Transcript Document

Overview of the JSE
www.jse.co.za
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Agenda
Overview of the JSE
Do you know how your business can benefit from listing on the JSE?
What is the difference between Altx and Main Board?
Recent JSE developments
www.jse.co.za
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2
JSE in the Global context
Key JSE achievements:
August, annualised liquidity 2013
350%
 The latest World Economic Forum
(WEF) Global Competiveness Report
ranks South Africa first out of 148
countries for regulation of securities
exchanges for the fourth consecutive
year
300%
Shenzhen SE
250%
Liquidity
MICEX/RTS
NASDAQ OMX
200%
Japan Exchange
Shanghai SE
150%
 Ranked 4th in the world in terms of
value of bonds traded on an exchange
according to the World Federation of
Exchanges (WFE)
Korea
Exchange
BME Spanish
BM&F Bov
Exc
D-Borse NSE India
Taiwan
100%
NYSE Euronext
TMX Group
50%
 One of the top 20 exchanges in the
world in terms of market cap
ASX
JSE Hong Kong
LSE Group
Bombay SE
0%
0
1 000
2 000
3 000
4 000
5 000
6 000
# of Listed Companies
7 000
 Ranked no 1 stock exchange in Africa
in Euromoney’s annual survey Best
Managed Companies in Africa 2013
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The JSE on the continent
July 2013
100%
80%
JSE
60%
BRVM
Kenya
Liquidity
40%
BSE
Nigeria
20%
EGX
0%
0
-20%
50
100
150
200
250
300
350
400
450
Ghana
-40%
SEM
-60%
-80%
-100%
# of listed companies
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SA / JSE in the global context
SA in a global context
• The World Economic Forum’s annual World
Competitiveness report showcases the world-leading
position of the JSE as a financial market and South
Africa as capital market destination
Description
SA ranking
(out of 148 countries)
Member of World Federation of
Exchanges
• The JSE is the only Sub-Saharan
African member of The World
Federation of Exchanges (“WFE”), a
highly esteemed global regulatory
body
• WFE membership is based on five
criteria:
Strength of auditing and reporting standards
1
Efficiency of corporate boards
1
Protection of minority shareholders
1
Regulation of securities exchanges
1
Financial markets legal rights development
1
» capital raising and risk
management
Availability of financial services
2
» public good
Financing through local equity market
2
Soundness of banks
3
» be significant within its country
of origin
» be regulated by a supervisory
body, within a statutory
framework
» standards and fees
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BRICS opportunities
MOU signed by participating BRICS exchanges
• Resulted in a joint initiative to expose investors to the
BRICS economies, through cross-listing products BRICSmart
• The Initial, 1st phase offering, now gives investors
access to derivatives on Brazil’s IBOVESPA, Russia’s
MICEX Index, India’s SENSEX Index, China’s Hang
Seng and Hang Seng China Enterprises Indices and
South Africa’s FTSE/JSE Top40 Index
• Apart from cross-listing products, other opportunities will
be explored to promote greater development and
understanding amongst the respective markets
Companies with listings on the JSE (equity and
debt) may be included in these cross listed
products in future
• This means they will be listed on participating BRICS
exchanges in Brazil, Russia, India and China, which
greatly increases their exposure to investors
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Net purchases/sales by non-residents
30,000
Rm
Non-residents ploughed R85.4 billion
(in net terms) into the domestic bond
market in 2012, up from R35.7 billion
in 2011
20,000
10,000
In October 2012, 11 of South Africa’s
government bonds became the first
African bonds to be included in the Citi
World Government Bond Index (these
bonds have a combined weighting of
0.41% in the Index)
0
-10,000
-20,000
-30,000
The only other emerging markets to be
included in the WGBI are Malaysia,
Mexico and Poland
-40,000
-50,000
-60,000
2007
2008
2009
2010
Shares
2011
2012
2013
Bonds
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FTSE/JSE indexation
All Share
Mid Cap
Small Cap
50%
40%
%
30%
20%
10%
0%
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
-10%
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The FTSE/JSE Africa Index Series is
designed to represent the performance
of Southern African companies,
providing investors with a
comprehensive and complementary set
of indices, which measure the
performance of the major capital and
industry segments of the African market
From 1995 until 2013, South Africa
Stock Market (FTSE/JSE) averaged
16216 Index points reaching an all time
high of 44453.88 Index points in
September of 2013 and a record low of
4308 Index points in September of
1998
The FTSE/JSE All Share Index is a
major stock market index which tracks
the performance of 160 companies
listed on the Johannesburg Stock
Exchange in South Africa. It is a freefloat, market capitalization weighted
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index
ZAR - Billions
Capital raised on JSE
250
200
78.059
150
87.549
80.857
100
50
106.984
125
76.69
64
84
39
-
14
2008
2009
2010
Corporate Bonds
2011
2012
Equity capital
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Funds under management (excludes Institutional investment)
Lisp Total Sum of Assets
R 81 865 348 233
Collective investments total
R1 199 807 578 842
Long Term Insurance
R1 738 281 842 769
Collective investments total
Long Term Insurance
Lisp Total Sum of Assets
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Do you know how your business can benefit
from listing on the JSE?
