JSE Limited (JSE) Earnings Call Transcript & Summary

Right. Are we ready to start? Excellent. Good afternoon, everybody. And thank you all so much. It's absolutely wonderful to see some of you in 3D. I know that we've got over 100 people dialed in, and we have the age-old debate of whether it's more forward-looking to have an in-person meeting and hybrid dialing or whether just to go digital. And so it's really good to see some of you. I have introduced many of you who are here in person to Fawzia already, but I would like to welcome Fawzia and introduce our new CFO of the JSE. Many of you would know Fawzia from industry. We're delighted to have somebody with both buy-side and sell-side experience. She has a depth of knowledge and she's only been here for 2 months and yet it feels like she's been here forever. And what is particularly pleasing is that her productivity and her execution is almost immediate. We haven't had a lag effect with her building up knowledge. She has been able to be productive, insightful, and deeply experienced in the issues of the exchange business from the other side of both fences, buy and sell-side. I'd also like to take this opportunity to thank Carmini Kander, our Acting CFO, for almost a year now. Carmini has worked tirelessly through the year and has also ensured a seamless handover. She has been supporting Fawzia through the year end, and will ensure absolute continuity in the next couple of months. I'm going to go through the presentation. I'll start with a bit of a summary on our performance, talk to you a little bit about contextual factors, a bit of a deep dive into some of our business unit performance and our strategic delivery before handing over to Fawzia, who's going to go through the financials, and then I'll wrap up with the way forward on our strategy. I'll ask you to hold questions and we'll take questions at the end. We do have Business Day TV in the room and they are broadcasting live. And I would like to also welcome all of our past Chair and CEOs. I know a number of them are dialed in and it's great to have you all online. So to begin, we -- just seeing if this remote is working, guys. Not sure if the remote is picking up the Bluetooth. Are you able to manually page down? Okay. Perhaps I'm going to start and we'll get the slide up in a moment. So as you all would have read in our SENS announcement and in the press release, the JSE delivered 4% growth in both NPAT and headline earnings, obviously, during challenging conditions and this was supported by growth across all of our business units and also underpinned by high operational performance and a rising interest rate environment, which, of course, buoyed our net interest income. The total group operating revenue was up 5% with, as I said, growth across all of the units. Now I have spoken to you, I think this is now -- no? I have spoken to you over the past few years about our journey to diversify our revenue. And I'm very pleased to report that today, we are starting to demonstrate genuine progress towards delivering on our promise. So, our non-trading revenue is up 20 -- has contributed 25%, and that's up from 18% just 4 years ago. I've spoken many times about the event-driven nature of our business, which often leads to a cyclicality of earnings and has led to swings in our financial performance. Our current diversification strategy is really aimed at improving the quality of our earnings and supporting us through the peaks and troughs of the market cycles. Our non-trading revenue over the past 10 years has grown by 10% compound annual growth revenue. And those are really a function of contributions from products like colocation, market data and JIS. In fact, our JIS business has grown at a compound annual growth rate of 49% since inception in 2020, and our colocation has grown by 19% over the last 9 years since that was introduced. And so our success to date in delivering on our promises and improving the quality of our earnings is really an indicator of the future of the exchange. Group operating expenses, as you would have seen, were up 7.5%, largely in line with inflation and partly impacted by operating pressures such as electricity and diesel, partly impacted by the normalization or annualized effects of some of the acquisitions that we made, keeping to -- trying to see if these slides are coming up. And so consequently, our EBITDA margin has remained more or less stable at 40% versus 41% last year. Let's see if this is coming up, guys. How we doing at the back there? 5 minutes. An important feature of the business is the ability to generate cash and we've proven this once again over the past year. And we're very pleased to have announced that we will be paying an ordinary dividend of ZAR 7.69. In addition to the financial results that I've just discussed, we are very pleased with our operational performance and our resilience, which is at an all-time high. Market uptime was 99.9%, up from our long-run average of 99.83%. Doesn't sound like a big increase in percentage terms, but I can guarantee you the difference between 99.83% and 99.9% means a number of Sunday Times headlines and many hours. Right. Thanks. And here, you finally see the slide and I apologize for that small technical glitch. And then in addition to our sort of operating trusted markets, in addition to the operational resilience, we also are focused very heavily on our regulatory transformation. Enormous transformations have been introduced, and Andre is in the room in our issuer regulatory space to try and cut red tape and improve the listings pipeline. In addition, we were awarded our Independent Clearing House effective 1 January, and we're very pleased with that. And then finally, I wanted to mention that the quality of our earnings is really underpinned by our strategic delivery. And the JSE continues to be a center of innovation, both for financial markets on the continent and in emerging markets broadly. And these results reflect the strategic focus that we've had over the last couple of years. Actions that we are taking is starting to translate into the results that we're seeing. Our cloud-based initiatives in the Information Services space and our fintech-powered private markets are building our commercial capabilities in the digital space. In the regulatory space, we are in the process of introducing a social listening artificial intelligence tool, which will provide an early warning system for any issues that would require follow-up or investigation. And then finally, our JSE analytics platform, which is called Trade Explorer under Mark's area was delivered. This is an exchange first. We are in discussions, both actually on our private placements and our Trade Explorer's innovations with many other first-world exchanges. And it's very pleasing to see that a country at the bottom of Africa is able to provide insights and share knowledge to other developed world exchanges in these new innovations. So smart technology is very much of an enabler for our business, and we don't really just see it as a buzz word. I'm going to discuss these a little bit later. But at the outset, I just want to reiterate our commitment to delivering on our strategy and ensuring that this translates into our results. I'm going to just touch very briefly on the current market operating environment. And I've got a couple of slides that indicate where we are. The JSE has shown, and I'm talking about the first slide on the left-hand side. The JC showed great resilience in the market environment, which has been very volatile. We've had a cascading series of crises ranging from high inflation, fears of low growth, national energy security, geopolitical tensions, China shutting down and now opening up. And all of these have contributed to the uncertainty in the market. And what is surprising and quite interesting is that the all-share index has outperformed all major indices in 2022 with distinct local and global drivers, which have influenced each of the quarters. And so the all-share hit its lowest point, as you'll see in that graph in September at minus 14%, and that was followed by a relatively speedy recovery towards the end of the year, and we ended the year almost flat minus [ 1.9% ]. This compares and you can see this in the other graphs to the S&P, which was down 19.4%, the Nasdaq composite, which was down 33.1%. And the MSCI EMEA index was down 22%. So everything north of 20% in the JSE was down just under 1%. From a sector perspective, our diversified set of listed companies has again demonstrated our resilience. So the JSE's financial '15 ended the year up 4.9%. Resource's 10 ended down 0.2%, and the Industrial 25 ended 5.4% down. As I mentioned in the call in August, what we have seen anecdotally and also quantitatively is that notwithstanding the enormous complexity in the South African macroeconomic environment, notwithstanding