Jse Limited · JSE:JSE

Jse — FY2020 Earnings Presentation

39 slides from Jse's earnings presentation, Feb 26, 2021

1. Slide 1: JSE Limited 2020 Year-End Results

   JSE Limited 2020 Year-End Results 26 February 2021 ©Johannesburg Stock Exchange. The content of this presentation is strictly reserved for the use of the JSE.

2. Slide 2: Agenda

   Agenda Key Highlights Pg 3 - 9 Business Review Pg 10 - 18 Financial Review Pg 19 - 29 Looking Ahead Pg 30 - 35 Appendix Pg 37 - 39 ©Johannesburg Stock Exchange 2

3. Slide 3: Key Highlights

   Key Highlights ©Johannesburg Stock Exchange 3

4. Slide 4: Business resilience and flexibility in a uniquely challenging year

   Business resilience and flexibility in a uniquely challenging year Revenue growth largely Successfully completed Link Strong business resilience Sustained double digit driven by heightened acquisition and first steps of and continuity against revenue growth in market volatility in the our inorganic

5. Slide 5: Sound financial performance underpinned by operational resilience

   Sound financial performance underpinned by operational resilience Revenue EBITDA OPEX EBIT margin +13% +19% +11% 32% to R2.5bn to R1.06bn to R1.72bn (up 1% point YoY) EPS Ordinary dividend per share Cash generated CAPEX & HEPS from operations +15% 725c R89m (83% pay-out ratio*) +14% to 936.7 cents *

6. Slide 6: Highly cash generative business model

   Highly cash generative business model Adjusted earnings * Cash generated from operations 1,001 1,003 990 976 977 962 942 Rm 913 880 837 2016 2017 2018 2019 2020 ©Johannesburg Stock Exchange *Earnings have been adjusted for non-cash items (depreciation, amortisation, forex profit/loss, impairments, g

7. Slide 7: Significant swings in level of market activity through the course of the year

   Significant swings in level of market activity through the course of the year Published ADV growth Billable ADV growth All Share Index 13% 10% 70% 8% 62% 3% 4% -2% 0% 0% -2% 60% -5% -9% 0% 50% -13% 39% 40% 34% -20% 30% 30% 25% 23% 21% 20% 20% 16% -40% 11% 12% 10% 10% 3% 5% 4% 2% -60% 0% -10% -2% -5%

8. Slide 8: A trusted market place within an uncertain operating environment

   A trusted market place within an uncertain operating environment • Collaborated with 38 market • Enhanced regulatory support across participants to donate trading all markets revenues earned over two • Provided support for distressed days across all asset classes to the Solidarity Fund Trusted compa

9. Slide 9: Maintained focus on progressing operational and strategic objectives for 2020

   Maintained focus on progressing operational and strategic objectives for 2020 Finalised the ICH** Entered into a application for Launched digital Moved the JSE Introduced a Won the Business of transaction with submission pending Introduced Delivered annual general reference data neutral The Year Awa

10. Slide 10: Business Review

    Business Review ©Johannesburg Stock Exchange 10

11. Slide 11: Positive performance across all segments

    Positive performance across all segments Segment Contribution YoY rev. growth Key drivers Strong growth driven primarily by greater equity market activity, despite activity driver contraction in some markets CAPITAL MARKETS 44% 45% +7%    Equity Market +14% (+R60m) Bonds and Financial Derivatives

12. Slide 12: 2020 Market activity drivers

    2020 Market activity drivers Billable equity value Equity derivatives Number of IPOs* Equity transactions traded** value traded 4 +21% +7% -7% (2019: 5) (2019: +10%) (2019: -2%) (2019: +2%) Currency Commodity derivatives Interest rate derivatives Bond nominal value traded derivatives number of numbe

13. Slide 13: Fewer IPOs in 2020 owing to uncertain market conditions

    7% Primary capital Fewer IPOs in 2020 owing to uncertain market conditions markets Revenue +3% YoY Primary market revenue (Rm)  Fewer IPOs in 2020 owing to uncertain market 181 conditions. There was new equity capital raised in the 164 secondary market of R67bn (2019: R36bn) 155 152 147  4 new com

