Wrap Text
JSE Limited reviewed consolidated interim financial statements for the six months ended 30 June 2013
JSE Limited
(Registration number 2005/022939/06)
Incorporated in the Republic of South Africa
ISIN code: ZAE000079711
Share code: JSE
JSE LIMITED REVIEWED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR the six months ended 30 June 2013
JSE DELIVERS STRONG PERFORMANCE IN SIX MONTHS TO
30 JUNE 2013 AND announces THE APPOINTMENT OF A
NEW NON-EXECUTIVE DIRECTOR
The JSE Limited ("JSE" or "Group") delivered a strong performance in the
six months to 30 June 2013.
Group operating revenue of R793.5m is up 16% (H1 2012: R682.8m) as
a result of:
- increased trading activity in the Equity, Financial Derivatives, Interest
Rate and Currency Markets; and
- continued strong performance from the Post-Trade Services and
Market Data Divisions.
Group earnings are up 191% to R292.7m (2012: R100.7m) and Group
headline earnings are up 35% to R285.2m (2012: R211.2m) driven by
the Group operating revenue performance in H1 2013 and the effect of
the impairment in the comparable period in 2012 (H1 2012: R72.6m).
The strong growth in trade volumes in the Equity Market (up 58.16% from
the same period in 2012; value traded up 22.2% from the same period)
enabled the JSE to provide approx. R60m in rebates to Equity Market
members in H1 2013, amounting to 8% of Group operating revenue.
While the Equity Market remains the JSE's biggest revenue generator,
above-average H1 2013 revenue growth from most of the JSE's business
units has contributed to the Group's H1 2013 revenue mix remaining in
line with that of H1 2012.
Group operating expenditure is down 3% at R487.8m (2012: R503.6m).
Of this:
- although head count is slightly up (2013: 503; 2012: 495), personnel
expenses for the six months have increased 19% year-on-year. This
reflects the impact of a larger proportion of these costs being
expensed rather than capitalised to projects (2013: R4m; 2012:
R29m). Gross remuneration actually paid for the six months to
June 2013 has only increased by 2% as a consequence of the
average salary increase for 2013 being contained to 5.6%;
- depreciation is up 28%, primarily as a result of the investment in the
new Equity market trading engine which was successfully implemented
in H2 2012; and
- the comparable period in 2012 was impacted by the effect of the
R72.6m impairment. The need, or otherwise, to make any further
impairments will be reviewed at year end.
The Group cash position is strong at over R1bn with the only significant
movement being the R100m that the JSE contributed in January 2013 in
establishing the Safcom Default Fund, a necessary condition to achieving
CPSS-IOSCO compliance for the Group Safcom Clearing House.
The Board has not declared an interim dividend, in line with its previously
stated preference for a single annual dividend based on a full year's
results. No change to the JSE's current dividend policy is contemplated,
which is to maintain dividend cover between 2.5x and 1.5x after-tax
profits.
Strategic and operating focus
The JSE is focused on growing all its business areas, none of which is
regarded as mature. Most projects are designed to strengthen the JSE's
delivery of products and services and many will introduce new lines of
revenue. In particular:
- T+3: Phase I of the JSE's move to T+3 was successfully implemented
on 21 July 2013. Phases 2 of the T+3 implementation will take place
in H2 2014 with Phase 3 as soon as possible after that. The JSE will
only be able to confirm the cost of these implementations once
detailed technical design work has been completed;
- a new web-based portal through which JSE Market Data clients can
report their monthly usage direct to the JSE, has been rolled out. This
reduces administration and complexity enabling JSE sales teams to
focus on building the Market Data client base and revenue;
- the JSE's initial colocation data centre with space for 35 client racks
at a capex cost of approx. R50m, of which the 2013 spend is expected
to be approx. R38m and the remainder in 2014. There will be on going
spend, the extent of which will depend on the rate at which the
colocation environment is expanded to meet client needs. Colocation
will introduce a new revenue line and increase speed of access to and
liquidity across all markets;
- the possibility of providing an Over-The-Counter clearing service
continues to be investigated;
- subject to confirmation on costs and functional fit, the Equity
Derivatives market will be migrated to the same trading engine as the
JSE's Equity Market and to a new clearing engine. This move will help
internationalise this market and increase speed liquidity on the
market. This is planned for mid-2015. Investment confirmation will
follow the imminent detailed design;
- work with National Treasury and industry participants to implement an
electronic trading platform (ETP) for the South African Government
bond market is gaining momentum; and
- some elements of the research into a possible new Equity Market
Business Model have been completed but the new Model is not
expected to be finalised this year. As previously indicated, the JSE
expects to be on BDA until at least the end of 2015 and possibly
longer. The work to date on the Equity Market Business Model has
been expensed.