the difficulties of the electricity crisis, sentiment towards South Africa is gradually improving. If we look at the FTSE Emerging Market Index over the past year, it's increased from 3.88% in weighting to 4.2% in December of last year, largely off the back of contractions in the weighting from Russia, Taiwan and China. Foreign flows -- and I'm now talking to this second top graph on the right-hand side, foreign flows have -- we've noticed a marked moderation in our equity outbound flows. In the prior year, in 2021, we saw net negative ZAR 153 billion flowing out of the market. This has reduced to a net negative of ZAR 85 billion. So still negative, but much more less severe. In the bond market, we noted an increase, almost double the prior year of ZAR 26.8 billion. Of course, we have seen foreign outflows in the month of February, and those have started to moderate in the month of March. In the bottom graph, you'll see that the volatility that we've experienced in the first half of the year was far greater than the second half, and the volume and value progression has followed that. So that's really a backdrop. And I'm going to now move on and talk to you about how that has translated into our business. If we can page down. Right. Up. Great. So, we're going to dive a little bit deeper into our markets. You can see all 4 of our business segments have delivered growth. Capital Markets increased by 3%, really benefiting off higher volatility in the first half of the year. Published equity market value traded was flat year-on-year, and we'll see how that's translated into our trading line in a moment. Our market continues to grow with 4% increase in market capitalization year-on-year, and we've seen increased hedging activity and colocation, which were both performance contributors over the year. We saw double-digit growth in our equity derivatives value traded, and that was off a very strong base the prior year. And our currency derivatives number of contracts traded also increased. In addition to that, bond nominal value traded and commodity derivatives number of contracts increased. And moving on to the Post-Trade Services business, 3% year-on-year growth. Really slightly elevated market activity in the first half of the year and also an increase in our OD trade types, which attracted fee in the post-trade environment but not in the trading environment. JSE Investor Services continues to make progress with revenues up 28% year-on-year. They onboarded 21 new clients during the year, and they retained all clients post acquisitions. They haven't lost any to competitors. You will recall that we acquired the share pans business from Investec in the second half of 2021. And this is now included for the first time on a fully annualized basis for the year of 2022. And then finally, Information Services, delivering double-digit growth and really off growth in the index business, derivatives markets and, of course, also favorable effects from our FX market. The FX revenue stream is obviously part of our strategy, plays a very important role as an FX hedge against our FX costs. On this slide, I'm going to break down in slightly more detail the business segments, and you'll see all of the business lines, except one has either delivered positive or flat results for the year. And as I mentioned earlier, 25% of this revenue is -- comes from non-trading related items. This slide also highlights another important feature, which is the overall diversification across our asset classes. Many of the global assets -- many of the global exchanges are centered on either equities, derivatives or bonds. And we are very fortunate to house a number of different asset classes. And that provides resilience to our overall income statement. The equity trading market, which is the largest area has reduced by 1% in revenue. Values traded, as I said, were flat for the year. And we processed a price reduction in our complex order trade types and this reduced our pricing. Trade activity was largely affected by a risk-off sentiment off the back of high inflation and tightening of policy rates. The equity derivatives business recorded a 9% increase, and this was really through growth in the index futures, IDX or index derivative futures, increased trading activity in the headline indices and also an uptick in total return indices and offshore index products. We're very pleased with the growth in this line because we had seen a decline for a number of years and last year was the first year that we saw a strong surge in growth and this represents growth on growth. Next, looking at the primary market. We saw a 3% increase in revenue, and that was driven by an overall increase in market capitalization of listed companies. And then the bonds and financial derivatives delivered a strong increase of 10%, and that was underpinned by an increase in bond nominal value traded. And the growth was attributed to a combination of ramp, volatility, the geopolitical crisis and rising interest rates, all of which made South African bonds attractive from a yield perspective. Commodity derivatives were up 6%, owing to an increase in the number of contracts traded as well as physical deliveries. And this was largely off the back of high-price food inflation, the geopolitical crisis and hedging activity, together with both global and local climate patterns, global weather patterns. As I mentioned earlier, post-trade 3% up off the back of an increase in the OD trade types and BDA remained flat as a result of the number -- lower number of equity transactions. And then finally, the Information Services business delivered double-digit growth, 11% up year-on-year. Solid growth across the indices and derivatives markets and a favorable FX impact, which contributed to 5% as a result of the weaker rand. Right. So moving on to the contributions that we've made. We can see that there are -- we've got 3 key priorities protecting and growing our core. We should not underestimate the importance of the core business. We invest heavily to ensure that we continue to protect that transformation of our market and sustainability of the marketplace. These are already culminating and underpinning the results that we've presented to you. As I mentioned, we have obtained the ICH or Independent Clearing House license. We introduced transition and sustainability-listed bonds. We're very pleased with the progress in that space. We've more than doubled -- we've almost doubled the number of bonds listed each year for the last 2 years. This has become a very popular fundraising vehicle for debt-related instruments. We introduced actively managed ETFs and certificates. There has been a tremendous surge in demand from the market, and these products have a restructuring potential in the market. Basically, actively managed ETFs are listed -- are similar to unit trusts but in the listed space. I've spoken about our availability and in terms of our local market share, we've continued to process more than 99% of trades by value traded. And we continue to innovate and work hard to ensure that we are offering value for money in that space. From a transformational perspective, our private placement market has 22 issuances with ZAR 12 billion in investor capital onboarded. We have launched our Trade Explorer, which has attracted a tremendous attention. At the moment, I think we're at about 20% take up. A number of participants are still engaging in the contracting process, but very, very positive feedback from our market participants so far. Expansion of clients at JIS. We have increased our market share from 20% to 29%. We continue to use innovation and underpinned by new products such as our newly launched BEE Verification tool. We are also prioritizing lost shareholders and really working hard to ensure that unclaimed dividends reduce, i.e., those BEE recipients who are not receiving their dividends are traced and connected to the issuers. We launched an SME accelerator program, and we've been through 2 pilots, and we are starting to scale that business. From a sustainability perspective, you would all be aware that we, in the middle of the year, launched our disclosure guidance. We've had great success in our hybrid working environment, and I'm finding the building more and more full each day. And what is particularly pleasing is that staff are wanting to come into the office. Productivity is high. Error rate is low, as you can see in our resilience and our levels of motivation and engagement by staff are at a very, very high level. Our NPS scores, our net promoter scores, which is our customers, are at an all-time high. We believe we've got more to do, and we are working to ensure that we maintain good relationships and that we're responsive and engaging with our customers. I'm now going to hand over to Fawzia, who is going to talk you through the financial results. Thanks.

