURRENT LIABILITIES: Long term deferred income 1,702 2,511 2,675 Lease liabilities 16,023 17,429 16,890 Liabilities for deferred taxes 730 512 1,386 Employee benefits liabilities 1,347 1,060 1,309 Total non-current liabilities 19,802 21,512 22,260 Total liabilities 47,371 47,724 55,268 EQUITY Share capital 4,587 4,587 4,587 Share premium 3,412 150 150 Capital reserve for share-based payment 4,686 7,203 7,690 Other comprehensive loss (1,502 ) (1,675 ) (1,502 ) Retained earnings 221,362 243,282 234,821 Total equity attributed to shareholders of the Company 232,545 253,547 245,746 Total liabilities and equity 279,916 301,271 301,014 Sharon Haran Chairman of the Board Eitan lev Tov Chief Executive Officer Asael Ben Yaakov VP of Finance and CFO Date of approving the financial information: August 13, 2026 The notes to the condensed financial information are an integral part thereof.
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Condensed Interim Financial Statements as of June 30, 2026 24 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENT OF PROFIT OR LOSS Amounts in thousand NIS For the six-month period ended For the three-month period ended For the year ended June 30 June 30 December 31 2026 2025 2026 2025 2025 (Unaudited) (Unaudited) (Audited) Revenues From the provision of services to acquirers and issuers 67,479 65,485 34,643 32,678 134,335 From the provision of services to others 11,440 11,047 5,832 5,667 22,642 Total Revenues 78,919 76,532 40,475 38,345 156,977 Operating, general and administrative expenses 61,895 52,010 31,900 26,023 110,195 Operating income 17,024 24,522 8,575 12,322 46,782 Finance Income (expenses) from marketable securities, net 4,498 6,545 3,972 6,052 12,607 Finance income 349 705 245 (42) 1,220 Finance expenses (486) (1,147) (356) (985) (2,095) Finance income, net 4,361 6,103 3,861 5,025 11,732 Income before taxes on income 21,385 30,625 12,436 17,347 58,514 Taxes on income 4,844 6,906 2,775 3,909 13,256 Net income attributable to Company shareholders 16,541 23,719 9,661 13,438 45,258 Net basic and diluted earnings per share attributable to shareholders (in NIS) 0.41 0.59 0.24 0.34 1.13 The notes to the condensed financial information are an integral part thereof.
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Condensed Interim Financial Statements as of June 30, 2026 25 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENT OF COMPREHENSIVE INCOME Amounts in thousand NIS For the six-month period ended For the three-month period ended For the year ended June 30 June 30 December 31 2026 2025 2026 2025 2025 (Unaudited) (Unaudited) (Audited) Net income attributed to the Company's shareholders 16,541 23,719 9,661 13,438 45,258 Other comprehensive income before taxes: Amounts not to be reclassified to profit or loss: Adjustments required for employee benefits 225 Other comprehensive income before taxes - - - - 225 Relevant tax impact - - - - (52 ) Other comprehensive income attributed to shareholders, after tax - - - - 173 - - - - Total comprehensive income attributed to shareholders 16,541 23,719 9,661 13,438 45,431 The notes to the condensed financial information are an integral part thereof.
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Condensed Interim Financial Statements as of June 30, 2026 26 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENT OF CHANGES IN EQUITY Amounts in thousand NIS For the six-month period ended June 30, 2026 (unaudited) Share capital Share premium Capital reserve for share-based payment Accumulated other comprehensive loss Retained earnings Total equity Balance at January 1, 2026 4,587 150 7,690 )1,502( 234,821 245,746 Changes during period: Net income for the period - - - - 16,541 16,541 Total comprehensive income - - - - 16,541 16,541 Exercise of warrants - 3,262 )3,262( - - - Cost of share-based payment - - 258 - - 258 Dividend paid - - - - )30,000( )30,000( Balance at June 30, 2026 4,587 3,412 4,686 )1,502( 221,362 232,545 For the six-month period ended June 30, 2025 (unaudited) Share capital Share premium Capital reserve for share-based payment Accumulated other comprehensive loss Retained earnings Total equity Balance at January 1, 2025 4,587 150 6,554 )1,675( 249,563 259,179 Changes during period: Net income for the period - - - - 23,719 23,719 Total comprehensive income - - - - 23,719 23,719 Cost of share-based payment - - 649 - - 649 Dividend paid - - - - )30,000( )30,000( Balance at June 30, 2025 4,587 150 7,203 )1,675( 243,282 253,547 The notes to the condensed financial information are an integral part thereof.
