| Wed 15 Mar 2006, 7:01 | | JSE Limited - JSE Limited Listing |
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JSE
JSE
JSE Limited - JSE Limited Listing, BBBEE Initiative And Employee Scheme
Announcement
JSE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2005/022939/06)
Share Code: UJSE
ISIN Code: ZAU000000010
JSE LIMITED LISTING, BBBEE INITIATIVE AND EMPLOYEE SCHEME ANNOUNCEMENT
INTRODUCTION
JSE Limited ("JSE") is licensed as an exchange under the Securities Services
Act, 2004. It has operated as a market place for the trading of financial
products for nearly 120 years. In this time, the JSE has evolved from a
traditional floor based equities trading market to a modern securities exchange
providing fully electronic trading, clearing and settlement in equities,
financial and agricultural derivatives and other associated instruments with
extensive surveillance capabilities. The JSE is also a major provider of
financial information.
Upon its restructuring in December 2000, the JSE implemented a series of
initiatives aimed at converting the JSE from a mutual to an incorporated entity.
Notably, the JSE introduced an independent board of directors, amended the JSE"s
constitution to be more akin to articles of association and, to the extent
possible for a mutual, started complying with the JSE Listings Requirements and
with the King Code. Notwithstanding these innovations, the JSE could not
declare dividends without jeopardising its statutory tax-exempt status and had
very limited equity capital raising options. In addition, membership and
ownership of the JSE were statutorily linked and trading in JSE rights (which
represented an ownership stake in the JSE) was limited to users (members) of the
JSE.
Following the removal of its tax exempt status, the JSE demutualised on 1 July
2005, and since then has been operating as a public, unlisted company.
Essentially, the JSE currently has all of the obligations of being listed, but
its shareholders have none of the benefits of a truly transparent and easily
accessible market in which to trade JSE shares. Despite low liquidity, the JSE
share price has seen remarkable growth since the demutualisation, with the first
trade taking place at R30 per share while at the end of December 2005 JSE shares
were trading at R125 per share. At the date of this announcement, JSE shares
are trading in a range between R140 and R160 per share.
LISTING
All financial information in this section of the announcement is unaudited.
The next logical step in the JSE"s corporate evolution is its listing.
Following extensive consultation with stakeholders, the board of directors of
the JSE ("Board") has resolved to proceed with a listing of the JSE"s shares on
the Main Board at 08:30 on Monday 5 June 2006, subject to the approval of the
Registrar of Securities Services ("the FSB") of the JSE"s compliance with the
JSE"s Listings Requirements. The FSB will regulate the JSE"s listing.
The Board believes that the listing will formalise and provide an appropriate
trading platform for trading JSE shares which would improve the visibility and
potentially liquidity in JSE shares and hence ensure that a clear and
transparent price is achieved for buyers and sellers of JSE Shares. In addition
it will open additional avenues for the JSE to raise capital, should the need
arise and place the JSE on the same footing as the leading international
exchanges whose shares are now listed thereby facilitating comparison between
the JSE and these exchanges.
In order to meet the JSE Listings Requirements relating to the minimum number of
issued shares necessary to qualify for a Main Board listing, the JSE needs to
subdivide its share capital, which subdivision will be achieved via a special
resolution to be passed by the JSE"s shareholders. In addition to the
subdivision, the Board feels strongly that a broad-based black economic
empowerment initiative ("BBBEE Initiative") and an employee long term incentive
and retention scheme ("Employee Scheme") should be introduced at the same time
as the listing. The Board believes that all the above transactions
("Transactions") are in the interests of shareholders, and that it is
appropriate to proceed with the listing on the basis of these proposals.
The Listing is conditional upon:
* formal approval to list from the FSB under the JSE"s Listings
Requirements; and
* a special resolution authorising the subdivision, being approved at a
general meeting of JSE shareholders ("the General Meeting") and
registered by the Registrar of Companies.