Thank you, Leila, and good afternoon to everybody. So, this is my first results call for the JSE, and I was just contemplating this morning that it is also my second month anniversary at the JSE. So, I'm a little bit worried about what Leila is going to give me on my third month anniversary, but we'll have to wait and see. So, I'm going to chat through our key financial highlights, and we're going to start with profitability first. So operating revenue up 5% year-on-year, and that was supported by growth across all of our business segments, as Leila said earlier today. It was also represented by growth in our traditional business drivers, but we've also seen the increased contribution from our non-trading revenue, which was up 13% and now represents 25% of total JSE revenue. This growth continues to be supported by strong commercial execution. Our total OpEx was up 7.5%, largely driven by inflationary increases, but I will unpack that in more detail in the upcoming slide. So, our EBITDA was stable year-on-year, up 1%, and that was driven off a softer performance in the second half of the year. And this is reflected in our EBITDA margin, which remained strong at 39%. We saw strong growth in our net finance income, helped along by the increase in interest yields. And what we saw is that on our own JSE funds, that interest yield was up circa 90 bps year-on-year. We also saw an increase in our average JSE margins of 20% across the year. So overall, the stable operating profit, together with that increase in net finance income has led to an increase in both our HEPS and our EPS of 4% for the year. Moving on to capital and cash highlights. So the JSE continues to be strongly cash generative. And in 2022, we generated ZAR 978 million from cash from operations, and that was up from ZAR 917 million in the prior year. And just for context, that was relative to a net profit after tax of ZAR 749 million for the year. Spend on CapEx was ZAR 127 million, as we continue to invest in maintaining the business and our operational resilience, key cornerstones for the JSE as we work towards keeping our markets safe and secure. Our overall cash balance at the end of the year was ZAR 2.2 billion, which is slightly down from the prior year, and that's largely related to investing activities. Regulatory capital always an important one. That was at ZAR 1.2 billion at the end of the year, up from the prior year, and that was supported by ZAR 822 million in cash and ZAR 143 million in bonds. And lastly, on this slide, for the year -- for the full year, we declared an ordinary dividend of ZAR 7.69 per share, up 2% year-on-year. And that represents an ordinary dividend payout ratio of 89%. On the next slide, I will unpack our operating costs in more detail. So if we start with personnel costs, which is the largest contributor to our OpEx, we saw that increase by 7% year-on-year. That's largely driven by the inflationary increases that we've applied to our annual salaries, but we have also seen an increase in the average headcount from the share plan services business in JIS. So as you all know, we purchased that business in September of 2021. So last year, we would have seen the full-year impact of that business. The share plan services business is now fully integrated into JIS, and that has established JIS as the leading share plans provider in South Africa and also given us access to the unlisted registry market. If we look at technology costs, we see that up 2% to ZAR 345 million, again, largely driven by inflation, but we did see some new costs in our new initiatives such as JIS and JPP. And in 2022, we also had to expense rather than capitalize some of the costs related to our STT or securities trading and technology system. In 2023, we will continue to evolve our IT strategy in order to deliver the appropriate technologies for the group. Depreciation and amortization, we saw up 6% to ZAR 273 million, and that was as a result of investments in software technology, in particular, licenses, which resulted in us having to accelerate depreciation on some of the software technology assets that we hold on our balance sheet. We also saw accelerated depreciation -- sorry, amortization on our leasehold improvements. On our other operating costs, which is the second largest contributor to our OpEx, we saw that increase from 12% to ZAR 601 million. And that really was as a result of a combination of factors. In the first instance, we saw the effect or the impact of the operating environment pressures across the board. And we saw that come through in our building utilities cost, including things like electricity and diesel, which is obviously impacting corporates in South Africa across the board. We also saw that low base effect owing to COVID-19. But in addition, we did have some costs that related to the strategic initiatives that we've now implemented. We also saw some costs coming through in respect of JRS administration fees, and that was related to revenue-generating activities in that business. We had some imposed regulatory-related costs and compliance costs. But overall, we remain focused on implementing strategies that will allow us to drive efficiencies and to keep our costs down. On the next slide, we're going to look at the detail in terms of our CapEx spend for 2022. So in the first half of the year, we spent ZAR 51 million, and that was followed by ZAR 76 million in the second half of the year. So ZAR 127 million in total for CapEx, and that was within the guided range. Now, about 85% of that relates to maintain the business type CapEx, and we continue to invest in operational resilience and maintenance and regulatory enhancements, as well as leasehold improvements. The remaining ZAR 18 million was spent on grow the business initiatives, and this includes the Information Services growth strategy, which for 22 included moving the master data to the cloud. It also included spend on the securities collateral project, which is important to allow us to include securities as JSE margin. If we move to 2023 CapEx guidance, you see that we're guiding between ZAR 130 million and ZAR 150 million. We have provided a range because that allows us to assess business cases and also to consider the accounting treatment. But in 2023, we will spend on clearing enhancements, as well as regulatory enhancements, as well as the bond CCP. We will continue to spend on infrastructure and systems maintenance, and we will also spend on our Information Services strategy. We are now at a critical phase in terms of the Information Services strategy as we've laid the groundwork, and we now need to start monetizing that part of the business, and we have seen that start to come through. On the next slide, we'll delve a little bit deeper into our cash generation. And we see that the JSE has continued to be strongly cash generative. So in 2022, we generated ZAR 978 million from operations, and that was up 7% year-on-year, and that contributed to our year-end balance of ZAR 2.2 billion. We also increased our investing activities, largely comprising intangible assets last year, and that included the renewal of multi-year licenses and some plant and equipment, and we also invested in government bonds. Our financing activities for last year included the acquisition of treasury shares, as well as the repayment of the lease liability. So as you can see, we continue to retain a healthy cash position at the JSE, but I think it is important that we unpack that in a little bit more detail, as well as to look at the regulatory capital requirements of the JSE. So if we look at the slide and we look at that graph, we see that our cash has moved slightly down. So from December 2020, it's moved down to ZAR 2.2 billion at the end of December 2022, which is still a strong and healthy cash balance. As you know, the JSE holds 2 levels of non-distributable reserves. The first relates to ring-fenced funds for investor protection and other funds. And then the second relates to regulatory capital. Now the combination of those 2 at the end of December amounted to ZAR 1.2 billion, or approximately 55% of the cash that we hold in the JSE. And then just as a reminder, the JSE calculates its regulatory capital as approximately 6 months' worth of OpEx. Obviously, there are some nuances to that. But in last year, the JSE invested an additional ZAR 115 million into JSEC in relation to the ICH. Now the JSEC is much smaller normally than the JSE, but relative to its size, it is quite capital intensive. The remaining cash balance is then the flexible cash that we hold on our balance sheet, and that is cash that's available for CapEx for return to our shareholders, as well as our working capital and other investments. And as of the end of December 2022, that balance was ZAR 1 billion. So, that was ZAR 1 billion available for dividends, for CapEx, as well as our financial year 2023 commitments. And talking about dividends, that leads us nicely to the next slide in terms of the dividends for 2022. As you're all aware, we announced a dividend of ZAR 7.69 per share for 2022, that is up 2% year-on-year and equates to a distribution of ZAR 668 million for last year. In terms of our dividend policy, we continue to commit to a dividend payout ratio of between 67% to 100%. The refinement in our policy will, however, allow us to have a more pragmatic and flexible approach in terms of the way we balance our cash between returns to shareholders and reinvestment in our business. Lastly, I'd like to provide some guidance in terms of our expectations for 2023. From an OpEx perspective, we expect an annual increase of between 5% to 8%. But again, we remain focused on driving efficiencies in order to manage that cost. From a CapEx perspective, we provide guidance of between ZAR 130 million and ZAR 150 million, and that is to be used for Information Services, data strategy, the bond CCP, infrastructure and systems maintenance, as well as clearing and regulatory enhancements. Lastly, we provide guidance on our dividend payout ratio of a payout ratio of between 67% to 100% in terms of our dividend policy, and that does allow us to maintain a dividend cover ratio of between 1x and 1.5x earnings. I look forward to your questions later. But for now, I'll hand back over to Leila. Thanks.

