Right, I think we're bang on time for 2:00 P.M., and a warm welcome to everybody. Thank you all so much for coming to join us. To those of you in person, it's wonderful to see you all in 3D. For those of you who are online, thank you for dialing in. Romy will be monitoring the online dial-ins for Q&A later, but for the moment, thank you very much for joining us. So we'd like to welcome you to our full year financial results presentation for the JSE. I'll kick us off with some highlights, and before delving into the group performance, and after that, our Group CFO, Fawzia Suliman, will provide a detailed overview of the financials, and then I'll close with an overview of our strategic initiatives. So starting...
Am I driving the slides? Starting with the slide four, you can see that the JSE delivered a strong set of results with an 11% increase in net profit after tax, translating into a 12.2% increase in headline earnings per share, and a return on equity of 19.4%, which is very much in line with our long-term targets. This performance, as you all well know, is set against an extremely challenging operating environment, and it demonstrates the exchange's ability to remain resilient, despite our largest contributor to revenue being equity trading, which was impacted by lower value traded. We're pleased to report a 6.9% increase year-on-year in growth in our operating income, and this number includes net margin income.
An important feature to notice is that the quality of our revenue, with gross growth being supported by asset class diversification, as well as trading income, now represents 37% of total income, almost ZAR 1 billion. The proportion of our non-trading income continues to increase year-on-year, very much consciously in line with our strategic intent, and this protects and cushions our profitability during softer market conditions. On the cost front, we continue to prioritize spending on strategic initiatives while maintaining a disciplined approach, delivering balanced or marginally positive operating leverage for the group. OpEx reflects our commitment to investing in people and technology. Our cash generated from operations remains healthy at just above ZAR 1 billion, and it's up 13.6% year-on-year, supporting a strong balance sheet position.
Therefore, for the year, we have declared an ordinary dividend of ZAR 7.84 per share, which translates into a dividend yield of around 8.5%, although that's shifted slightly with the increase in the share price since we announced yesterday. Finally, underpinning all of this is strategic partnerships and innovating in technology, both of which have been a very important priority for us. We launched new partnerships to enable us to rapidly innovate in data services, private markets, carbon trading, and importantly, a modernization of our broker-dealer accounting system, which will ensure that the JSE maintains its leading position among emerging market exchange operators. Moving on now to slide 5. It's important to set the scene for the environment that we're operating in.
As you're aware, 2023, in 2023, global markets were heavily influenced by geopolitical tensions, tighter monetary policy, and supply chain pressures. At the local level, South Africa continues to face additional challenges, with weak economic growth, high inflation, and escalating power disruptions. These, alongside the FATF gray listing, as well as the Reg 28 increase in offshore allowances, have negatively affected investor sentiment. While the macroeconomic certainty has translated into an overall shift in capital flows with less liquidity in South African markets, local investors have shifted their foreign assets, and international investors have equally reduced their exposure to South Africa.
We can see this risk-off appetite in the top two charts with emerging markets underperforming the benchmarks and lower volume and value traded in the equities markets. The biggest impact to the SA flows has really stemmed from two key factors. The first is that the SA's weighting has dropped to just over 3% in the FTSE index, just under 3% in the MSCI emerging index. Investors are now underweight the index. In fact, if we look at a long-run average, the emerging market index weighting in the total global flows has reduced. In 2010, the emerging market index constituted 14% of total industry index weightings, and that dropped to about 12% in 2020, and that's now 10%.
So only 10% of flows are going to emerging markets, and at the same time, South Africa has contracted in its relative weighting within that. Partially, outweighed by countries like India, Saudi Arabia, and a couple of others, and partly because of the contraction in valuation of South African stocks. Shifts in flows, as I mentioned already, to offshore allocations from local investors as a result of the Reg 28 changes in allowances, and global investors reducing their SA exposure, have also affected our numbers. Of course, these are all in the base now, and so we don't expect the Reg 28 impact to be material in the year ahead. Most managers are close to their 45%.
As you can see in the bottom chart, this is clearly affecting the valuation of emerging markets, and in particular, South African stocks, which now ironically present a fairly compelling investment proposition. The compounding effect of our local challenges means that it's very important for us to stay on top of these challenges and to ensure that we respond appropriately. Moving now to slide six. I just have mentioned the quality of our revenue earlier, which was really supported by diversification across the business units and the asset classes. As you can see on this slide, we have various different buckets with different dynamics operating within each of them, and I'll unpack this further in the next couple of slides, and also in Fawzia's financial section.
