Slide 1: 2nd March 2022
2nd March 2022 ©Johannesburg Stock Exchange. The content of this presentation is strictly reserved for the use of the JSE.
Slide 2: Key highlights, group performance, financial review, looking ahead, appendix
Key highlights 3-10 Group business performance 11-13 Financial review 14-23 Looking ahead 24-29 Appendix 30-45 2
Slide 3: Key Highlights
KEY HIGHLIGHTS ©Johannesburg Stock Exchange. 3
Slide 4: Revenue growth from higher value traded in H2 2021 and full year
Revenue growth from Strong cost discipline with EBITDA in excess of R1bn, Successfully integrated higher value traded in H2 OPEX growth below stable YoY and growing new entities, JIS gaining 2021 and full year inflation double digit YoY in H2 traction contribution from JIS* All-time low interest rat
Slide 5: Key financial metrics 2021
Operating revenue Operating costs EBITDA EBITDA margin +3% +4% Flat 41% to R2.5bn at R1.8bn at R1.06bn (2020: 42%) (2020: R2.4bn) (2020: R1.7bn) (2020: R1.06bn) EPS & HEPS Net finance income Ordinary dividend pay- Cash conversion ratio -27% -7% & -6% out ratio* to R146m to 874.1 and 878.9 cents 101%
Slide 6: H1 ADV down 5% to R29bn, H2 ADV up 20% to R31bn
H1 ADV 5% to R29bn (2020: R30bn), H2 ADV 20% to R31bn (2020: R26bn), FY 7% to R30bn (2020: R28bn) 5% 6% 2% 4% 5% 5% 5% 1% 1% -3% -2% -5% 68%79% 38%34% 21% 24%25% 22%21% 18% 9% 8% 2% 5% 1% -5% -10% -12% -14% -17% -26%-22% -23%-25% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Published ADV Yo
Slide 7: Equity trading – monthly billable average daily value traded
Equity trading – Equity trading – monthly billable average daily value traded (ADV) (Rbn) monthly average daily transactions (ADT) ADV 2021 v 2020: 5% ADT 2021 v 2020: 11% ADV 2020 v 2019: 7% ADT 2020 v 2019: 18% 60 700,000 50 600,000 40 500,000 400,000 30 300,000 20 200,000 10 100,000 0 0 J
Slide 8: SA GDP growth vs JALSH Index
SA GDP growth vs JALSH Index (31 Dec 1999-30 Sep 2021) – base 0 on 31/12/1999 690% 667% 590% 531% 490% 390% 290% 190% 90% -10% Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Dec-17 Dec-19 Dec-21 JALSH Index SA nominal GDP ©Johannesburg Stock Exchange. Source: Bloomberg 8
Slide 9: 2021 milestones and developments
Phase 1 Phase 1 of JSE Market JSE and FTSE “Actively “Cutting Red of trade Data Connect platform Russell new Fast-track inward Managed Tape” analytics delivered multi-asset listings from Certificates” published platform index Singapore published delivered launched Exchange (SGX) March April May June
Slide 10: JSE Investor Services: background, 2021 update, strategy
BACKGROUND 2021 UPDATE November 2020 - Completed acquisition of • Acquired remaining 25.15% in June 2021 (R75.45m cash) – JIS now 100% wholly owned , successful integration 74.85% of Link Market Services (now JIS) Business • Acquired administrative portion of Investec Share Plan Services (ISPS), add
Slide 11: Group Business Performance
GROUP BUSINESS PERFORMANCE ©Johannesburg Stock Exchange.
Slide 12: Market statistics: equity, bond and derivatives
Equity market Number of Billable equity Equity Number of IPOs* capitalisation** delistings*** value traded**** transactions 8 +15% 25 +5% -12% (2020: 4) (2020: R17.9tr) (2020: 20) (2020: +7%) (2020: +21%) Commodity Interest rate Bond nominal value Equity derivatives Currency derivatives derivatives
Slide 13: Revenue by business segment
CAPITAL MARKETS POST-TRADE SERVICES INFORMATION SERVICES JSE INVESTOR SERVICES (JIS) 2021 2021 2021 2021 2020 2020 2020 2020 5% 15% 44.0% 15% 1% 44.0% 39% 36% +1% YoY -5% YoY -2% YoY n/a YoY • Equity Market revenue -1%. Corporate • Clearing and Settlement revenue -5% • 4% underlying growth • First f
Slide 14: Financial Review
FINANCIAL REVIEW ©Johannesburg Stock Exchange.
