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Audited abridged results for 12 months ended 31 December 2012, cash dividend declaration and appointment of new CFO
JSE LIMITED
(Registration number 2005/022939/06)
Incorporated in the Republic of South Africa
ISIN code: ZAE000079711
Share code: JSE
AUDITED ABRIDGED RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2012, CASH DIVIDEND DECLARATION AND APPOINTMENT OF NEW
CHIEF FINANCIAL OFFICER
The financial results have been audited in accordance with all the applicable requirements of the Companies Act, 2008,
and under the supervision of Aarti Takoordeen CA(SA).
COMMENTARY
INTRODUCTION
The JSE has delivered a steady financial performance in 2012, making significant progress in achieving its long-term
strategic objectives and providing a solid foundation for the year ahead.
We celebrate a number of important successes as we progress into the second year of our 2017 strategic journey.
In particular, we:
- achieved CPSS-IOSCO compliance for our derivatives clearing house, Safcom, so that our clients now enjoy maximum
Basel III relief when they clear exchange traded derivatives through Safcom;
- implemented the new MillenniumIT trading system and replacement SENS solution for the equity market successfully,
on time and within budget;
- successfully upgraded the commodities and derivatives market technology to handle increased volumes;
- successfully integrated our Post-Trade Services business; and
- in conjunction with the National Treasury and market participants, found a way forward on securities transaction
tax with which participants are comfortable.
FINANCIAL REVIEW
Steady operating performance despite challenging operating environment
Despite a challenging operating environment, our Group revenue remained steady, increasing by 1.1% to R1.38 billion.
In common with most other cash equity exchanges around the world, our equity market trade execution revenues declined by
9.4%. However, this decline was offset by growth in other revenue lines, with notable improvements in both interest rate
products and market data.
Total operating expenses were slightly down (2012: R1.03 billion; 2011: R1.04 billion).
Although headcount was also slightly down (2012: 495; 2011: 504), personnel expenses rose by 18% year-on-year to R353.9 million
(2011: R299.2 million) owing to the full-year impact of the 2011 increase in headcount.
Other expenses declined by 8.8% to R672.3 million (2011: R737.5 million). Excluding the impact of impairments, other
expenses have increased by 6% annually over the past four years, a positive reflection of efforts to keep our (largely)
fixed cost base under control.
Management remains committed to keeping the business at an optimum size from an operational perspective, and also to
make it possible to take advantage of opportunities for new business growth.
Improvement in operating earnings
Earnings have improved by 6.7% year-on-year to R405.6 million (2011: R380.1 million) with EBIT margin up one
percentage point (2012: 29%; 2011: 28%). Although net profit after tax has declined by 12% to R302.1 million (2011: R341.8
million) this is largely the result of unwinding a deferred tax asset associated with the termination of key components of
SRP there has been no material change to the Groups underlying effective tax rate.
Financial strength and cash-generating ability
Our business continues to be strongly cash generative with cash generated from operations totalling R470.4 million
(2011: R664.6 million). The net cash invested in the business (inclusive of financing activities) of R85.3 million
(2011: R161 million) included the purchase of computer hardware for our new MillenniumIT equity trading engine and
computer software. Discretionary cash flow remained healthy at 394c per share (2011: 447c per share) leaving the Company
with free cash flow of R98.5 million (2011: R3.6 million) after payment of dividends to shareholders.
At year end our cash and cash equivalents stood at R1.1 billion (2011: R1.0 billion). We remain ungeared apart from a
loan (balance of R23.7 million) utilised to fund the acquisition in 2011 of the Managed Account Platform (2011: R26.8
million).This loan bears interest at the Short Term Fixed Interest rate (STEFI) and is repayable out of future revenues
from the venture.
Ongoing investment in the business remains crucial - looking forward into 2013, our capital expenditure programme for
business as usual activities amounts to about R45 million. A series of other strategic and technology investments remain
under consideration by executive management and the Board, and we highlight some of these later in this review. The
capex spend in 2013 for all these other potential investments is projected at about R200 million.
Post year end the Group committed R100 million to a new default fund, ring-fenced from the JSEs operations, and
established as part of our CPSS-IOSCO compliance process for on-exchange derivatives. This new fund serves to backstop losses
incurred where a clearing member is unable to settle its clearing obligations in any of our derivative markets. In
the event of a drawdown (a plausible although low probability scenario), the Group has an obligation to replenish its
contribution to a maximum aggregate amount of R100 million in any 12-month period following a clearing member default. The
JSE earns interest on its cash committed to the fund.
Launch pad for 2013
These results demonstrate the resilience of the JSEs business and attest to the underlying strength of our strategy
of continuing to diversify the revenue base. The leadership team is comfortable that the progress made in 2012, the
internal efficiencies and can do culture that is now taking root, together with the Groups financial strength, provide a
solid launch pad for delivering on our 2013 strategic objectives.
