Wrap Text
Unreviewed condensed consolidated interim financial statements for the six months ended June 2016
JSE Limited
(Registration number 2005/022939/06)
Incorporated in the Republic of South Africa
ISIN: 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 8585
JSE LIMITED UNREVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 2016
The condensed consolidated interim financial statements have been prepared in accordance with all the applicable
requirements of the Companies Act, 2008, under the supervision of the Chief Financial Officer, Aarti Takoordeen CA(SA).
A review has not been performed by the Group Auditors; instead they performed agreed upon procedures on the Long-Term
Incentive Schemes, since the Audit Committee regarded this type of engagement as more appropriate. There are no material
findings as a result of the work performed by the Group Auditors. The directors take full responsibility for the
preparation of this report.
Commentary
JSE Limited (the “JSE”, the “Company” or the “Group”) delivered a robust performance for the first half of 2016, driven
by strong growth from almost all business areas. Group earnings after tax increased by 19% to R513 million (H1 2015:
R430 million), with operating revenue growing by 17% (H1 2015: 16%) to R1.2 billion (H1 2015: R1 billion). This growth
is net of substantial cuts in Equity Market trading fees and related BDA fees, resulting from a consistent focus on
transaction fee reductions to drive use of our markets. Group earnings before interest and tax (EBIT) are up by 17% to
R567 million (H1 2015: R484 million). The earnings per share (EPS) increased by 19% to 599.7c (H1 2015: 503.9c) and
headline earnings per share (HEPS) increased by 19% to 585.1c (H1 2015: 490.3c).
A highlight of the first half was the achievement of readiness to move to three-day settlement (T+3) for the Equity
Market. This project went live on 11 July 2016, following extensive collaboration between the JSE, market participants
and regulators. This market is now more closely aligned to global standards, helping to make South Africa more
attractive to foreign investors.
The following areas made strong contributions to revenue during the first half of 2016:
* Capital markets: Markets were volatile during the first half of 2016 following local concerns and global economic
uncertainty. This impacted:
o The Cash Equities and Equity Derivatives markets, which grew by R55 million and R8 million respectively
because of an increase in billable value traded of 31% and 11% respectively. Cash equities revenue growth is
net of the impact of a reduction in report-only trade fees amounting to R11 million;
o The Currency Derivatives Market, which grew by R3 million owing to a 12% increase in number of contracts
traded; and
o The Interest Rate Market, which grew by R6 million owing to growth in bond value traded of 38%.
* Trading and market services: BDA contributed R151 million off the back of an 18% increase in the number of trades.
This growth (R1 million) is net of fee cuts amounting to R39 million.
* Post-Trade and Information Services:
o Post-trade services revenue rose to R212 million as a result of the 29% growth in value traded in the Equity
Market; and
o Market Data revenue, including colocation rose, by 32% to R150 million. Colocation revenue rose by 26% to R10
million. Market Data revenue was also boosted by forex gains (R23 million) and pricing impact (R7 million).
* Funds under management increased revenue to R46 million owing to an increase in margin deposits.
The Group’s Primary Markets area bore the brunt of the uncertain economy, with a decline in initial and additional
listings fees, resulting in a 2% fall in revenue. There were six new Equity Market listings in the first half (H1 2015: 9)
– including the very significant listing of AB InBev, which had a positive impact on the Equity Market in secondary
trading activity.
Cost control
The JSE continues to maintain positive operating leverage, with total expenses growing 12% (H1 2015: 12%) to R636 million
(H1 2015: R567 million). Included in the cost growth is 8% or R42 million (H1 2015: 10% or R52 million) growth of
business-as-usual costs, with the remainder of the cost growth of R35 million (H1 2015: R8 million) representing
project operating expenses.
