By Lehlohonolo Lehana.
The Johannesburg Stock Exchange (JSE) has announced its results for the full year ended December 2021, showing a 3% growth in operating revenue to R2.52 billion.
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).
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%), the group said.
“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,” said Group CEO Dr Leila Fourie.
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.
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, the group said. “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,” it said.
“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,” said Fourie.
“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.”
The group pointed to an average headcount of 519 (2020: 500): 408 at JSE (2020: 402) and 111 at JIS (2020: 98), as personnel expenses of 650 million, was up 8%, while technology costs climbed 5% to R337 million.
The JSE pointed to 25 company de-listings (2020: 20) largely through M&A and/or corporate action in the small to mid-cap space.
Meanwhile PSG Group has on Tuesday, 1 March 2022, announced that it intends to delist from the Johannesburg Stock Exchange (JSE).
The group said it intends to unbundle its stakes in PSG Konsult, Curro, Kaap Agri, CA&S and 25.1% of Stadio, whereafter it will repurchase all PSG Group shares held by its shareholders – other than select shareholders including management, the founders and their immediate family members – for R23 per share in cash.
“This will unlock enormous value for PSG Group shareholders,” PSG said. The combined value of the aforesaid unbundlings and the cash repurchase as at the close of business on Friday, 25 February 2022, amounted to approximately R114 per share, representing a 38.4% premium to the closing PSG Group share price at such date of R82.31.
This is the second value-unlock initiative recently undertaken by PSG Group management following the unbundling of Capitec.
PSG Group CEO, Piet Mouton said: “In all our engagements with shareholders over the past five years a significant part of the conversations revolved around the discount at which we trade and what PSG Group can do to narrow such discount. In 2020, PSG Group unbundled Capitec, thereby unlocking R21 billion of value for PSG Group shareholders. Despite this value unlock exercise, PSG Group continued to trade at a 30% discount.”
Investment holding companies currently trade at substantial discounts to fair value with the average discount being more than 40%. This is not just an SA phenomenon, but globally the investment holding company vehicle appears to have fallen out of favour, with private equity funds and unit trusts taking preference, said Mouton.
In addition, investors seem to prefer to be directly invested in operational companies rather than through an investment holding entity, he added. “The simple fact is that the large investment holding company discounts negate one of the primary reasons to be listed, being one’s ability to raise capital in the equity markets.