Jse Limited · JSE:JSE
Jse — H1 2021 Earnings Presentation
36 slides from Jse's earnings presentation, Aug 6, 2021
Slide 1: JSE Limited 2021 Interim Results
JSE Limited 2021 Interim Results 6 August 2021 ©Johannesburg Stock Exchange. The content of this presentation is strictly reserved for the use of the JSE.
Slide 2: Agenda
Agenda Key highlights 03 Group business performance 12 Financial review 15 Looking ahead 22 ©Johannesburg Stock Exchange
Slide 3: Key Highlights
Key Highlights ©Johannesburg Stock Exchange
Slide 4: Focused on strategic priorities whilst mitigating negative impact of external factors on earnings
Focused on strategic priorities whilst mitigating negative impact of external factors on earnings Lower capital markets Earnings high base in First full period of activity partly offset by OPEX flat excluding JIS 2020, impacted by FX and consolidation for JIS growth in some lower interest rates deri
Slide 5: Earnings reflecting operating environment and high revenue base effect
Earnings reflecting operating environment and high revenue base effect OPEX Total revenue EBITDA EBIT margin +6% -6% to R853m -19% 31% to R1.2bn Normalised costs (excluding to R520m (down 9% points YoY) JIS) flat EPS & HEPS Earnings cash CAPEX Cash balance conversion -26% R46m R2.1bn to 420.2 and 42
Slide 6: External factors impacting business performance
External factors impacting business performance Macro-economic factors and high base effect from H1 2020 Reduced trading Interest rates at activity and volatility Stronger rand record lows vs H1 2020 Lower revenue in Impacting USD- Capital Markets and denominated revenue Impacting net finance Post-T
Slide 7: Strong JSE All Share index recovering albeit off lower trading volumes
Strong JSE All Share index recovering albeit off lower trading volumes JSE All Share index – 31 December 2019 to 30 June 2021 (base 0 on 31/12/2019) US presidential elections Commodity prices rally 30% 09 & 12/03 – Onset of COVID-19, 20/04 - WTI oil futures 20% oil shock & prices turn negative for 0
Slide 8: Lower market activity from a high comparable base
Lower market activity from a high comparable base Equity market - monthly billable average daily value traded (ADV) (Rm) Equity market - monthly traded volumes 1,800,000 H1 2021 down 8% YoY H1 2021 down 19% YoY 1,600,000 14,000,000 1,400,000 12,000,000 1,200,000 10,000,000 1,000,000 8,000,000 800,00
Slide 9: Executing our strategic and operational priorities
Executing our strategic and operational priorities Announced Hosted SA Published Consultation Submitted acquisition of Tomorrow Paper entitled “Cutting Listed first social Delivered phase ICH** the remaining conference: red tape aimed at bond on our Launched phase 1 of 1 of JSE Market application mi
Slide 10: JSE Investor Services (JIS) integration and business update
JSE Investor Services (JIS) integration and business update 2020 Background H1 2021 update Completed acquisition of Positive commercial momentum 74.85% of Link Market • ShareHub launched in August 2020 Services (now called JIS) in • New clients secured and strong pipeline November 2020 – aids our re
Slide 11: Leading the way on sustainability
Leading the way on sustainability Two-pronged sustainability approach • Internally: considering and integrating sustainability matters into business operations • Externally: promoting, as an exchange and frontline regulator, access to capital and responsible investment Advocacy and engagement ESG in
Slide 12: Group Business Performance
Group Business Performance ©Johannesburg Stock Exchange
Slide 13: Capital Markets and Post-Trade Services coming off a high base in H1 2020
Capital Markets and Post-Trade Services coming off a high base in H1 2020 Segment Capital Markets Post-Trade Services Information Services JSE Investor Services (JIS) 15% 4% 15% 0% Revenue 44% 44% contribution 40% 37% YoY growth -4% -12% -6% n/a • Primary Market: Stable revenue but • Revenue traject
Slide 14: Market drivers
Market drivers Market Number of IPOs Number of delistings Equity transactions Billable equity value capitalisation*** traded* 6 +11% 15 -19% -8% (H1 2020: 4) (H1 2020: 13) (H1 2020: +37%) 30 June 2021: (H1 2020: +17%) R18.8tr Currency Commodity Interest rate Bond nominal value Equity derivatives der
Slide 15: Financial Review
Financial Review ©Johannesburg Stock Exchange
Slide 16: Key financial highlights
Key financial highlights Trading & profitability Cash & capital Operating Total Revenue Total OPEX* EBITDA Cash generated Operating cash Revenue from operations -6% +6% -19% conversion -3% to R1.2bn to R853m to R520m -10% ratio** to R1.2bn (H1 2020: (H1 2020: R1.3bn) (H1 2020: R801m) (H1 2020: R644m
Slide 17: Income statement
Income statement (Rm) H1 2021 H1 2020 D (%) Operating revenue 1,227 1,265 -3% Other income 15 58 -74% Total revenue 1 242 1 324 -6% Personnel expenses (292) (267) 9% Other operating expenses (430) (413) 4% EBITDA 520 644 -19% EBITDA (%) 42% 49% -7pts Depreciation and amortisation (132) (121) 8% EBIT
Slide 18: Operating expenses
Operating expenses JSE costs excluding JIS stable at R803m Personnel costs up 3% or R7m to R274m (R267m) • Gross remuneration up R20m (9%) to R234m (2020: R214m) • 410 average headcount, +4% YoY (2020: 396); 417 exit headcount (2020: 396) • ~ 4% annual salary increases R853m • Executive changes expe
Slide 19: Sustainably high cash conversion of earnings