Great. Thanks very much, Fawzia. And moving on to Slide 18. I'm going to conclude the presentation. We wanted to just provide you with a reminder of our strategic priorities. Our strategy reflects the commitment that we have to building a future-fit JSE. Everything that we do takes a step closer and whether that's in the technology, the regulation, services or using our talent space. We've really had decades of investment into our technology and our systems and hardware. And that, together with very deep institutional skills and knowledge have served us well through uncertain times. And I think the most recent pandemic period has been a good testament to that. Today, more than ever, our environment demands a more dynamic approach to growing and to navigating the uncertain global economic environment and the compounding local pressures. And so our 2023 objectives reflect this. And we continue to prioritize high-quality sustainable earnings with growth in HEPS and NPAT margin of 29% and an ROE of 19%. Protecting and growing our core business remains our primary focus. And this means investing in our assets, investing in cyber to ensure operational stability and resilience of our market infrastructure. Moreover, we are also looking to try and enhance the breadth and the quality of our products. Technology is very much in the DNA of the JSE. So, we maintain a dynamic approach to continually improving that and growing the business through use of tech. Our transform-the-business category includes all of our major growth initiatives, both organic and inorganic. And that includes expanding our footprint into digital platforms. As you've seen the launch of the JSE Trade Explorer, as well as the private placements market has been an important initial sort of delve into the digital space. We're very excited about the developments in the market data space. And this is a business that we've previously communicated is an important priority. We are starting to deliver on those. However, there is an important foundational stage of investing into, for example, our data lake in the cloud, which will enable monetization of new products. And finally, it's critical for us to be the exchange of choice in a sustainable marketplace and to contribute to the global sustainability agenda. Through the SME initiatives, we are aiming to grow South Africa's next big corporate skills and also create an opportunity and a runway to accessing capital. Supporting the greater sustainability environment that considers both climate, social and governance issues within a local context is very much something that we see as our responsibility as a local market infrastructure, and this continues to evolve. And we have an active voice in directing this. This also happens to be the fastest-growing asset class, both globally and locally. We are also continuing to work on accelerating our international relations and connections. And you would have seen a number of proof points over the past year in our MOU with the New York Stock Exchange, engagements with Southeast Asia roadshows that we've gone on together with market participants. And then in closing, I really just want to say that we are very pleased that we have a strong track record of solid performance across all of the segments despite a very challenging macroeconomic backdrop, both globally and locally. And our business model continues to evolve and to meet the changing needs of capital market participants. We are positioned to deliver stakeholder value through operational resilience through innovation, through increasing contributions of accretive mergers and acquisitions and at the same time, adhering to our sustainability agenda. So, I'd like to thank you all very much for listening to the presentation, and we'd like to now open up for questions. I know Romy is monitoring the online presence. So is there anybody in the room? We have some roving mics that would like to raise any questions. Yes. [ Howard ]?

