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JSE
JSE
JSE - JSE Limited - JSE Limited audited abridged results for the twelve
months ended 31 December 2011 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 2011 AND CASH DIVIDEND DECLARATION
COMMENTARY
Review
Despite facing difficult business decisions, the JSE has recorded a
satisfactory operating year. Strong revenue performance and cash flows, and
tight operating cost control for the year resulted in headline earnings per
share of 562.4 cents, 29% higher than 2010`s 436.1 cents per share.
Earnings per share were 400.8 cents, 10% lower than 2010`s 445.5 cents per
share primarily as a result of impairments made to software under
development, partly offset by the capitalisation of certain staff costs.
The financial results are discussed in greater detail in the section below
entitled Financial performance.
2011 was marked by challenges ranging from volatile markets, which were
difficult to call, and a slow global economic climate dampening the
appetite for new listings, to economic uncertainty abroad which heightened
anxiety on global markets, also affecting the local exchange. Rising debate
around key policy directions such as nationalisation and transaction taxes
has increased the climate of uncertainty which, if allowed to continue
without resolution, will impact on the nature and extent of investment in
our economy. But these debates have highlighted the need for responsible
business engagement as we work with Government to get clarity on policy
issues.
The challenges were balanced by National Treasury`s continued relaxation of
exchange controls, our increasing use of technology and growing interest in
Africa as an investment destination.
In any market climate, the financial services sector is a complex
ecosystem. Participants are, simultaneously, colleagues, service providers
and clients to one another, as well as being competitors. As a component of
this ecosystem, the JSE combines being a commercial entity, a regulator and
influencer.
We understand that it requires significant work and discussion to find what
creates a winning environment for all involved. We remain committed to
making a key contribution to the sustainability of the ecosystem and its
components, while working to ensure our own longevity and sustained value
creation for stakeholders.
Although the business of financial intermediation has been a growth
industry, with regulated securities exchanges standing at the apex of
burgeoning business, exchanges like the JSE need to evolve if they are to
continue playing a critical role in financial intermediation and risk
management. Driven by the major trends of technological advancement,
rapidly intensifying regulation, competition and growth in emerging
markets, coupled with pressure for greater corporate accountability and
responsibility, the critical interdependencies between the exchange, the
financial services community and its broader stakeholder group become ever
more apparent. It is within this context that the JSE is focused on
resilience and sustainability. Informed by the multiple (and cross-
pollinating) roles it fulfils and driven by the notion that the success of
the JSE both affects and is affected by the organisations and
infrastructure around it, identifying opportunities, developing new revenue
streams and countering threats in each of our markets become core to
managing the JSE. Unless it works towards the continued growth of issuers,
investors and broader stakeholders, the exchange does not have a
sustainable business.
Financial performance
The strong operational performance of each of our markets and business
lines has enabled the JSE to grow operating revenue by 9% to
R1.4 billion (2010: R1.3 billion). Other income reduced by 7% to R47.0
million (2010: R50.3 million), the net realised gain on disposal of
available-for-sale financial assets in the Investor Protection Funds
compared with the previous year. Excluding the impact of the impairment and
the capitalisation of staff and consultant costs in both 2010 and 2011,
operating costs increased by 5% to R952 million in 2011
(2010: R909 million).
Net finance income was unchanged at R86 million. Although the strong
operating performance resulted in a substantial increase in headline
earnings per share, we took the difficult business decision of recognising
an impairment of R223.3 million (2010: R33.2 million) to software under
development for the Systems Replacement Project ("SRP"). After the
impairment and the capitalisation of staff costs and consultant fees
relating to an increased allocation of resources to new and existing
capital projects amounting to R141 million (2010: R65 million), earnings
per share of 400.8 cents were 10% lower than in 2010.
The effective tax rate rose to 31% (2010: 30%) during the year as a
consequence of the additional secondary tax payable on the special dividend
declared by the exchange during September 2011.
The decision to impair SRP was taken after careful and detailed examination
of the results of the software testing performed on SRP in the second half
of 2011. That testing resulted in us deciding not to implement the SRP
system as planned towards the end of 2011. Given the extended period over
which the SRP has run and the challenges experienced with it which have
resulted in the impairment discussed earlier, we are reviewing the project
to ensure that it will still deliver the required benefits to the JSE and
clients. Our existing systems continue to operate and are stable.
We are not yet in a position to make a final decision on SRP but are
working to that goal as quickly as we can. At that point we will
communicate our decision to stakeholders.
Capital expenditure
Capital expenditure excluding goodwill was R264.1 million in 2011 and
related mainly to:
- R96.8 million capitalised to SRP; and
- the purchase of R106.9 million of computer hardware and leasehold
improvements, mostly for the Disaster Recovery Site and the upgrading of
the Data Centre, funded by the Investor Protection Funds. Depreciation
policies have not changed and are explained more fully in the notes to the
financial statements. Software under development for other projects
totalled R46.4 million.
Capital structure and dividend policy
During the year, the JSE acquired the Managed Account Platform for managing
hedge funds, for which we paid R27.5 million, funded by means of a loan
from FirstRand Alternative Investment Management (Pty) Ltd to be settled
from the revenue generated by the administration fees received from the
platform. This is the Group`s only long-term borrowing (2010: R nil). The
JSE holds R1 billion (2010: R1 billion) in cash and cash equivalents on the
balance sheet.
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 equity trades, it
sets aside sufficient cash to meet its obligations assuming the failure of
a JSE equity member
- 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 investments. On the basis of this assessment, the Board has
determined how much cash we need. This will be revisited regularly. During
2011, surplus funds, amounting to R200 million, were distributed to
shareholders as a special dividend.
Cash dividend declaration
The directors of the JSE advise shareholders that a final ordinary dividend
of 250 cents per ordinary share was declared today, Tuesday, 13 March 2012,
for the twelve-month period ended 31 December 2011. This equates to 2.19
times cover and is consistent with the stated dividend policy to pay
between 1.5 and 2.5 times cover. The final ordinary dividend is payable to
shareholders recorded in the register of members of the Company at the
close of business on Friday, 25 May 2012.
