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JSE - JSE Limited - JSE Limited audited abridged results for the twelve months

Release Date: 15/03/2011 12:37
Code(s): JSE
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JSE - JSE Limited - JSE Limited audited abridged results for the twelve months ended 31 December 2010 and cash dividend declaration JSE Limited (Registration number 2005/022939/06) Incorporated in the Republic of South Africa ISIN Code: ZAE000079711 Share code: JSE JSE LIMITED AUDITED ABRIDGED RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2010 AND CASH DIVIDEND DECLARATION COMMENTARY OVERVIEW OF 2010 The JSE had a fair year in challenging conditions in 2010, as the Exchange focused on making progress on operational projects while responding to global changes in the exchange industry and the opportunities and challenges these could hold for issuers and investors. After a period of uncertainty towards the start of the year, the JSE`s main equity index, the FTSE/JSE All Share Index (ALSI), rose 16.1% year on year, reaching a high of 32 227 on 30 December. The South African Volatility Index (SAVI), a forecast of equity market risk in South Africa, rose in the last quarter of 2010, implying higher market volatility and thus risk. However, SAVI levels were significantly lower than the highs reached during the global financial crisis in 2008/9. Foreign investors continued to increase their holdings in JSE equities (2010 net inflow: R36.4 billion; 2009: R75.3 billion) and grew their net investment in the interest rate market to R58.6 billion. Financial performance The operational performance of each of our markets has enabled the JSE to grow operating revenue by 9% to R1 255 million (2009: R1 156 million), with the main growth coming from the equities market, but contributions also made by information products sales and commodity derivatives. The interest rate market contributed 12 months of revenue in 2010 against six months the previous year when it was acquired from BESA. Other income climbed 24% to R50 million (2009: R41 million), primarily a result of the profit on realising portfolio investments in the Investor Protection Funds. JSE operating costs before net finance income rose by 8% to R879 million (2009: R810 million), as a result of: - the hiring of 20 people to our staff complement, primarily to enable us to complete our large IT projects; - impairment to software under development of R33 million, relating to development costs in the back office system and to the upgrade of SENS which is now not expected to deliver the anticipated value; - onerous lease costs of R1.9 million, attributable to the lease over Melrose Arch entered into by the Bond Exchange South Africa (BESA), and which were expensed during the course of 2010. The result is a 10% rise in operating profit for 2010 to R426 million from R386 million in 2009. Net interest earned fell by 16% to R87 million. Group headline earnings per share fell from 456 cents to 436 cents. Capital expenditure Capital expenditure was of R157 million in 2010 related mainly to: - the last phase of the JSE`s technology replacement project, including the back office system (BDA), surveillance and clearing, and settlement systems to be delivered this year. Most of the cost of this project was incurred between 2007 and 2010. - the JSE`s new data centres. The bulk of the depreciation for these will be taken through the income statement from 2011. Capital structure and dividend policy The JSE has no long-term borrowings and R1 046 million in cash reserves (2009: R921 million). The Exchange analyses its capital requirements in three categories: - first, to ensure a smoothly operating stock exchange, the JSE sets aside sufficient cash to fund four months of operations; - second, as the JSE guarantees all central order book equities trades, it sets aside sufficient cash to meet its obligations assuming the failure of a JSE equities member (broker); - third, the JSE must be in a position to maintain infrastructure and meet capital needs for expansion, so we set aside a portion of cash to fund these types of expenses; and - fourth, the Investor Protection Funds contribute R112 million of total (2009: R116 million). On the basis of this assessment, the Board has determined how much cash we need to retain and revisits this regularly. Cash dividend declaration The directors of JSE are proposing to declare ordinary dividend number 7 of 210 cents per share to be approved at the Annual General Meeting of shareholders to be held on Thursday, 28 April 2011. This equates to 2.1 times cover and is consistent with the stated dividend policy to pay between 1.5 and 2.5 cover. The salient dates for the payment of the dividend are as follows: To be released on SENS on Tuesday, 15 March 2011 Last date to trade JSE shares cum Friday, 20 May 2011 dividend JSE shares trade ex dividend Monday, 23 May 2011 Record date for purposes of Friday, 27 May 2011 determining the registered holders of JSE shares to participate in the dividend at close of business on Date of payment of dividend Monday, 30 May 2011 Share certificates may not be dematerialised or rematerialised from Monday 23 May 2011 to Friday, 27 May 2011, both days inclusive. Operating overview It is becoming clearer that, in a globally competitive environment, markets with strong regulation, solid infrastructure and thriving institutions will be better positioned to attract sustainable capital flows. The recognition by the World Economic Forum (WEF) Global Competitiveness Report 2010 - 2011 that South Africa`s securities exchange