Personnel expenses rose by 17% or R36 million (H1 2015: 8% or R16 million) to R246 million (H1 2015: R210 million) as a
result of:
* Cost-to-company and deferred compensation, which rose by R32 million or about 17%, largely driven by an 8% increase in
the average salary per employee as well as a rise in average headcount from 470 to 498. This contributed a 15 point
increase to the payroll bill, including retention payments;
* The LTIS accounting impact, which rose by R3 million to R25 million (H1 2015: R22 million), contributing 2
percentage points;
* Remuneration capitalised to projects, which rose by R2 million to R11 million, (H1 2015: R9 million) as work on
strategic projects accelerated, decreasing personnel costs by 1 percentage point; and
* Leave pay, which rose by R1 million to R3 million (H1 2015: R2 million) adding 1 percentage point.
Technology costs rose by 20% or R22 million (H1 2015: 19% or R18 million) to R133 million (H1 2015: R111 million)
largely owing to spend on contractors, which rose by R13 million or 81% to R29 million (H1 2015: R16 million),
contributing 12 percentage points to the growth.
Depreciation declined by R4 million to R47 million (H1 2015: rose by R2 million to R51 million).
General expenses rose by 8% to R210 million (H1 2015: R196 million) largely owing to:
* The JSE’s black broker enterprise development initiative, aimed at encouraging the growth of these members.
Disbursements in enterprise development contributions amounted to R3 million (H1 2015: Rnil);
* Membership fees rose by R3 million (H1 2015: rose by R1 million) owing to timing differences and forex impact; and
* Strate expenses rose by R7 million or 11% from R64 million to R71 million on the back of higher volumes.
Strong balance sheet
The Group cash balance is strong at R1.8 billion after paying a dividend of R534 million during the period (H1 2015:
R417 million).
Group external capital expenditure was R61 million on our various strategic initiatives and R16 million on improving
existing systems. This includes improved functionality on the project to integrate the JSE’s trading and clearing
systems. All currently planned investments and capital requirements for 2016 can be funded from the Group’s own
resources.
Strategic and operating performance
We continue to focus on strengthening the foundational elements of our business (people, technology and regulation),
diversifying revenues, and driving enhanced capital and cost efficiencies. We are particularly focused on driving
high-growth areas, and on 1 July 2016 we restructured the business to enable an enhanced focus on two such areas – the
Post-Trade Services and Information Services divisions.
Our focus for the second half of 2016 remains on projects that are designed to strengthen the delivery of the JSE’s
strategic vision. In particular:
* We are progressing the integration of the JSE’s trading and clearing systems for all JSE products (ITaC), which
will enable a central point of risk management, margin offset and cross-collateralisation. This first phase of the
project, which includes significant enhancements to the equity market functionality, will be delivered late in the
third quarter of 2016. The next phase, focused on equity derivatives and currencies, is targeted for
implementation in 2017;
* We are investigating alternative Equity Market risk and settlement models to bring the JSE Equity Market closer to
global equity market norms;
* We have started developing an exchange-traded platform (ETP) for government bonds with National Treasury and
market participants;
* We are monitoring the implementation of the twin peaks model of financial sector regulation for South Africa,
given its impact on the JSE and JSE Clear in terms of the Financial Markets Act (FMA);
* We are increasingly focused on selling JSE products and services outside of South Africa;
* We continue to work on improving our customer service.
* We are reviewing our approach to all areas of transformation.
Board changes
Shareholders will know that, in 2015, we announced the intention of Dr Leila Fourie, executive director responsible for
Post-Trade and Information Services, to resign in mid-2016. Dr Fourie resigned effective 18 July 2016. The Board has no
current plans to appoint an executive director in the place of Dr Fourie.
The Post-Trade Services division is now headed by Dr Alicia Greenwood.
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.
We are, however, clear about our 2016 priorities. Hence, we are clear as to which issues we need to tackle in order to
achieve our strategy. A demanding number of years of investment and delivery lie ahead as we continue to focus on
ensuring our long-term growth.
Directors’ responsibility statement
The directors are responsible for the preparation and presentation of these interim financial statements in accordance
with International Financial Reporting Standard, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, the Financial Pronouncements as issued by the Financial
Reporting Standards Council, and the requirements of the Companies Act of South Africa, and for such internal control as
the directors determine is necessary to enable the preparation of interim financial statements that are free from
material misstatement, whether due to fraud or error.
