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Abridged consolidated annual results and cash and special dividend declaration as well as changes to the board
JSE Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/022939/06)
Share code: JSE ISIN code: ZAE000079711
ABRIDGED CONSOLIDATED ANNUAL RESULTS AND CASH AND SPECIAL DIVIDEND DECLARATION AS WELL AS CHANGES TO THE BOARD
FOR THE YEAR ENDED 31 DECEMBER 2014
The JSE Limited ("the JSE" or "the Group") delivered a pleasing financial performance for 2014, largely attributable to growth in three areas of
our business: the Primary Market, the Equity Market and Post-Trade and Information Services.
Responsibility for abridged annual results
The preparation of these abridged annual results has been supervised by the chief financial officer, Aarti Takoordeen CA(SA) in terms of section
29(1)(e) of the Companies Act. This abridged report is extracted from the audited information, but is not itself audited. The directors take full
responsibility for the preparation of this abridged report and warrant that the financial information has been correctly extracted from the
underlying audited annual financial statements.
Financial review
Group earnings after tax for 2014 increased by 25% to R634 million (2013: R507 million), with operating revenue growing by 13% (2013: 12%) to
R1.8 billion (2013: R1.6 billion). This is underpinned particularly by strong growth in annuity revenue from listed companies (with 24 new listings
in 2014 – the highest since 2008) and products as well as notable cost management. The following areas also made healthy contributions to revenue:
Equity Market, where billable value traded grew by 7% yoy resulting in an 11% increase in revenue to R426 million (2013: R385 million); Post-Trade
Services, where a combination of billable value traded growth and rebates given in the prior year resulted in growth of 20% to R299 million
(2013: R249 million); and Market Data, where revenue grew 15% to R203 million (2013: R177 million) as a result of the growth in the number of
data terminals and increased passive tracking. In addition, new revenue lines in colocation and issuer services generated R9 million and
R2 million respectively.
Group earnings before interest and tax (EBIT) increased by 22% (2013: 42%) to R704 million (2013: R578 million). The earnings per share (EPS)
and headline earnings per share (HEPS) statistics are also pleasing at 742.4 cents (up 25%) and 735.0 cents (up 14%) respectively.
We continue to demonstrate sound cost control, with total operating expenses up by 5.5% to R1.14 billion (2013: R1.08 billion).
Personnel, technology and technology related costs (depreciation) continue to be the principal components of our largely fixed cost base. These
account for 68% of our cost base.
While we had a slightly lower headcount of 485 (2013: 497), personnel costs increased by 9.4% to R467 million (2013: R427 million). Normalised
gross remuneration paid to employees increased by 6%. This is after accounting for one-off items that fall outside basic salaries (in both years),
including restructure costs in 2014 of R6 million and a decline in the proportion of remuneration expensed rather than capitalised to internally
developed software solution assets of R10 million (2013: R13 million). Additionally, the discretionary bonus linked to Group earnings grew by
R15 million.
Other expenses grew by 3% to R669 million (2013: R650 million). Lower growth in non-technology expenses offset the high inflation rate on
technology spend of 18% yoy to R202 million (2013: R171 million). Software maintenance, software licenses and labour brokers grew by 18% or
R18 million, largely because of an increase in external services for work on the ITaC project, where no capitalisation on human resources cost has
yet taken place. Other third party services, mainly related to IT infrastructure licenses, increased 32% yoy or R11 million. There was an increase
of 27% or R3 million in server support and maintenance related to the colocation implementation. IT infrastructure connectivity costs also
increased by 25% yoy or R2 million. In addition, the R48 million impairment expense in the 2013 base number was not repeated in 2014.
Keeping the cost base under control demands ongoing attention. Over the past four years, the compound annual growth rate of other expenses
is 7% (excluding impairments), a positive reflection of these efforts.
We end the year in a strong cash position, with R1.6 billion in cash (2013: R1.4 billion) and almost no debt.
Ongoing investment in the business remains crucial. We continue to apply cash to strategic investment projects for the year in accordance with
our project capex rollout plan. Our planned third party capex spend for 2015 is R211 million (2014: R116 million).