In compliance with the Companies Act, the directors of the JSE confirm that
the Company will satisfy the solvency and liquidity test immediately after
completion of the dividend distribution. The dividend will be noted at the
Annual General Meeting to be held on Wednesday,
25 April 2012.
In compliance with the requirements of Strate, the following salient
dates for the payment of the dividend are applicable:
To be released on SENS on Tuesday, 13 March 2012
Last date to trade JSE shares cum dividend Friday, 18 May 2012
JSE shares trade ex dividend Monday, 21 May 2012
Record date for purposes of determining the Friday, 25 May 2012
registered holders of JSE shares to
participate in the dividend at close of
business on
Date of payment of dividend Monday, 28 May 2012
Share certificates may not be dematerialised or rematerialised from
Monday, 21 May 2012 to Friday, 25 May 2012, both days inclusive. On
Monday, 28 May 2012, the dividend will be electronically transferred to
the bank accounts of certificated shareholders who use this facility. In
respect of those who do not use this facility, cheques dated 28 May 2012
will be posted on or about that date. The accounts of those shareholders
who have dematerialised their shares (which are held at their participant
or broker) will be credited on Monday, 28 May 2012.
Operational overview
Issuer Regulation
The JSE`s Issuer Regulation division is responsible for regulating issuers
who list products on equity and bond markets. The JSE applies its Listings
Requirements in the regulation of companies and securities, whether
applying to list or already listed.
The division charges fees for new listings, annual listings fees for all
existing issuers, as well as documentation fees for dealing with specific
issuer documents produced during a year. New listings fees make up a
significant portion of the revenues of this division.
Highlights
- Number of new company listings on the JSE rose to 16 despite challenging
conditions
- Additional listings activity in other JSE-listed equity instruments - 14
new ETFs, ETNs and 334 new warrants (2010: 8 ETFs, ETNs)
- Revenue rose to R91.6 million (2010: R85.6 million) - 7.0% increase year
on year
- Percentage of total revenue (excl Strate Ad Valorem fees): 7.3%
The JSE has a listings pipeline, but does not predict future listing
numbers. In line with the strategic focus on innovative product
development, continued development of listings requirements which will
enable new product development will continue in 2012 and beyond.
Equity market
The equity market provides trading in equities, warrants and exchange
traded products. The equity market generates revenue from equity
transactions, with billing based on a combination of the number and value
of each transaction leg.
Highlights
- In August 2011, the JSE set a new trading record of 230 797 transactions
in one day, a 12% increase on our previous record of 205 784 transactions
- 11.6% increase in the number of transactions year on year (2011: 26.5
million; 2010: 23.8 million)
- Total value traded increased 9.9%
- Revenue rose 8.5% to R352.2 million (2010: R324.6 million)
- Percentage of total revenue (excl Strate Ad Valorem fees): 28%
The Equity Market will focus on the implementation of a new trading system
in Johannesburg during the first half of 2012. The co-location strategy is
in the process of being finalised in consultation with market participants.
The equity team also focused on increasing participation in 2012 through
revising the billing structure, satisfying requirements of market makers
and lowering trade execution times.
Back-office services (BDA)
The back-office services gives the exchange world-class surveillance
capabilities, allowing the JSE to see certain transactions to client level
in real time. Equity members are mandated to use the system. The system
keeps the securities records and books of individual broking firms and in
respect of their clients. Revenues for back-office services are somewhat
linked to the number of equity transactions that take place on the cash
equity market.
Highlights
- Risk management, clearing and settlement business performed well in 2011,
driven by transaction growth on the cash equity market performance
- Revenue rose 10.9% to R196.8 million (2010: R177.5 million)
- Percentage of total revenue (excl Strate Ad Valorem fees): 15.6%.
The replacement and upgrade of the system, due for implementation in 2011,
was delayed due to the need to focus on the implementation of the JSE`s new
equity trading system.
Equity risk management, clearing and settlement
The JSE is responsible for risk managing, clearing and guaranteeing the
settlement of central order book cash equity transactions. The exchange
charges a transaction fee per trade leg for this service, with a value-
based element. Though the division`s revenues are linked to the number of
equity transactions that take place on the cash equity market, the increase
in clearing and settlement revenues did not track equity trading exactly,
because of the different billing structure for equity trading and for risk
management.
Highlights
- The risk management, clearing and settlement business performed well in
2011, driven by transaction growth on the cash equity market
- Revenue rose by 10.6% to R209.0 million (2010: R188.9 million)
- Percentage of total revenue (excl Strate Ad Valorem fees): 16.6%.
The Post Trade Services Division is focusing on providing an OTC clearing
solution, developing a non-cash collateral system, setting up a Basle-
compliant default fund and ensuring CPSS-IOSCO compliance, consulting with
clients on possible new ways forward. The division is also working with
National Treasury and the stakeholders in the interest market to discuss a
preferred strategy to grow the spot bond market.
Bonds and financial derivatives
The financial derivatives market provides a platform for trading equity and
equity-related futures and options. Revenue is earned by charging a fee per
contract traded. The scale depends on the type of contract and whether it
is traded on the central order book or reported to the JSE. The currency
derivatives market provides a platform for trading currency futures and
options. Revenue is earned by charging a fee per contract traded, on a
scale that depends on the type of contract and whether it is traded on the
central order book or reported to the JSE. The interest rate market
provides investors with the opportunity to trade products in both the cash
and the derivative markets. Clients can trade on-exchange (central order
book) or off the central order book.
Highlights
- Strong growth in index derivatives and bespoke products
- Currency derivatives market performed well - number of contracts, growth
in value traded and open interest all doubled
- Bond market volumes increased by 23.6% to a nominal value of
- R29.9 trillion in 2011
- Value of bond derivatives traded rose from R160 billion in 2010 to
- R206 billion in 2011
- Financial derivatives revenue rose to R133.3 million (2010:
- R116.1 million
- Interest rate market revenue rose to R38.8 million (2010: R35.1 million)
- Total divisional revenue rose 13.9% to R172.1 million (2010: R151.2
million)
- Percentage of total revenue (excl Strate Ad Valorem fees): 13.7%.