Slide 15: Trading and profitability, cash and capital
TRADING & PROFITABILITY CASH & CAPITAL Operating Operating cash Total OPEX EBITDA Inorganic revenue conversion CAPEX investment +3% +4% Flat ratio* R165m to R2.5bn to R1.8bn at R1.06bn 101% (2020: R89m) R159m (2020: R1.7bn) (2020: R1.06bn) (2020: R225m) (2020: R2.4bn) (2020: 104%) Net finance Regula
Slide 16: Income statement (Rm)
(Rm) 2021 2020 D (%) Operating revenue 2 517 2 446 3% Other income 59 82 -28% Total revenue 2 576 2 528 2% Personnel expenses 650 601 8% Other operating expenses 871 868 0% EBITDA 1 055 1 060 0% EBITDA (%) 41% 42% -1 pt Depreciation and amortisation 258 249 3% Total operating expenses 1 779 1 718 4%
Slide 17: Operating costs
Personnel costs up 8% (R49m) to R650m R1.72bn * R1.78bn • Gross remuneration up R68m to R507m (2020: R440m), largely due to full year consolidation +4% of JIS • Average headcount of 519 (2020: 500): 408 at JSE (2020: 402) and 111 at JIS (2020: 98) 650 • Increase partly offset by lower retention and
Slide 18: OPEX bridge
(In Rm) OPEX bridge (In Rm) +4% +6% -2% 2020 included higher deal acquisition costs 1 779 1 718 (JIS and Globacap) and Covid-19 related 1 689 donations (not recurring in 2021) 2020 operating costs General expenses 2021 JIS FY consolidation 2021 operating costs comparable operating costs ©Johannesbur
Slide 19: Capital expenditure
2021 GROW THE BUSINESS – R11M R174m R180m* • Securities collateral R165m • Commodity derivatives: New diesel contract 7 40 • Colocation 11 77 2021 MAINTAIN THE BUSINESS – R148M R101m • Leasehold improvements to support new ways of work as well as client service • Rejuvenation of infrastructure and s
Slide 20: Cash conversion
Rm 104% 105% 104% 101% 92% 2017 2018 2019 2020 2021 Adjusted earnings* Cash generated from operations Conversion rate ©Johannesburg Stock Exchange. * NPAT has been adjusted for non-cash items (depreciation, amortisation, forex profit/loss, impairments, goodwill write-down) 20
Slide 21: Cash movement and total investment
Rm 917 206 165 * 613 ** • Capex R165m • JIS minority buy- out: R75m • Investment in Globacap: R84m Total investment: R324m 2,459 2,393 Cash December 2020 Cash generated from Investing activities Financing activities Dividends paid Cash Dec 2021 operations ©Johannesburg Stock Exchange. Figures contai
Slide 22: Regulatory capital held in equity
R1.13bn in equity R789m JSE Group calculates and held for JSE Limited and is held in the form of holds regulatory capital JSE Clear as at 31 restricted cash and cash in the form of equity December 2021 equivalents ©Johannesburg Stock Exchange. 22
Slide 23: Ordinary and special dividend per share
Ordinary dividend per share Special dividend per share 8.40 8.40 8.54 7.25 1.00 1.85 1.50 6.05 6.55 6.90 7.25 7.54 6.05 2017 2018 2019 2020 2021 Total dividend R526m R730m R730m R630m R741m Ordinary dividend 65% 62% 87% 83% 92% payout ratio Total dividend 65% 80% 101% 83% 104% payout ratio ©Johannes
Slide 24: Looking Ahead
LOOKING AHEAD ©Johannesburg Stock Exchange.