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Condensed Interim Financial Statements as of June 30, 2026 27 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENT OF CHANGES IN EQUITY Amounts in thousand NIS For the three-month period ended June 30, 2026 (unaudited) Share capital Share premium Capital reserve for share- based payment Accumulated other comprehensive loss Retained earnings Total equity Balance at April 1, 2026 4,587 3,408 4,595 )1,502( 211,701 222,789 Changes during period: Net income for the period - - - - 9,661 9,661 Total comprehensive income - - - - 9,661 9,661 Exercise of warrants - 4 )4( - - - Cost of share-based payment - - 95 - - 95 Balance at June 30, 2026 4,587 3,412 4,686 )1,502( 221,362 232,545 For the three-month period ended June 30, 2025 (unaudited) Share capital Share premium Capital reserve for share- based payment Accumulated other comprehensive loss Retained earnings Total equity Balance at April 1, 2025 4,587 150 6,911 )1,675( 229,844 239,817 Changes during period: Net income for the period - - - 13,438 13,438 Total comprehensive income - - - 13,438 13,438 Cost of share-based payment - - 292 - - 292 Balance at June 30, 2025 4,587 150 7,203 )1,675( 243,282 253,547 The notes to the condensed financial information are an integral part thereof.
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Condensed Interim Financial Statements as of June 30, 2026 28 For the year ended December 31, 2025 (audited) Share capital Share premium Capital reserve for share-based payment Accumulated other comprehensive loss Retained earnings Total equity Balance at January 1, 2025 4,587 150 6,554 )1,675( 249,563 259,179 Changes during the year: Net income - - - - 45,258 45,258 Other comprehensive income - - - 173 - 173 Total comprehensive income - - - 173 45,258 45,431 Cost of share-based payment - - 1,136 - - 1,136 Dividend paid - - - - )60,000( )60,000( Balance at December 31, 2025 4,587 150 7,690 )1,502( 234,821 245,746 The notes to the condensed financial information are an integral part thereof.
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Condensed Interim Financial Statements as of June 30, 2026 29 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENT OF CASH FLOWS Amounts in thousand NIS For the six-month period ended For the three-month period ended For the year ended June 30 June 30 December 31 2026 2025 2026 2025 2025 (Unaudited) (Unaudited) (Audited) Cash flows from operating activity: Net income for the period 16,451 23,719 9,661 13,438 45,258 Adjustments required to present cash flows from operating activity Adjustments to profit and loss items: Depreciation and amortizations 8,391 6,989 4,268 3,647 14,778 Expenses in respect of share- based payment transactions 258 649 95 292 1,136 Liability for post-retirement employee benefits, net (17 ) (44 ) (3 ) (18 ) (418 ) Changes in liabilities for employee benefits, net 38 (20 ) 43 (19 ) 232 Taxes on income 4,844 6,906 2,775 3,909 13,256 Finance income, net (4,361 ) (6,103 ) (3,861 ) (5,025 ) (11,732 ) Change in asset and liability items: Decrease (increase) in trade receivables (3,980 ) (2,297 ) (11,743 ) (392 ) (1,921 ) Decrease (increase) in other accounts receivable 457 173 2,108 1,820 (6,148 ) Increase (decrease) in trade payables (2,181 ) 2,483 (1,235 ) 2,335 3,963 Increase (decrease) in other accounts payable (4,508 ) (2,979 ) (4,908 ) (5,144 ) 3,332 Cash flows from operating activity before finance and taxes 15,482 29,476 (2,800 ) 14,843 61,736 Interest received 1,547 2,134 428 782 3,476 Interest and fees paid (308 ) (450 ) (152 ) (235 ) (899 ) Taxes paid, net (8,005 ) (3,436 ) (4,512 ) (3,996 ) (10,488 ) Net cash provided by (used in) operating activity 8,716 27,724 (7,036 ) 11,394 53,825 The notes to the condensed financial information are an integral part thereof.
