JSE ups dividend despite tough economy, delistings

Garth Theunissen - The JSE, the listed entity that runs Africa's biggest stock exchange, has managed to increase annual dividend and grow profit ahead of inflation despite another wave of delistings in 2023.

The board of the JSE declared an ordinary dividend of 784c per share for the year to end-December, up 2%, making for a payout ratio of 82.4%, it announced yesterday.

Though that was slightly down from the 89.3% payout ratio in 2022, it was still well within the bourse's targeted payout ratio of between 67% to 100% of sustainable earnings and equates to a R681 million payout.

Net profit after tax increased 11% to R831 million for the year, while headline earnings per share (HEPS) increased by 12.2%.

Operating income grew 6.9% to R2.9 billion as it increased the proportion of its revenue derived from non-trading activity to R954 million, in line with its diversification strategy.

This is meant to combat a wave of delistings, and capital expenditure of R155 million was focused on protecting the core business and growing new business lines.

"The JSE has delivered a strong set of results by focusing on our strategy to diversify revenue streams while delivering a competitive proposition to the market," JSE group CEO Leila Fourie said in a statement.

"Despite global uncertainty and shifting asset allocations by domestic and international investors, we innovated to ensure we continue to offer a compelling set of trading and non-trading services that supported our revenue growth."

Diversification

The JSE told News24 in December that it suffered 22 delistings in 2023, down slightly from the 25 delistings that occurred in 2022. That left the exchange with 284 listed companies by end-2023, down from 304 at end-2022.

While the JSE had five new listings in 2022 and two in 2023, the rate at which companies are fleeing the exchange still far outweighs those seeking to use the bourse as a capital-raising platform.

Among the various reasons cited for the wave of JSE delistings have been the regulatory cost burden on companies, the growing appeal of private equity-led investment and a moribund economy.

Nevertheless, the diversification strategy has helped it grow non-trading revenue to 36.8%, or R954 million, of its total operating revenue, up from 29% in 2019.

That has been driven by the introduction of new products and services such as JSE Clear, which enables the use of new kinds of securities collateral for derivatives.

Green portfolio

The bourse has also grown its sustainability portfolio, with a 17% increase in sustainability bonds and a 91% increase in actively managed certificates (AMCs).

It has also simplified its listing requirements and launched a Voluntary Carbon Market (VCM) and Renewable Energy Certificates (RECs).

The JSE's Private Placement Platform (JPP) onboarded 41 live deals by the end of 2023, mobilising R20 billion in investor capital in the process.

The bourse also increased its revenue across all its capital markets divisions, including equity, currency and commodities derivatives trading as well as bond and interest rate trading, though equity trading suffered a 4.6% drop in revenue to R486 million. – Fin24