14. Slide 14: Equity volumes boosted by H1 volatility

    Equity 22% market Equity volumes boosted by H1 volatility Equity market revenue (Rm) Revenue +14% YoY largely owing to an increase in billable value traded and more central order book activity resulting in higher effective pricing 555 503 499 493  Volatility peaked in H1 2020, followed by mixed per

15. Slide 15: Resilient revenue despite lower market activity

    Bonds & fin. derivatives Resilient revenue despite lower market activity markets 11% Equity derivatives revenue (Rm) and value traded (Rtr) Revenue +2% YoY to R262m Revenue Equity derivatives value traded Equity derivatives revenue +1% largely owing to increased activity and a 6.9 6.2 6.0 6.2 5.8 mo

16. Slide 16: Limited disruption from COVID-19 on South Africa's agricultural sector

    Commodity derivatives Limited disruption from COVID-19 on South Africa’s agricultural market 4% sector Revenue +7% YoY largely owing to an increase in annual pricing and product mix Commodity Derivatives revenue (Rm) and contracts traded (m)  Number of contracts traded flat YoY at 3.5m (2019: 2%) R

17. Slide 17: Growth driven by higher equity market activity

    Post-Trade Services Growth driven by higher equity market activity 39% Clearing and Settlement revenue (Rm) and effective rate (bps)* Revenue Effective rate (Bps) Clearing & Settlement revenue +16% YoY largely owing to an 0.27 0.27 increase in value traded and more central order book activity result

18. Slide 18: Strong revenue growth driven by FX impact, pricing and new business

    Information 16% services Strong revenue growth driven by FX impact, pricing and new business Revenue +15% YoY largely owing to annual price increases, foreign exchange gains on USD-denominated revenue and new business Information Services revenue (Rm) Market Data Indices Revenue overstatment 356  M

19. Slide 19: Financial Review

    Financial Review ©Johannesburg Stock Exchange 19

20. Slide 20: Robust performance with positive operating leverage, strong cash generation and progressive ordinary dividend

    Robust performance with positive operating leverage, strong cash generation and progressive ordinary dividend Trading & Profitability Cash & Capital allocation Personnel Cash generated Revenue Total OPEX EBITDA Operating cash expenses * from operations CAPEX conversion +13% +11% +4% +19% +14% ratio*

21. Slide 21: Positive operating leverage supporting earnings growth

    Positive operating leverage supporting earnings growth (Rm) 2020 2019 Growth % Revenue 2 446 2 187 12%  Total revenue including a net increase in Other income 82 41 98% realised forex profits as well as regulatory Total revenue 2 528 2 229 13% fines Personnel expenses 601 580 4% Other expenses 1 11

22. Slide 22: Effective pricing trend across the equity market value chain

    Effective pricing trend across the equity market value chain Trading fee: Equity Market (bps) Equity Market Clearing and Settlement (bps) BDA fees (cents per transaction) 0.39 65 0.36 0.32 0.33 0.27 0.27 64 64 0.31 0.26 60 60 0.25 0.25 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018

23. Slide 23: 2020 revenue mix

    2020 revenue mix Primary Markets: 7% (2019: 7%) Equity Market Trading: 22% (2019: 22%) Back-Office Services (BDA): 16% (2019: 15%) Equity Clearing and Settlement: 19% (2019: 19%) Bonds and Financial Derivatives: 11% (2019: 13%) Issuer Services: 0% (2019: 1%) Commodity Derivatives: 4% (2019: 4%) Info

24. Slide 24: Cost growth primarily driven by IT robustness and growth initiatives

    Cost growth primarily driven by IT robustness and growth initiatives +11% (In Rm) +8% 1,800 +2% +1% 0% +1% +2% +2% 23 2 26 +3% 28 27 25 1,600 45  Higher market  JSE Investor  Transaction  Annualised  Salary and activity  Risk including Services cost growth impact of net bonuses including cyber

25. Slide 25: Operating expenditure for growth and robustness

    Operating expenditure for growth and robustness Personnel costs  Gross remuneration  R18m or 4% to R435m (2019: R418m)  Average headcount at 402 (2019: 395) and Dec 2020 headcount at 406 (2019: 392) General expenses Depreciation Technology costs  Executive changes (LTIS/retention/other)  R20m 

