| Tue 17 Aug 2010, 12:30 | | JSE - JSE Limited - Reviewed condensed consolidated interim financial statements |
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JSE
JSE
JSE - JSE Limited - Reviewed condensed consolidated interim financial statements
for the six months ended 30 June 2010
JSE Limited
(Registration number 2005/022939/06)
(Incorporated in the Republic of South Africa)
ISIN Code: ZAE000079711
Share code: JSE
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED 30 JUNE 2010
Unless otherwise indicated, all comparatives refer to the six months ended 30
June 2009.Percentage changes have been calculated on unrounded numbers.
The first half of 2010 was a volatile one for local markets. Mirroring this
uncertainty, the main equity index of the Johannesburg Stock Exchange (JSE) rose
to 29 500 by mid-April but dropped to 26 259 by end-H1 2010.
Fluctuating sentiment was good for JSE Limited, the company that operates the
exchange. Group revenue climbed 14.5% to R623.3 million (H1 2009: R544.5
million) largely owing to increased trade on the spot equities market.
Foreigners were again net investors, investing R19.1 billion in South African
equities and R36.2 billion in local bonds. Liquidity on the equities market rose
to 53% for the period (H1 2009: 48.8%). Investors remained hesitant about equity
derivatives though commodity derivatives recovered somewhat, rising 15.9% to
R20.6 million (H1 2009: R17.8 million). As a result, the overall performance of
the Group remained resilient.
The 14.5% increase in revenue combined with controlled operating costs led to a
13.1% increase in net profit after tax to R207.6 million (H1 2009: R183.5
million).
During H1 2010, personnel expenses rose by 16.7% compared with the previous
period. This was owing to the unwinding of the discount on the deferred cash
bonus liability (R5.0 million), an average salary increase of 8.6% granted with
effect from 1 January 2010 and a 2.7% increase in headcount to 420 permanent
employees (Dec 2009: 409).
A new long term incentive scheme was approved by shareholders at the annual
general meeting in April 2010. This new scheme ("LTIS 2010") replaces the
previous long term schemes operated by the JSE, and accordingly no further
tranches will be awarded under these earlier schemes. Tranches already awarded
under the previous schemes will run their normal course. During the period under
review, the LTIS 2010 scheme resulted in a share based payment charge of R1.7
million (2009: Rnil).
Other expenses increased by 11.3%. The factors underlying this increase include
increased spending in consulting fees and computer costs of R2.3 million and
R3.5 million respectively, the impairment adjustment of R1.8 million to the loan
granted to the JSE Empowerment Fund Trust, and the recognition of the provision
for onerous costs (R4.0 million) associated with the Melrose Arch lease. (The
lease resulted from the JSE`s acquisition of the Bond Exchange of South Africa
(BESA) in 2009).
Net finance income fell by 25% due to lower interest rates and lower funds under
management.
The effective tax rate for the period under review was 33% (H1 2009: 34%).
Turning to the Group`s revenue sources:
- Six new company listings occurred during H1 2010 - five on the main board
(one of which on the Africa Board) and one on AltX - compared with four in
H1 2009. This is in line with listings numbers on member exchanges of the
World Federation of Exchanges. Though there is a new listings pipeline, the
JSE cannot predict new listings prospects as the decision to list remains
that of the company concerned. Revenue in the JSE`s Issuer Services
division, which handles new listings, increased 17.5% (H1 2010: R45.8
million; H1 2009: R39.0 million). This includes interest rate market issuer
services activity which was not included in the previous period. Like for
like, and including equities-related revenue only, H1 2010 revenue fell by
1% on the previous period.
- The number of spot equities market transactions rose 22.4% (H1 2010: 12.2
million; H1 2009: 10.0 million), generating revenue of R164.8 million (H1
2009: R145.3 million), a 13.4% increase.
- The average value per trade is declining in line with world markets,
largely owing to algorithmic trade strategies. The total value of equities
trades conducted on the exchange is up 15.4% year-on-year (H1 2010: R1.5
trillion; H1 2009: R1.3 trillion).
