Record total dividend declared
JSE Limited (JSE) announced its results for the full year ended 31 December 2021. Earnings before interest, tax, depreciation and amortisation (EBITDA) of R1.06 billion matched the prior year while EBITDA margin was healthy at 41% (2020: 42%). This performance was attributable to disciplined cost management, a positive contribution from JSE Investor Services (JIS) and a rebound in value traded in the second half of 2021. The record low interest rate environment did impact net profit, however, with headline earnings per share (HEPS) slipping 6% to 878.9 cents (2020: 936.7 cents per share).
“The JSE has delivered robust performance under a challenging macro-economic and trading environment. Our resilience while navigating an unfamiliar route through the pandemic has confirmed the value of the investments we have made in our technology platforms over an extended period,” says Leila Fourie, JSE Group CEO.
Strong cash generated from operations has enabled the Board to declare an ordinary dividend of 754 cents per share for 2021, an increase of 4% YoY in line with the JSE’s progressive dividend policy. This corresponds to an ordinary dividend pay-out of 92% of distributable profits in 2021 (2020: 83%). Given that the Group remains well capitalised with a healthy balance sheet that supports its regulatory capital requirements and growth strategy, the Board has declared a special dividend of 100 cents per share (2020: NIL).
“Our core business model, centered around quality earnings and strong cash generation, continues to provide a solid foundation for growth. We are transforming in line with a changing marketplace. Our inorganic strategy is beginning to demonstrate the intended benefit of diversification. The JSE remains committed to accelerating organic and inorganic growth to unlock responsible value creation and shareholder returns,” continues Fourie.
The JSE has delivered a resilient operating performance with total operating revenue increasing 3% to an all-time-high of R2.52 billion. This is reflected in the segment performance below.
Capital markets (44% of 2021 Group revenue)
- Primary Market: Revenue increased by 1% to R153 million (2020: R152 million)
- Equity Trading: Revenue decreased by 1% to R489 million (2020: R493 million)
- Equity Derivatives Trading: Revenue increased by 3% to R150 million (2020: R145 million)
- Currency Derivatives Trading: Revenue declined by 11% to R41 million (2020: R46 million)
- Bond and Interest Rate Trading: Interest rate revenue was flat at R71 million (2020: R71 million)
- Commodity Derivatives Trading: Revenue increased by 12% to R97 million (2020: R87 million)
- Company services: Revenue was flat at R6 million (2020: R6 million)
- JSE Investor Services (JIS): Revenue amounted to R125 million (2020: R17 million) for the first full-year consolidation of the business
Post-Trade Services (36% of 2021 Group revenue)
- Clearing and Settlement revenue decreased by 5% to R423 million (2020: R446 million)
- Back-office services (BDA) revenue decreased by 7% to R351 million (2020: R376 million)
- Funds under management declined by 1% to R81 million (2020: R82 million)
Information Services (15% of 2021 Group revenue)
- Revenue decreased by 2% to R350 million (2020: R356 million)
The market turbulence experienced during the global pandemic has reinforced the importance of operating resilient, fair and orderly markets. The JSE continues to strengthen its operating resilience by investing in technology, latency and security, and our staff. The real-world stress tests of the past two years have proven the value of those investments. The business is well-positioned to deliver sustainable value for clients, employees, shareholders and the broader economy, remaining well capitalised and cash generative.
“We have made strides in our diversification strategy and in improving the resilience of our technology and systems. A focus on execution, in addition to a few high-impact priorities, will underpin business activities in 2022. Our long-term strategic objectives are to grow and diversify revenue, invest in operational robustness and resilience, and further entrench sustainability in the business,” concludes Fourie.