Approval of financial statements
The unreviewed condensed consolidated interim financial statements were approved by the Board of directors on 12 August
2016 and are signed on its behalf by
N Nyembezi-Heita NF Newton-King
Chairman Chief Executive Officer
Consolidated statement of comprehensive income
for the six months ended 30 June 2016
Group
Six months ended 30 June Year ended 31 December
2016 2015 2015
(reviewed) (audited)
Notes R’000 R’000 R’000
Revenue 8 1 176 410 1 007 530 2 133 548
Other income 26 624 43 407 145 887
Personnel expenses 9 (245 727) (210 000) (495 759)
Other expenses 10 (389 899) (357 161) (760 920)
Profit from operating activities 567 408 483 776 1 022 756
Finance income 1 533 488 975 821 2 133 136
Finance costs (1 436 146) (896 585) (1 967 342)
Net finance income 97 342 79 236 165 794
Share of profit of equity-accounted investee (net of income tax) 24 817 22 370 46 568
Profit before income tax 689 567 585 382 1 235 118
Income tax expense 11 (176 917) (154 859) (335 640)
Profit for the period 512 650 430 523 899 478
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 (4 422) 17 054 24 191
Net change in fair value of available-for-sale financial assets reclassified to profit or loss (12 432) (11 468) (20 644)
Other comprehensive income for the period, net of income tax (16 854) 5 586 3 547
Total comprehensive income for the period 495 796 436 109 903 025
Earnings per share
Basic earnings per share (cents) 12.1 599.7 503.9 1 051.0
Diluted earnings per share (cents) 12.2 594.9 499.4 1 040.3
Other earnings
Headline earnings per share (cents) 12.3 585.1 490.3 1 026.3
Diluted headline earnings per share (cents) 12.4 580.4 485.9 1 015.8
Consolidated statement of financial position
as at 30 June 2016
Group
As at 30 June As at 31 December
2016 2015 2015
(reviewed) (audited)
Notes R’000 R’000 R’000
Assets
Non-current assets 1 136 382 993 708 1 115 895
Property and equipment 156 021 151 992 165 073
Intangible assets 13 408 877 310 739 358 700
Investment in equity-accounted investee 188 902 162 832 187 030
Other investments 18 302 792 304 615 312 564
Loan to the JSE Empowerment Fund Trust 25 794 14 301 25 271
Deferred taxation 53 996 49 229 67 257
Current assets 43 592 342 35 574 587 37 462 906
Trade and other receivables 564 623 412 505 466 930
Income tax receivable 529 600 594
JSE Clear Derivatives Default Fund collateral deposit 500 000 500 000 500 000
Margin deposits 40 771 648 33 108 028 34 447 066
Collateral deposits 85 3 695 140 687
Cash and cash equivalents 1 755 457 1 549 759 1 907 629
Total assets 44 728 724 36 568 295 38 578 801
Equity and liabilities
Total equity 2 862 463 2 503 861 2 956 152
Share capital 8 566 8 571 8 553
Share premium 12 974 80 278 57 954
Reserves 15 473 094 462 083 478 360
Retained earnings 2 367 829 1 952 929 2 411 285
Non-current liabilities 127 962 114 252 126 464
Employee benefits 8 883 9 948 10 845
Due to Safex members 1 347 1 347 1 347
Deferred taxation 11 371 7 178 13 620
Operating lease liability 92 949 81 447 87 435
Deferred income 13 412 14 332 13 217
Current liabilities 41 738 299 33 950 182 35 496 185
Trade and other payables 494 704 346 964 339 561
Income tax payable 4 718 35 194 32 713
Employee benefits 67 144 56 301 136 158
JSE Clear Derivatives Default Fund collateral contribution 400 000 400 000 400 000
Margin deposits 40 771 648 33 108 028 34 447 066
