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Summarised consolidated annual financial results and cash dividend declaration for the year ended 31 December 2020
JSE Limited
(Incorporated in the Republic of South Africa)
Registration number 2005/022939/06
Share code: JSE
ISIN: ZAE000079711
LEI: 213800MZ1VUQEBWRFO39
(JSE or the Group)
SUMMARISED CONSOLIDATED ANNUAL FINANCIAL RESULTS AND ORDINARY CASH DIVIDEND
DECLARATION FOR THE YEAR ENDED 31 DECEMBER 2020
Strong performance in core business units underpinned a 19% increase in
earnings before interest, tax, depreciation and amortisation (EBITDA) to
R1.06 billion (2019: R889 million). The JSE's record revenue during
the period largely reflects the impact of increased market volatility. Global
financial markets took their cue from pandemic-fuelled uncertainty as well as
a historic crash in oil prices. Local markets saw additional volatility with
record trading volumes amplified by a sovereign credit rating downgrade,
South Africa's exit from the World Government Bond Index and rand volatility.
The Group recognises the substantial human impact of the COVID-19 pandemic as
well as its impact on the financial ecosystem. The health and safety of
employees, support for clients and the operational resilience of platforms
and infrastructure remain key focal points for the Group.
The JSE successfully executed a major upgrade to the core trading platform,
continued to invest in information security readiness, and progressed well in
delivering its inorganic growth strategy. The Group also made substantial
improvements in client and employee engagement, as illustrated by the
increase in our net promoter score measured independently.
In the context of a challenging operating environment, we are pleased to
share a strong set of financial results for 2020. These results indicate the
following:
- Sustained earnings quality and cash generation - a key component of the
JSE's business model;
- Uninterrupted market services in the context of unprecedented volatility;
- Record Group revenue, including a 15% increase in Information Services;
- Continued investment to drive growth and maintain information
technology (IT) robustness in our operations;
- Positive operating leverage which improves earnings before interest and tax
(EBIT) margin;
- Capital expenditure (CAPEX) in support of operational and cyber resilience;
- Successful conclusion of the transaction to acquire a majority stake in
Link Market Services South Africa (Pty) Limited, and the transaction with
Globacap Technology Limited (Globacap) in line with our inorganic growth
strategy; and
- Healthy balance sheet underpins ordinary dividend growth and further
inorganic growth in future.
OVERVIEW OF RESULTS
R million (unless stated otherwise) FY2020 FY2019 % change
Total revenue 2 528 2 229 13%
Operating expenditure (OPEX) 1 718 1 541 11%
EBIT 811 687 18%
EBIT margin 32% 31% 1% pt
EBITDA 1 060 889 +19%
Net profit after tax (NPAT) 778 695 12%
Earnings per share (EPS) (cents) 936.7 cents 814.8 cents 15%
Headline earnings per share (HEPS) 936.7 cents 814.6 cents 15%
(cents)
Ordinary dividend per share declared 725.0 cents 690.0 cents 5%
(cents)
Cash generated from operations 1 003 880 14%
CAPEX 89 101 (12%)
Total revenue increased by 13% to R2.5 billion (2019: R2.2 billion), with
both operating income and total revenue at record highs. This performance was
achieved through the following:
- An increase in market activity and central order book trading, mainly
in the Equity Market, which growth was offset by some of the other
asset classes. This resulted in a 7% increase in revenue for the
Capital Markets segment;
- Post-Trade Services capitalised on heightened market activity and
billable value traded to grow revenue by 14%;
- Growth in Information Services owing to a combination of new business,
positive pricing and foreign exchange (FX) gains;
- Other income growth, which includes a net increase in FX gains as well
as regulatory fines; and
- R17 million for the first-time consolidation of JSE Investor Services
(Pty) Limited (JIS) (previously Link Market Services South Africa (Pty)
Limited (Link SA)) for two months.
Operating expenses increased by 11% to R1.7 billion (2019: R1.5 billion).
This growth in expenditure relates to JSE and the rest of the Group's
subsidiaries as follows:
- Personnel costs increased by 3%. The average headcount was 402 (2019:
395) and December 2020 exit headcount was 406 (2019: 392);
- Depreciation expenses increased by 22% owing to the annualised
depreciation impact of Integrated Trading and Clearing (ITaC), the
trading system upgrade and the capitalisation of software licences;
- Technology costs increased by 12% owing to higher spend on risk
including cybersecurity, mainframe migration and the trading system
upgrade. This was partially offset by lower net spend on contractors
and the capitalisation of expenses related to long-term software
licences;
- General expenses increased by 11% owing to higher market-activity-
related costs, external costs for growth initiatives, including due
diligence costs and legal and professional fees; and
- First-time consolidation of JIS's operating expenses of R15 million for
two months and JSE Empowerment Fund (JEF) Trust of R11 million for the
year, contributing to a 2% increase in OPEX.