regulation is the best in the world reflects our transformation from a single product equity exchange to a well-regulated, fully horizontally and vertically integrated exchange, now recognised as one of the world`s leading exchanges. In future, we aim to be recognised as the South African exchange providing the leading fully integrated financial market for African securities as well as an effective gateway to international products and markets for African investors. To this end and as indicated more fully below, in 2011 the JSE`s main focus will be on the delivery of several key projects: - finally bedding down our major technology initiatives and moving closer to being able to up the ante again in the technology-dependent services we are able to offer across all our markets. This includes offering lower execution speeds and a greater choice of ways to access our services; - completing the work to enable the successful implementation of our new equities trading system in 2012 in Johannesburg supplied by MillenniumIT, which is a company wholly owned by the LSE; - building consensus on the growth of our spot and derivatives interest rate markets; and - growing the client and product range in all our market segments, concentrating particularly on how to bring over-the-counter (OTC) trade on-market and on how to encourage more foreign activity on the JSE. Cross-border activity in the exchange sector continues. We believe the JSE needs to be linked into the global financial markets so that it can not only continue to attract foreign investment, but also provide local clients with the best possible access to foreign investment opportunities. This type of access can be obtained in a number of different ways, which include product diversification and the provision of value-added services. We are concentrating on these areas. Also important is identifying strategic relationships with leading global exchanges to enable us to deliver on our strategy. The Exchange`s agreement with the CME Group, the world`s largest derivatives exchange, is a case in point. Through this linkage, the JSE is able to offer cash settled ZAR-denominated commodity derivatives referencing CME prices to local investors, though there is no equity cross-holding between the exchanges. On the African continent, the JSE has focused its efforts on the following: - the Africa Board. As part of the Main Board in the equities market, this Board enables issuers from the continent (outside of South Africa) to take advantage of increased profile and capital raising opportunities through a dual listing on the JSE. In this regard, we are delighted with the efforts of the Africa Board Advisory Committee, which comprises prominent African business people, to assist with the Africa Board strategy. In 2011, the JSE will continue to promote the Africa Board and to develop and list associated products such as African exchange traded funds, African debt and African depository receipts. In this vein, we welcome the suggestion in the recent Treasury consultation paper on prudential regulation that African issuers should be treated as domestic issuers for prudential purposes; - building deeper relationships with some of the continent`s capital markets, which are seeking new ways of growing and wish to tap into the JSE`s experience in that regard; - progressing with the design of the Africa hub to allow customers to route orders to African exchanges using a single technological hub. Prospects While much has changed at the JSE during the past decade, there is significant work to be done given the winds of change sweeping the financial services industry worldwide. The JSE`s objectives for 2011 have been discussed above. Though the Board is focused on delivering on the objectives identified above, revenue projections are not possible in the stock exchange industry, given the dependence on trading volumes in all of our markets. At time of writing, the JSE`s markets continue to emulate 2010`s performance with similar transaction levels being maintained. This does not imply that the trends will necessarily continue throughout 2011. Indications are that 2011 will be a tough year in financial markets. By delivering on the projects outlined during this review, and by staying close to all clients, the JSE will deliver the best possible performance to the benefit of its users and investors. HJ Borkhum RM Loubser CHANGES TO BOARD The JSE Board has been relatively unchanged for the past decade. However, there comes a time in every institution when people wish to move on. The first change to the Board is the decision of our CEO, Russell Loubser to stand down as CEO with effect from 31 December 2011. Russell joined the JSE as CEO in 1997 and has been responsible for significant and highly successful innovations. This is not the time to praise or thank Russell for his enormous contribution as he still has nine months left before leaving the JSE. The time for farewells will come later. I am delighted to announce that the Board has appointed Nicky Newton-King as CEO with effect from 1 January 2012. Nicky has been Russell`s deputy for the past 8 years. This appointment is well deserved and will ensure an orderly transition. Other changes are that non-executive directors Gloria Serobe and Wendy Luhabe have indicated that they do not wish to make themselves available for re- election at our AGM in April 2011. After having served 10 and eight years on the Board respectively they have both made significant contributions to the JSE`s affairs and I thank them most sincerely. Jonathan Berman who joined the Board as an alternate director following the BESA merger, resigned during the course of the year due to his other business commitments. Lastly, in terms of accepted practice, it has been decided to shrink the number of executive directors on our Board. Leanne Parsons and John Burke who are senior and highly respected executives of the JSE will both stand down as executive directors at our AGM in April. I am pleased to announce that they will continue to contribute to the Board as alternate directors. Humphrey Borkum Consolidated statement of comprehensive income for the year ended 31 December 2010 Group 2010 2009
