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JSE
JSE
JSE - JSE Limited - JSE Limited audited abridged results for the twelve months
ended 31 December 2010 and cash dividend declaration
JSE Limited
(Registration number 2005/022939/06)
Incorporated in the Republic of South Africa
ISIN Code: ZAE000079711
Share code: JSE
JSE LIMITED AUDITED ABRIDGED RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER
2010 AND CASH DIVIDEND DECLARATION
COMMENTARY
OVERVIEW OF 2010
The JSE had a fair year in challenging conditions in 2010, as the Exchange
focused on making progress on operational projects while responding to global
changes in the exchange industry and the opportunities and challenges these
could hold for issuers and investors.
After a period of uncertainty towards the start of the year, the JSE`s main
equity index, the FTSE/JSE All Share Index (ALSI), rose 16.1% year on year,
reaching a high of 32 227 on 30 December. The South African Volatility Index
(SAVI), a forecast of equity market risk in South Africa, rose in the last
quarter of 2010, implying higher market volatility and thus risk. However, SAVI
levels were significantly lower than the highs reached during the global
financial crisis in 2008/9.
Foreign investors continued to increase their holdings in JSE equities (2010 net
inflow: R36.4 billion; 2009: R75.3 billion) and grew their net investment in the
interest rate market to R58.6 billion.
Financial performance
The operational performance of each of our markets has enabled the JSE to grow
operating revenue by 9% to R1 255 million (2009: R1 156 million), with the main
growth coming from the equities market, but contributions also made by
information products sales and commodity derivatives. The interest rate market
contributed 12 months of revenue in 2010 against six months the previous year
when it was acquired from BESA.
Other income climbed 24% to R50 million (2009: R41 million), primarily a result
of the profit on realising portfolio investments in the Investor Protection
Funds.
JSE operating costs before net finance income rose by 8% to R879 million (2009:
R810 million), as a result of:
- the hiring of 20 people to our staff complement, primarily to enable us to
complete our large IT projects;
- impairment to software under development of R33 million, relating to
development costs in the back office system and to the upgrade of SENS which is
now not expected to deliver the anticipated value;
- onerous lease costs of R1.9 million, attributable to the lease over Melrose
Arch entered into by the Bond Exchange South Africa (BESA), and which were
expensed during the course of 2010.
The result is a 10% rise in operating profit for 2010 to R426 million from R386
million in 2009.
Net interest earned fell by 16% to R87 million.
Group headline earnings per share fell from 456 cents to 436 cents.
Capital expenditure
Capital expenditure was of R157 million in 2010 related mainly to:
- the last phase of the JSE`s technology replacement project, including the back
office system (BDA), surveillance and clearing, and settlement systems to be
delivered this year. Most of the cost of this project was incurred between 2007
and 2010.
- the JSE`s new data centres.
The bulk of the depreciation for these will be taken through the income
statement from 2011.
Capital structure and dividend policy
The JSE has no long-term borrowings and R1 046 million in cash reserves (2009:
R921 million). The Exchange analyses its capital requirements in three
categories:
- first, to ensure a smoothly operating stock exchange, the JSE sets aside
sufficient cash to fund four months of operations;
- second, as the JSE guarantees all central order book equities trades, it sets
aside sufficient cash to meet its obligations assuming the failure of a JSE
equities member (broker);
- third, the JSE must be in a position to maintain infrastructure and meet
capital needs for expansion, so we set aside a portion of cash to fund these
types of expenses; and
- fourth, the Investor Protection Funds contribute R112 million of total (2009:
R116 million).
On the basis of this assessment, the Board has determined how much cash we need
to retain and revisits this regularly.
Cash dividend declaration
The directors of JSE are proposing to declare ordinary dividend number 7 of 210
cents per share to be approved at the Annual General Meeting of shareholders to
be held on Thursday, 28 April 2011. This equates to 2.1 times cover and is
consistent with the stated dividend policy to pay between 1.5 and 2.5 cover.
The salient dates for the payment of the dividend are as follows:
To be released on SENS on Tuesday, 15 March 2011
Last date to trade JSE shares cum Friday, 20 May 2011
dividend
JSE shares trade ex dividend Monday, 23 May 2011
Record date for purposes of Friday, 27 May 2011
determining the registered holders of
JSE shares to participate in the
dividend at close of business on
Date of payment of dividend Monday, 30 May 2011
Share certificates may not be dematerialised or rematerialised from Monday 23
May 2011 to Friday, 27 May 2011, both days inclusive.
Operating overview
It is becoming clearer that, in a globally competitive environment, markets with
strong regulation, solid infrastructure and thriving institutions will be better
positioned to attract sustainable capital flows. The recognition by the World
Economic Forum (WEF) Global Competitiveness Report 2010 - 2011 that South
Africa`s securities exchange regulation is the best in the world reflects our
transformation from a single product equity exchange to a well-regulated, fully
horizontally and vertically integrated exchange, now recognised as one of the
world`s leading exchanges.
In future, we aim to be recognised as the South African exchange providing the
leading fully integrated financial market for African securities as well as an
effective gateway to international products and markets for African investors.