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Condensed Interim Financial Statements as of June 30, 2026 30 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENT OF CASH FLOWS Amounts in thousand NIS The notes to the condensed financial information are an integral part thereof. For the six-month period ended For the three-month period ended For the year ended June 30 June 30 December 31 2026 2025 2026 2025 2025 (Unaudited) (Unaudited) (Audited) Cash flows from investing activity: Purchase of marketable securities (16,804 ) (32,125 ) (11,919 ) (17,375 ) (52,217) Proceeds from sale of marketable securities 44,336 38,590 39,514 24,193 75,243 Acquisitions and investments in property, plant and equipment and intangible assets (6,675 ) (14,521 ) (3,201 ) (8,292 ) (41,669 ) Net cash provided by (used in) investing activity 20,857 (8,056 ) 24,394 (1,474 ) (18,643 ) Cash flows from financing activity: Maturity of lease liabilities (1,285 ) (1,108 ) (659 ) (564 ) (2,348 ) Dividend paid (30,000 ) (30,000 ) (30,000 ) (30,000 ) (60,000 ) Net cash used in financing activity (31,285 ) (31,108 ) (30,659 ) (30,564 ) (62,348 ) Decrease in cash and cash equivalents (1,712 ) (11,440 ) (13,301 ) (20,644 ) (27,166 ) Balance of cash and cash equivalents at the beginning of the period 15,537 44,050 27,126 53,572 44,050 Profits (losses) from exchange rate differences for cash and cash equivalents - (794 ) - (1,112 ) (1,347 ) Balance of cash and cash equivalents at end of the period 13,825 31,816 13,825 31,816 15,537
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Condensed Interim Financial Statements as of June 30, 2026 31 AUTOMATED BANKING SERVICES LTD. CONDENSED STATEMENT OF CASH FLOWS Amounts in thousand NIS The notes to the condensed financial information are an integral part thereof. For the six-month period ended For the three-month period ended For the year ended June 30 June 30 December 31 2026 2025 2026 2025 2025 (Unaudited) (Unaudited) (Audited) Appendix A – material non- cash transactions Recognition of right-of-use assets against lease liability 665 995 558 801 2,007 Purchase of property, plant and equipment against trade payables 30 700 (183 ) (593 ) (200 )
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Notes to Financial Statements 32 AUTOMATED BANKING SERVICES LTD. NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL a. The reporting entity 1. Automated Banking Services Ltd. (hereinafter: the “Company and/or Shva”) was incorporated in Israel on September 13, 1978, and its official corporate address is 26 HaRokmim St., Holon. 2. On May 27, 2019, the Company published a supplementary prospectus and a shelf prospectus dated May 28, 2019 (hereinafter: the “Prospectus”), in which Company's shares were sold to the public by Company's shareholders. The Company’s shares were also listed on the Tel Aviv Stock Exchange and trading of the shares began on June 12, 2019, and the Company became a public company (reporting corporation). 3. On June 20, 2022, a notification was received on behalf of the supervisor of banks about the end of the period of application of proper banking management directives to the Company. 4. The Company currently operates in single operating segment, the clearing segment, which includes several activities, as follows: (1) connecting terminals to the charge card switch; (2) confirmation, transaction collection, accounting and settlement interface services; (3) ATM switch services including authorization, accounting and settlement; (4) development and distribution of "Ashrait" software; (5) tests to certify POS devices or Pin Pad devices for the EMV system; (6) certification of EMV terminals; (7) services for discount companies; (8) service to adjustment companies; (9) Shva Insights Services; (10) Shva Arena - aggregate information access services; (11) Information access service for the purpose of providing services by MasterCard; (12) CLP. Most of the Company's revenues derive from providing services to the credit card companies. Regarding the decision of the Commissioner of Competition regarding the cancellation of clauses in the conditions of the exemption from approval of a restrictive arrangement, which define the areas of activity in which Shva is allowed to engage and the condition of Shva's entry into any other field of activity with the prior approval of the Commissioner of Competition as detailed in Note 17 