The newly integrated Bonds and Financial Derivatives division is focused on
integrating the merged team, a strategy to address client concerns around
electronic trading and on the development of other products.
We have conducted a review of the current electronic trading strategy and
are now consulting with clients on possible new ways forward. The division
is also continuing to work with National Treasury and the stakeholders in
the interest rate market to discuss a preferred strategy to grow the spot
bond market.
Commodity derivatives market
The commodity derivatives market offers trade in agricultural products and
cash-settled Rand-denominated derivatives on commodities including corn,
wheat, gold, platinum, crude oil, silver and copper under licence from the
CME Group. In the most liquid of the physically settled grain derivatives
contracts, the underlying crop is traded 10 to 15 times over. Revenue is
earned by charging a fee per contract traded, based on the underlying
instrument.
Highlights
- Trade of Rand-settled foreign-referenced instruments under licence from
the CME Group continues to rise
- Options trade in crude oil and platinum contracts for the first time
- In October 2011, the commodity market achieved a record for open interest
- In late 2011, the market expanded its licensing agreements with other
exchanges to include the Kansas City Board of Trade to offer local
investors access to their benchmark Hard Red Winter Wheat contract
- Revenue rose 11.1% to R53.1 million (2010: R47.8 million)
- Percentage of total revenue (excl Strate Ad Valorem fees): 4.2%.
The division has an initiative underway to align certain commodity
instrument expiries with the currency futures expiry date to make it easier
for market participants to hedge out the currency risk associated with the
commodity trade. This year will see the introduction of a platform to
enable the trading of agricultural derivative silo receipts to allow the
JSE to provide further value to the physical grain market.
Data Sales
The JSE`s Data Sales division sells live, statistical, historical and end-
of-day data from all JSE markets.
Highlights
- Number of terminals displaying JSE data started rising again after a dip
in 2010, despite continued global contraction in the industry
- Terminals accessed by professional users rose by 16%
- Nearly 45% of terminals are foreign
- Financial derivatives revenue in IPS division rose 12% to R4 million
- Total revenue rose 7.6% to R125.5 million (2010: R116.7 million)
- Percentage of total revenue (excl Strate Ad Valorem fees): 10.0%.
The Data Sales division continues to focus on previously untapped markets,
particularly in a global environment where investors continue to seek
yields from new and specifically emerging markets.
Way forward
Over the past 15 years, the JSE has achieved significant growth and has
been recognised for the second year in a row as the highest ranked
regulated securities market globally. However, the various political,
economic, social, technological and regulatory forces that are at play in
our industry internationally will directly and indirectly affect the local
environment and, consequently, the way in which the JSE operates its
business.
Specifically:
- we expect policy uncertainty to continue for 2012 while political
leadership is contested both locally and internationally;
- the emergence of the BRICS nations presents opportunities for the JSE to
source new clients for our products and services;
- the increasing number of young, mobile South Africans represents an
opportunity for us to develop a new retail client base;
- the growing income disparities both locally and globally will present
challenges for businesses to ensure that they remain relevant to a broader
range of stakeholders or face the risk of increasing focus from the
economically disenchanted;
- the demand for corporate accountability will rise;
- regulatory focus on transparency and appropriate risk management will
place a premium on well-regulated exchange-type services; and
- technology will continue to be central to the manner in which exchange
clients seek to interface with us and through which we will be able to pull
them closer to the capital market ecosystem.
With this in mind, the JSE`s strategy is to continue to build a resilient
organisation which is positioned for the future.
Off the back of this strategy, the JSE executive has been restructured to a
smaller team of 12 people and the CEO with the necessary focus on issuer
and investor relations, public policy and regulation, each of the JSE`s
markets, data sales, issuer and market regulation, post trade services,
technology, finance and corporate services.
Stakeholders of the JSE will appreciate that revenue projections for the
Group are not feasible, given the dependence on trading volumes in all the
markets. Although we retain tight control of what is essentially a fixed
cost base, expenses are expected to increase from 2013 as a result of
depreciation charges starting once the Group`s major systems have been
implemented. As we chart this new strategic path we will enhance our
agility, cost effectiveness, capital efficiency and innovativeness. The
JSE`s team is extremely excited about this journey.
Appreciation
We would like to recognise the contribution to the JSE made by Rod Gravelet-
Blondin, who retired in December 2011 as head of the commodity derivatives
market. Rod joined the JSE in 2001 on the acquisition of the South African
Futures Exchange. He has led the market`s growth into the foremost
commodities market in Africa, and, while he will continue to consult to the
JSE, he will be greatly missed as a full-time executive.
We would also like to recognise the key role played by Russell Loubser, who
retired in December 2011 after 15 years as the JSE`s CEO. He is the giant
on whose shoulders the recent history of the JSE has been built.