To this end and as indicated more fully below, in 2011 the JSE`s main focus will
be on the delivery of several key projects:
- finally bedding down our major technology initiatives and moving closer to
being able to up the ante again in the technology-dependent services we are able
to offer across all our markets. This includes offering lower execution speeds
and a greater choice of ways to access our services;
- completing the work to enable the successful implementation of our new
equities trading system in 2012 in Johannesburg supplied by MillenniumIT, which
is a company wholly owned by the LSE;
- building consensus on the growth of our spot and derivatives interest rate
markets; and
- growing the client and product range in all our market segments, concentrating
particularly on how to bring over-the-counter (OTC) trade on-market and on how
to encourage more foreign activity on the JSE.
Cross-border activity in the exchange sector continues. We believe the JSE needs
to be linked into the global financial markets so that it can not only continue
to attract foreign investment, but also provide local clients with the best
possible access to foreign investment opportunities.
This type of access can be obtained in a number of different ways, which include
product diversification and the provision of value-added services. We are
concentrating on these areas.
Also important is identifying strategic relationships with leading global
exchanges to enable us to deliver on our strategy. The Exchange`s agreement with
the CME Group, the world`s largest derivatives exchange, is a case in point.
Through this linkage, the JSE is able to offer cash settled ZAR-denominated
commodity derivatives referencing CME prices to local investors, though there is
no equity cross-holding between the exchanges.
On the African continent, the JSE has focused its efforts on the following:
- the Africa Board. As part of the Main Board in the equities market, this Board
enables issuers from the continent (outside of South Africa) to take advantage
of increased profile and capital raising opportunities through a dual listing on
the JSE. In this regard, we are delighted with the efforts of the Africa Board
Advisory Committee, which comprises prominent African business people, to assist
with the Africa Board strategy. In 2011, the JSE will continue to promote the
Africa Board and to develop and list associated products such as African
exchange traded funds, African debt and African depository receipts. In this
vein, we welcome the suggestion in the recent Treasury consultation paper on
prudential regulation that African issuers should be treated as domestic issuers
for prudential purposes;
- building deeper relationships with some of the continent`s capital markets,
which are seeking new ways of growing and wish to tap into the JSE`s experience
in that regard;
- progressing with the design of the Africa hub to allow customers to route
orders to African exchanges using a single technological hub.
Prospects
While much has changed at the JSE during the past decade, there is significant
work to be done given the winds of change sweeping the financial services
industry worldwide. The JSE`s objectives for 2011 have been discussed above.
Though the Board is focused on delivering on the objectives identified above,
revenue projections are not possible in the stock exchange industry, given the
dependence on trading volumes in all of our markets.
At time of writing, the JSE`s markets continue to emulate 2010`s performance
with similar transaction levels being maintained. This does not imply that the
trends will necessarily continue throughout 2011.
Indications are that 2011 will be a tough year in financial markets. By
delivering on the projects outlined during this review, and by staying close to
all clients, the JSE will deliver the best possible performance to the benefit
of its users and investors.
HJ Borkhum RM Loubser
CHANGES TO BOARD
The JSE Board has been relatively unchanged for the past decade. However, there
comes a time in every institution when people wish to move on. The first change
to the Board is the decision of our CEO, Russell Loubser to stand down as CEO
with effect from 31 December 2011. Russell joined the JSE as CEO in 1997 and has
been responsible for significant and highly successful innovations. This is not
the time to praise or thank Russell for his enormous contribution as he still
has nine months left before leaving the JSE. The time for farewells will come
later.
I am delighted to announce that the Board has appointed Nicky Newton-King as CEO
with effect from 1 January 2012. Nicky has been Russell`s deputy for the past 8
years. This appointment is well deserved and will ensure an orderly transition.
Other changes are that non-executive directors Gloria Serobe and Wendy Luhabe
have indicated that they do not wish to make themselves available for re-
election at our AGM in April 2011. After having served 10 and eight years on the
Board respectively they have both made significant contributions to the JSE`s
affairs and I thank them most sincerely.
Jonathan Berman who joined the Board as an alternate director following the BESA
merger, resigned during the course of the year due to his other business
commitments.
Lastly, in terms of accepted practice, it has been decided to shrink the number
of executive directors on our Board. Leanne Parsons and John Burke who are
senior and highly respected executives of the JSE will both stand down as
executive directors at our AGM in April. I am pleased to announce that they will
continue to contribute to the Board as alternate directors.