in Part C (financial statements) in the Company's periodic report for 2024 see note 3 below. b. The interim financial information is reviewed and not audited. c. Financial strength and business resilience against the backdrop of the security situation After that 2025 ended with a positive growth trend, on February 28, 2026 Operation Lion's Roar struck Israel. The campaign was conducted on two parallel fronts: intense fighting against Iran that ended in April 2026, and a campaign against Lebanon that remains active and is currently being conducted under a fragile ceasefire that is intermittently violated. In the background of these matters, political uncertainty with Iran continues and there is concern that in the absence of stable understandings or a settlement mechanism, direct fighting with Iran may resume. The period of intense fighting temporarily affected private consumption. In the first days of the fighting, there was a drop in the volume of use in the leisure and retail sectors, while on the other hand, there was a jump in purchases in food chains and emergency supplies. With the end of the operation in April 2026, there was a rapid recovery and the public returned to regular purchases while adapting to the complex security reality.
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Notes to Financial Statements 33 AUTOMATED BANKING SERVICES LTD. NOTES TO FINANCIAL STATEMENTS NOTE 1 – GENERAL (CONT.) During the second quarter of the year, the security situation remained volatile. In early June 2026, there was another escalation, which included combined launches from Lebanon and Iran, following which a framework for a ceasefire was formulated between Israel, Lebanon and the United States. Work in the Company is taking place regularly, the Company's activities goes on continuously, there is no material impact on the Company's workforce and services are provided regularly to its customers. d. The condensed interim financial statements were approved for publication by the Company's Board of Directors on August 13, 2026. NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES a. Basis of presentation of the present financial information The interim condensed consolidated financial information of the Company as of June 30 , 202 6 (hereinafter – the "Interim Financial Information") was prepared in accordance with IAS 34 "Interim Financial Reporting", including the additional disclosure required by Chapter D of Securities Regulation (Periodic and Immediate Reports), 1970. The interim financial information does not include all the information and disclosures required in the annual financial statements. The interim financial information should be read in conjunction with the annual financial statements for 202 5 and the accompanying notes, which comply with the International Financial Reporting Standards, which are standards published by the International Accounting Standards Board (hereinafter - IFRS) and include the additional disclosure required in accordance with the Securities Regulations (Annual Financial Statements), 2010. The Company's revenues and results of operations for the six-month period ended June 30, 2026 are not necessarily indicative of the revenues and results that can be expected in the year ending December 31, 2026. Use of estimates and judgment In the preparation of the financial statements in accordance with IFRS, the Company's management is required to use judgment, estimates and assumptions, which affect the implementation of the policy, and the amounts of assets and liabilities, income and ex penses. It is hereby clarified that actual results may differ from these estimates. When formulating the accounting estimates used in the preparation of the Company’s financial statements, management is required to make assumptions regarding circumstances and events which involve significant uncertainty. When using its discretion in determining these estimates, the Company’s management relies on past experience, various facts, external factors, and reasonable assumptions according to the relevant circumstances for every estimate. The estimates and assumptions underlying these estimates, including those arising from the Company’s economic operating environment, are reviewed on an ongoing basis. Changes in accounting estimates are recognized in the period in which the estimates were amended and in all affected periods in the future.