The Board and management remain confident in the underlying strength of our operations and our Group's continued strong cash flows. All
currently planned investments and capital requirements for 2015 can be funded from the Group's own resources.
The Board has noted the increased global attention on the capitalisation of key financial market infrastructures, such as exchanges and clearing
houses. The Board believes that the JSE is appropriately capitalised, given the nature of the risks the Group currently faces and given the
uncertain nature of future regulatory capital requirements.
Changes to directorate
- 8 May 2014 (AGM):
- Humphrey Borkum retired as independent non-executive director and Chairman of the JSE.
- Dr Michael Jordaan's appointment to the Board with effect from 1 January 2014 was ratified by shareholders.
- 9 May 2014:
- Ms Nonkululeko Nyembezi-Heita succeeded Humphrey Borkum as independent non-executive Chairman.
- 10 June 2014:
- Bobby Johnston retired as a Board member.
- 8 July 2014:
- Gary Clarke, the Group Company Secretary, resigned.
- 14 August 2014:
- Leila Fourie, the executive head of the Post-Trade and Information Services division, joined the JSE Board as an executive director; and
- Graeme Brookes was appointed as Group Company Secretary.
- 5 March 2015:
- Suresh Kana was appointed by the Board with effect from 1 July 2015, after his retirement as Senior Partner of PwC Africa.
- 21 May 2015:
- Sam Nematswerani retires as a Board member.
Declaration of ordinary and special dividend
The Board has decided to declare both an ordinary and a special dividend for the year ended December 2014, at 400 cents and 80 cents per
ordinary share respectively. Accordingly, notice is hereby given that the directors have declared the following:
Annual gross Withholding
Dividend amount tax % Net amount
Ordinary 400 15% 340
Special 80 15% 68
480 – 408
The dividend has been declared from retained earnings and no secondary taxes on companies (STC) credits are available for use. A dividend
withholding tax of 15% will be applicable to all shareholders who are not exempt. The dividends are payable to shareholders recorded in the
register of members of the Company at the close of business on Friday, 12 June 2015.
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 AGM to be held on Thursday, 21 May 2015. In compliance with
the requirements of Strate, the following salient dates for the payment of the ordinary and special dividend are applicable:
Dividend paid in year 2015 2014
In respect of financial year ended 31 December 31 December
Dividend per share (400 + 80 = 480 for 2014) 480 cents 400 cents
Rand value R417 million R348 million
Declaration date Thur, 5 March 2015 11 March 2014
Last date to trade JSE shares cum dividend Fri, 5 June 2015 23 May 2014
JSE shares commence trading ex-dividend Mon, 8 June 2015 26 May 2014
Record date for purposes of determining the registered holders of JSE shares to participate in
the dividend at close of business on Fri, 12 June 2015 30 May 2014
Date of payment of dividend Mon, 15 June 2015 2 June 2014
Share certificates may not be dematerialised or rematerialised from Monday, 8 June 2015, to Friday, 12 June 2015, both days inclusive.
On Monday, 15 June 2015, 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 15 June 2015 will be posted on or about that date. The accounts of those
shareholders who have dematerialised their shares (which are held at their central securities depository participant or broker) will be credited
on Monday, 15 June 2015. The issued share capital of the Company as at the declaration date was 86 877 600. The tax number of the Company
is 9313008840.
Prospects
The JSE is a largely fixed-cost business. Costs are tightly controlled and the necessary capital investments are made in areas that will enhance the
Group's sustainability. Our revenues are variable and largely driven by activity on the various markets that we operate. For this reason, the Board
makes no projections regarding the Group's financial performance in 2015.
We are, however, clear about our 2015 priorities and hence the issues that we need to tackle in order to achieve our strategy. This sets us up
for a demanding number of years of investment and delivery, which, while impacting our income statement in the short term, are necessary to
ensure our long-term sustainability.
Nonkululeko Nyembezi-Heita Nicky Newton-King
JSE Chairman Chief executive officer
Appreciation
2014 has been a year of restructuring our operating model to better integrate our business and to enable us to respond both faster and more
cost efficiently to the competitive threats and opportunities we anticipate. These will, I believe, be critical elements in establishing long-term
sustainability.