Appointment of Chief Financial Officer and changes to Directorate
Freda Evans resigned as Chief Financial Officer in September 2012 and we thank her for the impact she made during the
time she spent with us. We are pleased to welcome Aarti Takoordeen, who joined the JSE on 1 February 2013, as our new
Chief Financial Officer. Aarti has been appointed to the JSE Board as an executive director effective 12 March 2013. The
Board also appointed Dr Mantsika Matooane and Ms Nomavuso Mnxasana as non-executive directors during 2012. Both Dr
Matooane and Ms Mnxasana will stand for election at the Companys Annual General Meeting on 25 April 2013.
OPERATIONS
Issuer Regulation
- Revenue rose 4.6% to R95.8 million (2011: R91.6 million).
- Number of new company listings on the JSE declined to 12 (2011: 16).
- Listings activity up in other JSE-listed equity instruments - 16 new ETFs, ETNs (2011: 14 ETFs, ETNs).
- The total nominal listed bond value by year-end December 2012 was R1.6 trillion (2011: R1.3 trillion), with 1 452
listings in total by year-end December 2012 (2011: 1 171).
- Numerous changes were made to the Listings Requirements to ensure they remain appropriate and are enabling
for both listed companies and investors.
The JSEs business development teams actively seeks new equity, debt and related listings. The Exchange has a listings
pipeline across its five markets, but does not predict future listing numbers. Listings in 2012 were slow, mainly owing
to the economic environment, and there were 18 delistings, mainly owing to corporate actions. In line with the strategic
focus on innovative product development, there will be continued development of the Listings Requirements, which will
enable new product development in 2013 and beyond.
Equity Market
- Revenue declined by 9.4% to R319.1 million (2011: R352.2 million).
- The number of transactions year-on-year was flat at 26.9 million (2011: 26.5 million).
- Average number of shares per trade (for all trades) continued to fall (2012: 2 296; 2011: 2 696).
- Total value traded increased by approximately 4% (2012: R3.4 trillion; 2011: R3.3 trillion).
- The new MillenniumIT trading system and replacement SENS solution were implemented successfully, on time and within budget.
The JSEs trade volume performance, although disappointing, is respectable in global terms. Equity Market volumes
across exchanges worldwide have been falling. In 2013, finalising the way forward in the Equity Market Business Model and
revisiting the costs of conducting business in the Equity Market will be core focus areas.
Post-Trade Services
At present, Post-Trade Services revenue reflects only the Equity Market risk management fees, which involve the
Exchange charging a transaction fee per trade leg for this service, with a value-based element. Although the divisions
revenues are linked to the number of equity transactions that take place on the cash Equity Market, the increase in
clearing and settlement revenues did not track equity trading exactly, because of the different billing structure for equity
trading and for risk management.
The division also risk manages the clearing of derivative transactions, but the JSE does not bill separately for this
risk management. Derivative transactions are billed in a per contract fee, which is accounted for in the Bond and
Financial Derivatives division.
- Revenue rose by 1.4% to R211.9 million (2011: R209.0 million).
- Post-Trade Services revenue was flat in 2012, owing to the flat volume of equities trades.
- CPSS-IOSCO compliance status was achieved by Safcom in December 2012, making it one of the worlds first clearing
houses to be compliant.
The division underwent enormous changes during 2012, prompted by the strategy to combine all Post-Trade Services into
one area. The Post-Trade Services division is investigating what services the JSE is able to provide in the
over-the-counter clearing space. It is also focusing on various initiatives to strengthen the on-exchange clearing business.
The division is also working to clarify the timing of a move to T+3.
Back-Office Services
- Revenue rose by 4.1% to R204.9 million (2011: R196.8 million).
The Exchange will continue to use our back office service, BDA, until at least December 2015, adding enhancements to
enable a number of regulating client requirements and T+3 settlement for the Equity Market.
Bonds and Financial Derivatives
- Total divisional revenue rose by 2.1% to R175.7 million (2011: R172.1 million).
- Financial Derivatives revenue declined by 3.6% to R112.6 million (2011: R116.8 million). Value traded is unchanged at
R4.3 trillion (2011: R4.3 trillion). The number of contracts declined by 7.9% to 137.1 million (2011: 148.9 million). Open
interest as at 31 December 2012 increased by 3.2% to 12.2 million contracts traded (2011: 11.8 million).
- Currency derivatives revenue rose by 5.5% to R17.5 million (2011: R16.6 million). The number of contracts traded
increased by 28.8% year-on-year to 18.9 million (2011: 14.7 million). Open interest as at 31 December 2012 also increased
by 10% to 1.1 million contracts traded (2011: 1.0 million).