Directorate
The Board is delighted to announce that Michael Jordaan, who retires as
CEO of First National Bank in December this year, will join the JSE Board
as a non-executive director with effect from 1 January 2014.
Outlook
The JSE is a largely fixed cost business. Costs are tightly controlled while
the necessary capital investments are made in areas that will enhance the
Group's sustainability. The Group's revenues are variable and largely
driven by activity on the various markets the Group operates. For this
reason, the Board makes no projections regarding the Group's
performance in H2 2013.
The Board is excited by the opportunities ahead as the Group continues
to make good progress towards delivering on its 2017 strategic
objectives. The Board is confident that as these deliveries succeed, the
JSE will increasingly be positioned as a growing, formidable and
sustainable business.
Review Conclusion
The consolidated interim financial statements of JSE Limited for the six
months ended 30 June 2013 have been reviewed by the company's
auditor, KPMG Inc. In their review report dated 13 August 2013, which is
available for inspection at the Company's Registered Office, KPMG Inc
state that their review was conducted in accordance with the International
Standard on Review Engagements 2410, Review of Interim Information
Performed by the Independent Auditor of the Entity, and have expressed
an unmodified conclusion on the consolidated interim financial statements.
JSE Group Investor Protection Funds*
Six monnths ended Year ended Six months ended Year ended
30 June 31 December 30 June 31 December
2013 2012 2012 2013 2012 2012
Note (reviewed) (reviewed) (audited) (reviewed) (reviewed) (audited)
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 9 793 571 682 797 1 384 867
Other income 39 004 11 682 46 923 9 012 3 995 15 355
Personnel expenses 10 (192 240) (161 107) (353 896)
Other expenses 11 (295 596) (342 516) (672 319) (3 788) (1 033) (5 474)
Profit before net finance income 344 739 190 856 405 575 5 224 2 962 9 881
Finance income 438 925 442 821 861 474 3 412 3 590 7 086
Finance costs (396 156) (401 457) (781 092)
Net finance income 42 769 41 364 80 382 3 412 3 590 7 086
Share of profit of equity accounted investees
(net of income tax) 21 869 17 142 35 056
Profit before income tax 409 377 249 362 521 013 8 636 6 552 16 967
Income tax expense 12 (116 670) (148 686) (218 902)
Profit for the period 292 707 100 676 302 111 8 636 6 552 16 967
Other comprehensive income
Net change in fair value of available-for-sale
financial assets 15 840 14 518 41 323 15 840 14 518 41 323
Net change in fair value of available-for-sale
financial assets reclassified to profit or loss (7 434) (2 449) (11 834) (7 434) (2 449) (11 834)
Other comprehensive income for the period, net of
income tax 8 406 12 069 29 489 8 406 12 069 29 489
Total comprehensive income for the period 301 113 112 745 331 600 17 042 18 621 46 456
Earnings per share
Basic earnings per share (cents) 13.1 341.9 117.0 351.8 10.1 7.6 19.8
Diluted earnings per share (cents) 13.2 340.2 116.5 349.5 10.0 7.6 19.6
* 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 Financial Markets Act, 2012. 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 on winding up. In certain limited circumstances, the JSE is entitled to the income
and surplus assets of the Trusts. For enhanced understanding, the Trusts have been shown separately, (before inter-company adjustments), although, for
compliance with IFRS, the results form part of the Group financial statements.
