Jse Limited · JSE:JSE
Jse — H1 2020 Earnings Presentation
35 slides from Jse's earnings presentation, August 2020
Slide 1: JSE Limited Interim results 2020
JSE Limited Interim results 2020 ©Johannesburg Stock Exchange. The content of this presentation is strictly reserved for the use of the JSE.
Slide 2: Agenda
Agenda Key Highlights 3-9 Business Review 10-17 Financial Review 18-25 Looking Ahead 26-28 ©Johannesburg Stock Exchange 2
Slide 3: Key Highlights
Key Highlights 3
Slide 4: Unprecedented environment
Unprecedented environment Global South Africa Significant monetary and fiscal stimulus around the globe Fiscal stimulus package of R500bn Central banks cut interest rates, with many advanced economies GDP growth expected to decline further, with pressure from close to zero weaker tax revenue
Slide 5: H1 key financial highlights
H1 key financial highlights Trading & Profitability Cash & Capital +22% +19% +20% R46m +18% YoY growth YoY growth YoY growth Total capital YoY growth R2.2bn Operating Operating Net operating Cash balance Group revenue investment revenue to expenses to cash flow to (2019: R2.2bn) to R1.32bn (2019: R3
Slide 6: H1 2020 performance
H1 2020 performance Market Activity Drivers Revenue Performance Across Business Areas 3 37% 17% +5% Number of Equity Billable equity +2% +26% YoY growth YoY growth YoY growth Bonds and IPOs* transactions value traded** Primary Market Equity Market Financial (2019: 2) (2019: 5%) (2019: -11%) Derivati
Slide 7: H1 2020 key takeaways
H1 2020 key takeaways Operational resilience Revenue performance Low growth macro Growth in other income and stability enabled largely reflects near-term environment places driven by foreign uninterrupted trading, impact of market greater impetus to clearing and settlement exchange gains adds volati
Slide 8: JSE response to the impact of the pandemic
JSE response to the impact of the pandemic • Smooth transition to remote working practices • Management of short positions and appropriate and responsive margin adjustments Maintained operational • Aligned our business continuity practices with market participants to ensure stable operations resilie
Slide 9: Key operational developments during the period
Key operational developments during the period Published amendments to Debt Listings Requirements for the final round of public consultations Introduced the sustainability segment Partnered with a service provider in Hong Kong to assist us in our data distribution to increase our footprint in Asia M
Slide 10: Business Review
Business Review 10
Slide 11: Capital Markets: Primary Market
Capital Markets: Primary Market Revenue 6% of total revenue (2019: 7%) Revenue 2% to R75m (2019: R73m) owing to higher annual listing fees. May and June have been marked by an increase in activity in corporate actions New IPOs have come under pressure in H1 2020 owing to volatile market conditions
Slide 12: Capital Markets: Equity Market
Capital Markets: Equity Market Revenue & Billable value traded 22% of total revenue (2019: 21%) Revenue Billable value traded Revenue 26% to R260m (2019: R206m) this follows an increase in R3.7tr 350 4 billable value traded and more central order book activity 300 4 250 3 Billable value traded ↑
Slide 13: Capital Markets: Bonds and Financial Derivatives
Capital Markets: Bonds and Financial Derivatives Equity derivatives – Revenue & Value traded 11% of total revenue (2019: 13%) 100 Revenue Equity derivatives value traded 4 Revenue 5% to R136m (2019: R130m) 90 4 80 R2.9tr 3 Equity derivatives revenue increased to R71m (2019: R70m). Activity in 70 6
Slide 14: Capital Markets: Commodity Derivatives
Capital Markets: Commodity Derivatives Revenue & Contracts traded 3% of total revenue (2019: 4%) Revenue Contracts traded Revenue 3% to R41m (2019: R40m) on the back of good weather, which has improved the outlook in the local grains market 1.7m Contracts traded 1% to R1.7m (2019: 1.8m) Valu
Slide 15: Post-Trade Services: Back-Office Services (BDA)
Post-Trade Services: Back-Office Services (BDA) Revenue & Number of transactions 17% of total revenue (2019: 15%) Revenue 26% to R198m (2019: R158m) following an increase in Revenue Number of transactions the number of transactions and smaller transaction sizes Trades 37% to 49m (2019: 35m)
Slide 16: Post-Trade Services: Clearing and Settlement
Post-Trade Services: Clearing and Settlement Revenue & Effective rate 20% of total revenue (2019: 18%) Revenue Effective rate (Bps) Revenue 31% to R240m (2019: R183m) owing to the increased billable value traded and higher on- order-book activity in the Equity 0.27bps Market Reflects only Equity
Slide 17: Information Services: Includes market data sales
Information Services: Includes market data sales Revenue breakdown 15% of total revenue (2019: 16%) Revenue 18% to R183m (2019: R156m) largely owing to annual Market Data Indices Revenue overstatement price increases, foreign exchange gains on USD-denominated revenue and new business 31 24 new c