As a result, EBIT increased by 18% to R811 million (2019: R687 million),
supported by positive operating leverage. There was a 1% gain in EBIT margin
to 32%. EBITDA increased by 19%. Strong NPAT growth of 12% to R778 million
(2019: R695 million) was recorded, despite a decrease in net finance income.
Total EPS and HEPS increased by 15%, to 936.7 cents from 814.8 cents and
814.6 cents respectively.
The Group continued to be strongly cash generative, with net cash from
operations of R1.03 billion (2019: R880 million), a record high. Total CAPEX
was R89 million (2019: R101 million), with the focus mainly on the trading
engine upgrade, the new master data reference system and additional
colocation racks. We are well positioned to continue our deliberate
investment in those areas of our business that we believe to be critical to
our long-term sustainability.
The JSE remains therefore in a healthy position with regard to cash and
capital, with net cash generation in 2020 resulting in a stable cash balance
of R2.5 billion at the end of December (2019: R2.6 billion). Accordingly, the
Board of Directors (Board) has declared an ordinary dividend of 725 cents per
ordinary share, an increase of 5% over the 2019 ordinary dividend of 690 cents
per share. This corresponds to an ordinary dividend pay-out of 83% of distributable
profits in 2020 (2019: 87%).
DECLARATION OF ORDINARY DIVIDEND
The Board has declared an ordinary dividend for the year ended 31 December 2020, as follows:
Annual gross Withholding Net
Dividend amount tax % amount
Ordinary 725 cents 20% 580 cents
The JSE's practice has been to return distributable cash to shareholders after ring-fencing cash for regulatory
capital requirements and investments (CAPEX and inorganic opportunities).
The ordinary dividend of 725 cents per share for 2020 represents a 5% increase on the 690 cents per share paid
in 2019, congruent with the Group's policy to progressively grow the nominal value of the ordinary dividend
over time, subject to retaining cash for regulatory capital and investments, including acquisitions.
The Board resolved to adjust the Group's dividend policy to reflect a dividend cover ratio of 1.5x - 1x earnings
(a pay-out ratio of 67% - 100% of current earnings (previously 40% - 67%)). This pay-out range reflects the fact that
cash generated exceeds NPAT, largely as a consequence of the technology investments in previous years. This
trend is expected to continue for the next few years.
The dividends have been declared from current profits, and the Group remains sufficiently capitalised. A dividend
withholding tax of 20% will be applicable to all shareholders who are not exempt. The dividends are payable to
shareholders recorded in the register of members of the JSE at the close of business on Friday, 26 March 2021. In
compliance with the Companies Act, 71 of 2008 (as amended) (the Companies Act), the directors confirm that the
JSE 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
dividend are applicable:
Dividend paid in year in respect of financial year ended 31 December 2020 31 December 2019
Ordinary dividend per share 725 cents 690 cents
Special dividend per share 0 cents 150 cents
Total rand value R630 million R730 million
Declaration date Thursday, 25 February 2021 Monday, 24 February 2020
Last date to trade JSE shares cum dividend Tuesday, 23 March 2021 Tuesday, 24 March 2020
JSE shares commence trading ex-dividend Wednesday, 24 March 2021 Wednesday, 25 March 2020
Record date for purposes of determining the
registered holders of JSE shares to participate in the
dividend at close of business on Friday, 26 March 2021 Friday, 27 March 2020
Dividend payment date Monday, 29 March 2021 Monday, 30 March 2020
Share certificates may not be dematerialised or rematerialised from Wednesday, 24 March 2021 to Friday, 26 March 2021,
both days inclusive. On Monday, 29 March 2021, the dividend will be electronically transferred to the bank accounts
of certificated shareholders. 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, 29 March 2021. The issued share
capital of the JSE as at the declaration date was 86 877 600 ordinary shares. The tax number of the JSE is 9313008840.
For further information
This short-form announcement is the responsibility of the directors. It is
only a summary of the information in the full announcement and does not
contain full details. Any investment decision should be based on the full
announcement, published and available at:
https://senspdf.jse.co.za/documents/2021/JSE/ISSE/JSE/25022021.pdf and on the
JSE website at: https://www.jse.co.za/investor-relations/results.
Ernst and Young Inc, the Group's independent auditor, has audited the Consolidated
Annual Financial Statements ("AFS") of the JSE Limited from which this announcement
has been derived, and has expressed an unmodified audit opinion on the AFS.
The auditor's report (with Key Audit Matters) issued on the AFS and the actual AFS can
be accessed at https://www.jse.co.za/investor-relations/results
This announcement itself is not audited and therefore the audit report does not cover
this announcement.
The full announcement is also available at our registered offices and the offices of
the sponsor for inspection at no charge during office hours.
Copies of the full announcement may be requested by emailing: ir@jse.co.za
Sandton
25 February 2021
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 25-02-2021 04:33:00
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