JSE Group Investor Protection Funds
as at as at as at as at
30 June 31 December 30 June 31 December
2013 2012 2012 2013 2012 2012
Notes (reviewed) (reviewed) (audited) (reviewed) (reviewed) (audited)
R'000 R'000 R'000 R'000 R'000 R'000
Assets
Non-current assets 884 969 897 422 900 862 230 829 191 026 215 057
Property and equipment 145 944 178 726 164 164
Intangible assets 14 307 180 329 490 314 790
Investments in equity accounted investees 124 250 101 989 119 904
Other investments 230 829 191 028 215 059 230 829 191 026 215 057
Derivative financial instruments 516
Loan to the JSE Empowerment Fund Trust 14 349 13 582 14 003
Deferred taxation 62 417 82 091 72 942
Current assets 18 866 155 16 110 958 16 177 565 111 538 109 203 112 212
Trade and other receivables 214 358 202 199 194 248 396 425 3 246
Income tax receivable 29 287 78 680 16 574
Safcom default fund deposits 19 502 914
Margin and collateral deposits 17 011 956 14 905 830 14 837 967
Cash and cash equivalents 1 107 640 924 249 1 128 776 111 142 108 778 108 966
Total assets 19 751 124 17 008 380 17 078 427 342 367 300 229 327 269
Equity and liabilities
Total equity 1 936 148 1 641 679 1 871 021 341 818 299 650 326 125
Share capital 8 533 8 571 8 571
Share premium 84 678 102 858 102 858
Capital contribution 121 873 121 873 121 873
Reserves 383 899 497 276 368 902 89 462 63 637 81 056
Retained income 1 459 038 1 032 974 1 390 690 130 483 114 140 123 196
Non-current liabilities 128 172 140 343 121 596
Finance lease 56
Borrowings 21 634 25 461 23 715
Employee benefits 5 408 16 643 5 128
Deferred taxation 4 929 5 173 4 946
Operating lease liability 48 475 45 604 36 985
Deferred income 46 470 46 242 49 632
Due to SAFEX members 1 256 1 164 1 190
Current liabilities 17 686 804 15 226 358 15 085 810 549 579 1 144
Trade and other payables 218 284 237 876 163 027 311 300 914
Employee benefits 55 361 68 935 67 860
Operating lease liability 1 203 13 717 16 956
Due to Group entities 238 279 230
Safcom default fund contribution 19 400 000
Margin and collateral deposits 17 011 956 14 905 830 14 837 967
Total equity and liabilities 19 751 124 17 008 380 17 078 427 342 367 300 229 327 269
Total
Non Shares JSE LTIS Exchange Investor
Share Share distributable BBBEE pending 2010 Retained and Protection Total
capital premium reserve reserve allotment reserve earnings subsidiaries Funds equity
Group Note R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
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 period
Profit for the period 94 124 94 124 6 552 100 676
Other comprehensive income
Net change in fair value of availableforsale
financial assets 14 518 14 518
Net change in fair value of availableforsale
financial assets reclassified to profit or loss (2 449) (2 449)
Total other comprehensive income 12 069 12 069
Total comprehensive income for the period 94 124 94 124 18 621 112 745
Transactions with owners recognised
directly in equity
Contributions by and distributions to owners
Dividends paid to owners (217 114) (217 114) (217 114)
Distribution from the BESA Guarantee
Fund Trust1 1 506 1 506 (1 506)
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 3 798 3 798 3 798
Total contributions by and distributions to owners (34) (26 784) 3 798 (215 608) (238 628) (1 506) (240 134)
Balance at 30 June 2012 8 571 102 858 10 058 165 336 22 232 1 032 974 1 342 029 299 650 1 641 679
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 availableforsale
financial assets 41 323 41 323
Net change in fair value of availableforsale
financial assets reclassified to profit or loss (11 834) (11 834)
Total other comprehensive income 29 489 29 489
Total comprehensive income for the year 285 144 285 144 46 456 331 600
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 R1.4m (June 2012: R1.5m) (December 2012: R2.9m) before inter-company adjustments was transferred to the JSE Limited for the defrayment of market regulatory expenditure.
