Jse Limited · JSE:JSE
Jse — H1 2018 Earnings Presentation
27 slides from Jse's earnings presentation, Aug 2, 2018
Slide 1: 2018 Interim Results
2018 INTERIM 2 August 2018 RESULTS
Slide 2: Operating environment for H1 2018
Operating environment for H1 2018 Globally IN SA Sell‐off in emerging markets impacting Political landscape dominated by President currencies and cash equities Ramaphosa appointment and subsequent cabinet reshuffle as well as uncertainty on land expropriation Trade policy of US President takes its t
Slide 3: H1 2018 market activity
H1 2018 market activity 11% 5% 10 4% Billable equity Equity Number of IPOs Equity derivatives value traded* transactions (H1 2017: 8) value traded (H1 2017: ‐13%) (H1 2017: 4%) (H1 2017: ‐18%) 26% 11% 7% 13% Interest rate Commodity Currency Bond nominal value derivatives contracts derivatives contra
Slide 4: How this translated in our business
How this translated in our business 7% 5% 29% 34% R1.2bn R613m R582m R561m Operating Operating EBIT NPAT revenue expenses (H1 2017: R453m) (H1 2017: R419m) (H1 2017: R1.1bn) (H1 2017: R644m) 7% 33% 34% R42m R522m 654.7c 654.6c Total capital Net cash flow EPS HEPS investment from operations (H1 2017:
Slide 5: Financial performance
Financial performance (Rm) H1 2018 H1 2017 Revenue 1 153 1 083* Other income 42 14* Total revenue 1 195 1 097 Personnel expenses (202) (245) Other expenses (411) (399) Total expenses (613) (644) EBIT 582 453 EBIT % 49% 41% Net finance income 122 111 Share of profit from associate (net of income tax)
Slide 6: Trends
Trends H1 total revenue H1 2018 revenue as a % total 9% Primary Markets: 8% (2017: 8%) 12 11.9 11.8 11.7 11.6 11.5 11.4 11.3 11.2 Equity Market: 27% (2017: 25%) 11.1 11 10.9 10.8 10.7 10.6 10.5 10.4 10.3 10.2 10.1 10 9.9 9.8 9.7 9.6 9.5 9.4 9.3 9.2 9 .1 8.9 8.8 8.7 8.6 8.5 Back‐Office Services (BDA)
Slide 7: External and internal capital expenditure
External and internal capital expenditure Grow the business R205m* Integrated Trading and Clearing project 1 ‐ 2016, R187m 2017, 2018 ETP for government bonds – 2016, 2017, 2018 Colocation ‐ 2018 124 R134m* 115 34 Maintain the business Business as usual – 2016, 2017, 2018 39 HR system – 20
Slide 8: Operating expenditure
Operating expenditure Total operating expenses down 5% to R613m (2017: R644m) R644m R613m Personnel costs 17% or R43m (2017: R1m or 0.2%) to R202m (2017: R245m) Gross remuneration 19% or R29m as a result of average headcount 22%. Headcount 245 at June 20% to 362* (2017: 454). Contributes
Slide 9: Technology cost composition
Technology cost composition Technology costs 10% to R116m Cost saving initiatives resulted in significant reductions in software and hardware maintenance support spend 2017 60 17 34 12 5 R128m* 2018 53 15 35 7 6 R116m Software maintenance and licences Contractors External services Hardware mainten
Slide 10: Cashflow view
Cashflow view Strong cashflow and no debt 522 24 2 525 Cash (Rm) 2 377 2 353* Cash December 2017 Cash generated from Investing activities Financing activities Dividends paid Cash June 2018 operations *Rounding difference 10
Slide 11: Capex external spend
Capex external spend Capital intensity policy applied from 2018 PROJECT / INITIATIVE H1 2018 H2 2018 FY 2018 FY 2017 Integrated Trading and Integrated Clearing project 29 20 49 100 ETP for government bonds 1 ‐ 1 1 HR system 1 ‐ 1 4 Colocation 3 1 4 ‐ ECS 2 ‐ 2 ‐ Project capex 36 21 57 105 Business a
Slide 12: Business Review
BUSINES REVIEW
Slide 13: Capital Markets: Primary Market
Capital Markets: Primary Market Revenue 8% of total revenue in H1 2018 Revenue flat at R82m (2017: R82m) Main Board 10 company listings (2017: 8) 11 ETFs (2017: 4) 116 warrants and structured products (2017: 121) 12 delistings (2017: 10) 1 REITs (2017: 1) 2015 2016 2017 2018 1 fast‐track listing (20