R`000 R`000 Revenue 1 255 148 1 155 756 Other income 50 267 40 547 Personnel expenses (338 098) (318 632) Other expenses (541 087) (491 774) Profit before net finance income 426 230 385 897 Finance income 1 027 947 1 325 473 Finance costs (940 957) (1 221 347) Net finance income 86 990 104 126 Share of profit of equity accounted 26 446 27 937 investees (net of tax) Profit before income tax 539 666 517 960 Income tax expense (161 659) (152 359) Profit for the year 378 007 365 601 Other comprehensive income Net change in fair value of available- 29 660 38 187 for-sale financial assets Net change in fair value of available- (31 893) (9 087) for-sale financial assets reclassified to profit or loss Income tax on other comprehensive income 0 0 Other comprehensive (loss)/income for (2 233) 29 100 the year, net of income tax Total comprehensive income for the year 375 774 394 701 Profit attributable to: Owners of the Exchange 378 007 367 244 Non-controlling interests 0 (1 643) Profit for the year 378 007 365 601 Total comprehensive income attributable to: Owners of the Exchange 375 774 396 344 Non-controlling interests 0 (1 643) Total comprehensive income for the year 375 774 394 701 Earnings per share Basic earnings per share (cents) 445.5 431.3 Diluted earnings per share (cents) 438.4 425.2 Consolidated statement of comprehensive income (continued) Exchange 2010 2009 R`000 R`000
Revenue 1 278 487 1 177 181 Other income 38 436 43 449 Personnel expenses (338 098) (318 632) Other expenses (514 240) (448 001) Profit before net finance income 464 585 453 997 Finance income 55 392 77 236 Finance costs (7 556) (11 835) Net finance income 47 836 65 401 Share of profit of equity accounted 0 0 investees (net of tax) Profit before income tax 512 421 519 398 Income tax expense (161 607) (152 053) Profit for the year 350 814 367 345 Other comprehensive income Net change in fair value of available-for- 0 0 sale financial assets Net change in fair value of available-for- 0 0 sale financial assets reclassified to profit or loss Income tax on other comprehensive income 0 0 Other comprehensive (loss)/income for the 0 0 year, net of income tax Total comprehensive income for the year 350 814 367 345 Profit attributable to: Owners of the Exchange 350 814 367 345 Non-controlling interests 0 0 Profit for the year 350 814 367 345 Total comprehensive income attributable to: Owners of the Exchange 350 814 367 345 Non-controlling interests 0 0 Total comprehensive income for the year 350 814 367 345 Earnings per share Basic earnings per share (cents) 413.5 431.5 Diluted earnings per share (cents) 406.9 425.3 Consolidated statement of comprehensive income (continued) Investor Protection Funds* 2010 2009 R`000 R`000
Revenue 0 0 Other income 36 082 13 165 Personnel expenses 0 0 Other expenses (15 334) (13 142) Profit before net finance income 20 748 23 Finance income 8 886 7 518 Finance costs 0 0 Net finance income 8 886 7 518 Share of profit of equity accounted 0 0 investees (net of tax) Profit before income tax 29 634 7 541 Income tax expense 0 0 Profit for the year 29 634 7 541 Other comprehensive income Net change in fair value of available-for- 29 660 38 187 sale financial assets Net change in fair value of available-for- (31 893) (9 087) sale financial assets reclassified to profit or loss Income tax on other comprehensive income 0 0 Other comprehensive (loss)/income for the (2 233) 29 100 year, net of income tax Total comprehensive income for the year 27 401 36 641 Profit attributable to: Owners of the Exchange 29 634 7 541 Non-controlling interests 0 0 Profit for the year 29 634 7 541 Total comprehensive income attributable to: Owners of the Exchange 27 401 36 641 Non-controlling interests 0 0 Total comprehensive income for the year 27 401 36 641 Earnings per share Basic earnings per share (cents) 34.9 8.9 Diluted earnings per share (cents) 34.4 8.7 * Investor Protection Funds comprises the JSE Guarantee Fund Trust, JSE Derivatives Fidelity Fund Trust and BESA Guarantee Fund Trust (the "Trusts"). The JSE maintains these Trusts for investor protection purposes as required under the Securities Services Act, No. 36 of 2004. The JSE is required to consolidate the Trusts into the results of the Group in terms of International Financial Reporting Standards (IFRS). However, as these Trusts are legally separate from the JSE, neither the JSE nor its shareholders have any right to the net assets of these Trusts. For enhanced understanding, the Trusts have been shown separately (before intercompany adjustments), although, for compliance with IFRS, the results form part of the Group financial statements. Consolidated statement of financial position as at 31 December 2010 Group 2010 2009