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Why should Your Company List on the JSE?
Taking your company to the next level:
• Accessing capital for growth
• Profiling your business
• Using your shares to make
acquisitions
• Exiting shareholders
• Incentivising staff - attract and
maintain good employees
• Enhance dealings with banks,
suppliers, distributors and customers
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Fundamental changes in the regulation creates
opportunities
Medium term budget policy
October 2011
“The National Treasury has announced that local investors will now
be able to trade in foreign domiciled companies listed on the JSE,
boosting the status of South Africa’s bourse as a springboard for
foreign companies to expand into Africa”
Benefits for investors
• SA investors are not limited to invest in only
South African companies but also foreign
companies listed on the JSE
• The JSE’s regulatory standards and
governance requirements may provide
comfort to investors
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Fundamental changes in the regulation
creates opportunities
Budget Speech
Review 2013
National Treasury announced their support for South African companies that want to expand into the rest of
Africa and offshore. Each Johannesburg Stock Exchange listed entity will be entitled to establish one subsidiary
to hold African and offshore operations (HoldCo), which will not be subject to foreign exchange restrictions. This
will incentivise companies to manage their African and offshore operations from South Africa, maximising the
benefits to South Africa’s economy. Transfers from the parent company to HoldCo will be allowed up to R750
million per year. Additional amounts may be considered on application to the Reserve Bank.
Benefits to South African and African companies
• Listing allows for index inclusion
• Capital raised on the JSE is freely transferable out of
South Africa
• South Africa holds a significant weighting in emerging
markets and attracts a substantial amount of foreign
investment
• Diversity shareholder base and get access to new
sizeable pools of equity
• Listed JSE shares may be used as transaction currency
for future acquisitions
• South Africa has a large domestic investor pool (top
15 investors have FUM of more than USD500bn)
• Numerous listed peers, which will promote research
coverage and investor interest
• JSE is a major destination for global emerging market
funds
• JSE likely to provide greater liquidity South Africa is well
banked, with a broader range of broker coverage by both
international banks and local operations
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Main Board market capitalisation by industry
Technology
0%
Telecoms
7%
Oil and Gas
4%
Utilities
0%
Industrials
65%
Basic Materials
20%
Health Care
3%
Financials
19%
Consumer Goods
32%
Consumer Services
10%
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Overview of Main Board corporate activity
New listings
Delistings
Companies listed
45
350
40
40
345
New listings & Delistings
35
1
3
5
4
340
30
25
25
335
22
20
18
15
13
13
10
13
14
13
18
330
14
325
8
6
5
320
2
0
315
2013
2012
R5,1bn
Rebosis R 1,6 bn
Inv Prop Fund R850 m
2011
R2,7bn
Ascension Prop
Delta
Transaction Cap
2010
2009
2008
2007
R 17, 6bn
Life Hlth R5,8bn
Royal Bafokeng R2,9 n
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Life Healthcare Case Study
Price Performance
Share performance since listing
200%
150%
Listing
10 June 2010
30 Sep 2013
Share Price
– cps
1350
3574
Market Cap
R14.07bn
R37.2bn
100%
High/Low
since admission
3622/1400
50%
Trading volumes
Average Monthly Values
0%
Jun-10
Jun-11
Jun-12
Jun-13
Average Monthly Volumes
-50%
Liquidity
Life Healthcare
Health Care
R90.4m
4.1 Million
66.4%
All Share
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AltX
Platform for small to medium sized, entrepreneurial,
high growth companies, family owned businesses
Distinct listing requirements
59 companies listed on this board
Market Capitalization R15.7 billion
Trading and settlement same as Main Board
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History
AltX started in October 2003 (replaced old DCM & VCM)
AIM / NASDAQ / Mothers / SESDAQ / TSXV
January
2004
First listing
2004
2005
10 listings
market cap
R1bn
2006
2007
40 listings
market cap
R9bn
17 listings
market cap
R1.9bn
2008
85 listings
market cap
R18bn
79 listings
market cap
R30bn
2010
2009
2011
68 listings
market cap
R10.2bn
76 Listings
market cap
R11bn
2012
63 listings
market cap
R13.3 bn
66 listings
market cap
R15.3bn