Collateral deposits 85 3 695 140 687
Total equity and liabilities 44 728 724 36 568 295 38 578 801
Consolidated statement of changes in equity
for the six months ended 30 June 2016
Share-
Total based
Share Share share payments 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 2015 8 541 63 348 71 889 405 551 43 937 449 488 1 952 617 2 473 994
Profit for the period – – – – – – 430 523 430 523
Other comprehensive income – – – 5 586 – 5 586 – 5 586
Total comprehensive income for the period – – – 5 586 – 5 586 430 523 436 109
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) – – – (1 723) – (1 723) 1 723 –
Dividends paid to owners – – – – – – (416 516) (416 516)
Equity-settled share-based payments – – – – 13 948 13 948 – 13 948
Transfer of profit from investor protection funds – – – 15 418 – 15 418 (15 418) –
Treasury shares (1) (3 470) (3 471) – – – – (3 471)
Treasury shares – share issue costs – (203) (203) – – – – (203)
Total contributions by and distributions to owners of the Company recognised 30 16 930 16 960 13 695 (6 686) 7 009 (430 211) (406 242)
directly in equity
Balance at 30 June 2015 8 571 80 278 88 849 424 832 37 251 462 083 1 952 929 2 503 861
Profit for the period – – – – – – 468 955 468 955
Other comprehensive income – – – (2 039) – (2 039) – (2 039)
Total comprehensive income for the period – – – (2 039) – (2 039) 468 955 466 916
Distribution from the BESA Guarantee Fund Trust(1) – – – (1 868) – (1 868) 1 868 –
Equity-settled share-based payments – – – – 7 717 7 717 – 7 717
Transfer of profit from investor protection funds – – – 12 467 – 12 467 (12 467) –
Treasury shares (18) (22 313) (22 331) – – – – (22 331)
Treasury shares – share issue costs – (11) (11) – – – – (11)
Total contributions by and distributions to owners of the Company recognised (18) (22 324) (22 342) 10 599 7 717 18 316 (10 599) (14 625)
directly in equity
Balance at 31 December 2015 8 553 57 954 66 507 433 392 44 968 478 360 2 411 285 2 956 152
Profit for the period – – – – – – 512 650 512 650
Other comprehensive income – – – (16 854) – (16 854) – (16 854)
Total comprehensive income for the period – – – (16 854) – (16 854) 512 650 495 796
LTIS Allocation 3 – shares vested 15 10 273 10 288 – – – – 10 288
LTIS Allocation 4 – shares vested 20 16 248 16 268 – – – – 16 268
Distribution from the BESA Guarantee Fund Trust(1) – – – (2 154) – (2 154) 2 154 –
Dividends paid to owners – – – – – – (542 658) (542 658)
Equity-settled share-based payments – – – – (1 860) (1 860) – (1 860)
Transfer of profit from investor protection funds – – – 15 602 – 15 602 (15 602) –
Treasury shares (22) (71 044) (71 066) – – – – (71 066)
Treasury shares – share issue costs – (457) (457) – – – – (457)
Total contributions by and distributions to owners of the Company recognised 13 (44 980) (44 967) 13 448 (1 860) 11 588 (556 106) (589 485)
directly in equity
Balance at 30 June 2016 8 566 12 974 21 540 429 986 43 108 473 094 2 367 829 2 862 463
Note 16 16 15 15
(1)The BESA Guarantee Fund Trust Deed makes specific provision for the utilisation of excess funds for the purpose of reducing the risk of claims being made against
the Trust. To this effect, R2.1 million (December 2015: R3.6 million) (June 2015: R1.7 million) before intercompany adjustments was transferred to the JSE Limited
for the defrayment of market regulatory expenditure.