Sustainably high cash conversion of earnings 900 105% 94% 94% 84% 88% 100% 800 700 620 600 560 50% 518 522 507 525 488 472 500 444 448 400 0% 300 200 -50% 100 0 -100% H1 2017 H1 2018 H1 2019 H1 2020 H1 2021 Adjusted Adjustedearnings* NPAT * Cash generated from operations Conversion rate ©Johannesbur
Slide 20: CAPEX managed within operating context
CAPEX managed within operating context Over R200m spent to grow the business H1 2021 spend: • Investment for future growth mainly owing to colocation R46m R46m • Rejuvenation of IT infrastructure • New digital market data client reporting platform (JSE Market Data Connect) • IT cybersecurity • Lease
Slide 21: Strong balance sheet underpinned by sound cash balance
Strong balance sheet underpinned by sound cash balance 472 93* 170 613 ** 2,459 2,055 Cash December 2020 Cash generated from Investing activities Financing activities Dividends paid Cash June 2021 operations In compliance with the FMA the JSE and JSE Clear are required to hold regulatory capital
Slide 22: Looking ahead
Looking ahead ©Johannesburg Stock Exchange
Slide 23: Strategic objectives and delivery
Strategic objectives and delivery Long-term strategic objectives Focus on the national agenda & Invest in operational robustness & further entrench sustainability Grow & diversify revenue streams resilience in the business H2 2021 strategic focus Driving the Group’s inorganic Delivering new products
Slide 24: Key considerations impacting our business environment in H2
Key considerations impacting our business environment in H2 Global Market Environment South Africa • SAA*: Proposed sale of majority stake represents resolution of long-running fiscal negative and signals change in strategy by government to embrace private sector in dealing with SOEs • Roll out of C
Slide 25: JSE distinctive value proposition
JSE distinctive value proposition Solid foundation of Strong financial Sustainably high cash liquid, robust and well- discipline and execution generation offering regulated markets capabilities sufficient liquidity Healthy balance sheet Making progress on our supporting strong inorganic growth Leadi
Slide 26: Questions
Questions ©Johannesburg Stock Exchange
Slide 27: Appendix
Appendix ©Johannesburg Stock Exchange
Slide 28: Listed first social and sustainability-linked products
7% Primary Market Listed first social and sustainability-linked products Primary Market revenue (Rm) Stable revenue • Higher number of IPOs in H1 2021 (6 vs 4 in H1 2020) • Look forward to welcoming more in the coming months • Aggregate market capitalisation of all equity listed instruments on the J
Slide 29: Equity Market impacted by high base effect in H1 2020
Equity 22% Market Equity Market impacted by high base effect in H1 2020 Equity Market revenue (Rm) Revenue -8% YoY largely owing to lower volumes and billable value traded, compared with a high base in H1 2020 • H1 2020 volumes driven by COVID-19-related volatility and resulting activity in the prio
Slide 30: Single digit increase driven by Equity Derivatives value traded
Bonds & Fin. Derivatives Single digit increase driven by Equity Derivatives value traded Markets 11% Equity Derivatives revenue (Rm) and value traded (Rtr) Equity Derivatives + 3% YoY to R74m, bonds and interest rate market revenue -5% Revenue Equity derivatives value traded YoY to R36m 3 3 3 3 3 Eq
Slide 31: Double digit growth against high base in 2020
Commodity Derivatives Double digit growth against high base in 2020 Market 4% Commodity Derivatives revenue (Rm) and contracts traded (m) Revenue +13% YoY due to higher value and volumes traded as well as greater volumes for physical deliveries Revenue Contracts traded • Number of contracts traded u
Slide 32: Revenue trajectory reflecting lower market activity year-on-year
Post-Trade Services Revenue trajectory reflecting lower market activity year-on-year 37% Clearing and Settlement revenue (Rm) and effective rate (bps)* Clearing & Settlement revenue -14% YoY due to lower equity value traded Revenue Effective rate (Bps) 0.26 0.26 0.25 0.27 0.26 • Value traded down 8%
Slide 33: Underlying revenue growth offset by adverse ZAR/USD changes
Information 15% Services Underlying revenue growth offset by adverse ZAR/USD changes Information Services revenue (Rm) Revenue -6% YoY largely owing to FX losses of R28m on US dollar denominated revenue Market Data Indices Revenue overstatement 184 • 17 new clients have signed up for market data pro
Slide 34: Balance sheet
Balance sheet (Rm) 30 June 2021 31 December 2020 30 June 2020 Assets Non-current assets 1 874 1 871 1 690 Property and equipment 120 140 154 Intangible assets 779 821 584 Investment in associate 303 320 298 Other non-current assets 671 590 654 Current assets 49 032 49 754 51 153 Margin deposits 45 9
Slide 35: Multi-year depreciation profile of assets and known future CAPEX
Multi-year depreciation profile of assets and known future CAPEX R247m** R245m 8 R236m*** 10 25 18 28 R202m 27 18 39 39 27 38 36 R110m 71 90 83 25 74 84 92 84 69 53 2018A 2019A 2020A 2021F 2022F Existing assets ITaC 1 Application of IFRS 16 on lease Licenses capitalised as Intangibles 2020 capex env
Slide 36: ©Johannesburg Stock Exchange. The content of this presentation is strictly reserved for the use
©Johannesburg Stock Exchange. The content of this presentation is strictly reserved for the use of the JSE.