Slide 18: Financial Review
Financial Review 18
Slide 19: Financial performance H1
Financial performance H1 (Rm) 2020 2019 % Variance Revenue 1 265 1 065 19% Other income 58 19 >100% Total revenue 1 324 1 084 22% Personnel expenses (267) (238) 12% Other expenses (534) (432) 23% Total expenses (801) (670) 20% EBIT 523 414 26% EBIT % 39% 38% 1 pt Net finance income 104 108 - 4% Shar
Slide 20: Trends
Trends H1 total revenue Revenue as a % total +22% Primary Markets: 6% (2019: 7%) 1, 400,000 Total revenue EPS HEPS 8 Equity Market: 22% (2019: 21%) 1, 200,000 Back-Office Services (BDA): 17% (2019: 15%) 1, 000,000 Equity Clearing and Settlement: 20% (2019: 18%) 800, 000 6 Bonds and Financial Derivat
Slide 21: Operating expenditure bridge
Operating expenditure bridge +20% +11% +9% +5% +1% +5% 58 9 33 31 ITaC annualised External Costs related COVID-19- impact services to higher related spend, Trading system ITaC annualised market including Rm and other support and activity, donations and technology maintenance including pa
Slide 22: Operating expenditure breakdown
Operating expenditure breakdown Growth & breakdown Total operating expenses up 20% to R801m (2019: R670m) General expenses Depreciation Personnel costs 12% or R29m to R267m (2019: R238m) Executive committee changes resulted in restraint and retention costs of R17m Technology costs Personnel cost
Slide 23: Total capital expenditure
Total capital expenditure CAPEX growth & breakdown R46m total capital investment (H1 2019: R33m) Grow the business H2 forecast - grow the business H2 forecast - maintain the business Integrated Trading and Clearing (ITaC) project 1 ⎼ 2018, 2019 Grow the business Maintain the business ETP for gov
Slide 24: Quality of earnings for H1
Quality of earnings for H1 Continued strength in cash generation Adjusted earnings Cash generated from operations 620 620 560 522 518 522 525 507 488 444 Rm 2016 2017 2018 2019 2020 Earnings have been adjusted for non-cash items (depreciation, amortisation, forex profit/loss, impairments, goodwill w
Slide 25: Cashflow view
Cashflow view 525 131 45 * 729 Rm 2,577 2,197 Cash December Cash generated Investing activities Financing activities Dividends paid Cash June 2020 2019 from operations excluding dividends *Includes the effect of exchange rate fluctuations on foreign-denominated cash held and proceeds from sale of tr
Slide 26: Looking ahead
Looking ahead 26
Slide 27: Strategic priorities
Strategic priorities Text 1. Co- 2. creation Trusted for market growth Growing shared place prosperity 3. National agenda Enhanced stakeholder experience through collaborative value Attract and retain diverse top talent to enable an exchange of creation and the highest quality of service delivery kn
Slide 28: H2 2020 strategic priorities
H2 2020 strategic priorities Partner to co-create for inclusive and Run trusted markets, products, and Lead by example on the national sustainable growth and balance equity services by ensuring market quality, agenda and promote #SAInc as a global market concentration risk settlement assurance, gove
Slide 29: Questions
Questions 29
Slide 30: Appendix
Appendix 30
Slide 31: Balance sheet as at 30 June
Balance sheet as at 30 June Six months ended Year ended (Rm) 30 June 2020 30 June 2019 31 December 2019 Assets Non-current assets 1 690 1 611 1 716 Property and equipment 154 188 184 Intangible assets 584 511 593 Investment in associate 298 273 293 Other non-current assets 654 639 646 Current assets
Slide 32: Financial metrics H1
Financial metrics H1 Ratios 2020 2019 2018 2017 2016 Operating margin 39% 38% 49% 41% 47% EPS 569.1 467.0 654.5 490.9 599.7 HEPS 569.0 466.1 654.6 488.9 585.1 EBITDA 644 504 637 511 614 ©Johannesburg Stock Exchange 32
Slide 33: Multi-year depreciation profile
Multi-year depreciation profile Existing assets ITaC 1 Application of IFRS 16 on lease Change in accounting treatment 2020 capex envelope 249 240 8 23 22 202 24 39 22 39 38 24 90 38 71 83 25 74 84 92 89 73 44 2018A 2019A 2020F 2021F 2022F 2021 and 2022 do not include depreciation from investment in
Slide 34: Technology costs: 4-year growth trend
Technology costs: 4-year growth trend Increased spend on risk landscape; ITaC annualised impact offset by lower net contractor spend Technology costs breakdown Technology cost H1 2020 R150m New and incremental spend: R28m R138m* ( 9% ) Risk landscape R10m ( 19%) 4 Infrastructure support R7m 11
Slide 35: JSE liquidity
JSE liquidity Monthly liquidity: 2011 to 2020 Monthly liquidity: 2011 to 2020 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% Jul Jul Jul Jul Jul Jul Jul Jul Jul Jan Jan Jan Nov Nov Jan Nov Nov Jan Nov Jan Jan Nov Nov Jan Nov Jan Jan Nov May May May Sep May May May May May Sep May May Mar Sep Mar M