Slide 25: Two-pronged approach to sustainability
Internally Focus on the JSE’s sustainability and Integrating sustainability • Employee welfare climate change disclosure guidance for into our organization and • Board diversity listed companies: business operations • Remuneration policy • Environmental footprint • Goal: Help companies navigate the
Slide 26: M&A strategic and financial guidelines
Strategic guidelines Financial guidelines Future focus areas JSE’s current Inorganic Recent • Strong fit with capital markets • Diversify revenues and strategic footprint growth focus acquisitions growth areas profits • Capital Markets workflow • Index data and analytics • Increase contribution of n
Slide 27: Information Services today and future focus areas
Information Services today Three core future focus areas • Growing contributor to Group revenue: Modernise data Support Group Sustain initiatives focusing architecture and • +200 bps to 13.5% in 2021 (11.5% in 2015) operational on digitalisation expand range of and new market effectiveness • 7.6% CA
Slide 28: Strategic priorities
Generate sustained, Protect and grow core Transform Partner for a sustainable high-quality earnings business the business marketplace • Deliver HEPS growth • Invest in core assets to • Progress our digital • Attract and retain top • Deliver returns on equity sustain operations transformation journey
Slide 29: Solid foundation of liquid, robust and well-regulated markets
Solid foundation of Strong financial discipline and Continued high cash generation liquid, robust and execution capabilities offering sufficient liquidity well-regulated markets Healthy balance sheet Progress on our inorganic growth supporting strong dividend track Leading the way initiatives and ot
Slide 30: Appendix
APPENDIX ©Johannesburg Stock Exchange.
Slide 31: Pricing and product development
• Tiered billing model significantly reduced cost of on-screen trading since 2018 Deliberately • All on-screen trades contributed towards cumulative value traded lowered throughout the month prices • Fee adjustments in equity (cash and derivatives) limited to inflation The JSE remains: • JSE to cont
Slide 32: Operating revenue, expenses and headcount
Operating revenue (Rm) Revenue as a % total 3% Primary Markets: 6% (2020: 7%) Equity Trading: 22% (2020: 22%) Back-Office Services (BDA): 15% (2020: 16%) Equity Clearing and Settlement: 18% (2020: 19%) Bonds and Financial Derivatives: 11% (2020: 11%) 2017 2018 2019 2020 2021 Commodity Derivatives: 4
Slide 33: Primary Market
6% PRIMARY MARKET Primary Market revenue (Rm) REVENUE UP 1% YOY • Higher number of IPOs in 2021, at 8 (2020: 4) • 25 company de-listings (2020: 20) largely through M&A and/or corporate action in the small to mid-cap space • Aggregate market capitalisation of all equity listed instruments on the JSE
Slide 34: Equity Trading
EQUITY 22% TRADING Equity Trading revenue (Rm) REVENUE DOWN 1% YOY • Billable value traded up 5% (2020: up 7%), ADV up 7% (2020: 5%) • Number of transactions/deals down 12% (2020: up 21%), after two 503 499 493 489 consecutive years of double-digit growth 433 • Complex Order Suite activity increased
Slide 35: Bonds and Financial Derivatives Markets
BONDS & FIN. DERIVATIVES 11% MARKETS Equity Derivatives revenue (Rm) and value traded (Rtr) OVERALL REVENUE STABLE YOY 6.2 6.0 6.2 5.4* 5.8 Equity Derivatives revenue up 3% largely owing to higher value traded • Value traded up 7% to R5.8tr driven by greater activity across delta one products, 170 1
Slide 36: Commodity Derivatives Market
COMMODITY DERIVATIVES MARKET 4% Commodity Derivatives revenue (Rm) and contracts traded (m) REVENUE UP 12% YOY • Value traded up 21% owing to higher commodity prices and volumes traded • Number of contracts traded up 2% to 3.6m, largely owing to global grains commodity prices • Physical deliveries:
