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Strong all round performance from JSE ​

Johannesburg, 2 August 2018 –Strong operating revenue performance (up 7%) following increased activity in all the JSE market segments, the continued focus on cost control and a one-off tax credit of R31m, resulted in the JSE’s earnings after tax in H1 2018 increasing by 34% to R561m (H1 2017: R419m).

Although performance in the first quarter was particularly strong, the slow-down in volatility in the second quarter trimmed gains.
“Our focus for the second half of 2018 remains on projects designed to strengthen the delivery of the JSE’s strategic vision and our long-term growth strategy so that we are able to better service our clients. In particular, we are coming to the closing stages of our Integrated Trading and Clearing (ITaC) project 1b and c.. This will provide clients with robust trading and clearing technology in our equity derivatives and currency markets and introduce more sophisticated trading and risk management functionality, enabling us over time to reduce the cost of transacting in those markets,” says JSE CEO, Nicky Newton-King.
Among its strides over the period, the JSE recently launched the pilot phase of the electronic trading platform (ETP) for government bonds with National Treasury, which went live on 18 July 2018. In keeping with its historical behaviour in this regard, the JSE introduced a new tiered billing model for the Cash Equities Market with effect from 30 July 2018. This will reduce the cost of trading in the Cash Equities Market by over 10%.
  • The following contributions to revenue are noteworthy:

    • ·  Primary Market revenue remains relatively flat at R82 million as a result of a decline in
         additional capital raised. There were ten new Equity Market listings in the first half
      (H1 2017: 8);
    • ·  Cash Equities Market revenue rose by 12% to R277 million owing to the 11% increase
      in billable value traded and the increase in the effective price as a result of the trade
      sizes executed by members;
    • ·  Equity Derivatives Market revenue decreased by 10% to R75 million. Value traded
      was up by 4% however, this was offset by a greater percentage of trades executed
      at lower price ranges;
    • ·  Currency Derivatives Market revenue decreased by 2% to R23 million. Contracts
      traded increased by 7%. However, the growth was offset by a decline in the
      effective rate as a result of the trade sizes executed by members;
    • ·  Commodity Derivatives Market revenue increased by 18% to R37 million owing
      to an 11% increase in the number of contracts traded as well as annual price increases.
      Spread trading activity picked up in the first half of 2018 on the back of large
      carry-over stock from the previous season;
    • ·  Interest Rate Market revenue rose by 11% to R23 million owing to a 13% increase in
      bond nominal value traded;
    • ·  Interest Rate Derivatives Market revenue grew by 14% to R3 million owing to an
      increase in the number of contracts traded (up 26%);
    • ·  Equity clearing and settlement revenue increased by 13% to R211 million following
      the 11% increase in billable value traded in the Equity Market;
    • ·  BDA revenue declined by 2% to R147 million because the number of transactions
      declined by 5%. This was somewhat offset by a higher pricing mix; and
    • ·  Information Services revenue increased by 7% to R134 million, largely owing to an
      increase in the use of existing products and some new business.
  • ​​​​The JSE is tracking on target to deliver the committed R170 million cost savings by end 2019.
Of the R613 million in operating expenses, personnel expenses decreased by R43 million, down 17%, to R202 million (H1 2017: R245 million). This is largely made up as follows:

  • ·  Gross remuneration which decreased by 19% as a result of the 22% lower average
    headcount. Our exit headcount on 30 June was 362 (H1 2017: 454). This contributed
    -12 percentage points.;
  • ·  The long-term incentive scheme (LTIS 2010) charges which decreased by R16 million
    to R10 million (2017: R26 million) owing to timing differences investing (-R9 million)
    and a higher proportion of LTIS vesting in the prior year (-R7m). This contributed -6
    percentage points.​
​Technology costs declined by R13 million, down 10%, to R116 million (H1 2017: R129 million), largely owing to cost optimisation initiatives. Depreciation decreased by R4 million, down 7%, to R54 million (H1 2017: R58 million), largely owing to the net effect of fully depreciated assets.
  • General expenses rose by R29 million, up 14%, to R241 million (H1 2017: R212 million).
  • “We are clear about our 2018 priorities and hence what we need to do to deliver a better service to our clients and to grow this business sustainably. The JSE is a largely fixed-cost business. Therefore we will maintain our focus on costs, while making the necessary capital investments in areas that will enhance the Group’s service offering and sustainability,” concludes Newton-King.

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