Something important to note here is that we reclassified in the investor protection levy income from other income into capital markets. After careful consideration, we believe that it's more appropriate in this division, as the levy forms part of a product fee, which is part of the capital markets environment. This change was applied prospectively, and it resulted in about a ZAR 47 million operating income growth. Operating income growth, excluding this levy, would have been at 5.2%. Moving now on to slide 7. We've grouped together purely our trading and post-trading revenues, so all of the other business units have been excluded. As you can see, revenue from most of our asset classes in the green blocks has increased during the year.
However, equity market trading and obviously then consequently, the post-trading, equity clearing and settlement are down due to lower value traded or subdued activity. The macroeconomic context has led to a risk-off appetite for investment in emerging markets, as I said earlier, and there was less liquidity in our markets, with the shift in capital flows to foreign assets and to safe havens. Despite the published equity value trading being down by 9.5%, overall trading, overall revenue from trading and post-trading was up for the year due to activity in other asset classes. Another component to highlight would be the increase of 30% in our colocation revenue, which Faizer is going to unpack a little, a bit more in more detail.
And these, all of these added ancillary services go to the diversification of revenue, but also to the reduction or to the management of our overhead costs. Despite the macroeconomic overhang and the geopolitical concerns, we saw pretty decent demand in the bond market, purely on a yield play, and this was supported by decent local and foreign interest. Global volatility in the interest rates and higher for longer concerns around the inflation cycle provided an underpin for activity across the bond markets over the equities. For currency derivatives, which you all know has been on a decline for a number of years. We witnessed an increase in trading activity off the back of rand volatility.
In the interest rate derivative space, there was higher demand for bond futures, albeit off a lower base, for hedging purposes, and we also saw an uptick in interest from new offshore players. For the commodities derivatives, higher trading and hedging activity was linked to the collapse in the corridor, the grain corridor deal between Ukraine and Russia, the drought in South America, and also strong demand for grains and oilseeds and volatility in the oil market. So we saw in this market overall much more activity in the second half of the year than we saw in the first half of the year, due to largely uncertain weather conditions.
While clearing and settlement is directly linked to trading in the post-trade space, we did see a slight increase in the revenue for BDA and funds under management, which overall led to a flat performance for the segment. JSE Clear, which started operating as an independent clearinghouse in January 2023, also reported higher revenues off the back of a new clearing membership fee, and also growth in the underlying derivatives markets, as you can see by those green derivative bars. Investor protection income was also higher, owing to an increase in the levy and the reclassification being applied prospectively. Finally, margin income continues to be supported by a favorable interest rate environment.
On slide eight, and on a similar theme, we want to move on to illustrate the progress of our diversification strategy, and this is at the heart of the results. Previously, you would have seen a very different outcome had our equity market been down by 9.5%. We continue to invest in defending our competitive position in our core trading activity, while building new services across the asset classes and private capital raising, information services, JSE Investor Services. And all of these enabled our non-trading income to increase by 37%, you can see in the red line of operating income, very much in line with our long-term strategy. In 2023, the JSE successfully demonstrated financial resilience.
The graph displays average daily value traded in the green, and total operating income, which is, the blue bar, and non-trading income, as a percentage of operating income. Over the past period, you will see that the lower trading activity typically resulted in a decline in operating income. So the relationship was slightly more correlated, especially in 2019, and if you take this back, you can see it through history. Where we see in 2019, the ADV was down 7%, and, although we were able to limit declines in operating income, it wasn't in a positive territory. And then, since 2019, the increase in our non-trading revenue has enabled us to reduce that impact of the trading environment volatility, and it supports greater financial resilience in the business.
For the first time this year, we see a new trend where that relationship is uncoupling, and average daily value traded being down by actually 9.5%, and total operating income up by 6.9%-7%, rounded. This really demonstrates the cushioning factor of our non-trading income, and it largely consists of market data fees under the information services business, JIS, JSE Investor Services, and margin income and colocation fees, as well as primary market fees. Overall, you can see that we are starting to demonstrate an improvement in the quality of earnings, and this is also a very important indicator of the future. It allows us, from a market participant perspective, to more broadly spread our overall overhead costs across a much bigger revenue base.