- The equities team continued to focus on encouraging increased use of the
Exchange`s products and services. First, a new billing model was introduced
in March 2010 to reduce total trading costs, encourage high frequency
trading and reward high volume participants. Trade volumes have increased
since. Second, the Exchange added an anonymous trading facility which
allows for the execution of large trades through hidden order functionality
in the central order book.
- The JSE views the South African retail market as a long-term growth area
and continues to pursue its strategy of increasing the financial knowledge
of South Africans with the aim of growing numbers of retail investors and
adding to trade volumes. During the period, the Exchange visited a number
of smaller cities country-wide to pursue this strategy.
- New product innovation remains one of the Exchange`s strengths. In the
interim period, the commodity derivatives team focused on expanding the
product range launched in partnership with the CME Group (the world`s
largest derivatives exchange), recently introducing soya complex contracts.
The equity team focused on a new range of commodity warrants and on
collective investment products including exchange traded funds aimed at
retail and institutional investors. New products were also added on other
JSE markets.
- The number of equity derivatives contracts traded rose by 6% to 84.2
million (H1 2009: 79.4 million). The biggest increases came from derivative
contracts on international shares. Value traded rose 26.2%. Despite this,
revenues eased by 0.7% to R53.3 million (H1 2009: R53.7 million) mainly
owing to two shifts in the product mix: first, a move from options to
futures, and second, a drop in the value of Can Do derivatives traded
during H1 2010 compared with the previous period.
- Effective 6 July 2010, the JSE adopted a maker-taker model for its equity
derivatives market. This change is aimed at making pricing structures more
equitable by rewarding participants bringing liquidity to the market,
encouraging greater activity and transparency. We have begun to see more
use of our on line trading system since the introduction of the new pricing
model.
- The number of commodity derivatives contracts traded increased by 12.1% (H1
2010: 1 011 712; H1 2009: 902 370). Commodity options accounted for most of
this growth, owing to volatility in agricultural prices at the start of
2010. This shift in product mix impacted favourably on revenues which rose
15.7% to R20.6 million (H1 2009: R17.8 million) during the period.
- The Interest Rate division generated trade reporting revenue of R16.4
million. Reported cash volumes in H1 2010 climbed to R7.33 trillion (H1
2009: R6.88 trillion). Open interest for all interest rate derivatives
products topped the R100,000 mark for the first time in the interest rate
exchange traded products history.
- Revenue generated by the Information Products Sales division, which is
focusing on new and existing offshore clients in a tough market following
the downsizing of several global institutions, climbed 6.5% to R58.7
million (H1 2009: R55.1 million). New product development continues.
Marketing efforts are currently focused on the FTSE/JSE Equally-Weighted
Top40 Index, launched during the period.
PROSPECTS
2010 is a year of consolidation for the JSE:
- Following the BESA acquisition effective 22 June 2009, dialogue with
interest rate market participants and industry groups is continuing. The
process is taking longer than anticipated; however the JSE remains
convinced that it will succeed in introducing a strategy which will succeed
in growing the Exchange traded interest spot and derivative market.
- The JSE continues to pursue its Africa strategy, which has gained momentum
since 2009 with the launch of the Africa Board, a platform for African
companies domiciled outside South Africa. In April 2010, the Africa Board
welcomed its second listing, Wilderness Holdings. Companies from elsewhere
on the continent have also publically stated their interest in listing on
the Africa Board. This interest is prompted, in part, by the JSE`s focused
marketing efforts and growing global investor interest in Africa as an
investment destination. The Exchange continues to talk to prospective
issuers about the benefits of listing on the Africa Board and looks forward
to welcoming some new listings in the coming period.
- The JSE`s technology systems replacement project (SRP) is proceeding. The
replacement of the last of the three major systems, including the
replacement of the JSE`s back office system (the Broker Dealer Accounting
system or BDA), is currently in the testing phase. Initial tests have
proved successful. The Exchange will announce the due date for
implementation in due course.
