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While we take a look at the JSE trading statistics every week we hardly ever take a look at their financial results. An oversight on our part for sure. Today we take a look at the latest trading statement released by the group in which they state that their Headline earnings per share (HEPS) will be between 25% and 35% lower than the previous period.
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Trading statement for the 6 months ended June 2019
The JSE is currently finalising its financial results for the six months ending 30 June 2019 (the “period”), which results are expected to be released on the Stock Exchange News Service on 30 July 2019.
In terms of the JSE Limited Listings Requirements, a listed company must publish a trading statement once it is satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported on next will differ by at least 20% from the reported financial results for the previous corresponding period. Shareholders are accordingly advised that:
- Headline earnings per share (“HEPS”) for the Group for the period is expected to be between 490.95 cents and 425.49 cents. This is between 25% and 35% lower than the 654.6 cents reported for the six months ended 30 June 2018 (“the comparative period”); and
- Earnings per share (“EPS”) for the Group for the period is expected to be between 491.03 cents and 425.56 cents. This is between 25% and 35% lower than the 654.7 cents reported for the comparative period.
In terms of the JSE Limited Listings Requirements, a listed company must publish a trading statement once it is satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported on next will differ by at least 20% from the reported financial results for the previous corresponding period. Shareholders are accordingly advised that:
- Headline earnings per share (“HEPS”) for the Group for the period is expected to be between 490.95 cents and 425.49 cents. This is between 25% and 35% lower than the 654.6 cents reported for the six months ended 30 June 2018 (“the comparative period”); and
- Earnings per share (“EPS”) for the Group for the period is expected to be between 491.03 cents and 425.56 cents. This is between 25% and 35% lower than the 654.7 cents reported for the comparative period.
HEPS and EPS for the Group for the period have been impacted by several factors, including:
- A decline in the key activity drivers in the main asset classes traded on the JSE and, in particular, lower value traded in the equities market which has seen more than R28 billion net foreign sales and muted local investor activity during H1 2019. This has translated into lower revenues. This revenue performance has been exacerbated by the high base effect in H1 2018;
- The impact of the new tiered billing model for equities trading, which reduced the cost of trading for our clients. This model was introduced in August 2018 and was applicable for H2 2018 but not in the comparative period;
- The impact of the income tax credit of R31m reported in H1 2018 which adds to the high base effect (as there was no tax credit in H1 2019);
- Management actions to fill vacancies so as to reach planned headcount levels (compared to the low base headcount throughout H1 2018), in order to deliver on the JSE’s extensive strategic initiatives; and
- Incremental technology and depreciation expenditures in the period following the implementation of the Integrated Trading and Clearing system.
The JSE’s cash and capital remain healthy and position the JSE well to execute on its various strategic initiatives. Although it is disappointing to reflect these expected results, the JSE revenue performance largely reflects the reality of the difficult economic environment in South Africa which, in turn, impacts investor appetite. This notwithstanding, we are committed to resourcing our business and making the investments we need to ensure the long-term sustainability of the JSE as a critical component of the South African economic ecosystem. Shareholders are advised that the information provided in this trading statement has not been reviewed and reported on by the Group’s external auditor.
End trading statement.
As we mentioned we contiously cover the JSE weekly trading statistics and make reference to the buying and selling activity of foreign investors in these weekly updates. The JSE themsevels refered to the net selling of some R28 billion in locally listed shares by foreigners above. For our weekly JSE trading statistics, see the latest one here.
The image below shows how the JSE share price reacted over the group released their trading statement earlier today. And from the share price it is clear the market is not happy with the trading statement and punishing JSE shares accordingly
- A decline in the key activity drivers in the main asset classes traded on the JSE and, in particular, lower value traded in the equities market which has seen more than R28 billion net foreign sales and muted local investor activity during H1 2019. This has translated into lower revenues. This revenue performance has been exacerbated by the high base effect in H1 2018;
- The impact of the new tiered billing model for equities trading, which reduced the cost of trading for our clients. This model was introduced in August 2018 and was applicable for H2 2018 but not in the comparative period;
- The impact of the income tax credit of R31m reported in H1 2018 which adds to the high base effect (as there was no tax credit in H1 2019);
- Management actions to fill vacancies so as to reach planned headcount levels (compared to the low base headcount throughout H1 2018), in order to deliver on the JSE’s extensive strategic initiatives; and
- Incremental technology and depreciation expenditures in the period following the implementation of the Integrated Trading and Clearing system.
The JSE’s cash and capital remain healthy and position the JSE well to execute on its various strategic initiatives. Although it is disappointing to reflect these expected results, the JSE revenue performance largely reflects the reality of the difficult economic environment in South Africa which, in turn, impacts investor appetite. This notwithstanding, we are committed to resourcing our business and making the investments we need to ensure the long-term sustainability of the JSE as a critical component of the South African economic ecosystem. Shareholders are advised that the information provided in this trading statement has not been reviewed and reported on by the Group’s external auditor.
End trading statement.
As we mentioned we contiously cover the JSE weekly trading statistics and make reference to the buying and selling activity of foreign investors in these weekly updates. The JSE themsevels refered to the net selling of some R28 billion in locally listed shares by foreigners above. For our weekly JSE trading statistics, see the latest one here.
The image below shows how the JSE share price reacted over the group released their trading statement earlier today. And from the share price it is clear the market is not happy with the trading statement and punishing JSE shares accordingly