- Interest rate market revenue rose by 17.7% to R45.7 million (2011: R38.8 million). The nominal value of bonds
traded rose by 10.0% to R23.0 trillion in 2012 (2011: R20.9 trillion). The number of bond derivatives contracts traded rose
by 92.3% from 1.3 million contracts traded in 2011 to 2.5 million in 2012. Open interest in bond derivatives rose by 40.5% from
251 448 in 2011 to 353 311 in 2012.
The Financial Derivatives Market changed the pricing mix in the interest rate and currency markets to encourage
increased market participation. We also upgraded the derivatives market technology to handle increased trading volumes. The
team is continuing to look at developing new products in this market.
In order to accommodate a far greater rate of growth in volumes, the equity derivatives trading engine needs to be
replaced, so this will be a focus area for the team for 2013. The implementation of a new engine is planned for 2014/2015.
In the government bond space, we are excited by the fact that the National Treasury has now published requirements for
an exchange traded platform for government bonds and we are now considering how the JSE can deliver that for the
National Treasury.
Commodity Derivatives Market
- Revenue rose by 5.3% to R55.9 million (2011: R53.1 million) following an increase in the number of physical
deliveries processed and improved activity in the cash-settled commodities.
- Three million derivatives contracts were traded during 2012, which is a 15.3% increase on the previous record of
2.6 million contracts set in 2011.
- Trade in rand-settled foreign-referenced instruments under licence from the CME Group continues to increase.
- The physical delivery process for grain products was enhanced by introducing a platform to the market to trade basis
premiums for grain stored in any of the 200 registered delivery points.
- In December 2012 approval was received from the regulators to introduce Zambian grain contracts to be traded in USD.
This milestone allows the commodities market to extend its price risk management instruments into Zambia.
The division continues to explore a range of new commodity products that can be physically settled to provide the
premier platform for price discovery and price risk management. By improving access to the market, the JSE plays a pivotal
role in aiding the sustainability of this sector.
Market Data
- Revenue rose by 17.0% to R146.8 million (2011: R125.5 million) owing to international growth in professional
indices users as well as algorithmic players and hedge funds subscribing to JSE data.
- The overall number of terminals displaying JSE data increased by 6.7% as a result of a continued focus on
diversifying the client base outside South Africa (2012: 53 003; 2011: 49 673).
- The sales focus on foreign clients across all continents continues.
- New data products that were launched will be promoted in 2013.
The implementation of the new MillenniumIT trading system for the Equity Market resulted in all live equities clients
having access to a low-latency market data feed from 2 July 2012. Market data clients subscribing to Live FTSE/JSE
Africa indices series also benefited from additional added value, receiving live streaming indices as well as real-time total
return indices for both the FTSE/JSE Top 40 and the FTSE/JSE Swix40.
During 2013, the division will focus on completing the automation of our client interaction. To grow revenue, the team
will also continue to focus on previously untapped markets, particularly in a global environment, where investors
continue to seek yields from new and specifically emerging markets.
INFORMATION TECHNOLOGY
The JSEs drive to upgrade and replace its trading systems and back-office technology over the past decade has been
accompanied by trade volume growth and is a factor in the Exchanges global recognition as a strong market operator and
regulator. The Exchange continues this drive in a bid to serve clients and maintain growth. With this in view, the JSE
upgraded the commodities and derivatives market technology to handle the increased volumes and is planning to replace the
Equity Derivatives trading engine completely in 2014.
The new MillenniumIT trading system was implemented successfully for the equity market, on time and within budget. The
system offers world-class trading technology, which along with its relocation to the JSE, significantly reduces latency
and transaction execution times. This also reduces reliance on international links, which enhances the systems
operational stability.
The JSE will retain BDA until at least December 2015 while evolving the Equity Market Business Model. Should any
change to the Equity Market Business Model be decided on (which is by no means certain), that change will require extensive
consultation with a wide and large number of stakeholders. The market will also need time to develop any new systems or
processes to accommodate any new model. It logically follows that BDA will need to be retained until at least the end of
2015.
The JSE is intending to offer co-location services in the JSEs existing primary data centre, but will do so only
if sufficient client demand exists to cover the cost of providing such services.
Technology is vital and we will continue to focus on it as we facilitate interaction with our clients across the value
chain and enhance their access to us.
DIVIDEND
The Board and management remains confident as to the underlying strength of the JSEs operations and its continued
strong cash flows. All planned investments and capital requirements for 2013 can be funded from own resources
notwithstanding this years reduction in after-tax profits. Accordingly, the Board has decided to maintain the dividend for
the year ended December 2012 at 250c per ordinary share.
Maintaining the dividend payout implies an improvement in dividend cover to 1.56x (2011: 2.19x). This cover is within
the 2.5x - 1.5x range stipulated in our existing dividend policy. However, the 2012 payout ratio should not be
considered a precedent for future years. From a policy perspective, we also prefer to pay a single dividend in any year.
Accordingly, notice is hereby given that the directors have declared an annual gross cash dividend of 250 cents (212.5
cents net of dividend withholding tax) per ordinary share for the 2012 financial year.