R`000 R`000 Assets Non-current assets 943 010 874 301 Property and equipment 113 272 87 301 Intangible assets 423 039 382 749 Investments in equity accounted 95 017 92 874 investees Investments in subsidiaries 0 0 Other investments 218 034 239 538 Derivative financial instruments 3 015 1 451 Due from the JSE Empowerment Fund Trust 13 910 0 Deferred taxation 76 723 70 388 Current assets 16 223 384 15 702 377 Trade and other receivables 187 379 210 918 Income tax receivable 61 783 29 641 Due from group entities 0 0 Margin deposits 14 923 444 14 540 905 Collateral deposits 4 447 116 Cash and cash equivalents 1 046 330 920 797 Total assets 17 166 393 16 576 678 Equity and liabilities Total equity 1 791 104 1 604 724 Non-current liabilities 170 630 195 258 Finance lease 1 279 3 333 Employee benefits 46 105 64 625 Deferred taxation 4 757 5 587 Operating lease liability 65 562 70 529 Deferred Income 51 847 50 165 Due to SAFEX members 1 080 1 019 Current liabilities 15 204 659 14 776 696 Trade and other payables 174 155 159 762 Employee benefits 94 113 70 571 Operating lease liability 8 500 5 342 Due to group entities 0 0 Margin deposits 14 923 444 14 540 905 Collateral deposits 4 447 116 Total equity and liabilities 17 166 393 16 576 678 Consolidated statement of financial position (continued) Exchange 2010 2009
R`000 R`000 Assets Non-current assets 894 850 806 741 Property and equipment 113 272 87 301 Intangible assets 422 729 382 400 Investments in equity accounted investees 21 416 21 416 Investments in subsidiaries 243 783 243 783 Other investments 2 2 Derivative financial instruments 3 015 1 451 Due from the JSE Empowerment Fund Trust 13 910 0 Deferred taxation 76 723 70 388 Current assets 1 119 078 969 317 Trade and other receivables 126 327 118 863 Income tax receivable 61 032 28 992 Due from group entities 9 097 8 184 Margin deposits 10 382 23 685 Collateral deposits 4 447 116 Cash and cash equivalents 907 794 789 477 Total assets 2 013 928 1 776 058 Equity and liabilities Total equity 1 449 012 1 287 592 Non-current liabilities 220 521 195 149 Finance lease 1 279 3 333 Employee benefits 46 105 64 625 Deferred taxation 4 648 5 478 Operating lease liability 65 562 70 529 Deferred Income 101 847 50 165 Due to SAFEX members 1 080 1 019 Current liabilities 344 395 293 317 Trade and other payables 102 658 65 964 Employee benefits 94 113 70 571 Operating lease liability 8 500 5 342 Due to group entities 124 295 127 639 Margin deposits 10 382 23 685 Collateral deposits 4 447 116 Total equity and liabilities 2 013 928 1 776 058 Consolidated statement of financial position (continued) Investor Protection Funds 2010 2009
R`000 R`000 Assets Non-current assets 218 032 239 536 Property and equipment 0 0 Intangible assets 0 0 Investments in equity accounted investees 0 0 Investments in subsidiaries 0 0 Other investments 218 032 239 536 Derivative financial instruments 0 0 Due from the JSE Empowerment Fund Trust 0 0 Deferred taxation 0 0 Current assets 116 075 122 584 Trade and other receivables 4 035 4 274 Income tax receivable 0 0 Due from group entities 0 2 200 Margin deposits 0 0 Collateral deposits 0 0 Cash and cash equivalents 112 040 116 110 Total assets 334 107 362 120 Equity and liabilities Total equity 331 847 357 888 Non-current liabilities 0 0 Finance lease 0 0 Employee benefits 0 0 Deferred taxation 0 0 Operating lease liability 0 0 Deferred Income 0 0 Due to SAFEX members 0 0 Current liabilities 2 260 4 232 Trade and other payables 581 3 061 Employee benefits 0 0 Operating lease liability 0 0 Due to group entities 1 679 1 171 Margin deposits 0 0 Collateral deposits 0 0 Total equity and liabilities 334 107 362 120 Consolidated statement of changes in equity for the year ended 31 December 2010 Attributable to owners of the Exchange
Non-dis- Share Share tributable capital premium reserve R`000 R`000 R`000
Group Balance at 31 December 8 514 162 779 10 058 2008 Total comprehensive income for the year Profit or loss for the 0 0 0 year Other comprehensive income Net change in fair value 0 0 0 of available-for-sale financial assets Net change in fair value 0 0 0 of available-for-sale financial assets reclassified to profit or loss Total other comprehensive 0 0 0 income Total comprehensive income 0 0 0 for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options lapsed 0 0 0 reclassified to retained earnings Dividends paid to owners 0 0 0 of the Exchange Total contributions by and 0 0 0 distributions to owners of the Exchange Changes in ownership interests in subsidiaries that do not result in a loss of control Non-controlling interest 0 0 0 in BESA Group Acquisition of non- 0 0 0 controlling interest in BESA Group Transfer to the BESA 0 0 0 Guarantee Fund Trust Total transactions with 0 0 0 owners of the Exchange Balance at 31 December 8 514 162 779 10 058 2009 Total comprehensive income for the year Profit for the year 0 0 0 Other comprehensive income Net change in fair value 0 0 0 of available-for-sale financial assets Net change in fair value 0 0 0 of available-for-sale financial assets reclassified to profit or loss Total other comprehensive 0 0 0 income Total comprehensive income 0 0 0 for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options lapsed 0 0 0 reclassified to retained earnings Dividends paid to owners 0 0 0 of the Exchange Distribution from the BESA 0 0 0 Guarantee Fund Trust1 Distribution from the JSE 0 0 0 Guarantee Fund Trust2 Treasury shares (48) (32 056) 0 Treasury shares - share 0 (65) 0 issue costs Equity settled share based 0 0 0 payment Total contributions by and (48) (32 121) 0 distributions to owners of the Exchange Total transactions with (48) (32 121) 0 owners of the Exchange Balance at 31 December 8 466 130 658 10 058 2010 1 The BESA Guarantee Fund Trust Deed makes specific provision for the utilisation of excess funds for the purpose of reducing the risk of claims being made against the Trust. To this effect R5,3m was transferred to the JSE Limited for the defrayment of market regulatory expenditure. 2 This represents the monies distributed by the JSE Guarantee Fund Trust for the specific purpose of funding the establishment of the JSE`s Disaster Recovery site. Consolidated statement of changes in equity (continued) Attributable to owners of the Exchange