Leila, many, many decades I come to these presentations being a shareholder since the JSE listed. I have some questions as a concerned shareholder, which I'd like to preface with a couple of observations. The first one is and amongst many, a 6.6% dividend yield, after dividend withholding tax gives us about 5.5%. The bond markets are offering us twice that amount at the moment. Our share price in this time, 2018, was ZAR 208. We're now down to ZAR 108. It's been 5 long years. Reasonable dividend, cash flow, that's fine. I've engaged on numerous occasions to possibly deploy the cash in what is a shrinking listed environment despite your observation that the market capitalization is rising. There is an enormous stampede out of the market with de-listings. You've got some of the larger players like PSG and others that are talking about, and the recent research done in the costs of maintaining listings on the JSE. It all makes for a worrying soup for existing shareholders and potential shareholders. So given the 5 years of, let's call it a languishing share price, a dividend yield that is half of what the bond yields are at the moment and the de-listing spates with more to come, can you give us as shareholders some confidence and some -- make us feel a little better about staying shareholders and what we're going to do to attract buyers of these shares given that on numerous occasions I've engaged with you and said to you, we've got shrinking, why don't you do a share buyback? I was extremely, extremely highly anticipated. Instead of giving us ZAR 760 million, take ZAR 1 billion, buy back 10% of the company given that we're shrinking. Warren Buffett has done it. Nedbank are doing it. Numerous companies around the world are doing it. I don't understand why the Board doesn't take a serious look at doing that to increase the robustness of our shareholder base.