- During H1 2010, trading and clearing engines in the JSE`s equity and
commodity derivatives markets were upgraded. Exchange traded currency and
interest rate derivatives will be moved to the system in due course.
The JSE remains committed to delivering value to issuers and investors. The
focus is on consistent work to build a sustainable business model, with
depth and breadth. The Board is optimistic that this should be achieved
through the strategic objectives discussed above, combined with the
strength of JSE regulation and the quality of the JSE`s service.
- In March 2010, the Exchange said that, in 2010, it would consolidate the
BESA acquisition, make continued improvements in IT, launch a new billing
model for equities trading and launch initiatives such as Block-X (the dark
pool facility) in response to client needs. As reported above, the JSE has
delivered on certain of these targets. It will deliver on the remainder
during H2 FY2010.
- As a significant portion of revenue is dependent on the level of trades on
the Exchange, the JSE is not able to predict future profits. There is no
guarantee that first half trading volumes will be sustained throughout
2010.
- The JSE will continue to focus on increasing liquidity and improving market
competitiveness.
- In the equity derivatives market, the Exchange will work to encourage on-
exchange central order book trading. It will also work on providing
services to clients who previously traded off-exchange but who now want to
trade on-exchange to manage risk.
- In H2 2010, additional hard commodity instruments will be launched under
licence from the CME Group.
- The JSE will also focus on delivering the intended benefits of the BESA
acquisition. The interest rate team aims to implement the following during
H2 2010:
- A single set of listings requirements;
- A single set of trading rules; and
- An improved pre-trade price discovery process, to be disseminated through
the Nutron system.
- The Exchange also continually strives to grow its other markets and revenue
streams.
For and on behalf of the Board
HJ Borkum RM Loubser
Chairman Chief Executive Officer
17 August 2010
Sandton
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2010
JSE Group
six months ended year ended
30 June 31 December
2010 2009 2009
(reviewed) (reviewed) (audited)
Note R`000 R`000 R`000
Revenue 7 623 301 544 515 1 155 756
Other income 21 102 8 583 40 547
Personnel expenses (150 871) (129 272) (318 632)
Other expenses (242 340) (217 720) (491 774)
Profit/(loss) before net 251 192 206 106 385 897
finance income
Finance income 536 987 736 322 1 325 473
Finance costs (493 337) (677 789) (1 221 347)
Net finance income 43 650 58 533 104 126
Share of profit of equity
accounted investees
(net of income tax) 14 225 13 223 27 937
Profit before tax 309 067 277 862 517 960
Income tax expense (101 508) (94 321) (152 359)
Profit for the period 207 559 183 541 365 601
Other comprehensive income
Net change in fair value of (7 865) 1 474 38 187
available-for-sale financial
assets
Net change in fair value of (9 229) (1 221) (9 087)
available-for-sale financial
assets transferred to profit
or loss
Income tax on other - - -
comprehensive income
Other comprehensive (17 094) 253 29 100
(loss)/income for the
period, net of income tax
Total comprehensive 190 465 183 794 394 701
income/(loss) for the period
Profit/(loss) attributable
to:
Owners of the Company 207 559 183 539 367 244
Non-controlling interest - 2 (1 643)
Profit for the period 207 559 183 541 365 601
Total comprehensive
income/(loss) attributable
to:
Owners of the Company 190 465 183 792 396 344
Non-controlling interest - 2 (1 643)
Total comprehensive 190 465 183 794 394 701
income/(loss) for the period
Earnings per share
Basic earnings per share 244.1 215.6 431.3
(cents)
Diluted earnings per share 240.4 212.5 425.2
(cents)