Humphrey Borkum Nicky Newton-King
Chairman Chief Executive Officer
Consolidated statement of comprehensive income
for the year ended 31 December 2011
Group
2011 2010
R`000 R`000
Revenue 1 369 810 1 255 148
Other income 46 980 50 267
Personnel expenses (299 184) (338 098)
Other expenses (737 530) (541 087)
Profit before net finance income 380 076 426 230
Finance income 911 776 1 027 947
Finance costs (825 646) (940 957)
Net finance income 86 130 86 990
Share of profit of equity-accounted investees
(net of income tax) 31 905 26 446
Profit before income tax 498 111 539 666
Income tax expense (156 316) (161 659)
Profit for the year 341 795 378 007
Other comprehensive income
Net change in fair value of available-for-sale 1 057 29 660
financial assets
Net change in fair value of available-for-sale (22 931) (31 893)
financial assets reclassified to profit or loss
Income tax on other comprehensive income - -
Other comprehensive loss for the year, net of (21 874) (2 233)
income tax
Total comprehensive income for the year 319 921 375 774
Earnings per share
Basic earnings per share (cents) 400.8 445.5
Diluted earnings per share (cents) 396.1 438.4
*Investor Protection Funds comprise 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. 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 comprehensive income (continued)
for the year ended 31 December 2011
Exchange
2011 2010
R`000 R`000
Revenue 1 392 304 1 278 487
Other income 175 408 38 436
Personnel expenses (299 184) (338 098)
Other expenses (860 943) (514 240)
Profit before net finance income 407 585 464 585
Finance income 57 528 55 392
Finance costs (9 013) (7 556)
Net finance income 48 515 47 836
Share of profit of equity-accounted investees
(net of income tax) - -
Profit before income tax 456 100 512 421
Income tax expense (155 850) (161 607)
Profit for the year 300 250 350 814
Other comprehensive income
Net change in fair value of available-for-sale - -
financial assets
Net change in fair value of available-for-sale - -
financial assets reclassified to profit or loss
Income tax on other comprehensive income - -
Other comprehensive loss for the year, net of - -
income tax
Total comprehensive income for the year 300 250 350 814
Earnings per share
Basic earnings per share (cents) 352.1 413.5
Diluted earnings per share (cents) 348.0 406.9
*Investor Protection Funds comprise 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. 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 comprehensive income (continued)
for the year ended 31 December 2011
Investor Protection
Funds*
2011 2010
R`000 R`000
Revenue - -
Other income 26 866 36 082
Personnel expenses - -
Other expenses (7 780) (15 334)
Profit before net finance income 19 086 20 748
Finance income 7 423 8 886
Finance costs - -
Net finance income 7 423 8 886
Share of profit of equity-accounted investees
(net of income tax) - -
Profit before income tax 26 509 29 634
Income tax expense - -
Profit for the year 26 509 29 634
Other comprehensive income
Net change in fair value of available-for-sale 1 057 29 660
financial assets
Net change in fair value of available-for-sale (22 931) (31 893)
financial assets reclassified to profit or loss
Income tax on other comprehensive income - -
Other comprehensive loss for the year, net of (21 874) (2 233)
income tax
Total comprehensive income for the year 4 635 27 401
Earnings per share
Basic earnings per share (cents) 31.1 34.9
Diluted earnings per share (cents) 30.7 34.4
*Investor Protection Funds comprise 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. 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 2011
Group
2011 2010
R`000 R`000
Assets
Non-current assets 954 338 943 010
Property and equipment 189 318 113 272
Intangible assets 352 952 423 039
Investments in equity-accounted investees 100 798 95 017
Investments in subsidiaries - -
Other investments 169 885 218 034
Derivative financial instruments 625 3 015
Loan to the JSE Empowerment Fund Trust 13 228 13 910
Deferred taxation 127 532 76 723
Current assets 16 374 566 16 223 383
Trade and other receivables 191 794 187 379
Income tax receivable 56 907 61 783
Due from group entities - -
Margin deposits 15 080 456 14 923 444
Collateral deposits 4 320 4 447
Cash and cash equivalents 1 041 089 1 046 330
Total assets 17 328 904 17 166 393
Equity and liabilities
Total equity 1 769 068 1 791 104
Non-current liabilities 164 742 170 630
Finance leases 167 1 279
Borrowings 26 770 -
Employee benefits 28 972 46 105
Deferred taxation 4 535 4 757
Operating lease liability 52 571 65 562
Deferred income 50 592 51 847
Due to SAFEX members 1 135 1 080
Current liabilities 15 395 094 15 204 659
Trade and other payables 219 580 174 155
Employee benefits 78 145 94 113
Income tax payable - -
Operating lease liability 12 593 8 500
Due to group entities - -
Margin deposits 15 080 456 14 923 444
Collateral deposits 4 320 4 447
Total equity and liabilities 17 328 904 17 166 393
Consolidated statement of financial position (continued)
as at 31 December 2011
Exchange
2011 2010
R`000 R`000
Assets
Non-current assets 780 815 894 850
Property and equipment 189 318 113 272
Intangible assets 324 343 422 729
Investments in equity-accounted investees 21 416 21 416
Investments in subsidiaries 104 351 243 783
Other investments 2 2
Derivative financial instruments 625 3 015
Loan to the JSE Empowerment Fund Trust 13 228 13 910
Deferred taxation 127 532 76 723
Current assets 1 080 403 1 119 078
Trade and other receivables 129 780 126 327
Income tax receivable 56 507 61 031
Due from group entities 6 333 9 097
Margin deposits 13 548 10 382
Collateral deposits 4 320 4 447
Cash and cash equivalents 869 915 907 794
Total assets 1 861 218 2 013 928
Equity and liabilities
Total equity 1 407 305 1 449 012
Non-current liabilities 232 259 220 521
Finance leases 167 1 279
Borrowings - -
Employee benefits 28 972 46 105
Deferred taxation 3 310 4 648
Operating lease liability 52 571 65 562
Deferred income 146 104 101 847
Due to SAFEX members 1 135 1 080
Current liabilities 221 654 344 395
Trade and other payables 112 648 102 658
Employee benefits 78 145 94 113
Income tax payable - -
Operating lease liability 12 593 8 500
Due to group entities 400 124 295
Margin deposits 13 548 10 382
Collateral deposits 4 320 4 447