Thank you, Howard. And as always, comprehensive summary of many, many points. So, I'll try to address some of those. So the first point around our divi yield relative to the bond market. Of course, there is an element of cyclicality to that. The bond yields in South Africa are particularly promising at this point in the cycle. Equity investments are really a longer-term investment. And so it is difficult at any one point in time to compare different asset classes. We need to take a long-run view. Of course, you have highlighted that there is a -- there was a dislocation in the share price probably about 5 years ago and also some structural impacts to the income statement. If you look at the long-run view, you would have seen that there were a number of pricing reductions in sort of 2016 to 2018. Those have, of course, contracted the top line, and those were designed to ensure that we were competitive. We've managed to retain 99.5% of market share. And that has -- the pricing changes has obviously contributed towards that. Secondly, on the cost line, our depreciation line, if you look from prior to AltX was ZAR 99 million. That's now over ZAR 260 million. And so our -- we have endured a rising depreciation line as a result of one project that ended up costing a little bit more than what was anticipated. I think what one needs to do is look through the cycle. We have seen growth over the last couple of years. We've seen a number of initiatives, which are starting to diversify the revenue and starting to build on that growth. The JSE is affected by global performance and is affected by local performance. Much of that is outside of our control. In terms of volume and value traded, those stats can't really be correlated very well with the listings number. So if you look at the number of listings, we had north of 680 listings 30 years ago. At that time, we had ZAR 800 billion worth of market cap. We had a huge reduction in listings in the sort of early 2000s, when there was a restructuring and a cleanup of that book of the -- what became the sort of entry market to what was at the time with the entry market to the main board. And if you look at the stats over the 20 years, you'll see that there are a number of listings. De-listings per year has declined over the last few years relative to the sort of 20-year average run. If we compare our market cap, it's gone from 30 years ago, ZAR 800 billion to what today is north of ZAR 22 trillion. Our market value and volume traded over the 30 years has also grown exponentially. So certainly, there are ups and downs. There's no question that all South African stocks are concurrently undervalued right now. Many of the international investors have said to us, they think the risk is overdone on South African stocks. And you can see that by that first graph that I discussed where we were flat year-end and Nasdaq was down 33%, and S&P was down 22.7%. That indicates that perhaps the undervaluation of the South African stocks are starting to recover. It's anecdotal at the moment. It's difficult to predict. It's not for us to forecast. But what I can say is that we are working on those factors that are in our control. I hear you on share buybacks. There are many conflicting and different views by shareholders as to whether they want [ some odd ] or a share buyback. And our share is also -- we're a mid-cap stock, we're not a large stock. So for us to do a share buyback and not factor in a liquidity impact would also be naive. And so we need to ensure that, and the Board is considering on an ongoing basis, the concept of a share buyback. We don't have a huge distributable cash value and shifting an entire dividend payout to a share buyback is quite a dramatic change. Of course, it's difficult to compare to the banks because the banks have much bigger balance sheets. They've come off a very difficult couple of years. And the interest income line has buoyed them and created a lot more distributable cash over the past year. So very different business lines. But thank you for your comment. Any other questions? Romy, any questions while we are looking? All right. If there are no other questions, I'd like to say that we look forward to chatting to you one-on-one. You are more than welcome to contact Romy if you'd like to chat. If you have any questions -- I think we may have one more question.