Total
Non Shares JSE LTIS Exchange Investor
Share Share distributable BBBEE pending 2010 Retained and Protection Total
capital premium reserve reserve allotment reserve earnings subsidiaries Funds equity
Group Note R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
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) (217 414) (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) (2 886) (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
Total comprehensive income for the period
Profit for the period 284 071 284 071 8 636 292 707
Other comprehensive income
Net change in fair value of available-for-sale
financial assets 15 840 15 840
Net change in fair value of available-for-sale
financial assets reclassified to profit or loss (7 434) (7 434)
Total other comprehensive income 8 406 8 406
Total comprehensive income for the period 284 071 284 071 17 042 301 113
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Dividends paid to owners of the Exchange (217 072) (217 072) (217 072)
Distribution from the BESA Guarantee
Fund Trust1 1 349 1 349 (1 349)
Treasury shares (46) (35 117) (35 163) (35 163)
Treasury shares share issue costs (90) (90) (90)
Sale of treasury shares 8 5 919 5 927 5 927
Allocation 1 shares vested 8 11 108 (11 108)
Equity settled share based payment 8 10 412 10 412 10 412
Total contributions by and distributions
to owners (38) (18 180) (696) (215 723) (234 637) (1 349) (235 986)
Balance at 30 June 2013 8 533 84 678 10 058 32 023 1 459 038 1 594 330 341 818 1 936 148
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 R1.4m (June 2012: R1.5m) (December 2012: R2.9m) before inter-company adjustments was transferred to the JSE Limited for the defrayment of market regulatory expenditure.
Consolidated interim statement of cash flows
for the six months ended 30 June 2013
JSE Group Investor Protection Funds
six months ended year ended six months ended year ended
30 June 31 December 30 June 31 December
2013 2012 2012 2013 2012 2012
(reviewed) (reviewed) (audited) (reviewed) (reviewed) (audited)
R'000 R'000 R'000 R'000 R'000 R'000
Cash flows from operating activities
Cash generated by/(used in) operations 425 236 280 538 470 403 (1 533) 1 628 (5 068)
Interest received 424 738 447 845 868 802 3 416 3 576 7 094
Interest paid (381 792) (404 882) (787 867)
Dividends received 1 574 1 530 3 482 1 574 1 530 3 482
Taxation paid (118 877) (123 438) (123 567)
Net cash generated by operating activities 350 879 201 593 431 253 3 457 6 734 5 508
Cash flows from investing activities
Proceeds on sale of other investments 14 116 11 958 32 309 14 116 11 958 32 309
Acquisition of other investments (14 048) (18 582) (36 161) (14 048) (18 582) (36 161)
Dividends from equity accounted investees 17 523 15 950 15 950
Investment in SAFCOM Default Fund (500 000)
Proceeds from disposal of property and equipment 60 76 788
Leasehold improvements (32) (187) (188)
Acquisition of intangible assets (13 546) (59 572) (74 363)
Acquisition of property and equipment (5 795) (15 811) (24 143)
Net cash (used in)/from investing activities (501 722) (66 168) (85 808) 68 (6 624) (3 852)
Cash flows from financing activities
Distribution by Investor Protection Funds (1 349) (1 507) (2 866)
Contributions received SAFCOM Default Fund 400 000
Acquisition of treasury shares (35 163) (26 736) (28 915)
Proceeds from sale of treasury shares 5 934 2 423 2 097
Loan repaid (2 081) (1 309) (3 055)
Dividends paid (217 091) (217 115) (217 114)
Net cash used in financing activities 151 599 (242 737) (246 987) (1 349) (1 507) (2 866)
Net (decrease)/increase in cash and cash equivalents 756 (107 312) 98 458 2 176 (1 397) (1 210)
Cash and cash equivalents at 1 January 1 128 776 1 041 089 1 041 089 108 966 110 175 110 176
Effect of exchange rate fluctuations on cash held (21 892) (9 528) (10 771)
Cash and cash equivalents at end of period 1 107 640 924 249 1 128 776 111 142 108 778 108 966
Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2013
1. Reporting entity
JSE Limited (the "Company", the "JSE" or the "Exchange") is a company domiciled in the Republic of South Africa. The condensed consolidated
interim financial statements of the Company as at and for the six months ended 30 June 2013 comprise the Company and its subsidiaries (together
referred to as the "Group") and the Group's interests in associates. The JSE is licensed as an exchange in terms of the Financial Markets Act, 2012.