The listing is not conditional on the approval of the BBBEE Initiative or the
Employee Scheme, but the JSE Board believes that it is not desirable for the JSE
to seek a listing without having implemented a long term black empowerment
initiative and without having taken steps to attempt to ensure the appropriate
retention of its key employees. Accordingly, the Board believes that it has a
fiduciary obligation to reconsider the appropriateness of the listing if these
initiatives are not approved by shareholders. In this event, it will call a
special board meeting for this purpose as soon as possible after the General
Meeting and will communicate decisions taken at this meeting to shareholders
through a SENS announcement.
1. The subdivision of shares
The JSE currently has 8 340 250 shares in issue. In order to meet one of the
requirements for a listing on the Main Board of the JSE namely, that a company
should have a minimum of 25 million shares in issue, the JSE needs to subdivide
its shares. In addition, the JSE share price has increased considerably since
its demutualisation on 1 July 2005. It is now trading in the range of R140 to
R160 per share.
The Board accordingly proposes a subdivision of each ordinary share of a par
value of R1 into ten ordinary shares of a par value of 10 cents each. This will
not only ensure that the JSE has sufficient shares in issue to meet the Main
Board requirements but will also ensure that the JSE trades in a price range
(currently estimated between R14-R16) which is likely to be more attractive to
retail investors.
The subdivision is conditional on a special resolution authorising the
subdivision, being approved at the General Meeting and registered by the
Registrar of Companies.
2. The BBBEE Initiative
The JSE currently has an approximate 9% direct black shareholding (as defined in
the Financial Sector Charter ("FSC")). As it is firmly committed to broad based
transformation, the JSE wishes to retain and grow this existing shareholding to
above 10% and has thus resolved to propose the BBBEE Initiative to JSE
shareholders for approval as a vital aspect of preparing the JSE for a listing.
The BBBEE Initiative proposed by the Board has two elements which will be put to
JSE shareholders as one indivisible transaction:
a. the creation of the JSE Empowerment Fund ("JEF"); and
b. the establishment of the Black Shareholder Retention Scheme to
incentivise black JSE shareholders to retain their JSE Shares until 1
June 2011 and beyond.
a. First element - JSE Empowerment Fund
The JSE proposes the establishment of JEF to provide financial assistance for
education initiatives targeted specifically at bringing black people into the
financial sector by enabling them to gain appropriate professional
qualifications and a better understanding of investment in financial markets.
JEF"s assets will be used for the benefit of black people only. JEF has been
structured so that it will, on the best information available to the JSE,
qualify as a black shareholder of the JSE under both the FSC and the dti Codes
on Broad Based Black Economic Empowerment.
The JSE proposes to issue 1 737 550 JSE Shares (2% of the JSE"s issued share
capital after the subdivision and the issue of shares under the BBBEE
Initiative) to JEF at par value. Depending on the Board"s view of the
affordability of issuing JSE Shares to JEF from an IFRS perspective, these JSE
shares may be issued to JEF in tranches over a number of years.
b. Second element - Black Shareholder Retention Scheme
In order to participate in the Black Shareholder Retention Scheme, a shareholder
must meet and agree to the conditions of the scheme and in particular must be
registered as a JSE shareholder or acquire JSE shares on or before 28 March 2006
("the Effective Date").