Total equity and liabilities 1 861 218 2 013 928
Consolidated statement of financial position (continued)
as at 31 December 2011
Investor Protection Funds
2011 2010
R`000 R`000
Assets
Non-current assets 169 883 218 032
Property and equipment - -
Intangible assets - -
Investments in equity-accounted investees - -
Investments in subsidiaries - -
Other investments 169 883 218 032
Derivative financial instruments - -
Loan to the JSE Empowerment Fund Trust - -
Deferred taxation - -
Current assets 113 505 116 075
Trade and other receivables 3 329 4 035
Income tax receivable - -
Due from group entities - -
Margin deposits - -
Collateral deposits - -
Cash and cash equivalents 110 176 112 040
Total assets 283 388 334 107
Equity and liabilities
Total equity 282 535 331 847
Non-current liabilities - -
Finance leases - -
Borrowings - -
Employee benefits - -
Deferred taxation - -
Operating lease liability - -
Deferred income - -
Due to SAFEX members - -
Current liabilities 853 2 260
Trade and other payables 594 581
Employee benefits - -
Income tax payable - -
Operating lease liability - -
Due to group entities 259 1 679
Margin deposits - -
Collateral deposits - -
Total equity and liabilities 283 388 334 107
Consolidated statement of changes in equity
for the year ended 31 December 2011
Non-
distri-
Share Share butable
capital premium reserve
Group R`000 R`000 R`000
Balance at 1 January 2010 8 514 162 779 10 058
Total comprehensive income for the year
Profit for the year - - -
Other comprehensive income
Net change in fair value of available-for- - - -
sale financial assets
Net change in fair value of available-for- - - -
sale financial assets reclassified to
profit or loss
Total other comprehensive loss - - -
Total comprehensive income for the year - - -
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Share options lapsed reclassified to - - -
retained earnings
Dividends paid to owners - - -
Distribution from the BESA Guarantee Fund - - -
Trust1
Distribution from the JSE Guarantee Fund - - -
Trust2
Treasury shares (48) (32 056) -
Treasury shares - share issue costs - (65) -
Equity-settled share-based payment - - -
Total transactions with owners (48) (32 121) -
Balance at 31 December 2010 8 466 130 658 10 058
Total comprehensive income for the year
Profit for the year - - -
Other comprehensive income
Net change in fair value of available-for- - - -
sale financial assets
Net change in fair value of available-for- - - -
sale financial assets reclassified to
profit or loss
Total other comprehensive loss - - -
Total comprehensive income for the year - - -
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Share options lapsed reclassified to - - -
retained earnings
Share options granted - - -
Dividends paid to owners - - -
Distribution from the BESA Guarantee Fund - - -
Trust1
Distribution from the JSE Guarantee Fund - - -
Trust2
Treasury shares (43) (28 946) -
Treasury shares - share issue costs - (79) -
Sale of treasury shares 8 6 091 -
Ordinary shares issued 174 21 918 -
Equity-settled share-based payment - - -
Total transactions with owners 139 (1 016) -
Balance at 31 December 2011 8 605 129 642 10 058
1The BESA Guarantee Fund Trust Deed makes specific provision for the
utilisation of excess funds for the purpose of reducing the risk of claims
being made against the Trust. To this effect R2.9 million (2010: R5.4
million), before intercompany adjustments, was transferred to the JSE
Limited for the defrayment of market regulatory expenditure.
2This represents the monies distributed by the JSE Guarantee Fund Trust for
the specific purpose of funding the establishment of the JSE`s data centre
(2010: disaster recovery site).
Consolidated statement of changes in equity (continued)
for the year ended 31 December 2011
JSE LTIS
BBBEE 2010 Retained
reserve reserve earnings
Group R`000 R`000 R`000
Balance at 1 January 2010 160 192 - 903 367
Total comprehensive income for the
year
Profit for the year - - 348 373
Other comprehensive income
Net change in fair value of available- - - -
for-sale financial assets
Net change in fair value of available- - - -
for-sale financial assets reclassified
to profit or loss
Total other comprehensive loss - - -
Total comprehensive income for the - - 348 373
year
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Share options lapsed reclassified to (311) - 311
retained earnings
Dividends paid to owners - - (163 469)
Distribution from the BESA Guarantee - - 5 368
Fund Trust1
Distribution from the JSE Guarantee - - 50 000
Fund Trust2
Treasury shares - - -
Treasury shares - share issue costs - - -
Equity-settled share-based payment - 6 244 -
Total transactions with owners (311) 6 244 (107 790)
Balance at 31 December 2010 159 881 6 244 1 143 950
Total comprehensive income for the
year
Profit for the year - - 315 286
Other comprehensive income
Net change in fair value of available- - - -
for-sale financial assets
Net change in fair value of available- - - -
for-sale financial assets reclassified
to profit or loss
Total other comprehensive loss - - -
Total comprehensive income for the - - 315 286
year
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Share options lapsed reclassified to (2 433) - 2 433
retained earnings
Share options granted 7 888 - -
Dividends paid to owners - - (361 158)
Distribution from the BESA Guarantee - - 2 947
Fund Trust1
Distribution from the JSE Guarantee - - 51 000
Fund Trust2
Treasury shares - - -
Treasury shares - share issue costs - - -
Sale of treasury shares - - -
Ordinary shares issued - - -
Equity-settled share-based payment - 12 190 -
Total contributions by and 5 455 12 190 (304 778)
distributions to owners
Total transactions with owners 5 455 12 190 (304 778)
Balance at 31 December 2011 165 336 18 434 1 154 458
1The BESA Guarantee Fund Trust Deed makes specific provision for the
utilisation of excess funds for the purpose of reducing the risk of claims
being made against the Trust. To this effect R2.9 million (2010: R5.4
million), before intercompany adjustments, was transferred to the JSE
Limited for the defrayment of market regulatory expenditure.
2This represents the monies distributed by the JSE Guarantee Fund Trust for
the specific purpose of funding the establishment of the JSE`s data centre
(2010: disaster recovery site).