I would like to thank all our stakeholders for their frank engagement with me and the JSE team. We have worked hard to build a more
collaborative relationship and I look forward to continuing our work in this regard in 2015.
As we tackle this year, I would like to thank all my colleagues at the JSE, and particularly the members of Exco, for their willingness to help chart
our new path. It is such a pleasure to work alongside this team.
Nicky Newton-King
Chief executive officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2014
Group
2014 2013
Notes R'000 R'000
Revenue 8 1 778 629 1 577 552
Other income 61 240 76 587
Personnel expenses 9 (466 786) (426 678)
Other expenses 10 (669 290) (649 779)
Profit from operating activities 703 793 577 682
Finance income 1 539 449 992 304
Finance costs (1 412 589) (874 236)
Net finance income 126 860 118 068
Share of profit of equity-accounted investees (net of income tax) 36 955 39 788
Profit before income tax 867 608 735 538
Income tax expense 11 (233 269) (228 910)
Profit for the year 634 339 506 628
Other comprehensive income
Items that are or may be reclassified to profit or loss
Net change in fair value of available-for-sale financial assets 27 143 49 987
Net change in fair value of available-for-sale financial assets reclassified to profit or loss (6 379) (15 875)
Income tax on other comprehensive income – –
Other comprehensive income for the year, net of income tax 20 764 34 112
Total comprehensive income for the year 655 103 540 740
Earnings per share
Basic earnings per share (cents) 12.1 742.4 592.1
Diluted earnings per share (cents) 12.2 734.1 588.6
Other earnings
Headline earnings per share (cents) 12.3 735.0 644.6
Diluted headline earnings per share (cents) 12.4 726.8 640.8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2014
Group
2014 2013
Notes R'000 R'000
Assets
Non-current assets 969 883 868 074
Property and equipment 161 836 162 171
Intangible assets 13 283 111 259 178
Investments in equity-accounted investees 159 284 142 169
Other investments 292 750 248 786
Loan to the JSE Empowerment Fund Trust 13 924 14 022
Deferred taxation 58 978 41 748
Current assets 28 241 085 20 507 267
Trade and other receivables 336 546 216 692
Income tax receivable 605 17 108
JSE Clear Derivatives Default Fund collateral deposit 500 000 516 870
Margin deposits 25 676 434 18 335 464
Collateral deposits 96 262 42 181
Cash and cash equivalents 1 631 238 1 378 952
Total assets 29 210 968 21 375 341
Equity and liabilities
Total equity 2 473 994 2 188 466
Share capital 8 541 8 533
Share premium 63 348 84 671
Reserves 449 488 431 075
Retained earnings 1 952 617 1 664 187
Non-current liabilities 120 522 122 127
Finance leases – 11 352
Borrowings 13 977 19 055
Employee benefits 14 5 761 –
Due to Safex members 1 347 1 286
Deferred taxation 9 077 12 324
Operating lease liability 74 358 57 807
Deferred income 16 002 20 303
Current liabilities 26 616 452 19 064 748
Trade and other payables 295 200 214 541
Income tax payable 32 377 –
Employee benefits 14 116 179 62 534
Operating lease liability – 28
JSE Clear Derivatives Default Fund collateral contribution 400 000 410 000
Margin deposits 25 676 434 18 335 464
Collateral deposits 96 262 42 181
Total equity and liabilities 29 210 968 21 375 341
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2014
Total JSE LTIS
Share Share share 2010 Total Retained Total
capital premium capital NDR reserve reserves earnings equity
Group R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 January 2013 8 571 102 858 111 429 336 183 32 719 368 902 1 390 690 1 871 021
Profit for the year – – – – – – 506 628 506 628
Other comprehensive income – – – 34 112 – 34 112 – 34 112
Total comprehensive income for the year – – – 34 112 – 34 112 506 628 540 740
Allocation 1 – shares vested – 11 108 11 108 – (11 108) (11 108) – –
Distribution from the BESA Guarantee Fund Trust(1) – – – (2 757) – (2 757) 2 757 –
Dividends paid to owners – – – – – – (217 091) (217 091)
Equity-settled share-based payment – – – – 23 129 23 129 – 23 129
Sale of treasury shares 8 5 926 5 934 – – – – 5 934