The JSE proposes to create the Black Shareholder Retention Scheme to incentivise
black people to buy and retain JSE shares until 1 June 2011 ("the Exercise
Date") in the following manner:
* offering options to any natural person who is black as defined in the FSC
and to any entity which is 50%+1 share owned by natural persons who are
black as defined in the FSC, provided that in each case, such person is
registered as a JSE shareholder or reflected as a holder of JSE shares in
the Broker Deal Accounting system ("BDA") records of JSE broking members on
the Effective Date or can prove to the satisfaction of the Board that it
acquired JSE shares on or before the Effective Date, still holds them at
that date and had on or before that date reported that acquisition to the
Company Secretary of the JSE and was awaiting that acquisition to be
transferred into its name in the relevant BDA record ("Qualifying Black
Shareholder");
* the options will grant Qualifying Black Shareholders the right to subscribe
for, collectively, up to a maximum of 1 737 550 JSE Shares (after the
subdivision) pro rata to the JSE shares held by such Qualifying Black
Shareholders on the Effective Date. The options will be issued in three
tranches in numbers determined by the Board. The first tranche will be
issued with effect from 5 June 2006 and the second and third with effect
from 1 June 2007 and 2008 respectively at a strike price of 20% of the 30
calendar day volume weighted average price ("VWAP") for JSE shares
immediately prior to and including the effective date of the grant of the
options;
* the options will be issued on the terms summarised in the circular to be
issued by the JSE to JSE shareholders during April 2006 and on the terms
set out in the Black Shareholder Retention Scheme rules finally approved by
JSE shareholders;
* the number of options to be granted to any Qualifying Black Shareholder
will be determined with reference to the number of JSE shares held by such
Qualifying Black Shareholders on the Effective Date;
* the options will be exercisable in the month of June 2011; and
* the options will only be exercisable should Qualifying Black Shareholders
hold their JSE shares throughout the period to 1 June 2011.
The JSE further intends to involve the Qualifying Black Shareholders in the
future strategic development of the JSE by establishing an Option Holders" Forum
in which there will be discussion about strategic threats and opportunities to
South Africa"s capital markets and how the JSE and option holders can work
together to address these.
At the General Meeting, an ordinary resolution is required to be approved by 75%
of shareholders present and voting to implement the two elements of the BBBEE
Initiative.
Black people who acquire JSE shares on or before the Effective Date should be
aware that if the JSE does not get shareholder approval to implement the BBBEE
Initiative, the JSE will not be able to offer any of the options referred to in
this announcement and they will have no claim against the JSE in this regard.
If you are a Qualifying Black Shareholder and believe that you are eligible to
participate in the Black Shareholder Retention Scheme, please contact the JSE"s
Company Secretariat (krishnag@jse.co.za or 011 520 7262) to confirm your
details.
3. Employee Scheme
The JSE needs to retain its senior management for its successful operation. The
Board considers it imperative to retain this group of people and has resolved to
do this through the introduction of a long term incentive and retention scheme
("the Employee Scheme").
The Employee Scheme is a cash bonus scheme which entitles participants to
certain cash bonuses based on their respective participation interests which
interests are granted to participants in terms of the Scheme, and the respective
bonuses are calculated by reference to the growth in the JSE"s share price over
the period during which the respective participation interests are held.
There is no obligation for the Employee Scheme to be put to shareholders for
approval. The Board has however, decided that JSE shareholders will be asked, at
the General Meeting, to ratify the Board"s decision to implement the Employee
Scheme.
4. Impact of Transactions on Share Capital
The effect of the subdivision as well as the BBBEE Initiative, details of which
are set out above, on the JSE"s authorised and issued share capital is as
follows:
As at the date of this Shares R"000
notice
Authorised
Ordinary shares of R1 each 40 000 000 40 000
Issued
Ordinary shares of R1 each 8 340 250 8 340
Share premium 162 779
As at the proposed date of Shares R"000
listing (after the
subdivision but before the
BBBEE Initiative)
Authorised
Ordinary shares of 10 cents 400 000 000 40 000
each
Issued
Ordinary shares of 10 cents 83 402 500 8 340
each
Share premium 162 779
After implementation of the Shares R"000
subdivision and the first
year impact of the BBBEE
Initiative
Authorised
Ordinary shares of 10 cents 400 000 000 40 000
each
Issued
Ordinary shares of 10 cents 85 140 050 8 514
each
Share premium and BBBEE
share issue reserve 189 326
5. Pro Forma Financial Effects of the Transactions on the Group
The pro forma financial effects of the Transactions on the Group are set out
below. The pro forma financial effects are produced for the year ended 2005,
assume that the subdivision has been effected, are the responsibility of the
Board and have been prepared for illustrative purposes only.