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
for the six months ended 30 June 2010
Investor Protection Funds*
six months ended year ended
30 June 31 December
2010 2009 2009
(reviewed) (reviewed) (audited)
R`000 R`000 R`000
Revenue - 55 -
Other income 11 299 4 110 13 165
Personnel expenses - - -
Other expenses (7 599) (6 453) (13 142)
Profit/(loss) before net 3 700 (2 288) 23
finance income
Finance income 4 393 2 400 7 518
Finance costs - - -
Net finance income 4 393 2 400 7 518
Share of profit of equity
accounted investees
(net of income tax) - - -
Profit before tax 8 093 112 7 541
Income tax expense - - -
Profit for the period 8 093 112 7 541
Other comprehensive income
Net change in fair value of (7 865) 1 474 38 187
available-for-sale financial
assets
Net change in fair value of (9 229) (1 221) (9 087)
available-for-sale financial
assets transferred to profit
or loss
Income tax on other - - -
comprehensive income
Other comprehensive (17 094) 253 29 100
(loss)/income for the
period, net of income tax
Total comprehensive (9 001) 365 36 641
income/(loss) for the period
Profit/(loss) attributable
to:
Owners of the Company 8 093 112 7 541
Non-controlling interest - - -
Profit for the period 8 093 112 7 541
Total comprehensive
income/(loss) attributable
to:
Owners of the Company (9 001) 365 36 641
Non-controlling interest - - -
Total comprehensive (9 001) 365 36 641
income/(loss) for the period
Earnings per share
Basic earnings per share 9.5 0.1 8.9
(cents)
Diluted earnings per share 9.4 0.7 8.7
(cents)
*Investor Protection Funds comprises the JSE Guarantee Fund Trust, JSE
Derivatives Fidelity Fund Trust and BESA Guarantee Fund Trust (the "Trusts").
The JSE maintains these Trusts for investor protection purposes as required
under the Securities Services Act 36, of 2004. The JSE is required to
consolidate the Trusts into the results of the Group in terms of International
Financial Reporting Standards (IFRS). However, as these Trusts are legally
separate from the JSE, neither the JSE nor its shareholders have any right to
the net assets of these Trusts on winding up. In certain limited circumstances,
the JSE is entitled to the income of the Trusts for investor protection
purposes, with the approval of the Financial Services Board. For enhanced
understanding, the Trusts have been shown separately, (before intercompany
adjustments), although, for compliance with IFRS, the results form part of the
Group financial statements.
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
as at 30 June 2010
JSE Group
six months ended year ended
30 June 31 December
2010 2009 2009
(reviewed) (reviewed) (audited)
R`000 R`000 R`000
Assets
Non-current assets 918 478 802 548 874 301
Property and equipment 84 222 90 672 87 301
Intangible assets 439 009 378 138 382 749
Investments in equity 82 795 78 163 92 874
accounted investees
Other investments 228 701 191 677 239 538
Derivative financial 2 268 3 069 1 451
instruments
Due from the JSE Empowerment 13 315 - -
Fund Trust
Deferred tax asset 68 168 60 829 70 388
Current assets 16 184 414 14 987 542 15 702 377
Derivative financial 252 - -
instruments
Trade and other receivables 172 928 162 377 210 918
Income tax receivable 34 064 27 972 29 641
Due from group entities 1 763 - -
Margin and collateral deposits 15 069 020 13 955 414 14 541 021
Cash and cash equivalents 906 387 841 779 920 797
Total assets 17 102 892 15 790 090 16 576 678
Equity and liabilities
Total equity 1 601 262 1 395 436 1 604 724
Non-current liabilities 204 965 216 008 195 258
Finance lease 2 046 1 459 3 333
Employee benefits 75 241 57 046 64 625
Deferred tax liability 5 380 25 252 5 587
Operating lease liability 67 808 73 455 70 529
Provision for onerous contract 4 049 - -
Investor Protection Levy 49 391 47 811 50 165
Loans and borrowings - 10 000 -
Due to SAFEX members 1 050 985 1 019