So it's good for the market, and it's good for JSE Limited. Then, as I move on to slide 9, I wanna just briefly reflect on the strategic progress. Much of these are non-financial measures. Many of them are driving revenue, though. As you know, we've got these three pillars: protect the core, transform, and sustain our marketplace. Our core business is critical and continues to generate strong returns for shareholders. It will remain an important priority. So starting with the first bucket, operational resilience is well above the long run average, 99.8%, above the 99.3, and much above the SLA. We launched Securities Collateral, which we're very pleased about, because this will reduce costs to the market. Market participants are now able to post govvy bonds rather than cash.
Our STT upgrade, which was an enormous tech upgrade, was ahead of budget and it was ahead of time and below budget. Our cloud-based colocation services, we're very pleased about, because this really takes us into a next generation of offering services in the cloud. You would have seen the Amazon announcement. This is with a group called Beeks, a very well-regarded global company, and this is reducing the average costs for our brokers. Brokers who are in our colocation center, bearing in mind that 69% of trading goes through the colocation center. It's a highly sophisticated center, but many of the brokers don't utilize their full racks that they have. So we have had some large players moving into this new service, and this drive is ready to start.
It's one of the many things that we're trying to do to reduce costs and to reduce margin pressures, for our members. Our sustainability bonds grew by 17%, and our actively managed certificates grew by 91%, and we have a healthy pipeline for both of those. We spent a lot of time on listings requirements, so I'm not gonna talk to that in detail. On the transform, our JIS revenue growth of 20% is something that we're very pleased about. If you look at the NPAT CAGR since that business was onboarded, we'll just take it from January so that we've got an annualized view, it's over 60% that we've been able to deliver.
The importance of this means that, A, it protects us from the ups and downs of revenue, and B, it's taking up 2 of our floors in the building, for example, and it absorbs a large part of our overall overhead costs, meaning that we have more ability to manage our pricing more effectively for the trading environment. Data lake is embedded, and all our essential equity and bond data has moved to the cloud. We're excited about the Big XYT ecosystems. It's an exchange first. Again, another partnership with a large global provider, which puts us at a very high level of innovation and next-generation technology. Our carbon market was launched in November, and we've had good take-up of clients who are looking to sign up. This is a long-run project, and we don't expect results in the short term.
We did deliver a tokenized digital assets prototype with the SARB and banks, and we are continuing to investigate the digital markets, and the bond CCP project is progressing very well. Under the sustainable marketplace, we are very pleased to announce that we have moved from BEE level one to level... level two to level one. You'll remember that in sort of 2019, we were BEE level three, and this is a very important part, component for our members. And so, we've jumped up in the number of points quite substantially, and we are well within the BEE level one status. Our net promoter score is at an all-time high, but we are working on that, and we think we need to do even more to try and improve what we deliver to our clients.
So I'm going to now hand over to Fawzia, who will take us through the financial results.
Thank you, Leila, and good afternoon to everyone. I'd like to start with our key financial highlights, and then I'll unpack the detail as I go along. Let's start with the income statement metrics first. Our operating income, which is operating revenue plus margin income, is up by 6.9% year-on-year, and this was driven by the asset class diversification, supporting capital markets revenue, as well as contributions from non-trading income, as Leila went through earlier on. We saw double-digit growth in information services and in JSE Investor Services, and JSE Clear also reported double-digit growth. On our OpEx line, we saw an increase of 6.7%, and this mostly reflects investment in our people and technology, supporting our implementation of our strategic initiatives.
We also saw the impact of inflationary increases and negative currency, and we saw that reflect across elements of our cost base. EBITDA margin was down 4 percentage points to 38%, and we saw strong growth in net finance income, which was up 66.4% due to the favorable interest rate environment. Meanwhile, NPAT grew by 11%, reflecting solid profitability, and this in turn led to an increase of 12.2% for headline earnings per share. If we move on to cash and capital allocation, you'll see that we continue to report healthy cash generated from operations, and around ZAR 1.1 billion cash was generated from operations, which represents an increase of 13.6% year-on-year. We did also increase our CapEx by 22.4%.