The dividend has been declared from retained earnings and no STC credits are available for use.
A dividend withholding tax of 15% will be applicable to all shareholders who are not exempt.
The final ordinary dividend is payable to shareholders recorded in the register of members of the Company at the close
of business on Friday, 24 May 2013.
In compliance with the Companies Act, the directors of the JSE confirm that the Company will satisfy the solvency and
liquidity test immediately after completion of the dividend distribution. The dividend will be noted at the Annual
General Meeting to be held on Thursday, 25 April 2013.
In compliance with the requirements of Strate, the following salient dates for the payment of the dividend are
applicable:
To be released on SENS on Tuesday, 12 March 2013
Last date to trade JSE shares cum dividend Friday, 17 May 2013
JSE shares trade ex dividend Monday, 20 May 2013
Record date for purposes of determining the registered holders of JSE shares
to participate in the dividend at close of business on Friday, 24 May 2013
Date of payment of dividend Monday, 27 May 2013
Share certificates may not be dematerialised or rematerialised from Monday, 20 May 2013 to Friday, 24 May 2013, both
days inclusive. On Monday, 27 May 2013, the dividend will be electronically transferred to the bank accounts of
certificated shareholders who use this facility. In respect of those who do not use this facility, cheques dated 27 May 2013 will
be posted on or about that date. The accounts of those shareholders who have dematerialised their shares (which are
held at their participant or broker) will be credited on Monday, 27 May 2013.
The issued share capital of the Company as at the declaration date is 86 877 600.
The tax number of the Company is 9313008840.
2013 INITIATIVES
The JSE is committed to building a business that we believe will survive the test of time. We have to build the base
by making the right investments in people and technology in order to drive value by achieving efficiencies, revenue
diversification and cost savings and positioning the organisation for growth and innovation.
Our priorities for 2013 include:
- significantly progressing the replacement of our derivatives trading engine in 2014, an important step towards us
increasing the liquidity in that market;
- building on the CPSS-IOSCO compliance status in the Post-Trade Services space that was achieved by the
JSE-appointed clearing house, Safcom. This will include considering services that the JSE is able to provide in the over-the-counter
clearing space;
- making a decision on the implementation timeline for T+3;
- finalising the comprehensive technology roadmap for the JSE based on strategic business initiatives;
- automating our client interaction in our Market Data space so as to improve our interaction with our clients;
- finalising the way forward in the Equity Market Business Model;
- revisiting the costs of conducting business in our market; and
- measurably improving the JSE client service levels to primary and secondary market customers.
PROSPECTS
Stakeholders of the JSE will appreciate that revenue projections for the Group are not feasible, given the dependence
on trading volumes in all the markets.
Although we retain tight control of what is essentially a fixed cost base, expenses are expected to increase from 2013
as a result of depreciation charges starting once the Groups major systems have been implemented. There are also a number
of possible initiatives in the pipeline that may require capex spend during 2013 such as co-location, T+3 and OTC clearing.
As we chart this new strategic path, we will enhance our agility, cost effectiveness, capital efficiency and innovativeness.
The JSE team is extremely excited about this journey.
APPRECIATION
The year presented the whole JSE team with new demands and 2013 will be no different. This has been a year of hard
work and new direction in a challenging external environment and we are very appreciative of the teams effort. We also
want to thank all our stakeholders for their frank engagement. We have worked hard to build a more collaborative
relationship and we look forward to continuing our work in this regard in 2013.
