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A 7% increase in revenue combined with controlled operating costs led the JSE Limited, the company that operates the local bourse, to report a 22% increase in net profit after tax to R253.8 million (H1: R207.6 million). The Group declared a special dividend of 210c/share.
“All divisions of the JSE reported an increase in revenue in the first half of 2011, with particularly strong performances from the cash equities, commodity derivatives and currency derivatives markets. This revenue growth, combined with lower operating expenses, indicates a better performance. We also retained the focus on our major strategies,” says Russell Loubser, CEO of the JSE.
The Group’s revenue for the period is derived from diverse sources:
- Issuer services – Revenue in the JSE’s Issuer Services division, which handles company and debt listings, increased 6% to R48.8 million (H1 2010: R45.8m). “Though there is a listings pipeline, potential issuers remain hesitant about the current economic environment. This is in line with the experience of other World Federation of Exchanges members,” says Loubser. During the first six months of 2011, five companies listed on the exchange compared to six in the first half of 2010.
- Equity market – The number of trades climbed 5% and value traded increase 4% in the first half of 2011. In total, equities revenue rose by 8% to R371.7 million (H1 2010: R344.5 million)
- Equity derivatives market – Equity derivative revenue rose 5% to R55.9 million (H1 2010: R53.3 million) as a 4% dip in the number of contracts traded was countered by a 12% rise in value traded. “This year, the equities derivatives team has worked hard to encourage trading of single stock futures on the central order book, which we believe is key in unlocking larger volumes and attracting international players,” says Loubser. The division also saw strong growth in index derivatives and bespoke products traded on-exchange.
- Currency derivatives market – Currency derivatives revenue climbed 44% to R7.2 million during the first half of 2011. This growth is attributed to a change in the billing model to stimulate trade; an increase in the range of instruments traded and the introduction of bespoke, on-market products. Currency derivatives are a small but growing portion of group revenue.
- Commodity derivatives – Revenue grew by 15% to R23.6 million (H1 2010: R20.6) largely due to increased trade. “Local maize and wheat contracts continue to make up most of the trade in this market, but the trade of foreign-referenced instruments under licence from the CME Group continues to rise,” says Loubser.
- Interest rate market - Strong secondary trade figures resulted in a 16% revenue growth to R19 million (H1 2010: R16.4 million).
- Information product sales – Despite a contraction in data sales to existing clients both locally and internationally, revenue grew 4% to R61.1 million as the team continues to grow its base of international clients.
Special Dividend
The JSE sets aside cash to fund operations, guarantee central order book equities trades, maintain infrastructure and meet capital needs for expansion. “Testing of the new equities back office system is progressing well and the new system is set to be implemented in 2012. As the capital expenditure for this project comes to an end and the exchange has sufficient cash reserves for its current needs, the Directors have declared a Special Dividend of 210 cents per share. The dividend will be paid out on 12 September 2011,” says Loubser.
Prospects
The JSE continues to focus on growing all markets, diversifying revenue streams and implementing strategic goals. In the first six months, the JSE has:
- Completed the integration of the interest rate market trading platforms so that there is now a single platform for the trading of interest rate products
- Delivered the first phase of the remote disaster recovery site
- Made good progress in implementing the new state-of-the-art data centre which is scheduled to be completed before year end.
“Market uncertainty and concerns regarding global sovereign debt have cast a shadow on the first months of 2011. Yet, despite these conditions, we have still managed to perform better than the first half of 2010. We will continue to focus on growing all our markets, diversifying our revenue streams as well as delivering value to issuers and investors through the strength of regulation and quality of service,” concludes Loubser.
For further information, please visit www.jse.co.za