Humphrey Borkum
Consolidated statement of comprehensive income
for the year ended 31 December 2010
Group
2010 2009
R`000 R`000
Revenue 1 255 148 1 155 756
Other income 50 267 40 547
Personnel expenses (338 098) (318 632)
Other expenses (541 087) (491 774)
Profit before net finance income 426 230 385 897
Finance income 1 027 947 1 325 473
Finance costs (940 957) (1 221 347)
Net finance income 86 990 104 126
Share of profit of equity accounted 26 446 27 937
investees (net of tax)
Profit before income tax 539 666 517 960
Income tax expense (161 659) (152 359)
Profit for the year 378 007 365 601
Other comprehensive income
Net change in fair value of available- 29 660 38 187
for-sale financial assets
Net change in fair value of available- (31 893) (9 087)
for-sale financial assets reclassified
to profit or loss
Income tax on other comprehensive income 0 0
Other comprehensive (loss)/income for (2 233) 29 100
the year, net of income tax
Total comprehensive income for the year 375 774 394 701
Profit attributable to:
Owners of the Exchange 378 007 367 244
Non-controlling interests 0 (1 643)
Profit for the year 378 007 365 601
Total comprehensive income attributable
to:
Owners of the Exchange 375 774 396 344
Non-controlling interests 0 (1 643)
Total comprehensive income for the year 375 774 394 701
Earnings per share
Basic earnings per share (cents) 445.5 431.3
Diluted earnings per share (cents) 438.4 425.2
Consolidated statement of comprehensive income (continued)
Exchange
2010 2009
R`000 R`000
Revenue 1 278 487 1 177 181
Other income 38 436 43 449
Personnel expenses (338 098) (318 632)
Other expenses (514 240) (448 001)
Profit before net finance income 464 585 453 997
Finance income 55 392 77 236
Finance costs (7 556) (11 835)
Net finance income 47 836 65 401
Share of profit of equity accounted 0 0
investees (net of tax)
Profit before income tax 512 421 519 398
Income tax expense (161 607) (152 053)
Profit for the year 350 814 367 345
Other comprehensive income
Net change in fair value of available-for- 0 0
sale financial assets
Net change in fair value of available-for- 0 0
sale financial assets reclassified to
profit or loss
Income tax on other comprehensive income 0 0
Other comprehensive (loss)/income for the 0 0
year, net of income tax
Total comprehensive income for the year 350 814 367 345
Profit attributable to:
Owners of the Exchange 350 814 367 345
Non-controlling interests 0 0
Profit for the year 350 814 367 345
Total comprehensive income attributable
to:
Owners of the Exchange 350 814 367 345
Non-controlling interests 0 0
Total comprehensive income for the year 350 814 367 345
Earnings per share
Basic earnings per share (cents) 413.5 431.5
Diluted earnings per share (cents) 406.9 425.3
Consolidated statement of comprehensive income (continued)
Investor Protection
Funds*
2010 2009
R`000 R`000
Revenue 0 0
Other income 36 082 13 165
Personnel expenses 0 0
Other expenses (15 334) (13 142)
Profit before net finance income 20 748 23
Finance income 8 886 7 518
Finance costs 0 0
Net finance income 8 886 7 518
Share of profit of equity accounted 0 0
investees (net of tax)
Profit before income tax 29 634 7 541
Income tax expense 0 0
Profit for the year 29 634 7 541
Other comprehensive income
Net change in fair value of available-for- 29 660 38 187
sale financial assets
Net change in fair value of available-for- (31 893) (9 087)
sale financial assets reclassified to profit
or loss
Income tax on other comprehensive income 0 0
Other comprehensive (loss)/income for the (2 233) 29 100
year, net of income tax
Total comprehensive income for the year 27 401 36 641
Profit attributable to:
Owners of the Exchange 29 634 7 541
Non-controlling interests 0 0
Profit for the year 29 634 7 541
Total comprehensive income attributable to:
Owners of the Exchange 27 401 36 641
Non-controlling interests 0 0
Total comprehensive income for the year 27 401 36 641
Earnings per share
Basic earnings per share (cents) 34.9 8.9
Diluted earnings per share (cents) 34.4 8.7
* 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, No. 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. 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 statement of financial position
as at 31 December 2010
Group
2010 2009
R`000 R`000
Assets
Non-current assets 943 010 874 301
Property and equipment 113 272 87 301
Intangible assets 423 039 382 749
Investments in equity accounted 95 017 92 874
investees
Investments in subsidiaries 0 0
Other investments 218 034 239 538
Derivative financial instruments 3 015 1 451
Due from the JSE Empowerment Fund Trust 13 910 0
Deferred taxation 76 723 70 388
Current assets 16 223 384 15 702 377
Trade and other receivables 187 379 210 918
Income tax receivable 61 783 29 641
Due from group entities 0 0
Margin deposits 14 923 444 14 540 905
Collateral deposits 4 447 116
Cash and cash equivalents 1 046 330 920 797
Total assets 17 166 393 16 576 678
Equity and liabilities
Total equity 1 791 104 1 604 724
Non-current liabilities 170 630 195 258
Finance lease 1 279 3 333
Employee benefits 46 105 64 625
Deferred taxation 4 757 5 587
Operating lease liability 65 562 70 529
Deferred Income 51 847 50 165
Due to SAFEX members 1 080 1 019
Current liabilities 15 204 659 14 776 696