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Overview of AltX corporate activity
New listings
Delistings
Companies listed
8
90
7
80
7
1
New listings & Delistings
6
70
2
60
5
5
Kibo
5
50
Curro
4
4
4
40
3
3
3
3
3
30
3
2
2
1
20
10
1
0
0
2013
Rockcastle
Global Asset Man
Waterberg Coal
Company
2012
R 90m
2011
R 150k
2010
2009
2008
R 5,8m
RGT Smart
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www.jse.co.za
AltX market capitalisation by industry
59 companies are listed
Utilities
0%
Tech and telecoms
6%
Consumer Goods
2%
Industrials
13%
Consumer Services
2%
Healthcare
0%
Financials
66%
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AltX liquidity
40
35
30
25
%
20
15
10
5
0
Jan
Feb
Mar
Apr
May
2012
Jun
2011
Jul
2010
Aug
Sep
Oct
Nov
Dec
2009
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AltX performance
200%
150%
100%
50%
0%
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
-50%
-100%
AltX
Fledgling
All Share
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Case Study – Ellies Holdings
Price Performance
Share performance
500%
Listing
5 Sept2007
30 Sep 2013
Share Price
– cps
185
720
Market Cap
R432.02m
R2.19bn
400%
300%
200%
High/Low
since admission
100%
0%
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Trading volumes
Sep-13
-100%
Average Monthly Values
Ellies
Small Cap
990/87
2 371 140.01
SA Industrials
Ellies is a leading manufacturer and distributor of
electronic products
Raised R104 million through private placement
Transferred to the main board , 26 November 2010
Constituent of the small cap index
Average Monthly Volumes
324 065.95
Liquidity
51.1% p.a.
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What is the difference between Altx
and Main Board?
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Listing Requirements
Listing requirements
Main Board
AltX
Share capital
R25million
R2million
Profit history
3 years
None
Pre-tax profit
R8 million
n/a
Shareholder spread
20%
10%
Number of shareholders
300
100
Sponsor
Designated adviser
Compulsory
Voluntary
2 (threshold 25%)
2 (threshold 50%)
0.04% of average market capitalisation
with a minimum of
R37,335.59 and a maximum of
R189 700.33 (incl. VAT)
R30 262.20
(including VAT)
n/a
All directors to attend Directors
Induction Programme
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Sponsor / DA
Publication in the press
Number of transaction categories
Annual listing fee
Education requirements
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Recent JSE developments
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New Developments ( listing vehicles)
Special Purpose Acquisition Company (SPAC)
A publicly-traded buyout company that raises money in order to pursue the acquisition of an existing company
Sweden
Canada
USA
2
Netherlands
1
5 1 3
1
90
Germany
10
Austria
UK
South
Korea
1
Malaysia
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Source: Bloomberg
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Overview of SPACS
Time frame for acquisitions:
• 24 Months ~ inline with acquisition
criteria
• If no acquisition made net IPO assets
( i.e. cash) is distributed to
shareholder
Acquisition consideration:
• Cash
• Debt
SPAC Admission criteria
Capital raised
Statement
Disclose acquisition
criteria
• Growth capital
Applicant is not carrying on any commercial
or business operations
Cannot be changed without 75% of
majority votes
• Details of directors remuneration
• Operating expenses for initial period
Directors
subscription of
shares
• 5% of shares or units
• Held in trust
• Lock in period: 6 months from date of
acquisition
• Acquisitions
Shareholders:
AltX = R50m
Disclosure
• Shares
Excess cash:
Main Board = R500m
Experience
Management must have sufficient and
satisfactory experience
• Vote to approve acquisition
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REIT’s
Real Estate Investment Trust (REITs)
REITs are corporations that own and manage a portfolio of real estate properties and mortgages
CISIPS
6
PLS
23
Company
15
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Overview of REITs listing requirements
Asset Class
Gearing
Distribution
R300 million size of portfolio (gross assets)
Property entity & section 13
75% rental revenue
Risk management process exists
Confirm have 60% gearing ratio
Latest audited or reviewed results or more
recent pro formas
Undertaking to restrict gearing on going basis
Confirm will qualify in terms of Tax Act
Undertaking to distribute 75% of
company tax net profit
Tax disincentive to retain group tax income
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Questions
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