Transfer of profit from Investor Protection Fund – – – 18 797 – 18 797 (18 797) –
Treasury shares (46) (35 117) (35 163) – – – – (35 163)
Treasury shares – share issue costs – (104) (104) – – – – (104)
Total contributions by and distributions to owners of the
Company recognised directly in equity (38) (18 187) (18 225) 16 040 12 021 28 061 (233 131) (223 295)
Balance at 31 December 2013 8 533 84 671 93 204 386 335 44 740 431 075 1 664 187 2 188 466
Profit for the year – – – – – – 634 339 634 339
Other comprehensive income – – – 20 764 – 20 764 – 20 764
Total comprehensive income for the year – – – 20 764 – 20 764 634 339 655 103
Allocation 1 – shares vested 35 11 365 11 400 – (11 400) (11 400) – –
Allocation 2 – shares vested 16 10 442 10 458 – (10 458) (10 458) – –
Distribution from the BESA Guarantee Fund Trust(1) – – – (3 280) – (3 280) 3 280 –
Dividends paid to owners – – – – – – (347 457) (347 457)
Equity-settled share-based payment – – – – 21 055 21 055 – 21 055
Reserves arising on acquisition of Strate (Pty) Limited
transferred – – – (10 058) – (10 058) 10 058 –
Transfer of profit from Investor Protection Fund – – – 11 790 – 11 790 (11 790) –
Treasury shares (43) (42 974) (43 017) – – – – (43 017)
Treasury shares – share issue costs – (156) (156) – – – – (156)
Total contributions by and distributions to owners of the
Company recognised directly in equity 8 (21 323) (21 315) (1 548) (803) (2 351) (345 909) (369 575)
Balance at 31 December 2014 8 541 63 348 71 889 405 551 43 937 449 488 1 952 617 2 473 994
(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, R3.3m (December 2013: R2.8m) before intercompany adjustments was transferred to the JSE Limited for
the defrayment of market regulatory expenditure.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2014
Group
2014 2013
R'000 R'000
Cash flows from operating activities
Cash generated by operations 899 727 757 971
Interest received 1 477 111 965 042
Interest paid (1 358 914) (850 457)
Dividends received 5 001 3 946
Taxation paid (204 866) (190 871)
Net cash generated by operating activities 818 059 685 631
Cash flows from investing activities
Proceeds on sale of other investments 35 284 40 935
Acquisition of other investments (51 533) (24 675)
Contributions in JSE Clear Derivatives Default Fund 16 870 (516 870)
Dividends from equity-accounted investees 19 779 17 523
Proceeds from disposal of property and equipment 295 172
Leasehold improvements (6 370) (32)
Acquisition of intangible assets (65 741) (33 384)
Acquisition of property and equipment (59 093) (48 079)
Net cash used in investing activities (110 509) (564 410)
Cash flows from financing activities
Proceeds from sale of treasury shares – 5 919
Contributions (paid)/received JSE Clear Derivatives Default Fund (10 000) 410 000
Loan repaid (5 078) (4 660)
Acquisition of treasury shares (43 173) (35 252)
Dividends paid (347 457) (217 091)
Net cash (used in)/from financing activities (405 708) 158 916
Net increase in cash and cash equivalents 301 834 280 137
Cash and cash equivalents at 1 January 1 378 952 1 128 776
Effect of exchange rate fluctuations on cash held (49 548) (29 961)
Cash and cash equivalents at 31 December 2014 1 631 238 1 378 952
SELECTED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1. Reporting entity
JSE Limted (the "JSE", the "Company" or the "Exchange") is a company domiciled in South Africa. The registration number is
2005/022939/06. The JSE is licensed as an exchange in terms of the Financial Markets Act, 19 of 2012. The JSE has the following main
lines of business: primary market services, trading, clearing and settlement services and market data sales. The address of the Company's
registered office is One Exchange Square, 2 Gwen Lane, Sandown. The consolidated financial statements of the Company as at and for the
year ended 31 December 2014 comprise the Company and its subsidiaries and controlled Structured Entities (collectively referred to as
the "Group" and individually as "Group entities") and reflect the Group's interest in associates.