BBBEE JSE LTIS Retained reserve 2010 earnings reserve R`000 R`000 R`000
Group Balance at 31 December 165 503 0 799 141 2008 Total comprehensive income for the year Profit or loss for the 0 0 358 060 year Other comprehensive income Net change in fair value 0 0 0 of available-for-sale financial assets Net change in fair value 0 0 0 of available-for-sale financial assets reclassified to profit or loss Total other comprehensive 0 0 0 income Total comprehensive income 0 0 358 060 for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options lapsed (5 311) 0 5 311 reclassified to retained earnings Dividends paid to owners 0 0 (163 469) of the Exchange Total contributions by and (5 311) 0 (158 158) distributions to owners of the Exchange Changes in ownership interests in subsidiaries that do not result in a loss of control Non-controlling interest 0 0 0 in BESA Group Acquisition of non- 0 0 0 controlling interest in BESA Group Transfer to the BESA 0 0 (95 676) Guarantee Fund Trust Total transactions with (5 311) 0 (253 834) owners of the Exchange Balance at 31 December 160 192 0 903 367 2009 Total comprehensive income for the year Profit for the year 0 0 348 373 Other comprehensive income Net change in fair value 0 0 0 of available-for-sale financial assets Net change in fair value 0 0 0 of available-for-sale financial assets reclassified to profit or loss Total other comprehensive 0 0 0 income Total comprehensive income 0 0 348 373 for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options lapsed (311) 0 311 reclassified to retained earnings Dividends paid to owners 0 0 (163 469) of the Exchange Distribution from the BESA 0 0 5 368 Guarantee Fund Trust1 Distribution from the JSE 0 0 50 000 Guarantee Fund Trust2 Treasury shares 0 0 0 Treasury shares - share 0 0 0 issue costs Equity settled share based 0 6 244 0 payment Total contributions by and (311) 6 244 (107 790) distributions to owners of the Exchange Total transactions with (311) 6 244 (107 790) owners of the Exchange Balance at 31 December 159 881 6 244 1 143 950 2010 1 The BESA Guarantee Fund Trust Deed makes specific provision for the utilisation of excess funds for the purpose of reducing the risk of claims being made against the Trust. To this effect R5,3m was transferred to the JSE Limited for the defrayment of market regulatory expenditure. 2 This represents the monies distributed by the JSE Guarantee Fund Trust for the specific purpose of funding the establishment of the JSE`s Disaster Recovery site. Consolidated statement of changes in equity (continued) Attributable to owners of the Exchange Total Non- Investor
Exchange con- Protec- and sub- trolling tion Total sidiaries interests Funds equity R`000 R`000 R`000 R`000
Group Balance at 31 1 145 995 0 227 497 1 373 492 December 2008 Total comprehensive income for the year Profit or loss 358 060 7 541 365 601 for the year Other comprehensive income Net change in 0 0 38 187 38 187 fair value of available-for- sale financial assets Net change in 0 0 (9 087) (9 087) fair value of available-for- sale financial assets reclassified to profit or loss Total other 0 0 29 100 29 100 comprehensive income Total 358 060 0 36 641 394 701 comprehensive income for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options 0 0 0 lapsed reclassified to retained earnings Dividends paid to (163 469) 0 0 (163 469) owners of the Exchange Total (163 469) 0 (163 469) contributions by and distributions to owners of the Exchange Changes in ownership interests in subsidiaries that do not result in a loss of control Non-controlling 0 1 643 1 643 interest in BESA Group Acquisition of 0 (1 643) 0 (1 643) non-controlling interest in BESA Group Transfer to the (95 676) 0 95 676 0 BESA Guarantee Fund Trust Total (259 145) 0 95 676 (163 469) transactions with owners of the Exchange Balance at 31 1 244 910 0 359 814 1 604 724 December 2009 Total comprehensive income for the year Profit for the 348 373 0 29 634 378 007 year Other comprehensive income Net change in 0 0 29 660 29 660 fair value of available-for- sale financial assets Net change in 0 0 (31 893) (31 893) fair value of available-for- sale financial assets reclassified to profit or loss Total other 0 0 (2 233) (2 233) comprehensive income Total 348 373 0 27 401 375 774 comprehensive income for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options 0 0 0 0 lapsed reclassified to retained earnings Dividends paid to (163 469) 0 0 (163 469) owners of the Exchange Distribution from 5 368 0 (5 368) 0 the BESA Guarantee Fund Trust1 Distribution from 50 000 0 (50 000) 0 the JSE Guarantee Fund Trust2 Treasury shares (32 104) 0 0 (32 104) Treasury shares - (65) 0 0 (65) share issue costs Equity settled 6 244 0 0 6 244 share based payment Total (134 026) 0 (55 368) (189 394) contributions by and distributions to owners of the Exchange Total (134 026) 0 (55 368) (189 394) transactions with owners of the Exchange Balance at 31 1 459 257 0 331 847 1 791 104 December 2010 1 The BESA Guarantee Fund Trust Deed makes specific provision for the utilisation of excess funds for the purpose of reducing the risk of claims being made against the Trust. To this effect R5,3m was transferred to the JSE Limited for the defrayment of market regulatory expenditure. 