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Notes to Financial Statements 34 AUTOMATED BANKING SERVICES LTD. NOTES TO FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONT.) Critical estimates The Company does not have critical estimates. b. Significant accounting policies and calculation methods applied in preparing the interim financial information are consistent with those used in preparing the 2025 annual financial statements of the Company. NOTE 3 – CONTINGENT LIABILITIES AND COMMITMENTS a. Separation of the Company and Masav - Separation Outline Following the Competition Authority's request in October 2019 regarding the joint affiliations between the Company and Masav, it was alleged that despite the change in the ownership structure (in accordance with the Law to Increase Competition and Reduce Concentration), the companies continue to have significant affiliations between them that raise competition concerns. In view of the above, the Company and Masav submitted an application in May 2020 for approval of a restrictive arrangement to the Competition Court, and subsequently, in April 2021, a temporary permit for the arrangement was approved subject to conditions agreed upon with the Competition Commissioner and the Bank of Israel. As part of this outline, the companies were required to separate all administrative and application- related affiliations, as well as to regulate infrastructure affiliations such as computer systems and shared offices. The following are the principles of the separation outline agreed upon between the parties: 1. By December 31, 2027, all existing joint affiliaties between the applicants will be completely severed, so that at the end of the approval date of the restrictive arrangement, no joint affiliations will remain between them and no services will be provided by one of the companies to the other that are not part of the services they sell to the general public.
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Notes to Financial Statements 35 NOTE 3 – CONTINGENT LIABILITIES AND COMMITMENTS (CONT.) 2. Severing of the joint affiliations will be done in a gradual and controlled manner. As a general rule, affiliations that have a greater impact on competition and that are likely to raise more significant competition concerns will be separated earlier. Affiliations that have a lesser impact on competition and whose separation involves greater technical complexity will be separated later. 3. During the interim period until the full separation of all affiliations, the applicants will cooperate in a manner that minimizes the concern of reducing competition between them, and only between the office holders required for a particular matter, in accordance with the conditions. 4. The conditions require documentation of the joint meetings and discussions of the companies' managements, in a manner that will allow the Commissioner, if necessary, to supervise the implementation of the conditions and the affiliations between the applicants. On March 27, 2022, approval was given under conditions to the restrictive arrangement by the Competition Court, in light of the reasons for the request and the consent of the parties. The approval of the restrictive arrangement is valid until December 31, 2029. Exemption from the Competion Commisioner dated december 28, 2022 From 2002, the Company operates in compliance with decisions of the Competition Authority regarding an exemption from a restrictive arrangement between Bank Hapoalim Ltd, Bank Leumi Ltd, Discount Bank, First International Bank of Israel Ltd, and the Company. The latest decision regarding the exemption from approval of a restrictive arrangement was issued on December 28, 2022 for a period of five years until December 28, 2026 under the conditions stipulated in such decision. b. Claims and class actions • Motion to approve class action 12789-01-25 Niles T.L.V. (E.L.) Ltd. et al. v. Automated Banking Services Ltd. On January 5, 2025, application to approve a class action (hereinafter, respectively, the "Application for Approval" or the "Application" and the "Claim") was filed with the Central District Court in Lod. According to the applicants, the Company launched a service called Shva Insights, in which it sells information to third parties. In doing so, according to the applicants, the Company allegedly violates the provisions of the law, including the provisions of the Privacy Protection Law, -1981. As per the Company's position, the allegations in the application are baseless and the Company is acting in accordance with the provisions of the law. A pre-trial hearing in the lawsuit was held on February 15, 2026 and June 24, 2026. Due to the preliminary stage of the proceeding, it is not yet possible to assess the prospects of the lawsuit.
