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13 March 2012 23:14

JSE full-year results: Nicky Newton-King - CEO, JSE

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    First financial results under her reign. Another dividend of R2.50.


    ALEC HOGG: Nicky Newton-King, chief executive of JSE Limited joins us now. Nicky, what happened at your board meeting? We were expecting to talk to you at around two this afternoon and finally got the information from you guys at four minutes to six. Was there some friction?

    NICKY NEWTON-KING: Not at all, Alec. What we like to do is keep you guessing! No, it was an extensive disclosure and we just wanted to make sure it was perfect.

    ALEC HOGG: All right, and so it was, particularly for shareholders who are going to get another R2.50 dividend. What's your cash pile going to be sitting at after – I think was a billion rand a year in June, you paid out that special dividend of R200m or R2.10, and now you are paying another dividend of R2.50. Is this going to be the way into the future?

    NICKY NEWTON-KING: Well, if we are cash-generative and we don’t have anything else we need to do with regard to the cash – for instance, reinvesting it in our business or the like – then clearly we would return it. But the question on our cash pile – it would still be over a billion net.

    ALEC HOGG: Sounds lazy, like a lazy balance sheet. Do you have anything else to do with it?

    NICKY NEWTON-KING: Well, you know, we are not into the lazy balance sheet game, but we certainly aren't into debt either. And I think in these particular times having enough cash so that we can meet our commitments – and, as you know, we are a particularly interesting type of business because we have to guarantee the settlement of on-market equity trades, and that does require a certain amount of liquid assets, and that’s why we keep so much cash.

    ALEC HOGG: How much would you have to keep for that, Nicky? How much would you have to set aside to make sure that that liquidity is there?

    NICKY NEWTON-KING: That's one number we never disclose. We do indicate that we keep cash for three particular purposes: reinvestment, the guarantee of equity market settlements and four months of operating expenses. So we certainly always take the position that if we have surplus cash and we aren't going to do something with it, it goes back.

    ALEC HOGG: This is your first set of financial results after 15 years of Russell Loubser. Looking ahead, what changes might there be under your reign?

    NICKY NEWTON-KING: We are still going to be in the business of running an exchange – hopefully an even better and even bigger exchange. But I'm busy focusing specifically on making sure that our big-ticket items are dealt with, and that we build a significant post-trade services or risk-management business, specifically to take advantage of the opportunities of Basel III.

    ALEC HOGG: So you won't be doing anything radical like moving away from the London stock market or the FTSE, which provides you with a lot of your back-end software at the moment?

    NICKY NEWTON-KING: Well, the London Stock Exchange provides our equities trading engine as it turns out, and we are going to use their new equities trading engine, which we are implementing in July. But we'll bring it here. And once again we believe that’s a very good business decision for us because it will enable us to limit our dependence on the global telecommunications network, and it will also enable us to provide services like prolocation and the like that enable faster trading, and bring our clients closer to us.

    ALEC HOGG: That share price today reacted positively to results which saw the headline earnings per share up 29%.

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