2 This represents the monies distributed by the JSE Guarantee Fund Trust for the specific purpose of funding the establishment of the JSE`s Disaster Recovery site. Consolidated statement of changes in equity (continued) Share Share BBBEE capital premium reserve Exchange R`000 R`000 R`000 Balance at 31 December 2008 8 514 162 779 165 503 Total comprehensive income for the year Profit for the year 0 0 0 Other comprehensive income Total other comprehensive 0 0 0 income Total comprehensive income 0 0 0 for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options lapsed 0 0 (5 311) transferred to retained earnings Dividends paid to equity 0 0 0 holders Total contributions by and 0 0 (5 311) distributions to owners of the Exchange Changes in ownership 0 0 0 interests in subsidiaries that do not result in a loss of control Total transactions with 0 0 (5 311) owners of the Exchange Balance at 31 December 2009 8 514 162 779 160 192 Total comprehensive income for the year Profit for the year 0 0 0 Other comprehensive income Total other comprehensive 0 0 0 income Total comprehensive income 0 0 0 for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options lapsed 0 0 (311) transferred to retained earnings Dividends to owners of the 0 0 0 Exchange Treasury shares (48) (32 056) 0 Treasury shares - share 0 (65) 0 issue costs Equity settled share based 0 0 0 payment Total contributions by and (48) (32 121) 311) distributions to owners of the Exchange Changes in ownership 0 0 0 interests in subsidiaries that do not result in a loss of control Total transactions with (48) (32 121) (311) owners of the Exchange Balance at 31 December 2010 8 466 130 658 159 881 Consolidated statement of changes in equity (continued) Retained JSE LTIS Total earnings 2010 reserve Exchange Exchange R`000 R`000 R`000 Balance at 31 746 920 0 1 083 716 December 2008 Total comprehensive income for the year Profit for the year 367 345 0 367 345 Other comprehensive income Total other 0 0 0 comprehensive income Total comprehensive 367 345 0 367 345 income for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options lapsed 5 311 0 0 transferred to retained earnings Dividends paid to (163 469) 0 (163 469) equity holders Total contributions (158 158) 0 (163 469) by and distributions to owners of the Exchange Changes in ownership 0 0 0 interests in subsidiaries that do not result in a loss of control Total transactions (158 158) 0 (163 469) with owners of the Exchange Balance at 31 956 107 0 1 287 592 December 2009 Total comprehensive income for the year Profit for the year 350 814 0 350 814 Other comprehensive income Total other 0 0 0 comprehensive income Total comprehensive 350 814 0 350 814 income for the year Transactions with owners of the Exchange, recognised directly in equity Contributions by and distributions to owners of the Exchange Share options lapsed 311 0 0 transferred to retained earnings Dividends to owners (163 469) 0 (163 469) of the Exchange Treasury shares 0 0 (32 104) Treasury shares - 0 0 (65) share issue costs Equity settled share 0 6 244 6 244 based payment Total contributions (163 158) 6 244 (189 394) by and distributions to owners of the Exchange Changes in ownership 0 0 0 interests in subsidiaries that do not result in a loss of control Total transactions (163 158) 6 244 (189 394) with owners of the Exchange Balance at 31 1 143 763 6 244 1 449 012 December 2010 Consolidated statement of cash flows for the year ended 31 December 2010 Group Exchange 2010 2009 2010 2009 R`000 R`000 R`000 R`000 Cash flows from operating activities Cash generated 529 238 467 318 566 653 527 936 by (used in) operations Interest 1 048 586 1 353 964 55 802 77 806 received Interest paid (960 943) (1 284 943) (7 738) (16 440) Dividends 4 045 3 922 0 0 received Taxation paid (200 966) (185 701) (200 811) (185 126) Net cash 419 960 354 560 413 906 404 176 inflow/(outflow) from operating activities Cash flows from investing activities Proceeds from 102 170 81 888 0 0 sale of other investments Acquisition of (51 007) (91 329) 0 0 other investments Acquisition of shares in Bond Exchange of South Africa, 0 (98 346) 0 (203 818) net of cash acquired Cash acquired 0 0 0 0 from BESA Guarantee Fund Trust Loan to JSE (14 695) 0 (14 695) 0 Empowerment Fund Trust Dividends from 24 303 17 710 24 303 17 710 equity accounted investees Proceeds from 46 447 46 447 disposal of property and equipment Leasehold (8 787) (3 181) (8 787) (3 181) improvements Acquisition of (99 311) (89 730) (99 311) (89 730) intangible assets Acquisition of (48 712) (27 080) (48 712) (27 080) property and equipment Net cash (used (95 993) (209 621) (147 156) (305 652) in)/from investing activities Cash flows from financing activities Distribution 0 (2 015) 50 000 0 from/(by) Investor Protection Funds Repayment of 0 (5 000) 0 0 loan to OMX Technology AB Purchase of (32 168) 0 (32 168) 0 Treasury shares Dividends paid (163 469) (163 469) (163 469) (163 469) Net cash used in (195 637) (170 484) (145 637) (163 469) financing activities Net increase 128 330 (25 545) 121 113 (64 945) (decrease) in cash and cash equivalents Cash and cash 920 796 946 341 789 477 854 422 equivalents at 1 January Effect of (2 796) 0 (2 796) 0 exchange rate fluctuations on cash held Cash and cash 1 046 330 920 796 907 794 789 477 equivalents at 31 December Consolidated statement of cash flows (continued) Investor Protection