The Group currently consists of the Company, its subsidiary companies (Safex Clearing Company (Pty) Limited, JSE Trustees (Pty) Limited, BESA
Limited, BESA Investments (Pty) Limited, BondClear Limited, Nautilus MAP Holdings (Pty) Limited, Nautilus MAP Operation (Pty) Limited,
Newshelf 1252 (Pty) Limited (Safcom Default Fund), special purpose entities (JSE Guarantee Fund Trust, JSE Derivatives Fidelity Fund Trust and
BESA Guarantee Fund Trust) and its interests in associated companies (Strate Limited and Indexco Managers Limited).
The consolidated financial statements of the Group as at and for the year ended 31 December 2012 are available upon request from the
Company's registered office at One Exchange Square, Gwen Lane, Sandown, or at www.jse.co.za.
2. Statement of compliance
These consolidated interim financial statements have been prepared in accordance with IAS 34, International Financial Reporting Standards,
Interim Financial Reporting and the Financial Reporting Guides issued by the Accounting Practices Board of SAICA as well as section 29(e) of the
Companies Act (No 71 of 2008). They do not include all of the information required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2012.
These condensed consolidated interim financial statements were approved by the Board of Directors on 13 August 2013.
3. Significant accounting policies
Change in accounting policies
Except for the new standards adopted, all accounting policies applied by the Group in these condensed consolidated interim financial statements
are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2012.
The Group has adopted the following new standards with a date of initial application of 1 January 2013:
IFRS 10 Consolidated Financial Statements
The Group has changed its accounting policy for determining whether it has control over and consequently whether it consolidates its investees.
The Group reassessed its control in investees as at 1 January 2013, and can confirm IFRS 10 does not have a significant impact to the Group.
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements. The Group has applied
the new fair value measurement prospectively. This change has had no significant impact on the measurement of the Group assets and liabilities.
4. Comparative figures
Unless otherwise indicated, comparative figures refer to the six months ended 30 June 2012.
5. Estimates
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as
at and for the year ended 31 December 2012.
6. Financial risk management
The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at
and for the year ended 31 December 2012.
7. Operating segments
Information about reportable segments
Equity
and Interest
Cash Currency Commodity rate
equities1 derivatives derivatives products2 Data sales Other3 Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000
For the period ended 30 June 2013
External revenues 489 901 79 230 24 954 32 540 81 971 84 975 793 571
For the period ended 30 June 2012
External revenues 409 534 65 227 24 547 28 175 70 780 84 533 682 797
For the period ended 31 December 2012
External revenues 827 142 130 037 55 939 60 750 146 849 164 150 1 384 867
1 Comprises equities trading fees, risk management, clearing and settlement fees, membership fees, issuer services and back-office services (BDA).