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Notes to Financial Statements 36 AUTOMATED BANKING SERVICES LTD. NOTES TO FINANCIAL STATEMENTS NOTE 4 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT a. Financial instruments The Company’s financial instruments include the following assets and liabilities: cash and cash equivalents, bank deposits, marketable securities, other accounts receivable trade payables, and other accounts payable. Due to their nature, the fair value of the Company’s financial instruments is identical to, or approximates their carrying amounts in the financial statements. b. Financial risk management The activity of the Company exposes it to a range of financial risks: market risk (including CPI risk, exchange rate risk, price risk and interest rate risk), credit risk and liquidity risk. As discussed above, the interim financial information does not include all information and disclosures required in annual financial statements, including regarding financial risk management of the Company, and therefore, the interim financial information should be read together with the 2025 annual financial statements and accompanying notes No material changes in the financial risk management policy of the Company took place relative to that reported in the 2025 annual financial statements. NOTE 5 – EVENTS AFTER THE REPORTED PERIOD In July 2026, restricted shares and options were allocated to the Company's CEO, officers and employees, and restricted shares were also issued to the chairman of the board of directors. On July 26, 2026, the Company's board of directors approved the allocation of 4,218 restricted shares to the chairman of the board of directors.
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37 Quarterly Report on Effectiveness of Internal Control over Financial Reporting and Disclosure according to Regulation 38C(a) Management, supervised by the Board of Directors of Automated Banking Services Ltd. (the "Company"), is responsible to set and maintaining proper internal control over financial reporting and disclosure by the corporation. For this matter, management consists of: 1. Eitan Lev Tov, General Manager (CEO); 2. Asael Ben Yaakov, VP Finance (CFO); Internal control over financial reporting and disclosure consists of controls and procedures in place at the Company, which have been designed by the General Manager and the most senior financial officer, or under their supervision, or by those performing in practice said capacities, under oversight of the Company's Board of Directors, and which are intended to provide reasonable assurance regarding the reliability of financial reporting and preparation of reports pursuant to statutor y provisions, and to en sure that information the Company is required to disclose in reports it issues pursuant to statutory provisions is collected, processed, summarized and reported duly and in the format prescribed by law. Internal control includes, inter alia, controls and procedures designed to ensure that information that the Company is required to disclose, as above, is collected and submitted to corporate management, including to the General Manager and to the most senior financial officer, or to those performing in practice said capacities, so as to enable decisions to be duly made with regards to the required disclosure. Due to its inherent limitations, internal control over financial reporting and disclosure is not designed to provide absolute assurance that misrepresentation or omission of information on the reports is prevented or detected. In the quarterly report on the effectiveness of internal control over financial reporting and disclosure, which was attached to the Company's periodic report for the period ended March 31, 2026 (hereinafter - "the latest quarterly report on internal control"), internal control was found to be effective. As of the date of the report, no event or matter has been brought to the attention of the Board of Directors and Management that could change the assessment of the effectiveness of internal control, as presented in the most recent annual report on internal control. As of the date of the report, based on the assessment of the effectiveness of internal control in the most recent annual repo rt on internal control, and based on information brought to the attention of the Board of Directors and Management as stated above, internal control is effective. As of the date of the report, based on what is stated in the latest quarterly report regarding internal control and based on information brought to the attention of management and the Board of Directors as stated above, internal control is effective.