Funds 2010 2009 R`000 R`000 Cash flows from operating activities Cash generated by (used in) operations (14 562) (10 632) Interest received 8 724 7 268 Interest paid 0 0 Dividends received 4 045 3 922 Taxation paid 0 0 Net cash inflow/(outflow) from (1 793) 558 operating activities Cash flows from investing activities Proceeds from sale of other 102 170 81 888 investments Acquisition of other investments (51 007) (91 329) Acquisition of shares in Bond Exchange of South Africa, net of cash acquired 0 0 Cash acquired from BESA Guarantee Fund 0 96 342 Trust Loan to JSE Empowerment Fund Trust 0 0 Dividends from equity accounted 0 0 investees Proceeds from disposal of property and 0 0 equipment Leasehold improvements 0 0 Acquisition of intangible assets 0 0 Acquisition of property and equipment 0 0 Net cash (used in)/from investing 51 163 86 901 activities Cash flows from financing activities Distributions from/(by) Investor (53 440) (2 015) Protection Funds Repayment of loan to OMX Technology AB 0 0 Purchase of Treasury shares 0 0 Dividends paid 0 0 Net cash used in financing activities (53 440) (2 015) Net increase (decrease) in cash and (4 070) 85 444 cash equivalents Cash and cash equivalents at 1 January 116 110 30 666 Effect of exchange rate fluctuations 0 0 on cash held Cash and cash equivalents at 31 112 040 116 110 December Notes to the financial statements for the year ended 31 December 2010 Basis of preparation and accounting policies JSE Limited (the "Company") is a company domiciled in the Republic of South Africa. The consolidated abridged annual financial statements of the Company as at and for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as "the Group") and the Group`s interests in associates and jointly controlled entities. The JSE Limited`s principal accounting policies applied by the Group in its consolidated abridged annual financial statements for the year ended 31 December 2010 are the same as those applied by the Group in its consolidated annual financial statements as at and for the year ended 31 December 2009. The JSE Limited`s abridged consolidated annual financial statements or the year ended 31 December 2010, have been prepared in terms of the recognition and measurement requirements of International Financial Reporting Standards and the presentation and disclosure requirements of IAS 34, Interim Financial Reporting and the AC 500 Series Pronouncements as issued by the Accounting Practises Board (APB). Comparative figures Where necessary, comparative figures have been reclassified to conform to changes in presentation as reported in the consolidated financial statements as at and for the year ended 31 December 2010. The consolidated financial statements and the separate financial statements were authorised for issue by the Board of Directors on 15 March 2011. Special purpose entities# The JSE Guarantee Fund Trust, JSE Derivatives Fidelity Fund Trust and BESA Guarantee Fund Trust are special purpose entities (SPE`s) set up for investor protection. The Group does not have any direct or indirect shareholding in these entities, however, based on the evaluation of the substance of the relationship with the Group and the SPE`s risks and rewards, the Group controls the financial and operating policies of these entities and the results are thus consolidated. SPE`s controlled by the Group were established under terms that impose strict limitations on the decision-making powers of the SPEs` management and that result in the Group receiving the majority of the benefits related to the SPE`s operations and net assets, being exposed to the majority of risks incident to the SPE`s activities, and retaining the majority of the residual or ownership risks related to the SPE`s or their assets. Distributions from special purpose entities# During the year surplus assets amounting to R50.0 million were distributed by the JSE Guarantee Fund Trust to the JSE for the establishment of the JSE`s disaster recovery site. The transfer of the funds were formally approved by the Financial Services Board. The funds received are recognised in deferred income in the JSE separate financial statements and will be released to profit or loss on a systematic basis over the useful life of the assets. As at 31 December 2010 the JSE has capitalised costs of R29.0 million in respect of the establishment of the disaster recovery site. Operating segments# The Group has five reportable segments, as stated below. The business units offer different products and services, and are managed separately because they require different technology and marketing strategies. Management has determined the operating segments based on the monthly reports reviewed by the Executive Committee (Exco). Exco reviews the revenue streams as set out below. Financial and personnel resources are allocated according to the needs of the various divisions in order to apply the strategy and operating plans agreed to during the budgeting process. Costs in the JSE are managed holistically across the Exchange and variances against budget are closely monitored. Information Technology and other corporate overheads are not generally allocated to a particular segment. Information about reportable segments Equity1 Equity Commodity
division derivatives derivatives R`000 R`000 R`000 For the year ended 31 December 2010 External revenues 772 885 116 077 47 827 For the year ended 31 December 2009 External revenues 720 695 116 175 41 241 1 Comprises equities trading fees, risk management, clearing and settlement fees, back-office services (BDA), issuer services and membership fees. 2 The interest rate market revenue was remeasured in the current year to include R12.6 million (2009: R5.0 million) which relates to the listing fees for the bond market. 3 Comprises funds management and Strate ad valorem fees. Information about reportable segments (continued) Interest rate2 Infor-
