JSE delivers resilient performance in tough economy
JOHANNESBURG, 21 February 2018 – 2017 was a challenging year for the JSE against a backdrop of tough market conditions which saw a decline in values and volumes traded in most of the JSE's key markets.
This environment impacted operating revenue which declined by 5% to R2.2 billion (2016: R2.3 billion). Against this background, management took steps to sustainably reduce the JSE's cost base which was down 1% to R1.40 billion (2016: R1.41 billion). As a result, we have reported Group earnings of R836 million (2016: R920 million), a decline limited to 9%.
Earnings per share (EPS) and headline earnings per share (HEPS) were 977.4 cents (down 9%) and 996.6 cents (down 6%) respectively.
Given the Group's strong cash generation (R977 million: 2016 R976 million) and robust balance sheet (R2.4 billion; 2016: R2 billion), the Board declared an ordinary dividend for the year ended December 2017 of 605 cents per ordinary share (2016: 560 cents) – an increase of 8%.
"2017 was a challenging year for both the JSE and its clients and we are pleased that, in this environment, we were able to grow the ordinary dividend to shareholders and continue to make year-on-year reductions in certain of our fees in order to find ways to make it more affordable for our clients to do business with us," says JSE CEO Nicky Newton-King.
The following contributions to operating revenue are noteworthy:
· The Equity Market billable value traded declined by 4% and there was a dilution in the effective price. This contributed to a 11% decrease in cash equities trading revenue to R507 million (2016: R569 million);
· BDA revenue decreased by 7% to R293 million (2016: R316 million) owing to a decreased number of transactions (declined by 5%) and a further fee reduction of 8%;
· The Equity Derivatives Market value traded declined by 11%, resulting in a 4% decrease in revenue to R170 million (2016: R177 million);
· Currency Derivatives Market revenue increased by 28% to R48 million (2016: R38 million) owing to the increase in the number of contracts traded (up 45%). This was driven by currency volatility off the back of political developments, improved emerging market sentiment and US dollar weakness;
· Interest Rate Market revenue increased by 5% to R63 million (2016: R60 million) with flat growth in bond nominal value traded and an increase in contracts traded of 30% in the Interest Rate Derivatives Market;
· Commodity Derivatives Market revenue declined by 2% to R68 million (2016: R70 million) owing to a 12% drop in commodity derivatives contracts. An easing of drought conditions resulted in lower volatility;
· Clearing and Settlement revenue declined by 7% to R384 million (2016: R413 million) following the decrease in equity billable value traded; and
· Information Services, which includes Market Data, decreased by 6% to R272 million (2016: R288 million), largely owing to the impact of forex losses.
The decrease in the Group's total operating expenses (down 1% to R1.40 billion (2016: R1.41 billion)) follows the implementation of our cost reduction initiatives. The most significant contributors to this reduction are personnel costs which decreased by 3% to R549 million (2016: R565 million) and technology costs which decreased by 9% to R257 million (2016: R283 million). The Group is progressing well towards its commitment to reduce its cost base by R170m by end 2019.
The Group also invested R187 million (2016: R205 million) in capex as the JSE moves towards the end of the delivery of Phase 1 of its Integrated Clearing and Settlement platform and the Exchange Traded Platform for Government Bonds, both of which are targeted for H1 2018 delivery, subject to client readiness.
"We are excited by the change in local sentiment. We are clear about our 2018 priorities and hence the issues that we need to tackle to improve our operational resilience and to achieve our strategy. We look forward to being a constructive part of the renewal of our battered country as we build momentum towards inclusive growth," concludes Newton-King
About the JSE
The Johannesburg Stock Exchange is based in South Africa, where it has operated as a market place for the trading of financial products for 131 years. It connects buyers and sellers in the equity, derivative and debt markets. The JSE is one of the top 20 exchanges in the world in terms of market capitalisation and is a member of the World Federation of Exchanges (WFE). The JSE offers a fully electronic, efficient, secure market with world-class regulation, trading and clearing systems, settlement assurance and risk management. www.jse.co.za
- Issued by:
- H+K Strategies South Africa
- Tel: +27 11 463 2198
- JSE contact:
- Samkele Nkabinde
- Mobile: 071 877 0638
- Tel: 011 520 7642
- Email: firstname.lastname@example.org