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Summarised consolidated annual results and cash and special dividend declaration for the year ended 31 December 2015
JSE Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/022939/06)
Share code: JSE ISIN: ZAE000079711
SUMMARISED CONSOLIDATED ANNUAL RESULTS AND CASH AND SPECIAL
DIVIDEND DECLARATION FOR THE YEAR ENDED 31 DECEMBER 2015
Responsibility for annual results
The preparation of these 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 report is extracted from the audited information, but is not itself audited. The directors take full responsibility for the
preparation of this report and warrant that the financial information has been correctly extracted from the underlying audited annual
financial statements.
COMMENTARY
The JSE Limited ("the JSE" or "the Group") delivered an excellent financial performance in 2015. This is principally attributable to double-digit
revenue growth across all operating divisions, driven by significantly higher market activity, which was well handled by the increasingly robust
technology in which we continue to invest. Group earnings after tax for 2015 increased by 42% to R899 million (2014: R634 million), with
operating revenue growing by 20% to R2.1 billion (2014: R1.8 billion).
Group earnings before interest and tax (EBIT) increased by 45% (2014: 22%) to R1 billion (2014: R704 million). The earnings per share (EPS)
and headline earnings per share (HEPS) statistics, at 1 051.0 cents (up 42%) and 1 026.3 cents (up 40%) respectively, reflect the Group's well
established commercial momentum.
Revenue
With regard to operating revenue, good contributions were made by:
- The Primary Market, where there was a 20% increase in revenue to R161 million (2014: R134 million) as a result of increased listings activity
and annual Equity listing fees being brought in line with global peers;
- The Equity Market, where billable value traded grew by 26%, resulting in a 25% increase in cash equities trading revenue to R501 million
(2014: R402 million);
- BDA, where revenue grew by 16% to R311 million (2014: R268 million) as a result of a 33% growth in the number of Equity Market
transactions. This was offset by rebates of R22 million paid in the first half of 2015 and enabled a price reduction of 20% from
September 2015;
- The Equities Derivatives Market, where value traded increased by 11%, resulting in an 18% increase in revenue to R173 million
(2014: R147 million);
- The Currency Derivatives Market, where revenue increased by 48% to R34 million (2014: R23 million);
- The Interest Rate Market, where bond nominal value traded increased by 21%, resulting in a 14% increase in revenue to R50 million
(2014: R44 million);
- The Commodities Derivatives Market, where the increased number and value of contracts traded resulted in a 33% increase in revenue
to R73 million (2014: R55 million);
- Post-Trade Services, where clearing and settlement revenue related to equity trading grew by 19% to R357 million (2014: R299 million).
The billing model was moved to a value-based model in the second half of 2014; and
- Market Data, where revenue grew by 16% (R31 million) to R226 million (2014: R195 million) owing to new business. Revenue from colocation
contributed R19 million, up from R9 million, completing the first year of this product offering. Colocation accounted for 26% of the total value
traded during the period.
Other income
Included in other income are forex gains of R83 million (2014: R19 million) related to the revaluation of the USD bank account and foreign
receivables.
Continued cost containment
The Group's total operating expenses increased by 11% (2014: 5.5%) to R1.26 billion (2014: R1.14 billion), including a deliberate increase
in general expenses of R291 million (14%). Included in operating expenses is R37 million (2014: R17 million) of project related operating
expenditure (opex) to deliver our key strategic technology initiatives. This leaves business-as-usual (BAU) expense growth of 9% for 2015.
Technology costs increased by 16% to R235 million (2014: R202 million). This was mainly owing to planned and preventative maintenance on key
technology assets.
Personnel costs increased by 6% to R496 million (2014: R467 million). This is made up as follows:
- Gross remuneration per employee increased by 7%. However, average headcount was 5% lower (excluding 17 learners appointed in
August 2015), declining from 494 to 472. This resulted in a net 2 percentage point increase in the payroll bill. Headcount at year-end was
506 (2014: 485);
- The discretionary bonus pool increased by R19 million to R82 million (2014: R63 million) owing to higher profits and represents a further
4 percentage point increase;
- A tertiary education bursary fund for children of JSE staff who are not of a senior level. This amounted to R4 million (2014: R0 million) and
increased personnel costs by 1 percentage point;
- The accounting impact for LTIS increased by R3 million to R30 million (2014: R27 million), contributing 1 percentage point to the total
growth; and
- Remuneration capitalised to projects increased by R8 million to R18 million (2014: R10 million) as work on strategic projects accelerated.