Current liabilities 15 296 665 14 178 646 14 776 696
Trade and other payables 169 097 178 312 159 762
Employee benefits 53 106 40 076 70 571
Operating lease liability 5 442 4 844 5 342
Due to group entities - - -
Margin and collateral deposits 15 069 020 13 955 414 14 541 021
Total equity and liabilities 17 102 892 15 790 090 16 576 678
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (CONTINUED)
as at 30 June 2010
Investor Protection Funds
six months ended year ended
30 June 31 December
2010 2009 2009
(reviewed) (reviewed) (audited)
R`000 R`000 R`000
Assets
Non-current assets 228 698 191 674 239 536
Property and equipment - - -
Intangible assets - - -
Investments in equity - - -
accounted investees
Other investments 228 698 191 674 239 536
Derivative financial - - -
instruments
Due from the JSE Empowerment - - -
Fund Trust
Deferred tax asset - - -
Current assets 119 002 132 909 122 584
Derivative financial - - -
instruments
Trade and other receivables 719 449 4 274
Income tax receivable - - -
Due from group entities - - 2 200
Margin and collateral deposits - - -
Cash and cash equivalents 118 283 132 460 116 110
Total assets 347 700 324 583 362 120
Equity and liabilities
Total equity 347 049 323 367 357 888
Non-current liabilities - - -
Finance lease - - -
Employee benefits - - -
Deferred tax liability - - -
Operating lease liability - - -
Provision for onerous contract - - -
Investor Protection Levy - - -
Loans and borrowings - - -
Due to SAFEX members - - -
Current liabilities 651 1 216 4 232
Trade and other payables 324 1 216 3 061
Employee benefits - - -
Operating lease liability - - -
Due to group entities 327 - 1 171
Margin and collateral deposits - - -
Total equity and liabilities 347 700 324 583 362 120
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2010
Attributable to equity holders of the Company
Non-
distribu- JSE
Share Share table BBBEE LTIS 2010
capital premium reserve reserve reserve
R`000 R`000 R`000 R`000 R`000
Group
Balance at 8 514 162 779 10 058 165 503 -
31 December 2008
(audited)
Total comprehensive - - - - -
income for the
period
Total transactions - - - (4 469) -
with owners
Non-controlling - - - - -
interest in BESA
Group
Transfer to the BESA - - - - -
Guarantee Fund
Trust*
Balance at 30 June 8 514 162 779 10 058 161 034 -
2009 (reviewed)
Balance at 8 514 162 779 10 058 165 503 -
31 December 2008
(audited)
Total comprehensive - - - - -
income for the year
Total transactions - - - (5 311) -
with owners
Non-controlling - - - - -
interest in BESA
Group
Minority share of - - - - -
losses
Transfer to the BESA - - - - -
Guarantee Fund
Trust*
Balance at 8 514 162 779 10 058 160 192 -
31 December 2009
(audited)
Total comprehensive - - - - -
income for the
period
Transactions with
owners, recorded
directly in equity
Contributions by and - - - (137) -
distributions to
owners BBBEE reserve
Options lapsed - - - (137) -
transferred to
retained earnings
Treasury shares (48) (32 056) - - -
(refer to note 6)
Treasury shares - - (65) - - -
share issue costs
Equity settled share - - - - 1 711
based payments
Dividends paid to - - - - -
equity holders
Total contributions (48) (32 121) - (137) 1 711
by and distributions
to owners
Total transactions (48) (32 121) - (137) 1 711
with owners
Balance at 30 June 8 466 130 658 10 058 160 055 1 711
2010 (reviewed)
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (CONTINUED) for
the six months ended 30 June 2010
Attributable to equity holders of the Company
Non- Total
Control- exchange Investor
Retained ling and sub- Protection Total
earnings interest sidiaries Funds Group
R`000 R`000 R`000 R`000 R`000
Group
Balance at 799 141 - 1 145 995 227 497 1 373 492
31 December 2008
(audited)
Total comprehensive 183 427 2 183 429 365 183 794
income for the
period
Total transactions (159 000) - (163 469) - (163 469)
with owners
Non-controlling - 1 619 1 619 - 1 619