Trade and other payables 174 155 159 762
Employee benefits 94 113 70 571
Operating lease liability 8 500 5 342
Due to group entities 0 0
Margin deposits 14 923 444 14 540 905
Collateral deposits 4 447 116
Total equity and liabilities 17 166 393 16 576 678
Consolidated statement of financial position (continued)
Exchange
2010 2009
R`000 R`000
Assets
Non-current assets 894 850 806 741
Property and equipment 113 272 87 301
Intangible assets 422 729 382 400
Investments in equity accounted investees 21 416 21 416
Investments in subsidiaries 243 783 243 783
Other investments 2 2
Derivative financial instruments 3 015 1 451
Due from the JSE Empowerment Fund Trust 13 910 0
Deferred taxation 76 723 70 388
Current assets 1 119 078 969 317
Trade and other receivables 126 327 118 863
Income tax receivable 61 032 28 992
Due from group entities 9 097 8 184
Margin deposits 10 382 23 685
Collateral deposits 4 447 116
Cash and cash equivalents 907 794 789 477
Total assets 2 013 928 1 776 058
Equity and liabilities
Total equity 1 449 012 1 287 592
Non-current liabilities 220 521 195 149
Finance lease 1 279 3 333
Employee benefits 46 105 64 625
Deferred taxation 4 648 5 478
Operating lease liability 65 562 70 529
Deferred Income 101 847 50 165
Due to SAFEX members 1 080 1 019
Current liabilities 344 395 293 317
Trade and other payables 102 658 65 964
Employee benefits 94 113 70 571
Operating lease liability 8 500 5 342
Due to group entities 124 295 127 639
Margin deposits 10 382 23 685
Collateral deposits 4 447 116
Total equity and liabilities 2 013 928 1 776 058
Consolidated statement of financial position (continued)
Investor Protection
Funds
2010 2009
R`000 R`000
Assets
Non-current assets 218 032 239 536
Property and equipment 0 0
Intangible assets 0 0
Investments in equity accounted investees 0 0
Investments in subsidiaries 0 0
Other investments 218 032 239 536
Derivative financial instruments 0 0
Due from the JSE Empowerment Fund Trust 0 0
Deferred taxation 0 0
Current assets 116 075 122 584
Trade and other receivables 4 035 4 274
Income tax receivable 0 0
Due from group entities 0 2 200
Margin deposits 0 0
Collateral deposits 0 0
Cash and cash equivalents 112 040 116 110
Total assets 334 107 362 120
Equity and liabilities
Total equity 331 847 357 888
Non-current liabilities 0 0
Finance lease 0 0
Employee benefits 0 0
Deferred taxation 0 0
Operating lease liability 0 0
Deferred Income 0 0
Due to SAFEX members 0 0
Current liabilities 2 260 4 232
Trade and other payables 581 3 061
Employee benefits 0 0
Operating lease liability 0 0
Due to group entities 1 679 1 171
Margin deposits 0 0
Collateral deposits 0 0
Total equity and liabilities 334 107 362 120
Consolidated statement of changes in equity
for the year ended 31 December 2010
Attributable to owners of the
Exchange
Non-dis-
Share Share tributable
capital premium reserve
R`000 R`000 R`000
Group
Balance at 31 December 8 514 162 779 10 058
2008
Total comprehensive income
for the year
Profit or loss for the 0 0 0
year
Other comprehensive income
Net change in fair value 0 0 0
of available-for-sale
financial assets
Net change in fair value 0 0 0
of available-for-sale
financial assets
reclassified to profit or
loss
Total other comprehensive 0 0 0
income
Total comprehensive income 0 0 0
for the year
Transactions with owners
of the Exchange,
recognised directly in
equity
Contributions by and
distributions to owners of
the Exchange
Share options lapsed 0 0 0
reclassified to retained
earnings
Dividends paid to owners 0 0 0
of the Exchange
Total contributions by and 0 0 0
distributions to owners of
the Exchange
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control
Non-controlling interest 0 0 0
in BESA Group
Acquisition of non- 0 0 0
controlling interest in
BESA Group
Transfer to the BESA 0 0 0
Guarantee Fund Trust
Total transactions with 0 0 0
owners of the Exchange
Balance at 31 December 8 514 162 779 10 058
2009
Total comprehensive income
for the year
Profit for the year 0 0 0
Other comprehensive income
Net change in fair value 0 0 0
of available-for-sale
financial assets
Net change in fair value 0 0 0
of available-for-sale
financial assets
reclassified to profit or
loss
Total other comprehensive 0 0 0
income
Total comprehensive income 0 0 0
for the year
Transactions with owners
of the Exchange,
recognised directly in
equity
Contributions by and
distributions to owners of
the Exchange
Share options lapsed 0 0 0
reclassified to retained
earnings
Dividends paid to owners 0 0 0
of the Exchange
Distribution from the BESA 0 0 0
Guarantee Fund Trust1
Distribution from the JSE 0 0 0
Guarantee Fund Trust2
Treasury shares (48) (32 056) 0
Treasury shares - share 0 (65) 0
issue costs
Equity settled share based 0 0 0
payment
Total contributions by and (48) (32 121) 0
distributions to owners of
the Exchange
Total transactions with (48) (32 121) 0
owners of the Exchange
Balance at 31 December 8 466 130 658 10 058
2010
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 R5,3m was transferred to the JSE Limited
for the defrayment of market regulatory expenditure.
2 This represents the monies distributed by the JSE Guarantee Fund Trust for the
specific purpose of funding the establishment of the JSE`s Disaster Recovery
site.