26. Slide 26: Multi-year depreciation profile

    Multi-year depreciation profile Existing assets ITaC 1 Application of IFRS 16 on lease Licenses capitalised as Intangibles 2020 capex envelope 2021 Capex envelope R259m R247m* 17 R232m** 8 14 R202m 25 27 28 39 14 39 36 27 36 R110m 71 90 83 25 74 84 92 84 82 53 2018A 2019A 2020A 2021F 2022F Excludes

27. Slide 27: CAPEX driven by trading engine upgrade

    CAPEX driven by trading engine upgrade 2020 spend (R89m) mainly driven by  Trading system upgrade (under budget) Maintain the business Grow the business  OTC and building upgrades (expensed)  New master reference data R145m  Smart regulation  Clearing system enhancements 41  Replenishment and

28. Slide 28: Maintained robust liquidity levels in 2020

    Maintained robust liquidity levels in 2020 1 003 320 90* 711** 2 577 2 459 Cash December 2019 Cash generated from Investing activities Financing activities Dividends paid Cash December 2020 operations *Includes the effect of exchange rate fluctuations on foreign-denominated cash held and proceeds fr

29. Slide 29: Ordinary dividend up 5% YoY

    Ordinary dividend up 5% YoY A dividend cover ratio of 1.5x - 1x earnings (a payout ratio of 67% - 100% of current earnings (previously 40% - 67%)). 8.4 8.4 Ordinary dividend per share Special dividend per share 1.85 1.50 6.90 7.25 6.55 5.60 6.05 2016 2017 2018 2019 2020 Total dividend R487m R526m R7

30. Slide 30: Looking ahead

    Looking ahead ©Johannesburg Stock Exchange 30

31. Slide 31: Key strategic priorities

    Key strategic priorities Focus on the national Grow & diversify Invest in operational agenda & further revenue streams robustness & resilience entrench sustainability in the business Maintain our corporate culture, enhance customer experience and create enduring stakeholder value ©Johannesburg Stock

32. Slide 32: Allocating our capital to its most effective uses

    Allocating our capital to its most effective uses Organic investment Balance sheet  Focus on rejuvenation of optionality infrastructure and systems Strengthen Financing  Both organic and inorganic  Investment in resilience and existing options investment funded from own stability  Revenue growth

33. Slide 33: Completed acquisition of JSE Investor Services (JIS) - previously Link SA

    Completed acquisition of JSE Investor Services (JIS) - previously Link SA JSE is introducing New opportunities for products such as JIS include: Link SA: 2nd largest Core offering: transfer ShareHub and virtual Asset reunification and secretarial and registry Client base of over 90 share registry bu

34. Slide 34: Completed partnership transaction with Globacap

    Completed partnership transaction with Globacap Uniquely powered by 18 placements to 600 Distributed Ledger Provides a financial investors in 35 Globacap: UK-based Technology & global ecosystem for private countries. Administrates tech-enabled market pioneer in issuing companies through over GBP 1bn

35. Slide 35: Key takeaways

    Key takeaways Continued Sustained earnings Strong business investment to quality and cash resilience drive growth and generation IT robustness Progressive Healthy balance Early progress ordinary dividend sheet and robust with our inorganic and high payout liquidity offering growth strategy ratio gro

36. Slide 36: Questions

    Questions ©Johannesburg Stock Exchange 36

37. Slide 37: Appendix

    Appendix ©Johannesburg Stock Exchange 37

38. Slide 38: Balance sheet as at 31 December 2020

    Balance sheet as at 31 December 2020 Year ended Year ended (Rm) 31 December 2020 31 December 2019 Assets Non-current assets 1 871 1 716 Property and equipment 140 184 Intangible assets 821 593 Investment in associate 320 293 Other non-current assets 590 646 Current assets 49 754 38 512 Margin deposi

39. Slide 39: www.jse.co.za

    ir, + at, 4 it, it, + + +t yt + yt at, + at, +4 it, it, . fT pT www.jse.co.za

JSE — FY2020 Earnings Presentation on 6ix