2 Includes R8,2m (2012: R7,6m) of issuer regulation listing fees relating to the bond market.
3 Comprises mainly of funds management and Strate ad valorem fees.
8. Share-based payments
Vesting of Allocation 1 Tranche 1 shares during period under review
The first award ("Allocation 1") under LTIS 2010 was granted in May 2010 with the following vesting profile:
Tranche 1: 50% of the total award, which has now vested on 1 May 2013
Tranche 2: 50% of the total award, vesting on 1 May 2014
As at 30 June 2013, details of Allocation 1 were as follows:
Corporate
Retention performance Total
Tranche 1 shares shares shares
Original number of Tranche 1 shares awarded May 2010 163 700 77 750 241 450
Forfeited by bad leavers to date (26 450) (10 850) (37 300)
Forfeited by good leavers to date (1 167) (2 182) (3 349)
Accelerated for good leavers to date (1 633) (4 368) (6 001)
Forfeited for missing corporate performance targets (27 761) (27 761)
Vested on 1 May 2013 (134 450) (32 589) (167 039)
Tranche 1 fully vested
Tranche 2
Original number of Tranche 2 shares awarded May 2010 163 700 77 750 241 450
Forfeited by bad leavers to date (26 450) (10 850) (37 300)
Forfeited by good leavers to date (1 167) (2 182) (3 349)
Accelerated for good leavers to date (1 633) (4 368) (6 001)
Tranche 2 shares available for vesting in May 2014 134 450 60 350 194 800
As at the vesting date of 1 May 2013, all available Tranche 1 retention shares (134 450 shares) vested for those participants still in the employment
of the JSE on this date.
In respect of the Tranche 1 corporate performance shares, the Board assessed performance over the three-year vesting term against the pre-set
financial and strategic targets, and determined that 54% of the available Tranche 1 shares (being 60 350 shares) should vest for those participants
still in the employ of the JSE on 1 May 2013.
The remainder of the Tranche 1 corporate performance shares were forfeited by participants. The vesting of Tranche 1 shares resulted in a
movement in equity of R11.1m (a reversal against the LTIS 2010 reserve), calculated at grant date fair value.
Grant of Allocation 4 share awards during period under review
On 22 June 2012 shareholders approved a special resolution authorising financial assistance to the JSE LTIS 2010 Trust for a period of two years,
for the purpose of acquiring JSE ordinary shares in the open market for allocation to selected employees in accordance with the rules of LTIS 2010.
In accordance with the terms of this resolution the Board approved a fresh annual allocation of shares ("Allocation 4") to selected employees for
the 2013 year, and these individual allocations were all accepted by scheme participants by 17 May 2013. Allocation 4 comprised a total of
457 100 JSE ordinary shares and these shares were acquired in the open market by 17 May 2013.
Notwithstanding the fair value grant date of 17 May 2013, a charge to profit and loss in respect of Allocation 4 has been brought to account as
from 1 June 2013 based on the materiality principle. Information on Allocation 4 is as follows:
Personal Corporate
performance performance
shares shares
Share price at grant date (Rand per share) 76.92 76.92
Total number of shares granted 328 500 128 600
Dividend yield 3% 3%
Grant date 17 May 2013 17 May 2013
Vesting profile:
50% of the shares awarded vest on 1 June 2016 164 250 64 300
50% of the shares awarded vest on 1 June 2017 164 250 64 300
Members of the JSE's executive committee, which includes the executive directors and the Company Secretary, have been granted a total of
100 800 personal performance shares and 128 600 corporate performance shares under Allocation 4.