Consolidated statement of cash flows
for the six months ended 30 June 2016
Group
Six months ended 30 June Year ended 31 December
2016 2015 2015
(reviewed) (audited)
R’000 R’000 R’000
Cash flows from operating activities
Cash generated by operations 587 104 455 050 1 058 178
Interest received 1 498 165 956 799 2 081 875
Interest paid (1 370 776) (873 415) (1 919 176)
Dividends received 1 634 3 115 6 455
Taxation paid (193 835) (144 187) (339 029)
Net cash generated by operating activities 522 292 397 362 888 303
Cash flows from investing activities
Proceeds on sale of other investments 48 885 27 336 74 090
Acquisition of other investments (43 535) (22 145) (69 712)
Dividends from equity-accounted investee 22 945 18 823 18 823
Proceeds from disposal of property and equipment 265 602 759
Leasehold improvements (1 615) (893) (893)
Acquisition of intangible assets (73 080) (52 105) (123 594)
Acquisition of property and equipment (14 147) (16 292) (54 875)
Net cash used in investing activities (60 282) (44 674) (155 402)
Cash flows from financing activities
Proceeds from sale of treasury shares 41 229 36 198 13 969
Loan repaid – (13 977) (13 977)
Acquisition of treasury shares (112 753) (39 872) (39 986)
Dividends paid (542 658) (416 516) (416 516)
Net cash used in financing activities (614 182) (434 167) (456 510)
Net (decrease)/increase in cash and cash equivalents (152 172) (81 479) 276 391
Cash and cash equivalents at 1 January 1 907 629 1 631 238 1 631 238
Cash and cash equivalents at end of period 1 755 457 1 549 759 1 907 629
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2016
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 condensed consolidated interim
financial statements of the Group as at and for the six months ended 30 June 2016 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.
2. Statement of compliance
The condensed Group consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards ("IFRSs") IAS 34
Interim Financial reporting, the SAICA financial reporting guides as issued by the Accounting Practice Committee, the Financial Pronouncements as issued by the
Financial Reporting Standards Council and the requirements of the Companies Act, 2008.
3. Accounting policies
All accounting policies applied by the Group in these condensed consolidated interim 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 six months ended 30 June 2015 and the year ended 31 December 2015.
5. Use of estimates and judgements
Judgements and estimates are consistent with those in the consolidated financial statements as at and for the year ended 31 December 2015.
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. New standards and interpretations not yet adopted
There are a number of forthcoming new standards and interpretations or amendments to standards and interpretations, which have been issued by the International
Accounting Standards Board (IASB) prior to the publication of these financial statements, but are effective only in future accounting periods, as listed below:
IFRS 9 – Financial Instruments – effective date: 1 January 2018
The amendments affect the classification, measurement and derecognition of financial assets and financial liabilities. The amendment will be adopted by the
Group for its financial reporting period ending after the date the statement comes into effect. The Group does not expect a significant impact from the adoption
of this statement.
IFRS 15 Revenue from Contracts with Customers – effective date: 1 January 2018
The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The
model features a contract based five-step analysis of transactions to determine whether, how much and when revenue is recognised. The Group does not expect a
significant impact from the adoption of this statement. The amendment will be adopted by the Group for its financial reporting period ending after the date the
statement comes into effect.
Six months ended Year ended
30 June 31 December
2016 2015(1) 2015
(reviewed) (audited)
R’000 R’000 R’000
8. Operating segments and revenue
Revenue comprises:
Capital Markets
Equity Market fees 289 465 234 751 501 190
Equity derivatives fees 90 464 82 507 173 434
Currency derivatives fees 18 836 15 393 34 009
Interest Rate Market fees 31 620 25 123 50 240
Commodity derivatives fees 34 518 33 644 73 069
Primary Market fees 76 030 77 961 160 644
Post-Trade and Information Services
Post-Trade Services 212 171 165 889 356 677
Market Data fees 149 512 113 403 244 937
Trading and Market Services
Back-Office Services (BDA) 151 092 150 179 310 717
Funds under management 46 281 41 526 86 415
Trading Services 12 046 9 512 19 944
Total revenue excluding Strate ad valorem fees 1 112 035 949 888 2 011 276
Strate ad valorem fees – cash equities 64 375 57 642 122 272
1 176 410 1 007 530 2 133 548
(1)June 2015 figures have been restated in line with the reorganization of operational segments as disclosed in the
Group’s consolidated financial statements as at and for the year ended 31 December 2015.