This decreased personnel cost growth by 2 percentage points.
Depreciation was largely flat at R100 million (2014: R99 million), as a result of increased colocation and T+3 Phase 2 amortisation, which was
offset by fully depreciated assets.
General expenses increased by 14% to R291 million (2014: R256 million) largely owing to deliberate marketing costs (the launch of the TFSA, Eris
interest rate swap futures, and the hosting of the ASEA Conference) and placement costs for senior staff.
Robust balance sheet
We generated R888 million (2014: R768 million) and ended the year with a robust balance sheet, including R1.9 billion (2014: R1.6 billion) in cash.
We remain committed to our Group external capital expenditure, with R159 million (2014: R116 million) committed to our strategic initiatives.
All currently planned investments and capital requirements for 2016 can be funded from the Group's own resources.
The Board believes that the JSE is appropriately capitalised, given the nature of the risks we currently face and given the uncertain nature of
future regulatory capital requirements.
Changes to directorate during the period under review
In 2015, the following changes to our Board of Directors took place:
21 May 2015 (AGM):
- Sam Nematswerani retired as a Board member and as chairman of the Audit Committee, having been a director for 9 years and 10 months.
We thank Sam for his sage advice over many years of service to the JSE.
1 July 2015:
- Suresh Kana was appointed to the Board as an independent non-executive director after he retired as senior partner of PwC Africa. He was
also appointed to serve on the Audit Committee. Suresh will retire at the next annual general meeting as required by the Companies Act, but
is available for election/re-election.
14 September 2015:
- Dr Leila Fourie, executive director responsible for the JSE's Post-Trade and Information Services (PTIS), has indicated that she will be leaving
the JSE in mid-2016.
Declaration of ordinary and special dividend
The Board has decided to declare both an ordinary and a special dividend for the year ended December 2015 at 520 cents and 105 cents per
ordinary share respectively. This is reflective of the strong growth in earnings and is consistent with our dividend philosophy – in terms of which
we aim for steady growth in the ordinary dividend over time, and to provide an additional return to shareholders via special dividends to the
extent that the annual financial performance and the Group's capital position so permits. Accordingly, notice is hereby given that the directors
have declared the following:
Annual gross Withholding
Dividend amount tax % Net amount
Ordinary 5.20 15 4.42
Special 1.05 15 0.8925
6.25 15 5.31
The dividend has been declared from retained earnings. 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 18 March 2016.
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. 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 2016 2015
In respect of financial year ended 31 Dec 31 Dec
Gross dividend per share 625 cents 480 cents
Rand value R543 million R417 million
Declaration date Thur, 25 February 2016 Thur, 5 March 2015
Last date to trade JSE shares cum dividend Fri, 11 March 2016 Fri, 5 June 2015
JSE shares commence trading ex-dividend Mon, 14 March 2016 Mon, 8 June 2015
Record date for purposes of determining the registered holders of JSE shares to participate
in the dividend at close of business on Fri, 18 March 2016 Fri, 12 June 2015
Date of payment of dividend Tue, 22 March 2016 Mon, 15 June 2015
Share certificates may not be dematerialised or rematerialised from Monday, 14 March 2016, to 18 March 2016, both days inclusive. On
22 March 2016, 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 22 March 2016 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 22 March 2016.
The issued share capital of the Company as at the declaration date was 86 877 600. The tax number of the Company is 9313008840.
Notice of annual general meeting
Notice is hereby given that the eleventh annual general meeting (AGM) of shareholders of the JSE will be held at 15:30 on Thursday, 26 May 2016,
at the registered office of the Company, One Exchange Square, 2 Gwen Lane, Sandown, to transact the business as stated in the AGM notice
forming part of the annual financial statements. The AGM notice includes the proxy form.
Only persons physically present at the meeting or represented by a valid proxy will be entitled to cast a vote on any matter put to a vote of
shareholders.
Salient dates 2016 AGM
Record date to determine which shareholders are entitled to receive the notice of AGM Friday, 4 March
Last day to trade in order to be eligible to attend and vote at the annual general meeting Friday, 13 May
Record date to determine which shareholders are entitled to attend and vote at the AGM Friday, 20 May
Forms of proxy for the annual general meeting to be lodged by 15:30 on* Tuesday, 24 May
* Any proxies not lodged by this time must be handed to the chairperson of the AGM immediately prior to the AGM.