Consolidated statement of changes in equity (continued)
Attributable to owners of the
Exchange
BBBEE JSE LTIS Retained
reserve 2010 earnings
reserve
R`000 R`000 R`000
Group
Balance at 31 December 165 503 0 799 141
2008
Total comprehensive income
for the year
Profit or loss for the 0 0 358 060
year
Other comprehensive income
Net change in fair value 0 0 0
of available-for-sale
financial assets
Net change in fair value 0 0 0
of available-for-sale
financial assets
reclassified to profit or
loss
Total other comprehensive 0 0 0
income
Total comprehensive income 0 0 358 060
for the year
Transactions with owners
of the Exchange,
recognised directly in
equity
Contributions by and
distributions to owners of
the Exchange
Share options lapsed (5 311) 0 5 311
reclassified to retained
earnings
Dividends paid to owners 0 0 (163 469)
of the Exchange
Total contributions by and (5 311) 0 (158 158)
distributions to owners of
the Exchange
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control
Non-controlling interest 0 0 0
in BESA Group
Acquisition of non- 0 0 0
controlling interest in
BESA Group
Transfer to the BESA 0 0 (95 676)
Guarantee Fund Trust
Total transactions with (5 311) 0 (253 834)
owners of the Exchange
Balance at 31 December 160 192 0 903 367
2009
Total comprehensive income
for the year
Profit for the year 0 0 348 373
Other comprehensive income
Net change in fair value 0 0 0
of available-for-sale
financial assets
Net change in fair value 0 0 0
of available-for-sale
financial assets
reclassified to profit or
loss
Total other comprehensive 0 0 0
income
Total comprehensive income 0 0 348 373
for the year
Transactions with owners
of the Exchange,
recognised directly in
equity
Contributions by and
distributions to owners of
the Exchange
Share options lapsed (311) 0 311
reclassified to retained
earnings
Dividends paid to owners 0 0 (163 469)
of the Exchange
Distribution from the BESA 0 0 5 368
Guarantee Fund Trust1
Distribution from the JSE 0 0 50 000
Guarantee Fund Trust2
Treasury shares 0 0 0
Treasury shares - share 0 0 0
issue costs
Equity settled share based 0 6 244 0
payment
Total contributions by and (311) 6 244 (107 790)
distributions to owners of
the Exchange
Total transactions with (311) 6 244 (107 790)
owners of the Exchange
Balance at 31 December 159 881 6 244 1 143 950
2010
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 R5,3m was transferred to the JSE Limited
for the defrayment of market regulatory expenditure.
2 This represents the monies distributed by the JSE Guarantee Fund Trust for the
specific purpose of funding the establishment of the JSE`s Disaster Recovery
site.
Consolidated statement of changes in equity (continued)
Attributable to owners of the Exchange
Total Non- Investor
Exchange con- Protec-
and sub- trolling tion Total
sidiaries interests Funds equity
R`000 R`000 R`000 R`000
Group
Balance at 31 1 145 995 0 227 497 1 373 492
December 2008
Total
comprehensive
income for the
year
Profit or loss 358 060 7 541 365 601
for the year
Other
comprehensive
income
Net change in 0 0 38 187 38 187
fair value of
available-for-
sale financial
assets
Net change in 0 0 (9 087) (9 087)
fair value of
available-for-
sale financial
assets
reclassified to
profit or loss
Total other 0 0 29 100 29 100
comprehensive
income
Total 358 060 0 36 641 394 701
comprehensive
income for the
year
Transactions with
owners of the
Exchange,
recognised
directly in
equity
Contributions by
and distributions
to owners of the
Exchange
Share options 0 0 0
lapsed
reclassified to
retained earnings
Dividends paid to (163 469) 0 0 (163 469)
owners of the
Exchange
Total (163 469) 0 (163 469)
contributions by
and distributions
to owners of the
Exchange
Changes in
ownership
interests in
subsidiaries that
do not result in
a loss of control
Non-controlling 0 1 643 1 643
interest in BESA
Group
Acquisition of 0 (1 643) 0 (1 643)
non-controlling
interest in BESA
Group
Transfer to the (95 676) 0 95 676 0
BESA Guarantee
Fund Trust
Total (259 145) 0 95 676 (163 469)
transactions with
owners of the
Exchange
Balance at 31 1 244 910 0 359 814 1 604 724
December 2009
Total
comprehensive
income for the
year
Profit for the 348 373 0 29 634 378 007
year
Other
comprehensive
income
Net change in 0 0 29 660 29 660
fair value of
available-for-
sale financial
assets
Net change in 0 0 (31 893) (31 893)
fair value of
available-for-
sale financial
assets
reclassified to
profit or loss
Total other 0 0 (2 233) (2 233)
comprehensive
income
Total 348 373 0 27 401 375 774
comprehensive
income for the
year
Transactions with
owners of the
Exchange,
recognised
directly in
equity
Contributions by
and distributions
to owners of the
Exchange
Share options 0 0 0 0
lapsed
reclassified to
retained earnings
Dividends paid to (163 469) 0 0 (163 469)
owners of the
Exchange
Distribution from 5 368 0 (5 368) 0
the BESA
Guarantee Fund
Trust1
Distribution from 50 000 0 (50 000) 0
the JSE Guarantee
Fund Trust2
Treasury shares (32 104) 0 0 (32 104)
Treasury shares - (65) 0 0 (65)
share issue costs
Equity settled 6 244 0 0 6 244
share based
payment
Total (134 026) 0 (55 368) (189 394)
contributions by
and distributions
to owners of the
Exchange
Total (134 026) 0 (55 368) (189 394)
transactions with
owners of the
Exchange
Balance at 31 1 459 257 0 331 847 1 791 104
December 2010
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 R5,3m was transferred to the JSE Limited
for the defrayment of market regulatory expenditure.
2 This represents the monies distributed by the JSE Guarantee Fund Trust for the
specific purpose of funding the establishment of the
JSE`s Disaster Recovery site.