When reference is made to the "Group" in the accounting policies, it should be interpreted as referring to the Company, where the context
requires, unless otherwise noted.
2. Basis of preparation
Statement of compliance
The abridged consolidated annual financial statements have been prepared in accordance with the measurement and recognition
requirements of IFRS and the SAICA financial reporting guides as issued by the Accounting Practices Committee and contain the
infomation required by IAS 34 interim financial reporting. The accounting Policies are in terms of IFRS and consistent with those of the
previous annual financial statements.
3. Changes in accounting policies
All accounting policies applied by the Group in these abridged consolidated financial statements are in terms of IFRS and are the same as
those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2014.
4. Comparative figures
Unless otherwise indicated, comparative figures refer to the twelve months ended 31 December 2013.
5. Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimates are revised and in any future periods affected.
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 2014.
7. Operating segments
The Group has five reportable segments, as stated below. Each business unit offers different products and services and is managed
separately, because each requires different technology and a different marketing strategy. Management makes decisions based on
management accounting information, which reflects revenue by business unit and costs at a cost category level without specific allocation
to business units.
Information about reportable segments
Equity and Interest
Cash(1) currency Commodity rate(2) Market
equities derivatives derivatives market data Other(3) Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000
For the year ended 31 December 2014
External revenues 1 108 731 170 551 55 191 63 018 203 852 177 286 1 778 629
For the year ended 31 December 2013
External revenues 965 856 155 765 48 750 61 954 176 641 168 586 1 577 552
(1) Comprises equities trading fees, risk management, clearing and settlement fees, membership fees, primary market fees and back-office services (BDA).
(2) Includes R19.3m (2013: R16.0m) of primary market fees relating to the bond market.
(3) Comprises funds under management, Strate ad valorem fees.
8. Revenue
Group
2014 2013
R'000 R'000
Revenue comprises:
Back-office services (BDA) 268 096 237 556
Commodity derivatives fees 55 191 48 750
Currency derivatives fees 23 473 23 858
Equity derivatives fees 147 078 131 907
Equity market fees 414 815 374 283
Funds under management 76 186 68 379
Interest rate market fees 43 742 45 954
Primary market fees 134 213 109 685
Market data fees 203 852 176 641
Membership fees 11 617 11 108
Post-trade services 299 265 249 224
Total revenue before Strate ad valorem fees 1 677 528 1 477 345
Strate ad valorem fees 101 101 100 207
Total revenue 1 778 629 1 577 552
9. Personnel expenses
Remuneration paid 444 716 398 432
Gross amount paid 455 038 411 585
Less: Capitalised to intangible assets (10 322) (13 153)
Long-term incentive schemes 22 070 28 246
466 786 426 678
10. Other expenses
Group
2014 2013
R'000 R'000
Impairment of intangible assets(1) – 48 138
Other operating expenses 558 433 491 518
Strate ad valorem fees 110 857 110 123
669 290 649 779
(1) The impairment of R48m in the 2013 financial year relates to the carrying value of the surveillance components of SRP
11. Income tax expense
The Group's consolidated effective tax rate for the year ended 31 December 2014 was 27% (2013: 31%). The reason for the higher 2013
effective tax rate is the impairment of R48m, referred to in note 10 above, which was not deducted for tax purposes.
We are currently investigating the tax treatment of software development costs, which may impact the taxation charge in future.
12. Earnings and headline earnings per share
12.1. Basic earnings per share
Profit for the year attributable to ordinary shareholders 634 339 506 628
Weighted average number of ordinary shares:
Issued ordinary shares at 1 January 86 877 600 86 877 600
Effect of own shares held (JSE LTIS 2010) (1 435 563) (1 315 623)
Weighted average number of ordinary shares at 31 December 85 442 037 85 561 977
Basic earnings per share (cents) 742.4 592.1
12.2. Diluted earnings per share
Profit for the year attributable to ordinary shareholders 634 339 506 628
Weighted average number of ordinary shares (diluted):
Weighted average number of ordinary shares at 31 December (basic) 85 442 037 85 561 977
Effect of LTIS Share Scheme 965 962 514 487
Weighted average number of ordinary shares (diluted) 86 407 999 86 076 464
Diluted earnings per share (cents) 734.1 588.6
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.