Humphrey Borkum Nicky Newton-King
Chairman Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2012
Group Exchange Investor Protection Funds*
2012 2011 2012 2011 2012 2011
R000 R000 R000 R000 R000 R000
Revenue 1 384 867 1 369 810 1 400 618 1 392 304 - -
Other income 46 923 46 980 65 332 175 408 15 355 26 866
Personnel expenses (353 896) (299 184) (353 896) (299 184) - -
Other expenses (672 319) (737 530) (651 827) (860 943) (5 474) (7 780)
Profit from operating activities 405 575 380 076 460 227 407 585 9 881 19 086
Finance income 861 474 911 776 54 514 57 528 7 086 7 423
Finance costs (781 092) (825 646) (9 018) (9 013) - -
Net finance income 80 382 86 130 45 496 48 515 7 086 7 423
Share of profit of equity-accounted investees (net of income tax) 35 056 31 905 - - - -
Profit before income tax 521 013 498 111 505 723 456 100 16 967 26 509
Income tax expense (218 902) (156 316) (219 133) (155 850) - -
Profit for the year 302 111 341 795 286 590 300 250 16 967 26 509
Other comprehensive income
Net change in fair value of available-for-sale financial assets 41 323 1 057 - - 41 323 1 057
Net change in fair value of available-for-sale financial assets
reclassified to profit or loss (11 834) (22 931) - - (11 834) (22 931)
Income tax on other comprehensive income - - - - - -
Other comprehensive income/(loss) for the year, net of income tax 29 489 (21 874) - - 29 489 (21 874)
Total comprehensive income for the year 331 600 319 921 286 590 300 250 46 456 4 635
Earnings per share
Basic earnings per share (cents) 351.8 400.8 333.7 352.1 19.8 31.1
Diluted earnings per share (cents) 349.5 396.1 331.6 348.0 19.6 30.7
* Investor Protection Funds comprise 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 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 2012
Group Exchange Investor Protection Funds
2012 2011 2012 2011 2012 2011
R000 R000 R000 R000 R000 R000
Assets
Non-current assets 900 862 954 338 663 580 780 815 215 057 169 883
Property and equipment 164 164 189 318 164 164 189 318 - -
Intangible assets 314 790 352 952 286 702 324 343 - -
Investments in equity-accounted investees 119 904 100 798 21 416 21 416 - -
Investments in subsidiaries - - 104 351 104 351 - -
Other investments 215 059 169 885 2 2 215 057 169 883
Derivative financial instruments - 625 - 625 - -
Loan to the JSE Empowerment Fund Trust 14 003 13 228 14 003 13 228 - -
Deferred taxation 72 942 127 532 72 942 127 532 - -
Current assets 16 177 565 16 374 566 1 233 980 1 080 403 112 212 113 505
Trade and other receivables 194 248 191 794 140 375 129 780 3 246 3 329
Income tax receivable 16 574 56 907 15 817 56 507 - -
Due from group entities - - 11 946 6 333 - -
Margin deposits 14 834 408 15 080 456 72 174 13 548 - -
Collateral deposits 3 559 4 320 3 559 4 320 - -
Cash and cash equivalents 1 128 776 1 041 089 990 109 869 915 108 966 110 176
Total assets 17 078 427 17 328 904 1 897 560 1 861 218 327 269 283 388
Equity and liabilities
Total equity 1 871 021 1 769 068 1 464 248 1 407 305 326 125 282 535
Share capital 8 571 8 605 8 571 8 605 - -
Share premium 102 858 129 642 102 858 129 642 - -
Capital contribution - - - - 121 873 121 873
Reserves 368 902 476 363 32 719 183 770 81 056 51 567
Retained earnings 1 390 690 1 154 458 1 320 100 1 085 288 123 196 109 095
Non-current liabilities 121 596 164 742 174 614 232 259 - -
Finance leases - 167 - 167 - -
Borrowings 23 715 26 770 - - - -
Employee benefits 5 128 28 972 5 128 28 972 - -
Deferred taxation 4 946 4 535 3 981 3 310 - -
Operating lease liability 36 985 52 571 36 985 52 571 - -
Deferred income 49 632 50 592 127 330 146 104 - -
Due to SAFEX members 1 190 1 135 1 190 1 135 - -
Current liabilities 15 085 810 15 395 094 258 698 221 654 1 144 853
Trade and other payables 163 027 219 580 97 846 112 648 914 594
Employee benefits 67 860 78 145 67 860 78 145 - -
Operating lease liability 16 956 12 593 16 956 12 593 - -
Due to group entities - - 303 400 230 259
Margin deposits 14 834 408 15 080 456 72 174 13 548 - -
Collateral deposits 3 559 4 320 3 559 4 320 - -
Total equity and liabilities 17 078 427 17 328 904 1 897 560 1 861 218 327 269 283 388
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2012
Non- Total
distri- JSE LTIS exchange Investor
Share Share butable BBBEE 2010 Retained and sub- Protection Total
capital premium reserve reserve reserve earnings sidiaries Funds equity
Group R000 R000 R000 R000 R000 R000 R000 R000 R000
Balance at 1 January 2011 8 466 130 658 10 058 159 881 6 244 1 143 950 1 459 257 331 847 1 791 104
Total comprehensive income for the year
Profit for the year - - - - - 315 286 315 286 26 509 341 795
Other comprehensive income
Net change in fair value of available-for-sale financial assets - - - - - - - 1 057 1 057
Net change in fair value of available-for-sale financial assets
reclassified to profit or loss - - - - - - - (22 931) (22 931)