9. Personnel expenses
Remuneration paid 231 122 197 032 483 091
Long-term incentive schemes 25 135 21 681 30 295
Total personnel expenses 256 257 218 713 513 386
Less: Capitalised to intangible assets (10 530) (8 713) (17 627)
245 727 210 000 495 759
Six months ended 30 June Year ended 31 December
2016 2015 2015
(reviewed) (audited)
R’000 R’000 R’000
10. Other expenses
Other expenses (319 391) (293 587) (626 808)
Strate ad valorem fees (70 508) (63 574) (134 112)
(389 899) (357 161) (760 920)
11. Income tax expense
The Group's consolidated effective tax rate for the six months ended 30 June 2016 was 27% (for the six months ended June 2015: 26%; for the year ended
31 December 2015: 27%).
Six months ended Year ended
30 June 31 December
2016 2015 2015
(reviewed) (audited)
R’000 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 512 650 430 523 899 478
Weighted average number of ordinary shares:
Issued ordinary shares at 1 January 86 877 600 86 877 600 86 877 600
Effect of own shares held (JSE LTIS 2010) (1 394 319) (1 445 455) (1 297 984)
Weighted average number of ordinary shares at 30 June/31 December 85 483 281 85 432 145 85 579 616
Basic earnings per share (cents) 599.7 503.9 1 051.0
12.2 Diluted earnings per share
Profit for the year attributable to ordinary shareholders 512 650 430 523 899 478
Weighted average number of ordinary shares (diluted):
Weighted average number of ordinary shares at 30 June/31 December (basic) 85 483 281 85 432 145 85 579 616
Effect of Long-Term Incentive Scheme 696 265 767 796 885 896
Weighted average number of ordinary shares (diluted) 86 179 546 86 199 941 86 465 512
Diluted earnings per share (cents) 594.9 499.4 1 040.3
The average market value of the Company’s shares for purposes of calculating the dilutive effect of share
options was based on quoted market prices using a volume-weighted average price for the six month period.
12.3 Headline earnings per share
Reconciliation of headline earnings:
Profit for the year attributable to ordinary shareholders 512 650 430 523 899 478
Adjustments are made to the following:
Profit or loss on disposal of property and equipment (43) (176) (536)
– Gross amount (60) (244) (745)
– Taxation effect 17 68 209
Net realised gain on disposal of available-for-sale financial assets (no taxation effect) (12 433) (11 468) (20 644)
Headline earnings 500 174 418 879 878 298
Headline earnings per share (cents) 585.1 490.3 1 026.3
12.4 Diluted headline earnings per share
Diluted headline earnings per share (cents) 580.4 485.9 1 015.8
13. Intangible assets
Included in the intangible assets of R409 million (June 2015: R311 million ) (December 2015: R359 million) is work in progress of R201 million (June 2015: R44
million) (December 2015: R140 million), mainly in respect of T+3 and integrated trading and clearing.
14. Financial instruments
The carrying amount of all significant financial instruments approximates the fair value.
15. Reserves
Six months ended 30 June Year ended 31 December
2016 2015 2015
(reviewed) (audited)
R’000 R’000 R’000
Investor protection funds(1) 429 986 424 832 433 392
– BESA Guarantee Fund Trust 108 382 106 350 107 306
– JSE Derivatives Fidelity Fund Trust 167 707 164 354 168 646
– JSE Guarantee Fund Trust 153 897 154 128 157 440
Non-distributable reserves 429 986 424 832 433 392
JSE LTIS 2010 reserve(2) 43 108 37 251 44 968
473 094 462 083 478 360
(1)These funds were established for the purpose of investor protection in the event of a member defaulting in the Equity, Equity Derivatives and Bond Markets.
(2)This reserve relates to the portion of the LTIS 2010 Long-Term Incentive Scheme that has been expensed to date.
16. Share-based payments
Vesting of Allocation 3 Tranche 2 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, vesting was completed in 2015.