12.3. Headline earnings per share
Reconciliation of headline earnings:
Profit for the year attributable to ordinary shareholders 634 339 506 628
Adjustments are made to the following:
Profit or loss on disposal of property and equipment 37 27
– Gross amount 51 38
– Taxation effect (14) (11)
Impairment of intangible assets – 60 795
– Gross amount – 48 138
– Taxation effect – 12 657
Net realised gain on disposal of available-for-sale financial assets (no taxation effect) (6 379) (15 875)
Headline earnings 627 997 551 575
Headline earnings per share (cents) 735.0 644.6
12.4. Diluted headline earnings per share
Diluted headline earnings per share (cents) 726.8 640.8
13. Intangible assets
Included in the intangible assets of R104m (2013: R33m), are newly developed intangible assets of R97m (2013: R31m), mainly in respect
of T+3, colocation and integrated trading and clearing.
14. Share-based payments
(i) Vesting of Allocation 1 Tranche 2 shares during the 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 vested on 1 May 2013.
Tranche 2: 50% of the total award, which vested on 1 May 2014 (during the period under review).
All available Tranche 2 retention shares (130 150 shares) vested for those participants still in the employ of the JSE on 1 May 2014.
In respect of Tranche 2 corporate performance shares, the Board assessed performance over the four-year vesting term against
the pre-set financial and strategic targets and determined that 93% (2013: 54%) of these Tranche 2 shares should vest for those
participants still in the employ of the JSE on 1 May 2014. The remainder of the Tranche 2 corporate performance shares (being
4 219 shares) was forfeited by participants.
The vesting of Tranche 1 was complete in the prior year. As at 31 December 2014, details of Tranche 2 were as follows:
Corporate
Retention performance Total
Tranche 2 – fully vested shares shares shares
Original number of Tranche 2 shares awarded May 2010 163 700 77 750 241 450
Forfeited by leavers to date (30 750) (10 850) (41 600)
Forfeited by good leavers to date (per LTIS rules) to date (1 167) (2 182) (3 349)
Accelerated for good leavers to date (1 633) (4 368) (6 001)
Tranche 2 shares forfeited for missing corporate performance targets – (4 219) (4 219)
Tranche 2 shares vested 1 May 2014 (130 150) (56 131) (186 281)
Tranche 2 shares outstanding – – –
(ii) Vesting of Allocation 2 Tranche 1 shares during the period under review
The second award ("Allocation 2") under LTIS 2010 was granted in May 2011 with the following vesting profile:
Tranche 1: 50% of the total award, which vested on 1 May 2014
Tranche 2: 50% of the total award, vesting on 1 May 2015
All available Tranche 1 retention shares (134 550 shares) vested for those participants still in the employ of the JSE on 1 May 2014.
In respect of Tranche 1 corporate performance shares, the Board assessed performance over the four-year vesting term against the
pre-set financial and strategic targets and determined that 70% of these Tranche 1 shares should vest for those participants still
in the employ of the JSE on 1 May 2014. The remainder of the Tranche 1 corporate performance shares (being 11 835 shares) was
forfeited by participants.
The vesting of Tranche 1 was completed during the year under review. As at 31 December 2014, details of Tranche 1 were as follows:
Corporate
Retention performance Total
Tranche 1 – fully vested shares shares shares
Original number of Tranche 1 shares awarded May 2011 158 750 54 700 213 450
Forfeited by leavers to date (24 200) (15 250) (39 450)
Tranche 1 shares forfeited for missing corporate performance targets – (11 835) (11 835)
Tranche 1 shares vested 1 May 2014 (134 550) (27 615) (162 165)
Tranche 1 shares outstanding – – –
(iii) Grant of Allocation 5 under LTIS 2010 during the period under review
At the annual general meeting held on 8 May 2014, shareholders approved two special resolutions authorising the acquisition of
shares for the purposes of awards under the LTIS 2010 scheme as well as the provision of financial assistance to the JSE LTIS 2010
Trust for a period of two years, for the purpose of acquiring such 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 these resolutions, the Board approved a
fresh annual allocation of shares ("Allocation 5") to selected employees for the 2014 year, and these individual allocations were all
accepted by scheme participants by 23 May 2014. Allocation 5 comprised a total of 422 870 JSE ordinary shares and these shares
were acquired in the open market by 29 May 2014.