Slide 14: Capital Markets: Equity Market
Capital Markets: Equity Market Billable value traded 27% of total revenue H1 2018 350 4 R7.0tr 300 4 Revenue 12% to R277m (2017: R247m) 250 3 3 200 Billable value traded 11% 2 150 2 100 1 Transactions 5% 50 1 ‐ ‐ Colocation 2015 2016 2017 2018 28 racks (2017:23 racks) 2 new racks added in July
Slide 15: Capital Markets: Bonds and Financial Derivatives
Capital Markets: Bonds and Financial Derivatives Equity derivatives value traded 12% of total revenue H1 2018 100 4 R3.1tn Revenue 5% to R125m (2017: R132m) 4 80 3 3 Equity derivatives revenue 10% to R75m (2017: R84m) 60 2 Contracts traded 61% to 71.1m (2017: 181.4m) 40 2 Value traded 4%
Slide 16: Capital Markets: Commodity Derivatives
Capital Markets: Commodity Derivatives 3% of total revenue H1 2018 40 Contracts traded 2.0 Revenue 18% to R37m (2017: R32m) 1.6m 1.8 35 Value traded 10% to R311bn (2017: R284bn) 1.6 30 1.4 Contracts traded 11% to 2m (2017: 1m) 25 1.2 Open interest 2% 20 1.0 0.8 15 0.6 10 0.4 5 0.2 0 0.0 2015
Slide 17: Post-Trade Services: Back-Office Services (BDA)
Post‐Trade Services: Back‐Office Services (BDA) 14% of total revenue H1 2018 Effective rate 155 0.3 Revenue 2% to R147m (2017: R150m) 150 0.25 Correlated to Equity Market transaction volumes 0.23bps 145 0.2 Strategic focus for H2 Maintain BDA for foreseeable future 140 Design of Equity CCP ris
Slide 18: Post-Trade Services: Equity Clearing and Settlement
Post‐Trade Services: Equity Clearing and Settlement Effective rate 19% of total revenue H1 2018 250 0.35 Revenue 13% to R211m (2017: R186m) 0.3 200 Correlated to Equity Market value traded 0.264bps 0.25 Reflects only Equity Market clearing and settlement fees 150 0.2 Strategic focus for H2 ITaC
Slide 19: Information Services: Includes Market Data
Information Services: Includes Market Data 12% of total revenue H1 2018 Revenue breakdown Revenue 7% to R134m (2017: R125m*) Market Data 9 new clients (2017: 13) 3 local clients and 6 international clients Indices AUM 9% to R559bn (2017: R512bn) New director of IS appointed Strategic focus for H
Slide 20: Looking Ahead
LOOKING AVEAB
Slide 21: H2 2018 strategic priorities
H2 2018 strategic priorities Complete ITaC Driving IS Maintain Progress our Embed the agile, Lead by to drive growth strategy strong cost operational client‐led culture example on the controls and resilience embodied in the national agenda deliver the JSE Way by relevant demonstrating a portion of t
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Slide 23: JSE Liquidity
JSE Liquidity Monthly liquidity: 2011 to 2018 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% Jan Sep Jan Sep Jan Sep Jan Sep Jan Sep Jan Sep Jan Sep Jan May May May May Mar Nov May Mar Nov Mar Nov May Mar Nov May Mar Nov Mar Nov Mar Nov May Mar Jul Jul Jul Jul Jul Jul Jul 2011 2012 2013 2014 2015
Slide 24: Equity Market: JSE effective pricing trend
Equity Market: JSE effective pricing trend 3‐year price trend 0.39 0.37 0.38* 0.27 0.26 0.26 Fees (in bps) 0.23 0.21 0.21 2016 2017 2018 Trading fee: Equity Market Equity Market Clearing and Settlement BDA fees 2016 BDA fee reduced by 20% 2016 Option Delta(OD) fee reduced to zero 2017 BDA fee reduce
Slide 25: Financial metrics
Financial metrics Ratios H1 2018 H1 2017 H1 2016 H1 2015 H1 2014 Operating margin 49% 41% 47% 46% 43% EPS 654.7 490.9 599.7 503.9 389.4 HEPS 654.6 488.9 585.1 490.3 391.2 EBITDA 636 511 614 535 428 25
Slide 26: Personnel expenses – Note 9.1
Personnel expenses – Note 9.1 (R’m) H1 2018 H1 2017 Profit before taxation comprises: Personnel expenses Remuneration paid to employees 175 895 201 339 Fixed‐term contractors 4 312 6 750 Contribution to defined contribution plans 7004 8 221 Directors emoluments 10 654 10 177 Executive directors 6 13
Slide 27: Thank You
Thank You 2 August 2018