Fair value charge to profit and loss
The profit or loss charge for the period, calculated using the Black-Scholes valuation methodology, in respect of all Allocations granted under LTIS
2010 is as follows:
Six months ended
30 June 2012
Allocation 1 (granted in May 2010) R3.3m R3.2m
Allocation 2 (granted in May 2011) R2.8m R0.3m
Allocation 3 (granted in June 2012) R3.6m Nil
Allocation 4 (granted in May 2013) R0.7m Nil
R10.4m R3.5m
Six months ended Year ended
30 June 31 December
2013 2012 2012
(reviewed) (reviewed) (audited)
R'000 R'000 R'000
9. Revenue
Equity market 194 092 161 157 319 136
Post-trade services 126 979 104 928 211 902
Back-office services (BDA) 119 640 99 700 204 909
Issuer regulation 51 879 46 145 95 827
Equity membership 5 583 5 239 10 434
Equity derivatives 64 882 56 950 112 571
Currency derivatives 14 348 8 277 17 466
Commodity derivatives 24 954 24 547 55 939
Interest rate market 23 321 20 541 45 684
Interest rate derivatives 967
Market data 81 971 70 780 146 849
Funds management 32 210 29 398 61 255
Total revenue before Strate ad valorem 740 826 627 662 1 281 972
Strate ad valorem 52 745 55 135 102 895
Total revenue 793 571 682 797 1 384 867
Six months ended Year ended
30 June 31 December
2013 2012 2012
(reviewed) (reviewed) (audited)
R'000 R'000 R'000
10. Personnel expenses (192 240) (161 107) (353 896)
There was an increase of 19% in personnel expenses. This is mainly as a result of lower levels of capitalised personnel costs.
Six months ended Year ended
30 June 31 December
2013 2012 2012
(reviewed) (reviewed) (audited)
R'000 R'000 R'000
11. Other expenses
Other operating expenses (242 851) (214 809) (489 273)
Impairment (72 572) (75 017)
Strate ad valorem fees (52 745) (55 135) (108 029)
(295 596) (342 516) (672 319)
The impairment of R72,6m in 2012, relates to the carrying value of the Market Services Solution ("MSS") and associated components, which have
been identified as not being able to deliver value. There have been no further impairments for the period under review.
12. Income tax expense
The Group's consolidated effective tax rate for the six months ended 30 June 2013 was 28% (for the six months ended 30 June 2012: 60%; for
the year ended 31 December 2012: 42%). The reason for the higher effective tax rate for the prior periods was due to the unwinding of deferred
tax amounting to R40.5m in respect of the impairments.
13. Earnings and headline earnings per share
13.1 Basic earnings per share
Six months ended Year ended
30 June 31 December
2013 2012 2012
(reviewed) (reviewed) (audited)
R'000 R'000 R'000
Profit for the period attributable to ordinary shareholders 292 707 100 676 302 111
Weighted average number of ordinary shares:
Issued ordinary shares at 1 January 86 877 600 86 877 600 86 877 600
Shares issued during the period
Effect of own shares held (JSE LTIS 2010) (1 258 908) (837 663) (1 001 589)
Weighted average number of ordinary shares at 30 June/31 December 85 618 692 86 039 937 85 876 011
Basic earnings per share (cents) 341.9 117.0 351.8
13.2 Diluted earnings per share
Six months ended Year ended
30 June 31 December
2013 2012 2012
(reviewed) (reviewed) (audited)
R'000 R'000 R'000
Profit for the period attributable to ordinary shareholders 292 707 100 676 302 111
Weighted average number of ordinary shares (diluted):
Weighted average number of ordinary shares at 30 June/31 December (basic) 85 618 692 86 039 937 85 876 011
Effect of share options in issue 420 359 385 220 556 960
Weighted average number of ordinary shares (diluted) 86 039 051 86 425 157 86 432 971
Diluted earnings per share (cents) 340.2 116.5 349.5
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 period that the options were outstanding.
13.3 Headline earnings per share
Six months ended Year ended
30 June 31 December
2013 2012 2012
(reviewed) (reviewed) (audited)
R'000 R'000 R'000
Reconciliation of headline earnings:
Profit for the period attributable to ordinary shareholders 292 707 100 676 302 111
Adjustments are made to the following:
Profit on disposal of property and equipment (27) (54) (69)
Gross amount (37) (76) (96)
Taxation 10 22 27
Impairment of intangible assets 113 023 116 191
Gross amount 72 572 75 017
Taxation 40 451 41 174
Net realised gains on disposal of available-for-sale financial assets (7 434) (2 449) (11 834)
Headline earnings 285 246 211 196 406 399
Headline earnings per share (cents) 333.2 245.5 473.2
13.4 Diluted headline earnings per share
Six months ended Year ended
30 June 31 December
2013 2012 2012
(reviewed) (reviewed) (audited)
R'000 R'000 R'000
Diluted headline earnings per share (cents) 331.5 244.4 470.2
14. Intangible assets
During the six months ended 30 June 2013, the Group acquired intangible assets with a cost of R13.5m (2012: R59.6m), mainly in respect of
Listings information database; Market data automation and T+3. In H1 2012, we impaired the Market Services Solution and its associated
software, amounting to R72.6m. There were no impairments for H1 2013.