Consolidated statement of changes in equity (continued)
for the year ended 31 December 2011
Total
exchange
and Investor
sub- Protection Total
sidiaries Funds equity
Group R`000 R`000 R`000
Balance at 1 January 2010 1 244 910 359 814 1 604 724
Total comprehensive income for the
year
Profit for the year 348 373 29 634 378 007
Other comprehensive income
Net change in fair value of - 29 660 29 660
available-for-sale financial assets
Net change in fair value of - (31 893) (31 893)
available-for-sale financial assets
reclassified to profit or loss
Total other comprehensive loss - (2 233) (2 233)
Total comprehensive income for the 348 373 27 401 375 774
year
Transactions with owners recognised
directly in equity
Contributions by and distributions
to owners
Share options lapsed reclassified to - - -
retained earnings
Dividends paid to owners (163 469) - (163 469)
Distribution from the BESA Guarantee 5 368 (5 368) -
Fund Trust1
Distribution from the JSE Guarantee 50 000 (50 000) -
Fund Trust2
Treasury shares (32 104) - (32 104)
Treasury shares - share issue costs (65) - (65)
Equity-settled share-based payment 6 244 - 6 244
Total transactions with owners (134 026) (55 368) (189 394)
Balance at 31 December 2010 1 459 257 331 847 1 791 104
Total comprehensive income for the
year
Profit for the year 315 286 26 509 341 795
Other comprehensive income
Net change in fair value of - 1 057 1 057
available-for-sale financial assets
Net change in fair value of - (22 931) (22 931)
available-for-sale financial assets
reclassified to profit or loss
Total other comprehensive loss - (21 874) (21 874)
Total comprehensive income for the 315 286 4 635 319 921
year
Transactions with owners recognised
directly in equity
Contributions by and distributions
to owners
Share options lapsed reclassified to - - -
retained earnings
Share options granted 7 888 - 7 888
Dividends paid to owners (361 158) - (361 158)
Distribution from the BESA Guarantee 2 947 (2 947) -
Fund Trust1
Distribution from the JSE Guarantee 51 000 (51 000) -
Fund Trust2
Treasury shares (28 989) - (28 989)
Treasury shares - share issue costs (79) - (79)
Sale of treasury shares 6 099 - 6 099
Ordinary shares issued 22 092 - 22 092
Equity-settled share-based payment 12 190 - 12 190
Total transactions with owners (288 010) (53 947) (341 957)
Balance at 31 December 2011 1 486 533 282 535 1 769 068
1The BESA Guarantee Fund Trust Deed makes specific provision for the
utilisation of excess funds for the purpose of reducing the risk of claims
being made against the Trust. To this effect R2.9 million (2010: R5.4
million), before intercompany adjustments, was transferred to the JSE
Limited for the defrayment of market regulatory expenditure.
2This represents the monies distributed by the JSE Guarantee Fund Trust for
the specific purpose of funding the establishment of the JSE`s data centre
(2010: disaster recovery site).
Consolidated statement of changes in equity (continued)
for the year ended 31 December 2011
Share Share BBBEE
capital premium reserve
Exchange R`000 R`000 R`000
Balance at 1 January 2010 8 514 162 779 160 192
Total comprehensive income for the year
Profit/total comprehensive income for - - -
the year
Total comprehensive income for the year - - -
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Share options lapsed transferred to - - (311)
retained earnings
Dividends paid to owners - - -
Treasury shares (48) (32 056) -
Treasury shares - share issue costs - (65) -
Equity-settled share-based payment - - -
Total transactions with owners (48) (32 121) (311)
Balance at 31 December 2010 8 466 130 658 159 881
Total comprehensive income for the year
Profit/total comprehensive income for - - -
the year
Total comprehensive income for the year - - -
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Share options lapsed transferred to - - (2 433)
retained earnings
Share options granted - - 7 888
Dividends paid to owners - - -
Treasury shares (43) (28 946) -
Treasury shares - share issue costs - (79) -
Sale of treasury shares 8 6 091 -
Ordinary shares issued 174 21 918 -
Equity-settled share-based payment - - -
Total transactions with owners 139 (1 016) 5 455
Balance at 31 December 2011 8 605 129 642 165 336
Consolidated statement of changes in equity (continued)
for the year ended 31 December 2011
JSE LTIS
Retained 2010 Total
earnings reserve exchange
Exchange R`000 R`000 R`000
Balance at 1 January 2010 956 107 - 1 287 592
Total comprehensive income for the
year
Profit/total comprehensive income for 350 814 - 350 814
the year
Total comprehensive income for the 350 814 - 350 814
year
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Share options lapsed transferred to 311 - -
retained earnings
Dividends paid to owners (163 469) - (163 469)
Treasury shares - - (32 104)
Treasury shares - share issue costs - - (65)
Equity-settled share-based payment - 6 244 6 244
Total transactions with owners (163 158) 6 244 (189 394)
Balance at 31 December 2010 1 143 763 6 244 1 449 012
Total comprehensive income for the
year
Profit/total comprehensive income for 300 250 - 300 250
the year
Total comprehensive income for the 300 250 - 300 250
year
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners
Share options lapsed transferred to 2 433 - -
retained earnings
Share options granted - - 7 888
Dividends paid to owners (361 158) - (361 158)
Treasury shares - - (28 989)
Treasury shares - share issue costs - - (79)
Sale of treasury shares - - 6 099
Ordinary shares issued - - 22 092
Equity-settled share-based payment - 12 190 12 190
Total transactions with owners (358 725) 12 190 (341 957)
Balance at 31 December 2011 1 085 288 18 434 1 407 305
Consolidated statement of cash flows
for the year ended 31 December 2011
Group
2011 2010
R`000 R`000
Cash flows from operating activities
Cash generated by/(used in) operations 664 575 529 238
Interest received 912 360 1 048 586
Interest paid (826 264) (960 943)
Dividends received 3 905 4 045
Taxation paid (202 471) (200 966)
Net cash generated by/(used in) from operating 552 105 419 960
activities
Cash flows from investing activities
Proceeds on sale of other investments 82 306 102 170
Acquisition of other investments (33 100) (51 007)
Loan to JSE Empowerment Fund Trust - (14 695)
Dividends from equity-accounted investees 26 124 24 303
Proceeds from disposal of property and 83 46
equipment
Leasehold improvements (47 406) (8 787)
Acquisition of intangible assets (179 126) (99 311)
Acquisition of property and equipment (62 083) (48 712)
Net cash (used in)/from investing activities (213 202) (95 993)
Cash flows from financing activities
Distribution from/(by) Investor Protection - -
Funds
Proceeds from issue of new shares 22 092 -
Proceeds from sale of treasury shares 6 099 -
Loan raised 26 770 -
Acquisition of treasury shares (29 068) (32 168)
Dividends paid (361 158) (163 469)
Net cash used in financing activities (335 265) (195 637)
Net increase/(decrease) in cash and cash 3 638 128 330
equivalents
Cash and cash equivalents at 1 January 1 046 330 920 796