interest in BESA
Group
Transfer to the (95 505) - (95 505) 95 505 -
BESA Guarantee Fund
Trust*
Balance at 30 June 728 063 1 621 1 072 069 323 367 1 395 436
2009 (reviewed)
Balance at 799 141 - 1 145 995 227 497 1 373 492
31 December 2008
(audited)
Total comprehensive 358 060 - 358 060 36 641 394 701
income for the year
Total transactions (158 158) - (163 469) - (163 469)
with owners
Non-controlling - 1 643 1 643 - 1 643
interest in BESA
Group
Minority share of - (1 643) (1 643) - (1 643)
losses
Transfer to the (95 676) - (95 676) 95 676 -
BESA Guarantee Fund
Trust*
Balance at 903 367 - 1 244 910 359 814 1 604 724
31 December 2009
(audited)
Total comprehensive 199 282 - 199 282 (8 817) 190 465
income for the
period
Transactions with
owners, recorded
directly in equity
Contributions by 137 - - - -
and distributions
to owners BBBEE
reserve
Options lapsed 137 - - - -
transferred to
retained earnings
Treasury shares - - (32 104) - (32 104)
(refer to note 6)
Treasury shares - - - (65) - (65)
share issue costs
Equity settled - - 1 711 - 1 711
share based
payments
Dividends paid to (163 469) - (163 469) - (163 469)
equity holders
Total contributions (163 332) - (193 927) - (193 927)
by and
distributions to
owners
Total transactions (163 332) - (193 927) - (193 927)
with owners
Balance at 30 June 939 317 - 1 250 265 350 997 1 601 262
2010 (reviewed)
* The transfer represents the isolation in the BESA Guarantee Fund Trust of the
value on acquisition by the JSE of the Trust.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
for the six months ended 30 June 2010
JSE Group
six months ended year ended
30 June 31 December
2010 2009 2009
(reviewed) (reviewed) (audited)
R`000 R`000 R`000
Net cash inflow from 216 871 185 965 354 561
operating activities
Net cash (used in)/from (65 976) (127 041) (209 621)
investing activities
Net cash outflow from (165 305) (163 486) (170 484)
financing activities
Net (decrease)/increase in (14 410) (104 562) (25 544)
cash and cash equivalents
Cash and cash equivalents at 920 797 946 341 946 341
beginning of period
Cash and cash equivalents at 906 387 841 779 920 797
end of period
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (CONTINUED)
for the six months ended 30 June 2010
Investor Protection Funds
six months ended year ended
30 June 31 December
2010 2009 2009
(reviewed) (reviewed) (audited)
R`000 R`000 R`000
Net cash inflow from 1 037 3 727 558
operating activities
Net cash (used in)/from 2 972 98 067 86 901
investing activities
Net cash outflow from (1 836) - (2 015)
financing activities
Net (decrease)/increase in 2 173 101 794 85 444
cash and cash equivalents
Cash and cash equivalents at 116 110 30 666 30 666
beginning of period
Cash and cash equivalents at 118 283 132 460 116 110
end of period
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2010
1. Reporting entity#
JSE Limited (the "Company", the "JSE" or the "Exchange") is a company domiciled
in the Republic of South Africa. The condensed consolidated interim financial
statements of the Company as at and for the six months ended 30 June 2010
comprise the Company and its subsidiaries (together referred to as the "Group")
and the Group`s interests in associates. The JSE is licensed as an exchange in
terms of the Securities Services Act, No 36 of 2004.
2. Statement of compliance#
These condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS), IAS 34,
Interim Financial Reporting and the AC 500 series pronouncements issued by the
Accounting Practices Board of SAICA. They do not include all of the information
required for full annual financial statements and should be read in conjunction
with the consolidated financial statements of the Group as at and for the year
ended 31 December 2009.
These condensed consolidated interim financial statements were approved by the
Board of Directors on 17 August 2010.