We spent ZAR 155 million in 2023, and while we still remain focused on protecting the core business, we are pleased with the increasing investment in our growth initiatives. Very importantly, we continue to maintain adequate cash and regulatory capital at ZAR 2.5 billion and ZAR 1.1 billion, respectively. Finally, we declared an ordinary dividend of ZAR 7.84 per share, and that is up by 2% from last year, while our ROE margin was up to 19.4%. Moving on to slide 13, I just want to quickly break down our overall revenue performance. As Leila mentioned earlier, equity markets, and in particular, emerging markets, continues to be under pressure, and we saw a direct impact on revenue linked to trading value and transactions, which were both down for the year.
But despite the difficult trading environment, revenue in our largest segment was still up 3% for the year, and this was driven by the higher bonds and derivatives revenue, which was up by 16%, which offset the lower equity market trading revenue. Equity derivatives and primary markets revenue both reported a 2% increase year-on-year, while commodity derivatives was up by 11%. Moving down the table, I am pleased to note the progress that we have made in growing market share and our service offering at JIS. Revenues were up a strong 20% for the year. The post-trade segment was flat year-on-year, reflecting the subdued market activity. Clearing and settlements revenue was down by 6%, in line with the lower equity market value traded, while BDA and funds under management were up by 5% and 9%, respectively.
JSE Clear reported 16% growth, and as you know, this is a new reporting segment, as we started operating as an independent clearing house in January 2023. Derivatives revenue for 2022 has been unbundled and restated, so it's been excluded from capital markets and included in JSE Clear for comparative purposes. Finally, the information services business also delivered solid growth of 16%, with contributions to operating revenue increasing from 15% last year to 17% in the current year. On the next few slides, I'll unpack the underlying drivers for our revenue segments. We'll start with capital markets and JIS. Equity markets trading revenue was down as expected, given the dynamics that we discussed earlier. Revenues were down 5%, while value traded was down by 9.5%, really demonstrating the effectiveness of our diversification strategy.
Colocation revenue was up 30% and now contributes 69% to value traded, compared to 66% in the previous year. Primary markets revenue was up by 2%, as additional capital raised increased from ZAR 13 billion to ZAR 41 billion. And while the IPO pipeline and interest has improved, the timing and execution thereof remains constrained due to the macro environment. We've seen decent growth in the structured product suite, in particular, issuances across ETFs, AMCs, and warrants, and our sustainability bond segment also grew year-on-year. Bonds and financial derivatives revenue was up 16%, owing to a 20% increase in bond nominal value traded and an increase in contracts traded for currency and interest rate derivatives.
Equity derivatives revenue was up 2%, while value traded was down by 4%, and circa 80% of activity remains concentrated in the main index futures contract, which was flat due to muted hedge activities. The uptick in option structures and the price increases in the international derivatives product supported the overall increase in revenue. Commodity derivatives revenue was up 11%, with the number of contracts up by 4%, as we saw more trading and hedging activity in the second half of the year off the back of uncertain weather conditions. And then lastly, JIS revenue was up by 20%. This was driven by 10 new client wins for the year, elevated corporate action activity, and an uplift in margin income on the back of higher interest rates.
So overall, since January 2021, JIS has delivered a solid CAGR revenue growth of 23.5%. In the post-trade segment, we see that our clearing and settlements revenue was down 6%, and that was as a direct result of lower equity value traded, with billable equity value traded down by 5%. On the other hand, BDA revenue was up 5%, following an uptick in the number of equity transactions. Funds under management revenue was up 9% due to the higher JSE Trustees' cash balances, and JSE Clear, our new reporting segment, was up by 16% due to the growth in our underlying derivatives markets, as well as the introduction of the clearing membership fee. As a result, the overall segment was flat year-on-year. Moving on to information services, we see that information services reported solid double-digit growth of 16%.
Now, this segment continues to benefit from the US dollar-denominated revenues, and growth was primarily driven by the higher index revenue related to US partnership contributions from FTSE Russell. Important to note that increasing US dollar-denominated revenue is quite intentional and part of our diversification strategy. We also saw steady growth in our core market data products, and this, coupled with the positive FX effect, has resulted in the increase that we're reporting in this segment. Moving on to Slide 17, here, I will unpack our OpEx growth, which really largely reflects the spend on our people and technology, two key pillars of our business. Personnel-related costs increased by 13% to ZAR 784 million, and this increase is attributed to our annual salary adjustments, as well as a rise in incentives.