Consolidated statement of changes in equity (continued)
Share Share BBBEE
capital premium reserve
Exchange R`000 R`000 R`000
Balance at 31 December 2008 8 514 162 779 165 503
Total comprehensive income
for the year
Profit for the year 0 0 0
Other comprehensive income
Total other comprehensive 0 0 0
income
Total comprehensive income 0 0 0
for the year
Transactions with owners of
the Exchange, recognised
directly in equity
Contributions by and
distributions to owners of
the Exchange
Share options lapsed 0 0 (5 311)
transferred to retained
earnings
Dividends paid to equity 0 0 0
holders
Total contributions by and 0 0 (5 311)
distributions to owners of
the Exchange
Changes in ownership 0 0 0
interests in subsidiaries
that do not result in a
loss of control
Total transactions with 0 0 (5 311)
owners of the Exchange
Balance at 31 December 2009 8 514 162 779 160 192
Total comprehensive income
for the year
Profit for the year 0 0 0
Other comprehensive income
Total other comprehensive 0 0 0
income
Total comprehensive income 0 0 0
for the year
Transactions with owners of
the Exchange, recognised
directly in equity
Contributions by and
distributions to owners of
the Exchange
Share options lapsed 0 0 (311)
transferred to retained
earnings
Dividends to owners of the 0 0 0
Exchange
Treasury shares (48) (32 056) 0
Treasury shares - share 0 (65) 0
issue costs
Equity settled share based 0 0 0
payment
Total contributions by and (48) (32 121) 311)
distributions to owners of
the Exchange
Changes in ownership 0 0 0
interests in subsidiaries
that do not result in a
loss of control
Total transactions with (48) (32 121) (311)
owners of the Exchange
Balance at 31 December 2010 8 466 130 658 159 881
Consolidated statement of changes in equity (continued)
Retained JSE LTIS Total
earnings 2010 reserve Exchange
Exchange R`000 R`000 R`000
Balance at 31 746 920 0 1 083 716
December 2008
Total comprehensive
income for the year
Profit for the year 367 345 0 367 345
Other comprehensive
income
Total other 0 0 0
comprehensive income
Total comprehensive 367 345 0 367 345
income for the year
Transactions with
owners of the
Exchange, recognised
directly in equity
Contributions by and
distributions to
owners of the
Exchange
Share options lapsed 5 311 0 0
transferred to
retained earnings
Dividends paid to (163 469) 0 (163 469)
equity holders
Total contributions (158 158) 0 (163 469)
by and distributions
to owners of the
Exchange
Changes in ownership 0 0 0
interests in
subsidiaries that do
not result in a loss
of control
Total transactions (158 158) 0 (163 469)
with owners of the
Exchange
Balance at 31 956 107 0 1 287 592
December 2009
Total comprehensive
income for the year
Profit for the year 350 814 0 350 814
Other comprehensive
income
Total other 0 0 0
comprehensive income
Total comprehensive 350 814 0 350 814
income for the year
Transactions with
owners of the
Exchange, recognised
directly in equity
Contributions by and
distributions to
owners of the
Exchange
Share options lapsed 311 0 0
transferred to
retained earnings
Dividends to owners (163 469) 0 (163 469)
of the Exchange
Treasury shares 0 0 (32 104)
Treasury shares - 0 0 (65)
share issue costs
Equity settled share 0 6 244 6 244
based payment
Total contributions (163 158) 6 244 (189 394)
by and distributions
to owners of the
Exchange
Changes in ownership 0 0 0
interests in
subsidiaries that do
not result in a loss
of control
Total transactions (163 158) 6 244 (189 394)
with owners of the
Exchange
Balance at 31 1 143 763 6 244 1 449 012
December 2010
Consolidated statement of cash flows
for the year ended 31 December 2010
Group Exchange
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Cash flows from
operating
activities
Cash generated 529 238 467 318 566 653 527 936
by (used in)
operations
Interest 1 048 586 1 353 964 55 802 77 806
received
Interest paid (960 943) (1 284 943) (7 738) (16 440)
Dividends 4 045 3 922 0 0
received
Taxation paid (200 966) (185 701) (200 811) (185 126)
Net cash 419 960 354 560 413 906 404 176
inflow/(outflow)
from operating
activities
Cash flows from
investing
activities
Proceeds from 102 170 81 888 0 0
sale of other
investments
Acquisition of (51 007) (91 329) 0 0
other
investments
Acquisition of
shares in Bond
Exchange of
South Africa, 0 (98 346) 0 (203 818)
net of cash
acquired
Cash acquired 0 0 0 0
from BESA
Guarantee Fund
Trust
Loan to JSE (14 695) 0 (14 695) 0
Empowerment Fund
Trust
Dividends from 24 303 17 710 24 303 17 710
equity accounted
investees
Proceeds from 46 447 46 447
disposal of
property and
equipment
Leasehold (8 787) (3 181) (8 787) (3 181)
improvements
Acquisition of (99 311) (89 730) (99 311) (89 730)
intangible
assets
Acquisition of (48 712) (27 080) (48 712) (27 080)
property and
equipment
Net cash (used (95 993) (209 621) (147 156) (305 652)
in)/from
investing
activities
Cash flows from
financing
activities
Distribution 0 (2 015) 50 000 0
from/(by)
Investor
Protection Funds
Repayment of 0 (5 000) 0 0
loan to OMX
Technology AB
Purchase of (32 168) 0 (32 168) 0
Treasury shares
Dividends paid (163 469) (163 469) (163 469) (163 469)
Net cash used in (195 637) (170 484) (145 637) (163 469)
financing
activities
Net increase 128 330 (25 545) 121 113 (64 945)
(decrease) in
cash and cash
equivalents
Cash and cash 920 796 946 341 789 477 854 422
equivalents at 1
January
Effect of (2 796) 0 (2 796) 0
exchange rate
fluctuations on
cash held
Cash and cash 1 046 330 920 796 907 794 789 477
equivalents at
31 December
Consolidated statement of cash flows (continued)
Investor Protection
Funds
2010 2009
R`000 R`000
Cash flows from operating activities