3. Significant accounting policies#
a) Change in accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those applied by
the Group in its consolidated financial statements as at and for the year
ended 31 December 2009.
b) Accounting policies for new transactions and events
The JSE LTIS 2010 Trust was formed for the benefit of the Group to
incentivise its employees. The purpose of this Trust is limited to the
purchase, holding and disposal of shares in terms of the JSE LTIS 2010
Scheme, (the "Scheme"), as well as to administer the Scheme. The JSE LTIS
2010 Trust meets the definition of a special purpose entity and is required
to be consolidated in terms of SIC 12, Consolidation of Special Purpose
Entities. IFRSs do not provide specific guidance on the treatment in the
Company`s separate financial statements of contributions to a trust to
enable the trust to purchase shares in the market. Consequently the JSE has
elected to treat the JSE LTIS 2010 Trust as an agent of the JSE.
4. Comparative figures#
Where necessary, comparative figures have been reclassified to conform to
changes in presentation as reported in the consolidated financial statements as
at and for the year ended 31 December 2009. Refer to notes 5 and 7. Unless
otherwise indicated comparative figures refer to the six months ended 30 June
2009.
5. Operating segments#
Information about reportable segments
Interest
Equity Equity Commodity rate
division1 derivatives2 derivatives market
R`000 R`000 R`000 R`000
For the period ended
30 June 2010
External revenues 394 671 58 354 20 573 16 390
For the period ended
30 June 2009
External revenues 342 805 58 660 17 756 1 226
For the period ended 31
December 2009
External revenues 725 674 116 175 41 241 16 433
Information about reportable segments (continued)
Information
sales Other Total
R`000 R`000 R`000
For the period ended
30 June 2010
External revenues 58 703 74 610 623 301
For the period ended
30 June 2009
External revenues 55 133 68 935 544 515
For the period ended 31
December 2009
External revenues 108 773 147 460 1 155 756
1 Comprises equities trading fees, risk management, clearing and
settlement fees, membership fees, issuer services and technology
services (BDA).This amount includes approximately R7.0 million in
respect of interest rate issuer fees.
2 Includes approximately R5.0 million in respect of currency derivatives
which was included in the Interest rate market in the comparable
period in June 2009.
6. JSE LTIS 2010 Trust#
A new long term incentive scheme was approved by shareholders at the annual
general meeting in April 2010. This new scheme ("LTIS 2010") replaces the
previous long term schemes operated by the JSE, and accordingly, no further
tranches will be awarded under these earlier schemes. Tranches already awarded
under the previous schemes will run their normal course.
Scheme objective and design
The objective of LTIS 2010 is to incentivise and retain selected senior
employees of the JSE over rolling three- and four-year time horizons. To this
end, LTIS 2010 comprises a retention component and a performance component, with
the objectives, qualifying criteria and potential rewards applicable to each
component being clearly distinguished. In particular, the performance component
is intended to align the interests of scheme participants with the interests of
JSE shareholders.
LTIS 2010 is a full-value, restricted share scheme which provides scheme
participants with exposure to JSE shares, these shares having been acquired on
an annual basis in the open market by a trust established by the JSE. A scheme
participant gets immediate beneficial ownership of the JSE shares from the date
of the award, although this beneficial ownership is subject to restrictions; and
possible forfeiture where a participant leaves the employ of the JSE or the
relevant JSE corporate performance metrics are not achieved.
First allocation under LTIS 2010
Subsequent to receiving shareholder approval, the formalities relating to the
establishment of LTIS 2010 and the associated Trust were completed, and the
Human Resources Committee of the Board approved the first share allocation under
the rules of the scheme. Approval for the individual allocations and clearance
to acquire the JSE shares was granted by the Board, and all individual
allocations were accepted by scheme participants on or about 25 May 2010.
The following assumptions, using Black-Scholes valuation methodology, were used
to calculate the share based payment charge of R1,7 million (2009: Rnil).
Retention Performance
shares shares
Base price (Rand per share) 66.48 66.48
Total number of shares granted 327 400 155 500
Dividend yield 3.00% 3.00%
Vesting dates:
50% of the shares awarded vesting on 1 May 2013 163 700 77 750
50% of the shares awarded vesting on 1 May 2014 163 700 77 750
Vesting of first allocation
All shares awarded under LTIS 2010 are held in trust and are restricted until
all vesting conditions are fulfilled whereupon the shares vest. Should the
vesting conditions not be fulfilled, the share awards are forfeited.