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 2016.
Notwithstanding the difficult economic environment in which we will be operating, we are clear about our 2016 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.
Appreciation
2015 has been a hard year, but our focus on reviewing our business model and delivering as we planned to do have energised us to face the
competitive threats and opportunities we anticipate. These will, we believe, be critical elements in establishing our long-term sustainability.
We would like to thank all our stakeholders for their interaction with the JSE team. We have worked hard to build a more collaborative
relationship and we look forward to continuing our work in this regard in 2016.
We would like to thank all our colleagues at the JSE, and particularly the members of Exco. It is such a pleasure to work alongside this team.
Having celebrated 23 colleagues, each with more than 25 years of service, this year we are reminded of the extraordinary passion and
commitment the JSE team brings to this business every day.
Approval of financial statements
The consolidated and separate annual financial statements of the JSE Limited, as identified in the first paragraph, were approved by the Board of
Directors on 25 February 2016 and signed by:
N Nyembezi-Heita NF Newton-King
Chairman Chief Executive Officer
Audit opinion
KPMG Inc., the Group's independent auditor, has audited the consolidated annual financial statements of the JSE Limited from which the
consolidated results contained in this report have been derived, and has expressed an unmodified audit opinion on the consolidated annual
financial statements. The summarised consolidated financial results comprise the statements of financial position at 31 December 2015 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 the 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
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2015
Group
2015 2014
Notes R'000 R'000
Revenue 8 2 133 548 1 778 629
Other income 145 887 61 240
Personnel expenses 9 (495 759) (466 786)
Other expenses 10 (760 920) (669 290)
Profit from operating activities 1 022 756 703 793
Finance income 2 133 136 1 539 449
Finance costs (1 967 342) (1 412 589)
Net finance income 165 794 126 860
Share of profit of equity-accounted investee (net of income tax) 46 568 36 955
Profit before income tax 1 235 118 867 608
Income tax expense 11 (335 640) (233 269)
Profit for the year 899 478 634 339
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 24 191 27 143
Net change in fair value of available-for-sale financial assets reclassified to profit or loss (20 644) (6 379)
Income tax on other comprehensive income 11 – –
Other comprehensive income for the year, net of income tax 3 547 20 764
Total comprehensive income for the year 903 025 655 103
Earnings per share
Basic earnings per share (cents) 12.1 1 051.0 742.4
Diluted earnings per share (cents) 12.2 1 040.3 734.1
Other earnings
Headline earnings per share (cents) 12.3 1 026.3 735.0
Diluted headline earnings per share (cents) 12.4 1 015.8 726.8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2015
Group
2015 2014
Notes R'000 R'000
ASSETS
Non-current assets 1 115 895 969 883
Property and equipment 165 073 161 836
Intangible assets 13 358 700 283 111
Investment in equity-accounted investee 187 030 159 284
Other investments 312 564 292 750
Loan to the JSE Empowerment Fund Trust 25 271 13 924
Deferred taxation 67 257 58 978
Current assets 37 462 906 28 241 085
Trade and other receivables 466 930 336 546
Income tax receivable 594 605
JSE Clear Derivatives Default Fund collateral deposit 500 000 500 000
Margin deposits 34 447 066 25 676 434
Collateral deposits 140 687 96 262
Cash and cash equivalents 1 907 629 1 631 238
Total assets 38 578 801 29 210 968
EQUITY AND LIABILITIES
Total equity 2 956 152 2 473 994
Share capital 8 553 8 541
Share premium 57 954 63 348
Reserves 478 360 449 488
Retained earnings 2 411 285 1 952 617
Non-current liabilities 126 464 120 522
Borrowings – 13 977
Employee benefits 10 845 5 761
Due to Safex members 1 347 1 347
Deferred taxation 13 620 9 077
Operating lease liability 87 435 74 358
Deferred income 13 217 16 002
Current liabilities 35 496 185 26 616 452
Trade and other payables 339 561 295 200
Income tax payable 32 713 32 377
Employee benefits 136 158 116 179
JSE Clear Derivatives Default Fund collateral contribution 400 000 400 000
Margin deposits 34 447 066 25 676 434
Collateral deposits 140 687 96 262
Total equity and liabilities 38 578 801 29 210 968
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2015
Share-