Group Only BBBEE Only BBBEE
Audit Initiative Employee Initiative
ed (first year Scheme & Employee
2005 expense) Schemes
Cents Pro After Pro After Pro After
forma adjus forma adjus forma adjus
adjus tment adjus tment adjus tment
tment tment tment
Before subdivision
Basic EPS 1 283 (338) 945 (34) 1 249 (372) 911
HEPS 1 220 (337) 883 (33) 1 187 (370) 850
NAV per share 8 184 8 020 8 150 7 980
After subdivision (10 for 1 split)
Basic EPS 128 (34) 94 (3) 125 (37) 91
HEPS 122 (34) 88 (3) 119 (37) 85
NAV per share 818 802 815 798
The financial effects are based on the assumptions set out below:
1. In relation to JEF: 1 737 550 JSE Shares are issued to JEF at par value
and, in terms of IFRS, the total cost of approximately R21,5 million is
recognised in the income statement immediately.
2. In relation to the Black Shareholder Retention Scheme: The first tranche of
options to subscribe for 579 183 JSE shares is issued with effect from 31
December 2005 at 20% of the 30 calendar day VWAP immediately prior to and
including 31 December 2005 (ie a subscription price of R2.11 per share). In
terms of IFRS, the fair value cost of the options is recognised in the
income statement immediately. Fair value costs of approximately R6 million
are recognised in respect of the remaining two tranches in each of the
following two years. These are not shown in the pro formas above. The
options have been valued using the Black-Scholes valuation methodology.
3. In relation to the Employee Scheme: 2 500 000 participation interests are
issued under the Scheme and vest over a 5 year period. The cost of the
participation interests so awarded are valued using the Black-Scholes
valuation methodology and, in terms of IFRS, are expensed over the 5 years
of the Employee Scheme with only the first year (of an amount of
approximately R3,9 million) being brought into account in the pro formas.
6. Salient dates
The salient dates relating to the Listing, Subdivision, BBBEE Initiative,
Employee Scheme and dividend declaration are set out below:
2006
Effective Date for Black Shareholder Tuesday 28 March
Retention Scheme at 17:45 on
Circular posted to shareholders on or Thursday 13 April
about
Last day for lodging forms of proxy for Sunday 7 May
the General Meeting by 17:45 on
The General Meeting to be held in the Tuesday 9 May
JSE Auditorium at 17:45 on
Results of the General Meeting announced Wednesday 10 May
on SENS on
Results of the General Meeting published Thursday 11 May
in the press on
Last day to trade over the counter in Friday 2 June
order to be recorded as a shareholder on
the record date for the subdivision
Effective date of the subdivision Monday 5 June
Listing of JSE from commencement of Monday 5 June
trade on
Record date for the purposes of Friday 9 June
determining the registered holders of
the JSE shares which will be subject to
the subdivision
Last date to trade JSE shares cum Thursday 15 June
dividend
JSE shares trade ex dividend Monday 19 June
Record date for determining the Friday 23 June
registered holders of JSE shares to
participate in the dividend
Date for payment of dividend Monday 26 June
Notes:
1. The abovementioned times and dates are South African times and dates and
are subject to change.
2. Any change to the above times and dates will be released on SENS and
published in the press.
7. Documentation
A circular, which is subject to the approval of the FSB, containing full details
of the Listing, the Subdivision, the BBBEE Initiative and the Employee Scheme as
well as a Notice of General Meeting and pre-listing particulars will be sent to
shareholders on or about 13 April 2006.
Gary C Clarke
Company Secretary
Sandton
15 March 2006
Date: 15/03/2006 07:01:11 AM Produced by the JSE SENS Department