Cash generated by (used in) operations (14 562) (10 632)
Interest received 8 724 7 268
Interest paid 0 0
Dividends received 4 045 3 922
Taxation paid 0 0
Net cash inflow/(outflow) from (1 793) 558
operating activities
Cash flows from investing activities
Proceeds from sale of other 102 170 81 888
investments
Acquisition of other investments (51 007) (91 329)
Acquisition of shares in Bond Exchange
of
South Africa, net of cash acquired 0 0
Cash acquired from BESA Guarantee Fund 0 96 342
Trust
Loan to JSE Empowerment Fund Trust 0 0
Dividends from equity accounted 0 0
investees
Proceeds from disposal of property and 0 0
equipment
Leasehold improvements 0 0
Acquisition of intangible assets 0 0
Acquisition of property and equipment 0 0
Net cash (used in)/from investing 51 163 86 901
activities
Cash flows from financing activities
Distributions from/(by) Investor (53 440) (2 015)
Protection Funds
Repayment of loan to OMX Technology AB 0 0
Purchase of Treasury shares 0 0
Dividends paid 0 0
Net cash used in financing activities (53 440) (2 015)
Net increase (decrease) in cash and (4 070) 85 444
cash equivalents
Cash and cash equivalents at 1 January 116 110 30 666
Effect of exchange rate fluctuations 0 0
on cash held
Cash and cash equivalents at 31 112 040 116 110
December
Notes to the financial statements
for the year ended 31 December 2010
Basis of preparation and accounting policies
JSE Limited (the "Company") is a company domiciled in the Republic of South
Africa. The consolidated abridged annual financial statements of the Company as
at and for the year ended 31 December 2010 comprise the Company and its
subsidiaries (together referred to as "the Group") and the Group`s interests in
associates and jointly controlled entities.
The JSE Limited`s principal accounting policies applied by the Group in its
consolidated abridged annual financial statements for the year ended 31 December
2010 are the same as those applied by the Group in its consolidated annual
financial statements as at and for the year ended 31 December 2009. The JSE
Limited`s abridged consolidated annual financial statements or the
year ended 31 December 2010, have been prepared in terms of the recognition and
measurement requirements of International Financial Reporting Standards and the
presentation and disclosure requirements of IAS 34, Interim Financial Reporting
and the AC 500 Series Pronouncements as issued by the Accounting Practises Board
(APB).
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 2010.
The consolidated financial statements and the separate financial statements were
authorised for issue by the Board of Directors on 15 March 2011.
Special purpose entities#
The JSE Guarantee Fund Trust, JSE Derivatives Fidelity Fund Trust and BESA
Guarantee Fund Trust are special purpose entities (SPE`s) set up for investor
protection. The Group does not have any direct or indirect shareholding in these
entities, however, based on the evaluation of the substance of the relationship
with the Group and the SPE`s risks and rewards, the Group controls the financial
and operating policies of these entities and the results are thus consolidated.
SPE`s controlled by the Group were established under terms that impose strict
limitations on the decision-making powers of the SPEs` management and that
result in the Group receiving the majority of the benefits related to the SPE`s
operations and net assets, being exposed to the majority of risks incident to
the SPE`s activities, and retaining the majority of the residual or ownership
risks related to the SPE`s or their assets.
Distributions from special purpose entities#
During the year surplus assets amounting to R50.0 million were distributed by
the JSE Guarantee Fund Trust to the JSE for the establishment of the JSE`s
disaster recovery site. The transfer of the funds were formally approved by the
Financial Services Board. The funds received are recognised in deferred income
in the JSE separate financial statements and will be released to profit or loss
on a systematic basis over the useful life of the assets. As at 31 December 2010
the JSE has capitalised costs of R29.0 million in respect of the establishment
of the disaster recovery site.
Operating segments#
The Group has five reportable segments, as stated below. The business units
offer different products and services, and are managed separately because they
require different technology and marketing strategies. Management has determined
the operating segments based on the monthly reports reviewed by the Executive
Committee (Exco). Exco reviews the revenue streams as set out below. Financial
and personnel resources are allocated according to the needs of the various
divisions in order to apply the strategy and operating plans agreed to during
the budgeting process. Costs in the JSE are managed holistically across the
Exchange and variances against budget are closely monitored. Information
Technology and other corporate overheads are not generally allocated to a
particular segment.
Information about reportable segments
Equity1 Equity Commodity
division derivatives derivatives
R`000 R`000 R`000
For the year ended 31
December 2010
External revenues 772 885 116 077 47 827
For the year ended 31
December 2009
External revenues 720 695 116 175 41 241
1 Comprises equities trading fees, risk management, clearing and settlement
fees, back-office services (BDA), issuer services and membership fees.
2 The interest rate market revenue was remeasured in the current year to include
R12.6 million (2009: R5.0 million) which relates to the listing fees for the
bond market.