Total based
Share Share share payment 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 2014 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
LTIS Allocation 1 – shares vested 35 11 365 11 400 – (11 400) (11 400) – –
LTIS Allocation 2 – shares vested 16 10 442 10 458 – (10 458) (10 458) – –
Distribution from the BESA Guarantee
Fund Trust1 – – – (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
funds – – – 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
Profit for the year – – – – – – 899 478 899 478
Other comprehensive income – – – 3 547 – 3 547 – 3 547
Total comprehensive income for the year – – – 3 547 – 3 547 899 478 903 025
LTIS Allocation 2 – shares vested 16 8 441 8 457 – (8 457) (8 457) – –
LTIS Allocation 3 – shares vested 15 12 162 12 177 – (12 177) (12 177) – –
Distribution from the BESA Guarantee Fund
Trust(1) – – – (3 591) – (3 591) 3 591 –
Dividends paid to owners – – – – – – (416 516) (416 516)
Equity-settled share-based payment – – – – 21 665 21 665 – 21 665
Transfer of profit from investor protection
funds – – – 27 885 – 27 885 (27 885) –
Treasury shares (19) (25 783) (25 802) – – – – (25 802)
Treasury shares – share issue costs – (214) (214) – – – – (214)
Total contributions by and distributions to
owners of the Company recognised directly
in equity 12 (5 394) (5 382) 24 294 1 031 25 325 (440 810) (420 867)
Balance at 31 December 2015 8 553 57 954 66 507 433 392 44 968 478 360 2 411 285 2 956 152
(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, R3.6 million (December 2014: R3.3 million) 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 2015
Group
2015 2014
R'000 R'000
Cash flows from operating activities
Cash generated by operations 1 058 178 850 171
Interest received 2 081 875 1 477 111
Interest paid (1 919 176) (1 358 914)
Dividends received 6 455 5 001
Taxation paid (339 029) (204 866)
Net cash generated by operating activities 888 303 768 503
Cash flows from investing activities
Proceeds on sale of other investments 74 090 35 284
Acquisition of other investments (69 712) (51 533)
Contributions for JSE Clear Derivatives Default Fund – 16 870
Dividends from equity-accounted investee 18 823 19 779
Proceeds from disposal of property and equipment 759 295
Leasehold improvements (893) (6 370)
Acquisition of intangible assets (123 594) (65 741)
Acquisition of property and equipment (54 875) (59 093)
Net cash used in investing activities (155 402) (110 509)
Cash flows from financing activities
Proceeds from sale of treasury shares 13 969 –
Contributions paid to JSE Clear Derivatives Default Fund – (10 000)
Loan repaid (13 977) (5 078)
Acquisition of treasury shares (39 986) (43 173)
Dividends paid (416 516) (347 457)
Net cash used in financing activities (456 510) (405 708)
Net increase in cash and cash equivalents 276 391 252 286
Cash and cash equivalents at 1 January 1 631 238 1 378 952
Cash and cash equivalents at 31 December 2015 1 907 629 1 631 238
SELECTED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
1. Reporting entity
JSE Limited (the "JSE" or the "Company") 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 2015
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 consolidated financial statements and the separate financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards (IFRSs), including IAS 34, the SAICA financial reporting guides as issued by the Accounting
Practice Committee, the Financial Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements
and the requirements of the Companies Act, 2008.
3. Changes in accounting policies
All accounting policies applied by the Group in these 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 2015.
4. Comparative figures
Unless otherwise indicated, comparative figures refer to the 12 months ended December 2014.
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 the 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 2015.
7. Operating segment
Reorganisation of operating segments
During the period under review and following the organisational restructure in 2014, management refined the manner in which
operational segments are reported. In order to align to the internal reporting structure of the Group, several changes have been made to
the disclosure of operating segments.
The most significant changes are as follows:
- previously disclosed as ‘Cash equities' have now been split into individual segments: namely Back-Office Services (BDA), Equity
Market fees, Primary Market fees (which represent/comprise listing fees for the Equity Market products) [2015: R145 million;
2014: R115 million], membership fees and Post-Trade Services.