Tranche 2: 50% of the total award, vesting on 30 June 2016
All available Tranche 2 retention shares (114 350 shares) vested for those participants still in the employ of the JSE on 1 May 2016.
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 80% of these Tranche 2 shares should vest for those participants still in the employ of the JSE on 1 May 2016. The
remainder of the Tranche 2 corporate performance shares (being 9 770 shares) was forfeited by participants.
As at 30 June 2016, details of Tranche 2 were as follows:
Personal Corporate
performance performance Total
Tranche 2 – fully vested shares shares shares
Original number of Tranche 2 shares awarded in June 2012 131 800 51 500 183 300
Forfeited by leavers to date (17 450) (2 650) (20 100)
Tranche 2 shares forfeited for missing performance targets – (9 770) (9 770)
Accelerated for good leavers (7 300) (5 360) (12 660)
Tranche 2 shares vested on 1 June 2016 (107 050) (33 720) (140 770)
Tranche 2 shares outstanding – – –
Vesting of Allocation 4 Tranche 1 shares during the period under review
The fourth award (“Allocation 4”) under LTIS 2010 was granted in May 2013 with the following vesting profile:
Tranche 1: 50% of the total award, vesting was completed during the current period.
Tranche 2: 50% of the total award, vesting on 1 June 2017
150 450 Personal performance shares vested for those participants still in the employ of the JSE on 1 June 2016.
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 86.54% of these Tranche 1 shares should vest for those participants still in the employ of the JSE on 1 June 2016. The remainder of
the Tranche 1 corporate performance shares (being 8 211 shares) was forfeited by participants.
As at 30 June 2016, details of Allocation 4 Tranche 1 were as follows:
Personal Corporate
performance performance Total
Tranche 1 – fully vested shares shares shares
Original number of Tranche 1 shares awarded in June 2012 164 250 64 300 228 550
Forfeited by leavers to date (13 800) (3 250) (17 050)
Tranche 1 shares forfeited for missing performance targets – (8 211) (8 211)
Accelerated for good leavers (3 250) (3 246) (6 496)
Tranche 1 shares vested on 1 June 2016 (147 200) (49 593) (196 793)
Tranche 1 shares outstanding – – –
Grant of Allocation 7 under LTIS 2010 during the period under review
At the annual general meeting held on 26 May 2016, 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 7”) to selected employees for the 2016 year, and these
individual allocations were all accepted by scheme participants by 4 March 2016. Allocation 7 comprised a total of 342 090 JSE ordinary shares and these shares
were acquired in the open market by 10 March 2016, at a volume-weighted average price (including all execution costs) of R148.57 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 342 090, a total of 167 530 corporate performance shares has been granted to members of the JSE’s Executive
Committee. No personal performance shares were allocated under Allocation 7.
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:
Six months ended 30 June
2016 2015
(reviewed)
R’000 R’000
Allocation #2 (granted in May 2011) – 589
Allocation #3 (granted in June 2012) 1 071 4 325
Allocation #4 (granted in May 2013) 5 012 4 020
Allocation #5 (granted in May 2014) 3 980 4 184
Allocation #6 (granted in June 2015) 4 513 630
Allocation #7 (3) – –
14 576 13 748
(3)As at 30 June 2016, the grant date as defined in IFRS 2 had not been determined as the vesting conditions are in the process of being finalised. Once all
vesting conditions have been finalised and communicated to all affected parties, the relevant income statement charge will be recognised.
17. Contingent liabilities and commitments
17.1 Contingent liabilities
There were no material changes to the contingent liabilities as disclosed in the annual financial statements for 31 December 2015.
17.2 Commitments
There were no material changes to the commitments as disclosed in the annual financial statements for 31 December 2015.
18. 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).
Level 1 Level 2 Level 3 Total balance
30 June 2016 R’000 R’000 R’000 R’000
Available-for-sale financial assets 163 170 139 622 – 302 792
31 December 2015
Available-for-sale financial assets 183 465 129 098 – 312 563
Sandton
12 August 2016
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 12/08/2016 02:26:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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