Total other comprehensive loss - - - - - - - (21 874) (21 874)
Total comprehensive income for the year - - - - - 315 286 315 286 4 635 319 921
Transactions with owners recognised directly in equity
Contributions by and distributions to owners
Share options lapsed reclassified to retained earnings - - - (2 433) - 2 433 - - -
Share options granted - - - 7 888 - - 7 888 - 7 888
Dividends paid to owners - - - - - (361 158) (361 158) - (361 158)
Distribution from the BESA Guarantee Fund Trust1 - - - - - 2 947 2 947 (2 947) -
Distribution from the JSE Guarantee Fund Trust2 - - - - - 51 000 51 000 (51 000) -
Treasury shares (43) (28 946) - - - - (28 989) - (28 989)
Treasury shares - share issue costs - (79) - - - - (79) - (79)
Sale of treasury shares 8 6 091 - - - - 6 099 - 6 099
Ordinary shares issued 174 21 918 - - - - 22 092 - 22 092
Equity-settled share-based payment - - - - 12 190 - 12 190 - 12 190
Total contributions by and distributions to owners 139 (1 016) - 5 455 12 190 (304 778) (288 010) (53 947) (341 957)
Total transactions with owners 139 (1 016) - 5 455 12 190 (304 778) (288 010) (53 947) (341 957)
Balance at 31 December 2011 8 605 129 642 10 058 165 336 18 434 1 154 458 1 486 533 282 535 1 769 068
Total comprehensive income for the year
Profit for the year - - - - - 285 144 285 144 16 967 302 111
Other comprehensive income
Net change in fair value of available-for-sale financial assets - - - - - - - 41 323 41 323
Net change in fair value of available-for-sale financial assets
reclassified to profit or loss - - - - - - - (11 834) (11 834)
Total other comprehensive profit - - - - - - - 29 489 29 489
Total comprehensive income for the year - - - - - 285 144 285 144 46 456 331 600
Transactions with owners recognised directly in equity
Contributions by and distributions to owners
Transfer of BBBEE reserve to retained earnings - - - (165 336) - 165 336 - - -
Dividends paid to owners - - - - - (217 114) (217 114) - (217 114)
Distribution from the BESA Guarantee Fund Trust1 - - - - - 2 866 2 866 (2 866) -
Treasury shares (37) (28 808) - - - - (28 845) - (28 845)
Treasury shares - share issue costs - (70) - - - - (70) - (70)
Sale of treasury shares 3 2 094 - - - - 2 097 - 2 097
Equity-settled share-based payment - - - - 14 285 14 285 - 14 285
Total contributions by and distributions to owners (34) (26 784) - (165 336) 14 285 (48 912) (226 781) (2 866) (229 647)
Total transactions with owners (34) (26 784) - (165 336) 14 285 (48 912) (226 781) (2 866) (229 647)
Balance at 31 December 2012 8 571 102 858 10 058 - 32 719 1 390 690 1 544 896 326 125 1 871 021
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
R2,9m (2011: R2,9m), before intercompany adjustments, 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 JSEs data centre.
JSE LTIS
Share Share BBBEE 2010 Retained Total
capital premium reserve reserve earnings exchange
Exchange R000 R000 R000 R000 R000 R000
Balance at 1 January 2011 8 466 130 658 159 881 6 244 1 143 763 1 449 012
Total comprehensive income for the year
Profit for the year - - - - 300 250 300 250
Total comprehensive income for the year - - - - 300 250 300 250
Transactions with owners recognised directly in equity
Contributions by and distributions to owners
Share options lapsed transferred to retained earnings - - (2 433) - 2 433 -
Share options granted - - 7 888 - - 7 888
Dividends paid to owners - - - - (361 158) (361 158)
Treasury shares (43) (28 946) - - - (28 989)
Treasury shares - share issue costs - (79) - - - (79)
Sale of treasury shares 8 6 091 - - - 6 099
Ordinary shares issued 174 21 918 - - - 22 092
Equity-settled share-based payment - - - 12 190 - 12 190
Total contributions by and distributions to owners 139 (1 016) 5 455 12 190 (358 725) (341 957)
Total transactions with owners 139 (1 016) 5 455 12 190 (358 725) (341 957)
Balance at 31 December 2011 8 605 129 642 165 336 18 434 1 085 288 1 407 305
Total comprehensive income for the year
Profit for the year - - - - 286 590 286 590
Total comprehensive income for the year - - - - 286 590 286 590
Transactions with owners recognised directly in equity
Contributions by and distributions to owners
Transfer of BBBEE reserve to retained earnings - - (165 336) 165 336 -
Dividends paid to owners - - - - (217 114) (217 114)
Treasury shares (37) (28 808) - - - (28 845)
Treasury shares - share issue costs - (70) - - - (70)
Sale of treasury shares 3 2 094 - - - 2 097
Equity-settled share-based payment - - - 14 285 - 14 285
Total contributions by and distributions to owners (34) (26 784) (165 336) 14 285 (51 778) (229 647)
Total transactions with owners (34) (26 784) (165 336) 14 285 (51 778) (229 647)
Balance at 31 December 2012 8 571 102 858 - 32 719 1 320 100 1 464 248
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2012
Group Exchange Investor Protection Funds
2012 2011 2012 2011 2012 2011
R000 R000 R000 R000 R000 R000
Cash flows from operating activities