Slide 37: Post-Trade Services
POST-TRADE SERVICES 36% Clearing and Settlement revenue* (Rm) and effective rate (bps)** OVERALL REVENUE DOWN 5% YOY Clearing & Settlement: down 5% YoY 450 0.25 0.26 0.25 0.27 0.25 0.4 • Clearing and Settlement revenue down owing to the high base effect from scrip lending and penalties in 2020 400 4
Slide 38: Information Services
INFORMATION 15% SERVICES Information Services revenue (Rm) REVENUE DOWN 2% YOY Reported revenue decline (-2% YoY) as stronger ZAR impacted US dollar denominated revenue 4% underlying growth 356 350 MARKET DATA 310 53 57 278 • Delivered the first phases of both the trade analytics platform and the ne
Slide 39: Depreciation and amortisation forecast
R258m R267m R274m R249m 19 18 2 18 12 28 25 27 R202m 44 39 44 38 39 38 38 90 83 R110m 71 R240m, R249m R256m 74 68 excluding 25 JIS 84 92 92 92 81 78 2018 2019 2020 2021 2022F * 2023F ** Existing assets ITaC 1 Application of IFRS 16 on lease Licences *** 2022 Capex envelope JIS (incl customer contrac
Slide 40: Statement of financial position
(Rm) 2021 2020 30 Jun 21 Assets Non-current assets 1 967 1 871 1 874 Property and equipment 176 140 120 Intangible assets 727 821 779 Investment in associate 328 320 303 Other non-current assets 736 590 672 Current assets 59 071 49 754 49 032 Margin deposits 55 413 46 308 45 959 JSE Clear Derivative
Slide 41: Key ratios
Ratios 2021 2020 2019 2018 2017 Operating margin 31% 32% 31% 41% 40% EPS 874.1 936.7 814.8 1 056.5 1 006.0 HEPS 878.9 936.7 814.6 1 056.2 996.5 PE 12.8 12.6 14.6 15.7 15.4 Dividend yield (ordinary) 6.7% 6.3% 5.8% 4.0% 4.0% Dividend yield (total) 7.6% 6.3% 7.0% 5.1% 4.0% EBITDA 1 055 1 060 889 1 042
Slide 42: Dividend policy and target capital structure
Seeks to grow the nominal value of the ordinary dividend DIVIDEND POLICY JSE’S PRACTICE TARGET CAPITAL STRUCTURE OVER TIME • Aims to pay a single annual ordinary • To return distributable cash to • Target capital structure will not dividend shareholders after ring-fencing cash radically change over
Slide 43: Declines in fees over time
Deliberate declines in fees over time, heightened impact on trading • 2016 option delta (OD) fee reduced to zero 2017 2018 2019 2020 2021 0.64 0.64 0.64 • 2017 BDA fee reduced by 8% 0.60 0.60 (from R0.65) • 2018 new tiered billing model resulted in a 12% reduction in 0.36 the effective rate trading
Slide 44: Effective rates: JSE vs A2X
Effective Rates Trading fees Basis Points • 2021 effective rates for onscreen trading (AT, UT, XT) are used for the Total: 0.92 JSE o The JSE has a tiered billing model with caps Total: 0.74 • A2X charges 0.20bps for the price maker (aggressor) and 0.40bps for 0.19 the price taker (passive), which a
Slide 45: Repo rate and half-yearly net finance income
SARB’s repo rate (%) and JSE half yearly net finance income (Rm) - 2017 – 2021 IFRS 16* - 2019 at R31m 7.0% 120 6.5% 6.0% 100 5.5% 80 5.0% 4.5% 60 4.0% 3.5% 40 3.0% H1'17 H2'17 H1'18 H2'18 H1'19 H2'19 H1'20 H2'20 H1'21 H2'21 Net finance income Average repo rate over period ©Johannesburg Stock Exchan
Slide 46: % change in number of equity listings (2010-2021)
% change in number of equity listings (2010-2021) HKEX 82% Euronext 76% Nasdaq 37% NYSE 9% ASX 7% TMX -6% B3 - Brasil Bolsa Balcão -8% JSE -18% LSEG -21% SIX -22% Deutsche Boerse AG -36% Luxembourg Stock Exchange -55% -100% -50% 0% 50% 100% ©Johannesburg Stock Exchange. Source: Company data. Note: F
Slide 47: www.jse.co.za
www.jse.co.za ©Johannesburg Stock Exchange. The content of this presentation is strictly reserved for the use of the JSE.