- previously disclosed as ‘Equity and currency derivatives' have now been split into individual segments, namely equity derivative fees
and currency derivative fees.
- previously disclosed as ‘Interest Rate Market' has now been split into individual segments: namely Interest Rate Market fees and
Primary Market fees (which reflect listing fees for the Interest Rate Market products) [2015: R19 million; 2014: R16 million].
- previously disclosed as ‘Other' have been separately disclosed into individual segments of funds under management and Strate ad
valorem fees related to the Cash Equities Market.
In addition to the changes detailed above, comparatives have been restated and operating segments have been grouped into the following
operational divisions:
- Capital Markets
- Post-trade and Information Services
- Trading and Market Services
Operating segments have been disclosed in note 8.1
Group
2015 2014
R'000 R'000
8. Operating segments and revenue
8.1 Revenue comprises:
Capital Markets
Equity Market fees 501 190 402 292
Equity derivatives fees 173 434 147 078
Currency derivatives fees 34 009 23 392
Interest Rate Market fees 50 240 43 810
Commodity derivatives fees 73 069 55 191
Primary Market fees 160 644 134 213
Post-Trade and Information Services
Post-Trade Services 356 677 299 265
Market Data fees 244 937 203 852
Trading and Market Services
Back-Office Services (BDA) 310 717 268 096
Funds under management 86 415 76 186
Trading Services 19 944 24 153
Total revenue excluding Strate ad valorem fees 2 011 276 1 677 528
Strate ad valorem fees – cash equities 122 272 101 101
2 133 548 1 778 629
9. Personnel expenses
Remuneration paid 465 464 444 716
Gross amount paid 483 091 455 038
Less: Capitalised to intangible assets (17 627) (10 322)
Long-term incentive schemes 30 295 22 070
495 759 466 786
10. Other expenses
Group
2015 2014
R'000 R'000
Other expenses 526 340 467 203
Technology costs 234 580 202 087
760 920 669 290
11. Income tax expense
The Group's consolidated effective tax rate for the year ended 31 December 2015 was 27% (2014: 27%).
We are currently investigating the tax treatment of software development costs, which may impact the taxation charge in future.
Group
2015 2014
R'000 R'000
12. Earnings and headline earnings per share
12.1 Basic earnings per share
Profit for the year attributable to ordinary shareholders 899 478 634 339
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) (1 297 984) (1 435 563)
Weighted average number of ordinary shares at 31 December 85 579 616 85 442 037
Basic earnings per share (cents) 1 051.0 742.4
12.2 Diluted earnings per share
Profit for the year attributable to ordinary shareholders 899 478 634 339
Weighted average number of ordinary shares (diluted):
Weighted average number of ordinary shares at 31 December (basic) 85 579 616 85 442 037
Effect of LTIS share scheme 885 896 965 962
Weighted average number of ordinary shares (diluted) 86 465 512 86 407 999
Diluted earnings per share (cents) 1 040.3 734.1
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 899 478 634 339
Adjustments are made to the following:
Profit or loss on disposal of property and equipment (536) 37
– Gross amount (745) 51
– Taxation effect 209 (14)
Net realised gain on disposal of available-for-sale financial assets (no taxation effect) (20 644) (6 379)
Headline earnings 878 298 627 997
Headline earnings per share (cents) 1 026.3 735.0
12.4 Diluted headline earnings per share
Diluted headline earnings per share (cents) 1 015.8 734.1
13. Intangible assets
Included in the intangible assets of R359 million (2014: R283 million), are newly developed intangible assets of R137 million (2014: R97 million),
mainly in respect of T+3, client relationship management and integrated trading and clearing.
14. Share-based payments
(i) Vesting of Allocation 2 Tranche 2 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 May 2015 (during the period under review)
Tranche 2 – fully vested
All available Tranche 2 retention shares (110 450 shares) vested for those participants still in the employ of the JSE on 1 May 2015.
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 78% of these Tranche 2 shares should vest for those participants still
in the employ of the JSE on 1 May 2015. The remainder of the Tranche 2 corporate performance shares (being 8 679 shares) was
forfeited by participants.