Notwithstanding the fair value grant date of 23 May 2014, a charge to profit and loss in respect of Allocation 5 has been brought to
account as from 1 June 2014, based on the materiality principle.
Included in the total number of shares granted of 422 870, a total of 271 010 corporate performance shares has been granted to
members of the JSE's executive committee. No personal performance shares were allocated under Allocation 5.
Information on Allocation 5 is as follows:
Corporate
performance
shares
Share price at grant date (rands per ordinary share) 102.27
Total number of shares granted 422 870
Dividend yield 3%
Grant date 23 May 2014
Vesting profile:
50% of the shares awarded vest on 1 June 2017 211 435
50% of the shares awarded vest on 1 June 2018
211 435
Fair value charge to profit and loss.
The profit or loss fair value charge for the period, calculated using the Black-Scholes valuation methodology, in respect of all
allocations granted under LTIS 2010 is as follows:
2014 2013
Rm Rm
Allocation #1 (granted in May 2010) R0.7m R4.2m
Allocation #2 (granted in May 2011) R1.1m R6.2m
Allocation #3 (granted in June 2012) R5.0m R8.1m
Allocation #4 (granted in May 2013) R8.0m R4.6m
Allocation #5 (granted in May 2014) R6.2m -
R21.0m R23.1m
15. Contingent liabilities and commitments
15.1 Contingent liabilities
15.1.1 The JSE has a contingent liability in respect of a guarantee of R0,7m (2013: R0,7m) issued to the Financial Services Board.
15.1.2 A summons was served on the JSE during December 2011 in terms of which Pinnacle Point Holdings Pty Ltd (PPG) and
four other plaintiffs have instituted action against the JSE for payment of R1 387 451 336.30. These losses were allegedly
suffered as a result of the transaction concluded between the Acc-Ross group of companies and PPG. The JSE has lodged an
exception against the plaintiff's particulars of claim to dismiss the action against the JSE, which exception will be heard in
due course.
15.2 Commitments
On 3 June 2013, the JSE entered into an extension to the operating lease on the building from which it conducts business.
The lease has been extended on revised terms and conditions and will now terminate on 30 August 2025.
Fair value estimation
Financial instruments measured in the statement of financial position at fair value require disclosure. The following is the fair value
measurement hierarchy:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The following table presents the Group's assets and liabilities that are measured at fair value.
Level 1 Level 2 Level 3 Total balance
R'000 R'000 R'000 R'000
2014
Assets
Other investments
– Equity securities (available-for-sale) 186 885 80 567 – 267 452
– Debt investments (available-for-sale) 25 297 – – 25 297
Total assets 212 182 80 567 – 292 749
2013
Assets
Other investments
– Equity securities (available-for-sale) 162 877 69 177 – 232 054
– Debt investments (available-for-sale) 16 731 – – 16 731
Total assets 179 608 69 177 – 248 785
The carrying values of the other financial assets and financial liabilities approximate their fair values.
16. Audit opinion
KPMG Inc, the Group's independent auditor, has audited the consolidated annual financial statements of the 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 2014 and the statements of comprehensive income, changes in equity and cash flows for the year then ended and selected
explanatory notes. A copy of the auditor's report is available for inspection at the JSE's registered office.
The auditor's report does not necessarily report on all of the information contained in this abridged annual results and cash dividend
declaration. Shareholders are therefore advised to obtain a copy of the auditor's report together with the accompanying
financial information from the JSE'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)
5 March 2015
Date: 05/03/2015 02:31:00 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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