3 Comprises funds management and Strate ad valorem fees.
Information about reportable segments (continued)
Interest rate2 Infor-
mation
market sales Other3 Total
R`000 R`000 R`000 R`000
For the year
ended 31
December 2010
External 47 745 116 727 153 887 1 255 148
revenues
For the year
ended 31
December 2009
External 21 412 108 773 147 460 1 155 756
revenues
1 Comprises equities trading fees, risk management, clearing and settlement
fees, back-office services (BDA), issuer services and membership fees.
2 The interest rate market revenue was remeasured in the current year to include
R12.6 million (2009: R5.0 million) which relates to the listing fees for the
bond market.
3 Comprises funds management and Strate ad valorem fees.
EARNINGS AND HEADLINE EARNINGS PER SHARE#
Basic earnings per share
The calculation of basic earnings per share at 31 December 2010
of 445.5 (2009: 431.3) cents per share was based on profit for
the year attributable to ordinary shareholders of R378.0 million (2009: R367.2
million) and a weighted average number of ordinary shares of 84 843 695 (2009:
85 140 050), calculated as follows:
Group Exchange
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Profit for the 378 007 367 244 350 814 367 345
year attributable
to ordinary
shareholders
Weighted average
number of
ordinary shares:
Issued ordinary 85 140 050 85 140 050 85 140 050 85 140 050
shares at
1 January
Effect of own (296 355) 0 (296 355) 0
shares held (JSE
LTIS 2010)
Weighted average 84 843 695 85 140 050 84 843 695 85 140 050
number of
ordinary shares
at 31 December
Basic earnings 445.5 431.3 413.5 431.5
per share (cents)
Diluted earnings per share
The calculation of diluted earnings per share at 31 December 2010 of 438.4
(2009: 425.2) cents per share was based on the profit for the year attributable
to ordinary shareholders of R378.0 million (2009: R367.2 million) and a weighted
average number of ordinary shares outstanding after adjustment for the effects
of all dilutive potential ordinary shares of 86 215 531 (2009:
86 369 696), calculated as follows:
Profit for the 378 007 367 244 350 814 367 345
year attributable
to ordinary
shareholders
Weighted average
number of ordinary
shares (diluted):
Weighted average 84 843 695 85 140 050 84 843 695 85 140 050
number of ordinary
shares at 31
December (basic)
Effect of share 1 371 836 1 229 646 1 371 836 1 229 646
options in issue
Weighted average 86 215 531 86 369 696 86 215 531 86 369 696
number of ordinary
shares (diluted)
Diluted earnings 438.4 425.2 406.9 425.3
per share (cents)
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.
Headline earnings per share
The calculation of headline earnings per share at 31 December 2010 of 436.1
(2009: 456.1) cents per share was based on headline earnings attributable to
ordinary shareholders of R370.0 million (2009: R388.4 million) and a weighted
average number of ordinary shares of 84 843 695 (2009: 85 140 050) during the
year.
Reconciliation of headline earnings:
Profit for the year 378 007 367 244 350 814 367 345
attributable to
ordinary shareholders
Adjustments, net of
tax1, are made to the
following:
Loss on sale of 12 107 12 107
property and equipment
Impairment of goodwill 0 158 0 0
Impairment of monies 0 329 55 1 844
due from related
entities
Impairment of 23 889 27 286 23 889 5 773
intangible assets
Impairment of 0 2 113 0 0
available-for-sale
equity securities
Remeasurement included 0 200 0 0
in equity accounted
earnings of associates
Profit on realisation (31 893) (9 087) 0 0
of available-for-sale
instruments
Headline earnings 370 015 388 351 374 770 375 069
Headline earnings per 436.1 456.1 441.7 440.5
share (cents)
1 Taxation effect of headline adjustments was R9.3 million (2009: R2.3 million)
Diluted headline earnings per share
The calculation of diluted headline earnings per share at
31 December 2010 of 429.2 (2009: 449.6) cents per share was
based on headline earnings for the year of R370.0 million (2009:
R388.4 million) and a weighted average number of ordinary shares outstanding
after adjustment for the effects of all dilutive potential ordinary shares of 86
215 531 (2009: 86 369 696).
Diluted headline earnings per share 429.2 449.6 434.7 434.3
(cents)
Impairment loss#
Software under development
During the year, a special review of the capitalised software development costs
was conducted. Certain elements totaling R33.2 million (2009: R8.0 million) were
identified as not being able to deliver value and were therefore impaired.
Furthermore, management prepared a value in use impairment calculation for
assessing the overall impairment of total costs. Based on this calculation, no
further impairment was required as the net present value of the cash generating
unit was calculated to be greater than the capitalised carrying value of the
software under development.
Audit Opinion
KPMG Inc, the company`s independent auditors, has audited the consolidated
annual financial statements of JSE Limited from which the abridged consolidated
results contained in this report have been derived, and has expressed an
unmodified audit opinion on the consolidated annual financial statements. The
abridged consolidated financial results comprise the statements of financial
position at 31 December 2010, and the statements of comprehensive income,
changes in equity and cash flows for the year then ended, and selected
explanatory notes. The selected explanatory notes have been marked with a #.
Their audit report is available inspection at the company`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
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 15/03/2011 12:37:00 Produced by the JSE SENS Department.
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