The vesting of Tranche 1 was completed in 2014. As at 31 December 2015, details of Tranche 2 were as follows:
Corporate
Retention performance Total
shares shares shares
Original number of Tranche 2 shares awarded in May 2011 158 750 54 700 213 450
Forfeited by leavers to date (34 300) (15 250) (49 550)
Tranche 2 shares forfeited for missing performance targets – (8 679) (8 679)
Accelerated for good leavers (14 000) (7 293) (21 293)
Tranche 2 shares vested on 1 May 2015 (110 450) (23 478) (133 928)
Tranche 2 shares outstanding – – –
(ii) Vesting of Allocation 3 Tranche 1 shares during the period under review
The third award (Allocation 3) under LTIS 2010 was granted in June 2012 with the following vesting profile:
Tranche 1: 50% of the total award, which vested on 30 June 2015
Tranche 2: 50% of the total award, vesting on 30 June 2016
Tranche 1 – fully vested
116 533 personal performance shares vested for those participants still in the employ of the JSE on 1 June 2015, with 1 017 shares
being forfeited for missing personal performance targets.
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 78.07% of these Tranche 1 shares should vest for those participants still
in the employ of the JSE on 1 June 2015. The remainder of the Tranche 1 corporate performance shares (being 10 713 shares) was
forfeited by participants.
As at 31 December 2015, details of Allocation 3 Tranche 1 were as follows:
Corporate
Retention performance Total
shares shares shares
Original number of Tranche 1 shares awarded in June 2012 131 800 51 500 183 300
Forfeited by leavers to date (14 250) (2 650) (16 900)
Tranche 1 shares forfeited for missing performance targets (1 017) (10 713) (11 730)
Tranche 1 shares vested on 1 June 2015 (116 533) (38 137) (154 670)
Tranche 1 shares outstanding – – –
(iii) Grant of Allocation 6 under LTIS 2010 during the period under review
At the annual general meeting held on 21 May 2015, 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 6) to selected employees for the 2015 year, and these individual allocations were all
accepted by scheme participants by 1 June 2015. Allocation 6 comprised a total of 302 340 JSE ordinary shares and these shares
were acquired in the open market by 29 May 2015, at a volume-weighted average price (including all execution costs) of R131.54 per
ordinary share. These shares are held in trust and are restricted until all vesting conditions are fulfilled, whereupon the shares vest.
Included in the total number of shares granted of 302 340, a total of 160 620 corporate performance shares has been granted to
members of the JSE's Executive Committee. No personal performance shares were allocated under Allocation 6.
Information on Allocation 6 is as follows:
Corporate
performance
shares
Share price at grant date (rands per share) 131.54
Total number of shares granted 302 340
Dividend yield 3%
Grant date 1 June 2015
Vesting profile:
50% of the shares awarded vest on 31 May 2018 151 170
50% of the shares awarded vest on 31 May 2019 151 170
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 allocations granted
under LTIS 2010 is as follows:
2015 2014
Allocation 1 (granted in May 2010) – R0.7m
Allocation 2 (granted in May 2011) R0.7m R1.1m
Allocation 3 (granted in June 2012) R5.3m R5.0m
Allocation 4 (granted in May 2013) R6.6m R8.0m
Allocation 5 (granted in May 2014) R5.5m R6.2m
Allocation 6 (granted in June 2015) R3.1m –
R21.2m R21.0m
15. Contingent liabilities and commitments
15.1 Contingent liabilities
15.1.1 The JSE has a contingent liability in respect of a guarantee of R0.7 million (2014: R0,7 million) issued to the Financial Services
Board.
15.1.2 During the year under review, a matter involving Pinnacle Point Holdings (Pty) Ltd (PPG) and other plaintiffs, for which a contingent
liability was disclosed in prior years, has been disposed as a result of withdrawal of action against the JSE.
15.2 Commitments
There were no changes to the commitment as disclosed in the annual financial statements for 31 December 2014 except for the
change below: In order to fulfil the liquidity risk management obligations of JSE Clear (Pty) Ltd as a qualified central counterparty, in
compliance with CPSS-IOSCO4, the Group entered into additional commitment to the value of R500 million with a local commercial
bank. The commitment is renewable on an annual basis. This brings the Group's total liquidity facility to R2 billion.
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
2015
Assets
Other investments
– Equity securities (available-for-sale) 154 775 129 098 – 283 873
– Debt investments (available-for-sale) 28 690 – – 28 690
Total assets 183 465 129 098 – 312 563
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
The carrying values approximate the fair value.
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
25 February 2016
Date: 25/02/2016 05:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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