We've got a question from [ Colin Smith ]. He is asking, please, can you update us on pricing, i.e., any changes on pricing through the year? Thank you.

Thanks very much. So, Colin, we've taken very much of -- the pricing modules are all publicly available. We've taken very much of an inflationary pricing increase approach. Our inflation was 5.5%. We increased the cap on our trading lines by 5.5%. We didn't increase our basis points. We've increased our local pricing for Information Services, largely across our lines by 6.5%. Our international lines range from 2.5% to 5.5%. The reason for the slight adjustment is that the -- as a result of the growth in the weakness of the rand, the difference between our local pricing and our international pricing was starting to diverge, and so we are rebalancing that. We've increased the price per transaction by ZAR 0.04 on the BDA line. And I think I've covered pretty much everything. Is there anything you want to add? So more or less in line with what we had as inflation at the time of price increases. Thanks, Colin.

We've got 2 questions here from [ Martin Lowenthal ]. The first one is what is being done to attract new listings? And the second is what has been the impact of the new competitor exchanges? And just to tee up the third question from Colin Smith. He asked how significant is the clearinghouse license? And will this be a revenue generator in itself? And any business model descriptor would be great.

Any business model?

Descriptor would be great.

Right. So perhaps on the Independent Clearing House license, this is a very important regulatory milestone. We've introduced a number of governance changes. It will affect how we price and how we manage that business. There have been a couple of price increases to ensure that those -- that, that market and that independent subsidiary can effectively wash its own face. And then the second question was what are we doing about listings -- the first question. So an enormous amount of work is happening to address the listings environment. Firstly, we've introduced a private placement market. As I said, we had 22 new issuances, which is now starting to counterbalance any of the de-listings, particularly in the small and mid-cap space. And we are seeing traction and acceleration of that market. As you would know, Andre has introduced a raft of very exciting changes. Andre, do you want to talk to some of your changes just at a very high level. We've got quite a lot coming up in the next quarter, quarter 2.

Thanks, Leila. Perhaps just a few points on the listings changes. So, we've taken a 2-pronged approach on the listing side. I think the first one is to try and make the listings framework as competitive as possible, taking into account what other markets are doing internationally. So, we are trying to attract as many companies as possible by introducing changes that are attractive. It will get companies to come and list on the exchange. I mean one of those changes would, for instance, be the introduction of dual-class shares with appropriate balances and safeguards in place for companies.

Many of our international counterparts have opened up their markets to those types of listings. So, we are hopeful that we will get some listings on that side. And then also making the entry criteria more attractive for companies to get listings on the JSE. And then I think Leila spoke about it earlier on the small and mid-cap space, trying to make the listings framework a bit easier for those companies to comply with, with the provisor that we need to make sure that we maintain standards because without appropriate standards, we will not attract international investors. This business is about quality companies, okay. It doesn't wash anymore. All right. This is not the police force. We've got to be allowed to bring the smaller companies to the market, and they need to be encouraged, the institutions to buy them. There is no liquidity in anything under ZAR 10 billion, and the bigger guys are complaining about the costs. So it needs to be very well recognized to be on the southern tip of Africa, people need capital, okay? And there is no way to get into this market. We started the venture capital market here and gave up, okay? Because it is a white lizard of compliance that's impossible, okay, to exceed to, and it doesn't prevent the Tongaat's, the Steinhoff's, [ the ERHs ], and I can go on with the longest.

No, thanks for that, Howard. I think if you look at the consultation paper that we published in 2021, it was aimed at addressing exactly that issue, is we took account of some of the noise in the market that some of the smaller companies were struggling to comply. And the document we put out was to start the conversation with the market to look at what is more appropriate for companies in the smaller end of the market. You're quite right about the VCM. I think we introduced AltX in 2003. We're looking at AltX. We're looking at segmenting the main board to make it easier for some of the smaller companies on the main board. And then lastly, depending on the outcome of that model to introduce a growth market for the JSE. So, I think there's a few strategies that we need a bit of time to implement to get there.