The performance metrics applicable to the performance shares recognise the JSE`s
long term institutional role and incentivise management to develop successful
longer-term strategies that will contribute to sustainable growth in shareholder
value. Members of the JSE`s key executive personnel, have been granted 124 100
retention shares and 155 500 performance shares.
7. Revenue#
six months ended year ended
30 June 31 December
2010 2009 2009
(reviewed) (reviewed) (audited)
R`000 R`000 R`000
Revenue
Equity derivatives fees 53 336 53 732 106 700
Commodity derivatives fees 20 573 17 756 41 241
Equities trading fees 164 826 145 267 309 980
Currency derivatives 5 018 4 928* 9 475
Interest rate market 16 390 1 226 16 433
Risk management, clearing and 92 895 76 187 163 663
settlement fees
Information sales 58 703 55 133 108 773
Membership fees 4 367 4 151 8 360
Issuer services 45 830 39 011 78 853
Technology services (BDA) 86 753 78 189 164 818
Funds management 22 454 25 567 49 630
Total revenue before Strate ad 571 145 501 147 1 057 926
valorem fees
Strate ad valorem fees 52 156 43 368 97 830
Total revenue 623 301 544 515 1 155 756
*This amount was reported in the June 2009 interim results as part of the
Interest rate market division.
8. Headline and diluted headline earnings per share#
six months ended year ended
30 June 31 December
2010 2009 2009
(reviewed) (reviewed) (audited)
R`000 R`000 R`000
Reconciliation of headline
earnings:
Profit for the period 207 559 183 539 367 244
attributable to Owners of the
Company
Adjustments are made to the
following:
Loss on sale of property and 15 - 107
equipment
Impairment of goodwill - - 158
Impairment of monies due from - - 329
related entities
Impairment of intangible assets - - 27 286
Impairment of available-for-sale - 2 113 2 113
securities
Remeasurement included in equity - - 200
accounted earnings of associates
Profit on realisation of (9 229) (1 655) (9 087)
available-for-sale instruments
Headline earnings 198 345 183 997 388 350
Headline earnings per share 233.3 216.1 456.1
(cents)
Diluted headline earnings per 229.7 213.0 449.6
share (cents)
9. Contingent liabilities and commitments#
There were no changes to the contingent liabilities and commitments as reported
in the consolidated financial statements as at and for the year ended 31
December 2009, except as noted below.
a) Commitments
As a result of the JSE`s acquisition of BESA, the Company assumed the
obligations in respect of the lease of a building at Melrose Arch and accounts
for the lease as an operating lease. The lease was renewed for a further five
year period during 2007 and terminates on 30 June 2012. The premises are not
fully occupied. The lease payments escalate at 10% per annum. Management views
the lease contract as onerous as it expects the cost of meeting the obligations
under the contract to exceed the associated expected economic benefits.
Consequently, the present obligation of R4.0 million was recognised and
accounted as a provision during the period.
Review conclusion
KPMG Inc., the company`s independent auditor, has reviewed the condensed
consolidated interim financial statements contained in this interim report and
has expressed an unmodified conclusion on the condensed consolidated interim
financial statements. Their review report is available for inspection at the
company`s registered office.
The condensed consolidated financial results include the consolidated statement
of financial position at 30 June 2010, the consolidated statement of
comprehensive income and the condensed consolidated statements of changes in
equity and cash flows for the six months then ended and selected explanatory
notes. Selected explanatory notes are marked with a #.
A full version of this announcement can be found at www.jse.co.za
JOHANNESBURG STOCK EXCHANGE
1 Exchange Square, 2 Gwen Lane, Sandown, South Africa
Private Bag X9991174, Sandton 2146, South Africa, Sandown
Tel +27 11 520 7000 Fax +27 11 520 8584
Sponsor: RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 17/08/2010 12:30:04 Produced by the JSE SENS Department.