mation market sales Other3 Total R`000 R`000 R`000 R`000 For the year ended 31 December 2010 External 47 745 116 727 153 887 1 255 148 revenues For the year ended 31 December 2009 External 21 412 108 773 147 460 1 155 756 revenues 1 Comprises equities trading fees, risk management, clearing and settlement fees, back-office services (BDA), issuer services and membership fees. 2 The interest rate market revenue was remeasured in the current year to include R12.6 million (2009: R5.0 million) which relates to the listing fees for the bond market. 3 Comprises funds management and Strate ad valorem fees. EARNINGS AND HEADLINE EARNINGS PER SHARE# Basic earnings per share The calculation of basic earnings per share at 31 December 2010 of 445.5 (2009: 431.3) cents per share was based on profit for the year attributable to ordinary shareholders of R378.0 million (2009: R367.2 million) and a weighted average number of ordinary shares of 84 843 695 (2009: 85 140 050), calculated as follows: Group Exchange 2010 2009 2010 2009
R`000 R`000 R`000 R`000 Profit for the 378 007 367 244 350 814 367 345 year attributable to ordinary shareholders Weighted average number of ordinary shares: Issued ordinary 85 140 050 85 140 050 85 140 050 85 140 050 shares at 1 January Effect of own (296 355) 0 (296 355) 0 shares held (JSE LTIS 2010) Weighted average 84 843 695 85 140 050 84 843 695 85 140 050 number of ordinary shares at 31 December Basic earnings 445.5 431.3 413.5 431.5 per share (cents) Diluted earnings per share The calculation of diluted earnings per share at 31 December 2010 of 438.4 (2009: 425.2) cents per share was based on the profit for the year attributable to ordinary shareholders of R378.0 million (2009: R367.2 million) and a weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares of 86 215 531 (2009: 86 369 696), calculated as follows: Profit for the 378 007 367 244 350 814 367 345 year attributable to ordinary shareholders Weighted average number of ordinary shares (diluted): Weighted average 84 843 695 85 140 050 84 843 695 85 140 050 number of ordinary shares at 31 December (basic) Effect of share 1 371 836 1 229 646 1 371 836 1 229 646 options in issue Weighted average 86 215 531 86 369 696 86 215 531 86 369 696 number of ordinary shares (diluted) Diluted earnings 438.4 425.2 406.9 425.3 per share (cents) The average market value of the Exchange`s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the year. Headline earnings per share The calculation of headline earnings per share at 31 December 2010 of 436.1 (2009: 456.1) cents per share was based on headline earnings attributable to ordinary shareholders of R370.0 million (2009: R388.4 million) and a weighted average number of ordinary shares of 84 843 695 (2009: 85 140 050) during the year. Reconciliation of headline earnings: Profit for the year 378 007 367 244 350 814 367 345 attributable to ordinary shareholders Adjustments, net of tax1, are made to the following: Loss on sale of 12 107 12 107 property and equipment Impairment of goodwill 0 158 0 0 Impairment of monies 0 329 55 1 844 due from related entities Impairment of 23 889 27 286 23 889 5 773 intangible assets Impairment of 0 2 113 0 0 available-for-sale equity securities Remeasurement included 0 200 0 0 in equity accounted earnings of associates Profit on realisation (31 893) (9 087) 0 0 of available-for-sale instruments Headline earnings 370 015 388 351 374 770 375 069 Headline earnings per 436.1 456.1 441.7 440.5 share (cents) 1 Taxation effect of headline adjustments was R9.3 million (2009: R2.3 million) Diluted headline earnings per share The calculation of diluted headline earnings per share at 31 December 2010 of 429.2 (2009: 449.6) cents per share was based on headline earnings for the year of R370.0 million (2009: R388.4 million) and a weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares of 86 215 531 (2009: 86 369 696). Diluted headline earnings per share 429.2 449.6 434.7 434.3 (cents) Impairment loss# Software under development During the year, a special review of the capitalised software development costs was conducted. Certain elements totaling R33.2 million (2009: R8.0 million) were identified as not being able to deliver value and were therefore impaired. Furthermore, management prepared a value in use impairment calculation for assessing the overall impairment of total costs. Based on this calculation, no further impairment was required as the net present value of the cash generating unit was calculated to be greater than the capitalised carrying value of the software under development. Audit Opinion KPMG Inc, the company`s independent auditors, has audited the consolidated annual financial statements of JSE Limited from which the abridged consolidated results contained in this report have been derived, and has expressed an unmodified audit opinion on the consolidated annual financial statements. The abridged consolidated financial results comprise the statements of financial position at 31 December 2010, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and selected explanatory notes. The selected explanatory notes have been marked with a #. Their audit report is available inspection at the company`s registered office. One Exchange Square, 2 Gwen Lane, Sandown, South Africa Private Bag X991174, Sandton 2146, South Africa Tel +27 11 520 7000 Fax +27 11 520 8584 Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited) Date: 15/03/2011 12:37:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.

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