Effect of exchange rate fluctuations on cash (8 879) (2 796)
held
Cash and cash equivalents at 31 December 1 041 089 1 046 330
Consolidated statement of cash flows (continued)
for the year ended 31 December 2011
Exchange
2011 2010
R`000 R`000
Cash flows from operating activities
Cash generated by/(used in) operations 671 054 566 653
Interest received 57 216 55 802
Interest paid (8 997) (7 738)
Dividends received - -
Taxation paid (203 471) (200 811)
Net cash from/(used in) from operating activities 515 802 413 906
Cash flows from investing activities
Proceeds on sale of other investments - -
Acquisition of other investments - -
Loan to JSE Empowerment Fund Trust - (14 695)
Dividends from equity-accounted investees 26 124 24 303
Proceeds from disposal of property and equipment 83 46
Leasehold improvements (47 406) (8 787)
Acquisition of intangible assets (150 485) (99 311)
Acquisition of property and equipment (62 083) (48 712)
Net cash generated by/(used in) investing (233 767) (147 156)
activities
Cash flows from financing activities
Distribution from/(by) Investor Protection Funds 51 000 50 000
Proceeds from issue of new shares 22 092 -
Proceeds from sale of treasury shares 6 099 -
Loan raised 0 -
Acquisition of treasury shares (29 068) (32 168)
Dividends paid (361 158) (163 469)
Net cash used in financing activities (311 035) (145 637)
Net increase/(decrease) in cash and cash (29 000) 121 113
equivalents
Cash and cash equivalents at 1 January 907 794 789 477
Effect of exchange rate fluctuations on cash held (8 879) (2 796)
Cash and cash equivalents at 31 December 869 915 907 794
Consolidated statement of cash flows (continued)
for the year ended 31 December 2011
Investor Protection Funds
2011 2010
R`000 R`000
Cash flows from operating activities
Cash generated by/(used in) operations (8 866) (14 562)
Interest received 7 838 8 724
Interest paid - -
Dividends received 3 905 4 045
Taxation paid - -
Net cash from/(used in) from operating 2 877 (1 793)
activities
Cash flows from investing activities
Proceeds on sale of other investments 82 306 102 170
Acquisition of other investments (33 100) (51 007)
Loan to JSE Empowerment Fund Trust - -
Dividends from equity-accounted investees - -
Proceeds from disposal of property and - -
equipment
Leasehold improvements - -
Acquisition of intangible assets - -
Acquisition of property and equipment - -
Net cash (used in)/from investing activities 49 206 51 163
Cash flows from financing activities
Distribution from/(by) Investor Protection (53 947) (53 440)
Funds
Ordinary shares issued - -
Proceeds from issue of new shares - -
Proceeds from sale of treasury shares - -
Loan raised - -
Acquisition of treasury shares - -
Dividends paid - -
Net cash generated by/(used in) financing (53 947) (53 440)
activities
Net increase/(decrease) in cash and cash (1 864) (4 070)
equivalents
Cash and cash equivalents at 1 January 112 040 116 110
Effect of exchange rate fluctuations on cash - -
held
Cash and cash equivalents at 31 December 110 176 112 040
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2011
Basis of preparation and accounting policies
JSE Ltd (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 2011 comprise the Company
and its subsidiaries (together referred to as the "Group") and the Group`s
interest in associates.
The JSE Limited principal accounting policies applied by the Group in its
consolidated abridged annual financial statements for the year ended 31
December 2011 are the same as those applied by the Group in its
consolidated annual financial statements as at and for the year ended 31
December 2010.
The JSE Limited`s abridged consolidated annual financial statements for the
year ended 31 December 2011 have been prepared in terms of the recognition
and measurement requirements of International Financial Reporting Standards
and the AC500 series pronouncements as issued by the Accounting Practices
Board, the JSE Listing Requirements, the requirements of the Companies Act,
2008 and the presentation and disclosure requirements of IAS 34.
The consolidated financial statements and the separate financial statements
were authorised for issue by the Board of Directors on 13 March 2012.
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. SPEs 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 SPEs` 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 SPEs or their assets.
Distributions from special purpose entities#
During the year surplus assets amounting to R51.0 million (2010: R50.0
million) were distributed by the JSE Guarantee Fund Trust to the JSE for
the establishment of the JSE`s data centre (2010: 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.
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
Equity and
Equity1 currency Commodity
division derivatives derivatives
R`000 R`000 R`000
For the year ended 31 December
2011
External revenues 846,055 133,305 53,142
For the year ended 31 December
2010
External revenues 772,885 116,077 47,827
1Comprises equities trading fees, risk management, clearing and settlement
fees, membership fees, issuer services and back-office services (BDA).
2Includes R13.2 million (2010: R12.6 million) of Issuer Regulation listing
fees relating to the bond market.
3Comprises funds management and Strate ad valorem fees.
Information about reportable segments (continued)
Interest2
rate Data
market sales Other3 Total
R`000 R`000 R`000 R`000
For the year ended 31
December 2011
External revenues 52,040 125,547 159,721 1,369,810
For the year ended 31
December 2010
External revenues 47,745 116,727 153,887 1,255,148
1Comprises equities trading fees, risk management, clearing and settlement
fees, membership fees, issuer services and back-office services (BDA).
2Includes R13.2 million (2010: R12.6 million) of Issuer Regulation listing
fees relating to the bond market.
3Comprises funds management and Strate ad valorem fees.
Acquisition of subsidiary#
On 1 July 2011, the Group acquired the entire issued share capital of
Momentum Managed Account Platform Holdings (Proprietary) Limited for a
purchase consideration of R1. Subsequent to the acquisition the name was
changed to Nautilus MAP Holdings (Proprietary) Limited. In addition, a
newly created company of the Group, Nautilus MAP Operations (Proprietary)
Limited, acquired the business that administers the hedge fund platform of
Momentum Managed Account Platform (Proprietary) Limited ("MOMMAP"), as a
going concern for a purchase consideration of R27 499 999 from FirstRand
Alternative Investment Management (Proprietary) Limited. This purchase
consideration will be funded from a portion of the cash flows generated by
the platform. MOMMAP will also be party to certain en commandite
partnership agreements, effective from 1 July 2011. The platform will offer
hedge fund investors greater protection by segregating investors` assets
from the hedge fund manager and monitoring hedge funds` trading activity,
thereby ensuring that the funds remain within the agreed investment
mandates.