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38 CEO declaration pursuant to Regulation 38C(d)(1) I, Eitan Lev Tov, declare that: (1) I have reviewed the interim report of Automated Banking Services Ltd. (hereinafter: "the Company") for the second quarter of 2026 (hereinafter "the Reports" or "the Interim Reports"); (2) To my knowledge, the interim reports are free of any misrepresentation of any material fact and no representation of any material fact required for making the representations therein, under the circumstances in which they were made, not misleading in reference to the period covered by the report is missing. (3) To my knowledge, the interim reports and the other financial information included in the interim reports present fairly, in all material respects, the financial position, results of operations and cash flows of the Company as of the dates and for the periods presented in the Reports. (4) I have disclosed to the Company's independent auditor, Board of Directors and the Board's Audit Committee, based on my most up-to-date assessment of the internal control over financial reporting and disclosure: (a) All significant deficiencies and material weaknesses in the design or implementation of internal control over financial reporting and disclosure which may reasonably and adversely impact the Company's ability to collect, analyze, summarize or report financial information in a manner that may cast doubt over the reliability of financial reporting and preparation of financial statements pursuant to statutory provisions; and (b) Any fraud, whether or not material, involving the General Manager or any of the direct reports thereof, or involving any other employees with significant capacity in internal control over financial reporting and disclosure. (5) I, alone or together with others in the Company: (a) have established controls and procedures, or have verified their determination and existence under my supervision of controls and procedures, designed to ensure that material information relating to the Company is brought to my attention by others in the Compa ny, in particular during the preparation period of the reports; and- (b) have established controls and procedures, or have verified their establishment and existence under my supervision of controls and procedures, designed to reasonably ensure the reliability of the financial reporting and the preparation of the financial sta tements in accordance with the provisions of the law, including in accordance with generally accepted accounting principles; (c) I have not been informed of any event or matter that occurred during the period between the date of the last periodic report and the date of this report, which may change the conclusions of the board of directors and management regarding the effectiveness of internal control over financial reporting and disclosure of the corporation. The foregoing shall not derogate from my statutory responsibility, or that of any other person, under any law. August 13, 2026 ________________________ Eitan Lev Tov CEO
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39 Declaration of the most senior financial officer pursuant to Regulation 38C(d)(2) I, Asael Ben Yaakov, declare that: (1) I have reviewed the interim financial statements and other financial information included in the interim reports of Automated Banking Services Ltd. (hereinafter: " the Company ") for the second quarter of 202 6 (hereinafter " the Reports" or the "Interim Reports"); (2) To my knowledge, the Interim Reports and the other information included in the Interim Reports is free of any misrepresentation of any material fact and no representation of any material fact required for making the representations therein, under the circumstances in which they were made, not misleading in reference to the period covered by the report is missing. (3) To my knowledge, the Interim Reports and the other information included in the Interim Reports present fairly, in all material respects, the financial position, results of operations and cash flows of the Company as of the dates and for the periods presented in the Reports. (4) I have disclosed to the Company's independent auditor, Board of Directors and the Board's Audit Committee, based on my most up-to-date assessment of the internal control over financial reporting and disclosure: (a) All significant deficiencies and material weaknesses in the design or implementation of internal control over financial reporting and disclosure, to the extent is refers to the Interim Reports and the other information included in the Interim Reports, whi ch may reasonably and adversely impact the Company's ability to collect, analyze, summarize or report financial information in a manner that may cast doubt over the reliability of financial reporting and preparation of financial statements pursuant to s tatutory provisions; and (b) Any fraud, whether or not material, involving the General Manager or any of the direct reports thereof, or involving any other employees with significant capacity in internal control over financial reporting and disclosure. (5) I, alone or together with others in the Company: (a) have established controls and procedures, or have verified their determination and existence under my supervision of controls and procedures, designed to ensure that material information relating to the Company is brought to my attention by others in the Company, in particular during the preparation period of the reports; and- (b) have established controls and procedures, or have verified their establishment and existence under my supervision of controls and procedures, designed to reasonably ensure the reliability of the financial reporting and the preparation of the financial sta tements in accordance with the provisions of the law, including in accordance with generally accepted accounting principles; (c) I have not been informed of any event or matter that occurred during the period between the date of the last periodic report and the date of this report, which may change the conclusions of the board of directors and management regarding the effectiveness of internal control over financial reporting and disclosure of the corporation. The foregoing shall not derogate from my statutory responsibility, or that of any other person, under any law. August 13, 2026 ________________________________ Asael Ben Yaakov - VP Finance (CFO)