15. Financial instruments
The fair values of financial assets and financial liabilities, together with the carrying amounts in the condensed consolidated statement of financial
position, are as follows:
Carrying Fair
30 June 2013 amount value
R'000 R'000
Non-current financial assets
Available-for-sale financial assets 230 829 230 829
Loan to the JSE Empowerment Fund Trust 14 349 14 349
245 178 245 178
Current financial assets
Trade and other receivables 214 358 214 358
Safcom default fund deposits 502 914 502 914
Margin and collateral deposits 17 011 956 17 011 956
Cash and cash equivalents 1 107 640 1 107 640
18 836 868 18 836 868
Non-current financial liabilities
Borrowings (21 634) (21 700)
(21 634) (21 700)
Current financial liabilities
Trade and other payables (218 284) (218 284)
Safcom default fund contribution (400 000) (400 000)
Margin and collateral deposits (17 011 956) (17 011 956)
(17 630 240) (17 630 240)
Six months ended Year ended
30 June 31 December
2013 2012 2012
(reviewed) (reviewed) (audited)
R'000 R'000 R'000
16. Dividends declared and paid by the Group
Ordinary dividend of 250 cents gross
(2012: 250 cents) per share 217 193 217 193 217 193
The dividend disclosed in June 2013 relates to the dividend declared and related to 2012 results.
Ordinary dividend of 250 cents gross
(2012: 250 cents) per share on unallocated treasury shares (121) (79) (79)
217 072 217 114 217 114
In terms of the new Dividend Tax, effective 1 April 2012, the dividends have been declared from income reserves, and the dividend withholding
tax rate is 15%.
The net dividend amount is 212.5 cents per ordinary share for shareholders liable to pay dividend tax and 250 cents per ordinary share for
shareholders exempt from dividend withholding tax. The number of shares in issue at the date of declaration is 86 877 600.
17. Contingent liabilities and commitments
There were no material changes to the contingent liabilities as disclosed in the Annual Financial Statements for 31 December 2012.
18. Fair value estimation
The following table analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are
categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The different levels are defined as
follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: inputs for the asset or liability that are unobservable
Level 1 Level 2 Level 3
R'000 R'000 R'000
Available-for-sale financial assets 230 829
19. Safcom default fund
The Safex Clearing Company Proprietary Limited (SAFCOM) operates as the JSEs appointed clearing house in terms of the Financial Markets
Act, 2012. In order to achieve recognition as a Qualifying Central Counterparty (QCCP) under the CPSS-IOSCO provisions, clearing houses are
required to establish a default fund for mutualising losses in the event of a clearing member default. SAFCOM has established such a default fund,
and has been recognised by the Financial Services Board (FSB) as a QCCP with effect from January 2013. Newshelf 1252 (Pty) Limited ("Safcom
Default Fund") is incorporated as a private profit company wholly owned by JSE Limited with a limited purpose of holding these funds.
The JSE has invested R100m into the fund and received contributions of R400m from clearing members. The R500m is invested in fixed and call
deposits.
Sandton
13 August 2013
Sponsor
Rand Merchant Bank
(a division of First Rand Limited)
JSE Limited
(Registration number 2005/022939/06)
Incorporated in the Republic of South Africa
ISIN code: ZAE000079711
Share code: JSE
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
www.jse.co.za
Date: 13/08/2013 03:05:00 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,
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