Cash generated by/(used in) operations 470 403 664 575 534 469 671 054 (5 068) (8 866)
Interest received 868 802 912 360 54 651 57 216 7 094 7 838
Interest paid (787 867) (826 264) (9 075) (8 997) - -
Dividends received 3 482 3 905 - - 3 482 3 905
Taxation paid (123 567) (202 471) (123 182) (203 471) - -
Net cash generated by operating activities 431 253 552 105 456 863 515 802 5 508 2 877
Cash flows from investing activities
Proceeds on sale of other investments 32 309 82 306 - - 32 309 82 306
Acquisition of other investments (36 161) (33 100) - - (36 161) (33 100)
Dividends from equity-accounted investees 15 950 26 124 15 950 26 124 - -
Proceeds from disposal of property and equipment 788 83 778 83 - -
Leasehold improvements (188) (47 406) (188) (47 406) - -
Acquisition of intangible assets (74 363) (179 126) (74 363) (150 485) - -
Acquisition of property and equipment (24 143) (62 083) (24 143) (62 083) - -
Net cash (used in)/from investing activities (85 808) (213 202) (81 966) (233 767) (3 852) 49 206
Cash flows from financing activities
Distribution from/(by) Investor Protection Funds - - - 51 000 (2 866) (53 947)
Proceeds from issue of new shares - 22 092 - 22 092 - -
Proceeds from sale of treasury shares 2 097 6 099 2 097 6 099 - -
Loan raised - 26 770 - - - -
Loan repaid (3 055) - - - - -
Acquisition of treasury shares (28 915) (29 068) (28 915) (29 068) - -
Dividends paid (217 114) (361 158) (217 114) (361 158) - -
Net cash used in financing activities (246 987) (335 265) (243 932) (311 035) (2 866) (53 947)
Net increase/(decrease) in cash and 98 458 3 638 130 965 (29 000) (1 210) (1 864)
cash equivalents
Cash and cash equivalents at 1 January 1 041 089 1 046 330 869 915 907 794 110 176 112 040
Effect of exchange rate fluctuations on cash held (10 771) (8 879) (10 771) (8 879) - -
Cash and cash equivalents at 31 December 1 128 776 1 041 089 990 109 869 915 108 966 110 176
SELECTED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012
Basis of preparation and accounting policies#
JSE Limited (the JSE, the Company or the Exchange) is a company domiciled in South Africa. The consolidated financial statements of the Company as at and for
the year ended 31 December 2012 comprise the Company and its subsidiaries and controlled special purpose vehicles (collectively referred to as the Group and
individually as Group entities) and the Groups interest in associates.
The JSE Limited's abridged consolidated annual financial statements for the year ended 31 December 2012 have been prepared in terms of the recognition and measurement
requirements of International Financial Reporting Standards (IFRSs) and the SAICA financial reporting guides as issued by the Accounting Practices Committee and
the financial reporting pronouncements as issued by the Financial Reporting Standards Council, the JSE listing requirements, the requirements of the Companies Act, 2008
and the presentation and disclosure requirements of IAS 34.
The JSE Limited's principal accounting policies applied by the Group in its consolidated abridged annual financial statements for the year ended 31 December 2012 are the same
as those applied by the Group in its consolidated annual financial statements as at and for the year ended 31 December 2011.
The consolidated financial statements and the separate financial statements were authorised for issue by the Board of Directors on 12 March 2013.
Special purpose entities#
The JSE Guarantee Fund Trust, JSE Derivatives Fidelity Fund Trust and BESA Guarantee Fund Trust are special purpose entities (SPEs) 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 SPEs risks and rewards, the Group controls the financial and operating policies of these entities and the results are thus consolidated. SPEs 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 SPEs operations and net assets, being exposed to the majority of risks incident to the SPEs activities, and retaining the majority
of the residual or ownership risks related to the SPEs or their assets.
Operating segments#
The Group has 5 reportable segments, as stated below. 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. 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#
Equity and Interest2
Equity1 currency Commodity rate Market
division derivatives derivatives market data Other3 Total
R000 R000 R000 R000 R000 R000 R000
For the year ended
31 December 2012
External revenues 827 142 130 037 55 939 60 750 146 849 164 150 1 384 867
For the year ended
31 December 2011
External revenues 846 055 133 305 53 142 52 040 125 547 159 721 1 369 810
1Comprises equities trading fees, post-trade services, membership fees, issuer regulation and back-office services (BDA).
2Includes R15.1 million (2011: R13.2 million) of issuer regulation listing fees relating to the bond market.
3Comprises Funds management and Strate ad valorem fees.