In the six months to 31 December 2011 Nautilus MAP Operations (Proprietary)
Limited contributed revenue of R3.5m and profit of R1.9m to the Group`s
results. If the acquisition had occurred on 1 January 2011, management
estimates that consolidated revenue would have been R5.6m, and consolidated
profit for the year would have been R0.9m. In determining these amounts
management has assumed that the fair value adjustments that arose at the
date of acquisition would have been the same if the acquisition had
occurred on 1 January 2011.
The following summarises the consideration transferred and the recognised
amounts of assets acquired and liabilities assumed at the acquisition date:
R`000
Consideration transferred
Consideration paid 27 500
Identifiable assets acquired and liabilities assumed
Customer relationships 4 078
Deferred taxation (1 142)
Total net identifiable assets 2 936
Goodwill
Goodwill on the acquisition of the business has been
recognised as follows:
Total consideration transferred 27 500
Less: value of net identifiable assets (2 936)
Goodwill 24 564
The goodwll is attributable mainly to the skills and technical talents of
the work force, and the synergies expected to be achieved from integrating
the business acquired into the Group`s existing business. The goodwill
recognised is not deductible for income tax purposes.
Acquisition-related costs
The Group incurred acquisition-related costs of R1,1m (2010: R0,4m)
relating to external legal and consulting fees. These costs have been
recognised in other expenses in the Group`s consolidated statement of
comprehensive Income.
EARNINGS AND HEADLINE EARNINGS PER SHARE#
Basic earnings per share
The calculation of basic earnings per share at 31 December 2011 of 400.8
(2010: 445.5) cents per share was based on profit for the year attributable
to ordinary shareholders of R341,8m (2010: R378,0m) and a weighted average
number of ordinary shares of 85 279 409
(2010: 84 843 695) calculated as follows:
Group Exchange
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Profit for the year 341 795 378 007 300 250 350 814
attributable to
ordinary shareholders
Weighted average number
of ordinary shares:
Issued ordinary shares 85 140 050 85 140 050 85 140 050 85 140 050
at 1 January
Shares issued during 864 338 0 864 338 0
the period
Effect of own shares (724 979) (296 355) (724 979) (296 355)
held (JSE LTIS 2010)
Weighted average number 85 279 409 84 843 695 85 279 409 84 843 695
of ordinary shares at
31 December
Basic earnings per 400.8 445.5 352.1 413.5
share (cents)
Diluted earnings per share
The calculation of diluted earnings per share at 31 December 2011 of 396.1
(2010: 438.4) cents per share was based on the profit for the year
attributable to ordinary shareholders of R341,8m (2010: R378,0m) and a
weighted average number of ordinary shares outstanding after adjustment for
the effects of all potentially dilutive ordinary shares of 86 280 587
(2010: 86 215 531) calculated as follows:
Profit for the year 341 795 378 007 300 250 350 814
attributable to
ordinary shareholders
Weighted average number
of ordinary shares
(diluted):
Weighted average number 85 279 409 84 843 695 85 279 409 84 843 695
of ordinary shares at
31 December (basic)
Effect of share options 1 001 178 1 371 836 1 001 178 1 371 836
in issue
Weighted average number 86 280 587 86 215 531 86 280 587 86 215 531
of ordinary shares
(diluted)
Diluted earnings per 396.1 438.4 348.0 406.9
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 2011 of 562.4
(2010: 436.1) cents per share was based on headline earnings attributable
to ordinary shareholders of R479,6m (2010: R370,0m) and a weighted average
number of ordinary shares of 85 279 409 (2010: 84 843 695) during the year.
Group Exchange
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Reconciliation of headline
earnings:
Profit for the year 341 795 378 007 300 250 350 814
attributable to ordinary
shareholders
Adjustments are made to the
following:
(Profit)/loss on disposal (60) 12 (60) (12)
of property and equipment
Gross amount (83) 16 (83) 16
Taxation 23 (4) 23 (4)
Impairment of monies due 0 0 3 636 55
from Group entities1
Impairment of intangible 160 806 23 889 160 806 23 889
assets
Gross amount 223 342 33 179 223 342 33 179
Taxation (62 536) (9 290) (62 536) (9290)
Impairment of investment in 0 0 139 432 0
BESA Limited1
Net realised gain on (22 932) (31 893) 0 0
disposal of available-for-
sale financial assets1
Headline earnings 479 609 370 014 604 064 374 770
Headline earnings per share 562.4 436.1 708.3 441.7
(cents)
1no taxation effect
Diluted headline earnings per share
The calculation of diluted headline earnings per share at 31 December 2011
of 555.9 (2010: 429.2) cents per share was based on headline earnings for
the year of R479.6m (2010: R370,0m) and a weighted average number of
ordinary shares outstanding after adjustment for the effects of all
potentially dilutive ordinary shares of 86 280 587 (2010: 86 215 531).
Group Exchange
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Diluted headline earnings 555.9 429.2 700.1 434.7
per share (cents)
Software under development#
During the year, a special review of the software development costs was
conducted. Certain elements relating mainly to the SRP project totaling
R223,3m (2010: R33,2m) were identified as not being able to deliver value
and have therefore been impaired. Management prepared a value in use
impairment calculation (discounted at the weighted average cost of capital)
for assessing the overall impairment of total costs. Based on this
calculation, no further impairment was required. The decision to impair SRP
was taken after careful and detailed examination of the results of the
software testing performed on SRP in the second half of 2011. That testing
resulted in management deciding not to implement the SRP system as planned
towards the end of 2011. Given the extended period over which the SRP
project has run and the challenges experienced with it which have resulted
in the impairment, we are reviewing the project to ensure that it will
still deliver the required benefits to the JSE and clients. We are not yet
in a position to make a final decision on SRP but are working to that goal
as quickly as we can. At that point we will communicate our decision to
stakeholders.
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 2011 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 for 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)
The financial results have been audited in accordance with any applicable
requirements of the 2008 Companies Act.
Date: 13/03/2012 TIME Produced by the JSE SENS Department.
Date: 13/03/2012 17:45:34 Produced by the JSE SENS Department.