[indiscernible]

Sorry for that, Howard.

Right. So just now addressing the competition question. At JSE, we really welcome competition because it does make us more nimble. It makes us sharpen our pencils. We don't see competition narrowly through one lens of our competitor exchanges in the local environment. We've worked very hard to make sure that we offer depth of market, quality of market that large blocks of trade can be executed with great price formation on the market, and that is a really important indicator of a quality market. Where we see competition in addition to our local environment is really on, on screen trading, particularly in the derivatives market. We see competition in the private equity market. And we've tried to remain as responsive as we can to introduce innovative products that can attract liquidity and attract flow and particularly the JPP, JSE private placements is an example in that space, nascent, embryonic, very small and still to grow. But really, the competition element is much broader. And our main approach to building a competitive approach is through innovation. If I use the JIS environment, as an example, we've introduced a number of innovations, our ShareHub, which cuts costs for issuers, our BEE Verification and our very successful focus on finding lost shareholders and driving the unclaimed dividend problem forward. And those are -- that's the basis on which we compete is really to use innovation that will try and reduce friction and reduce costs. Romy, any -- you've got one more question?

We've got 3 more to close out with. I'll tee them up for you, and then we will call it a day. We've got one asking us what we are doing to attract retail investors? Could we please have an update on JPP? And what is driving the growth in market share in JIS?

Great. So perhaps growth in market share on JIS is simply a number of new clients that we have relative to the number of clients in the market, and we're largely focused on the listed environment. There has been a remarkable drive through using our innovation to try and encourage clients to take up our services. Our ShareHub services, our ATM, digital ATM, which is over 60% of market share are all new technologies that are starting to encourage issuers to use our services. In terms of the -- other question was on the retail market. The retail market remains an important market for us there. I've mentioned this before. There are 3 elements that we are focusing on there. Investor education, financial literacy, we do an enormous amount. We involved 23,000 students in our investor challenge game. The second is pricing, and we are looking at how we can manage through the pricing and the costs to the end retailer. And the third is access. We have had a number of questions from market participants around fractionalization of shares and new innovations that could be thought of, and we are doing research and engaging the market on how we can address that using technology to improve access. And then the final question was really on JPP. Do you want to take the mic there? Val?

Good afternoon, everybody. So just quickly on JPP. As Leila mentioned, I launched JPP. It's a year soon end of this month. It's been a good high demand area for capital raise and as well as a lot of investors who have committed to trying to look at the alternatives and investments. We've got 21 issuances on the platform, a total of ZAR 4.9 billion in capital off, many genres and seeing a good pipeline of interest for capital raise. So, there's definitely the demand in terms of capital need and funding a growing segment in the market. We have ZAR 12 billion of investor assets on that platform or intent. It's very hard to marry it. It's much longer DD and commitment times compared to the public markets like equities and bonds. But there is interest. Lots of the institutional investors have alternative investment mandates where their mandates are not fully at allocation. So it has created quite a good breeding ground. It's still a long trajectory in terms of how we close it, but we're seeing a good value proposition. And we're trying to work within the ecosystem. So through the conduits of the banks and others to try and scale this up, how do we get access to a broader reach of investors and then a pipeline of deals. So it's still early days, but so far the value proposition looks good as a complement next to the capital raise offerings of the JSE in the public market, and we will commit a lot of effort and time to grow this within the ecosystem.

Leila, we have one more question to close out on. How have we been partnering with government to help track listings to the JSE?

So, we engage government on a regular basis. We are discussing with them a number of policy initiatives -- initiatives relating to ranging from potential tax incentives for small and mid-caps. Of course, this is a difficult environment in which to engage on issues such as tax concessions. We are also discussing the possibility of listing potential, more cash-generative SOEs with a clean balance sheet, of course. And we are also engaging with them on infrastructure investment. Infrastructure investment is a key focus area for the private placements market. And we believe that we could work with government, both locally and into Africa. In addition to that, you would remember that we discussed our investigation into the carbon market. As you all know, corporate companies get a tax rebate for up to 10% of potential tax carbon offsets. And we are engaging the government on how to address that at a national level. On the sustainability front, we continually engage market -- government participants relating particularly to sustainability bonds. So the raising of debt finance for green, social projects, et cetera. And those are some of the many aspects that we engage government on. And we really also provide a bit of a conduit and use them our convening power to bring corporates together to engage with government on important matters that would grow the economy. Great. I think we are out of time, and it looks like we have no more questions. So, I'd like to take this opportunity to thank you for coming in person to thank those who took the trouble to dial in online. And I'd like to say that we are very open and would welcome any other questions or comments. Thank you for your time. Thank you for your insightful and thoughtful questions. We look forward to the year ahead. Thank you.