Revenue#
Group Exchange
2012 2011 2012 2011
R000 R000 R000 R000
Revenue comprises:
Equities trading fees 319 136 352 188 319 136 352 188
Post-trade services 211 902 208 962 211 902 208 962
Back-office services (BDA) 204 909 196 816 204 909 196 816
Issuer regulation 95 827 91 622 95 827 91 622
Membership fees 10 434 9 689 10 434 9 689
Financial derivatives fees 112 571 116 753 112 297 116 436
Currency derivatives fees 17 466 16 552 17 466 16 552
Commodity derivatives fees 55 939 53 142 55 939 53 142
Interest rate market fees 45 684 38 818 48 199 41 403
Market Data 146 849 125 547 146 849 125 547
Funds management 61 255 50 088 74 765 70 314
Total revenue before Strate ad valorem fees 1 281 972 1 260 177 1 297 723 1 282 671
Strate ad valorem fees 102 895 109 633 102 895 109 633
Total revenue 1 384 867 1 369 810 1 400 618 1 392 304
EARNINGS PER SHARE
Basic earnings per share#
The calculation of basic earnings per share at 31 December 2012 of 351.8 (2011: 400.8) cents per share was based on
profit for the year attributable to ordinary shareholders of R302.1 million (2011: R341.8 million) and a weighted average
number of ordinary shares of 85 876 011 (2011: 85 279 409) calculated as follows:
Group Exchange
2012 2011 2012 2011
R000 R000 R000 R000
Profit for the year attributable to ordinary shareholders 302 111 341 795 286 590 300 250
Weighted average number of ordinary shares:
Issued ordinary shares at 1 January 86 877 600 85 140 050 86 877 600 85 140 050
Shares issued during the period - 864 338 - 864 338
Effect of own shares held (JSE LTIS 2010) (1 001 589) (724 979) (1 001 589) (724 979)
Weighted average number of ordinary shares at 31 December 85 876 011 85 279 409 85 876 011 85 279 409
Basic earnings per share (cents) 351.8 400.8 333.7 352.1
Diluted earnings per share#
The calculation of diluted earnings per share at 31 December 2012 of 349.5 (2011: 396.1) cents per share was based on the profit for the year
attributable to ordinary shareholders of R302.1 million (2011: R341.8 million) and a weighted average number of ordinary shares outstanding
after adjustment for the effects of all dilutive potential ordinary shares of 86 432 971 (2011: 86 280 587) calculated as follows:
Group Exchange
2012 2011 2012 2011
R000 R000 R000 R000
Profit for the year attributable to ordinary shareholders 302 111 341 795 286 590 300 250
Weighted average number of ordinary shares (diluted):
Weighted average number of ordinary shares at 31 December (basic) 85 876 011 85 279 409 85 876 011 85 279 409
Effect of share options in issue 556 960 1 001 178 556 960 1 001 178
Weighted average number of ordinary shares (diluted) 86 432 971 86 280 587 86 432 971 86 280 587
Diluted earnings per share (cents) 349.5 396.1 331.6 348.0
The average market value of the Exchanges 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 2012 of 473.2 (2011: 562.4) cents per share was based on headline earnings
attributable to ordinary shareholders of R406.4 million (2011: R479.6 million) and a weighted average number of ordinary shares of 85 876 011
(2011: 85 279 409) during the year.
Group Exchange
2012 2011 2012 2011
R000 R000 R000 R000
Reconciliation of headline earnings:
Profit for the year attributable to ordinary shareholders 302 111 341 795 286 590 300 250
Adjustments are made to the following:
Profit on disposal of property and equipment (69) (60) (69) (60)
Gross amount (96) (83) (96) (83)
Taxation effect 27 23 27 23
Impairment of monies due from Group entities1 - - - 3 636
Impairment of intangible assets 116 191 160 806 116 191 160 806
Gross amount 75 017 223 342 75 017 223 342
Taxation effect 41 174 (62 536) 41 174 (62 536)
Impairment of investment in BESA Limited1 - - - 139 432
Net realised gain on disposal of available-for-sale financial assets1 (11 834) (22 932) - -
Headline earnings 406 398 479 609 402 711 604 064
Headline earnings per share (cents) 473.2 562.4 468.9 708.3
1 No taxation effect
Diluted headline earnings per share#
The calculation of diluted headline earnings per share at 31 December 2012 of 470.2 (2011: 555.9) cents per share was based on headline earnings
for the year of R406.4 million (2011: R479.6 million) and a weighted average number of ordinary shares outstanding after adjustment for the effects
of all dilutive potential ordinary shares of 86 432 971 (2011: 86 280 587).
Group Exchange
2012 2011 2012 2011
R000 R000 R000 R000
Diluted headline earnings per share (cents) 470.2 555.9 465.9 700.1
Software under development#
The impairment loss of R75 million (2011: R223.3 million) relates mainly to the carrying value of the Market Services
Solution (MSS) and associated components of SRP. The trigger event which led to the decision to impair was a
technical analysis that indicated the need to rewrite MSS, one of the five components of SRP. Value in use for MSS was deemed to
be Rnil.
We are currently investigating the tax treatment of software development costs which may impact the taxation charge going forward.
Audit opinion
KPMG Inc, the Group`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 2012 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 for 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)
12 March 2013
www.jse.co.za
Date: 12/03/2013 02:28:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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