Our incentives were higher, owing to good leavers and retention cost in 2023, and that was set up against a lower LTES in the prior year as a result of lower LTES vesting. Technology cost increased by 11% to ZAR 384 million, and this increase reflects spend related to our growth strategy. Elements that form part of our growth initiatives include information services strategy, as well as our cloud foundation, while BAU-related expenditure relates to software and hardware support and maintenance, licensing fees, as well as cyber resilience initiatives. We did also see the impact of inflationary increases and a negative currency impact, in particular on this line item. Depreciation and amortization expenses decreased by 24%, and this reduction is related to a change in the estimate of useful lives of capitalized software and systems.
Our regulatory compliance and other costs increased by 7% to ZAR 277 million, and this is primarily due to the new cost associated with the independent clearing house, as well as an increase in the trading levies that we saw come through this year. Some of these costs are passed on to our customers, and the related revenue is now reflected in operating income. Lastly, our general operating expenses have increased by 14%, and this growth is largely attributed to the impact of the operating environment and, very importantly, in the investment in our strategic initiatives. We did also see the impact of unclaimed VAT expenses come through on this line, as well as data information charges that supports revenue in the business, and then there was increases in utility costs relating to diesel.
We will continue to proactively manage and to strike a balance between managing cost growth and spending on strategic initiatives that strengthen our core business and enhance our capabilities for the future. Next, I'd like to move on to our CapEx spend, and we see that it was in line with the expectations. We spent ZAR 155 million in 2023 versus ZAR 127 million in the prior year. Now, around 80% of the spend was on maintaining the business initiatives, which includes rejuvenation of infrastructure and systems. We completed three operating systems platform upgrades as well as the system migration. We also upgraded our STT platform, as Leila mentioned earlier, and we spent on items for regulatory enhancements.
The remaining ZAR 33 million was spent on growth initiatives, and this related to our information services growth strategy, progressing the bond CCP, as well as new market development in digital assets. In 2024, we expect to spend within the range of ZAR 145 million-ZAR 165 million, and the components that we will invest in will be quite similar to the previous year. Moving to the next slide for a quick view of our cash position, you will see that the JSE continues to retain a strong liquidity profile, with a closing cash and bonds balance of ZAR 2.56 billion at the end of 2023.
In addition, net cash generated from operations was ZAR 1.1 billion, and our investing activities included investments in intangible assets, the acquisition of plant and equipment, as well as investment in government bonds. Financing activities comprised the acquisition of treasury shares and the repayment of our lease liabilities. Moving on to the next slide, I thought I'll just spend a little bit of time to break down our cash between ring-fenced cash and available cash. Now, as you know, the group holds two levels of non-distributable cash. The first is the investor protection and other funds, and the second, very importantly, is regulatory capital. These collectively amount to around ZAR 1.46 billion, which leaves us with ZAR 1.09 billion of cash, which is available, for various different aspects, and that includes CapEx spend working capital, other investments, as well as shareholder returns.
All currently planned investments can be funded from the group's cash resources. Then moving on to dividends. As you are aware, we have announced an ordinary dividend of ZAR 7.84 per share for 2023. This is up 2.2, sorry, 2% year-on-year, and equates to a distribution of ZAR 681 million and a payout ratio of 82%, which would have moved since yesterday. We reiterate our commitment to a dividend policy, which equates to a payout ratio of between 67%-100%, and the policy enables us to have a flexible approach to balancing cash between the shareholder returns and the investment in the business. My apologies, the payout ratio wouldn't have moved. It was the dividend yield that would have moved from yesterday.
Okay, and then finally, on slide 22, we have outlined our guidance for 2024 relating to OpEx, CapEx, and to the dividends. From an OpEx perspective, we do expect our cost growth to be between 5%-8%, and we will continue to proactively manage our cost. Drivers for our cost include spend on technology, our growth strategy, and increases linked to inflation and a weaker rand. We are guiding to a CapEx within the range of ZAR 145-165 million, as I mentioned earlier, and we will continue to invest in our growth strategy as well as to maintain our operational resilience. Then, as mentioned before, we will pay a dividend in line with our policy of a 67%-100% payout ratio.
Then finally, we remain committed to growing our non-trading income with a view to delivering sustainable quality earnings. And with that, I'll hand back over to Leila, who will conclude the rest of the presentation.
Thanks, Fawzia. Moving on to slide 24, we concluding the earnings presentation. We wanted to provide you with an update on our strong value proposition and our key strategic focus areas. So we have been transformational and innovative over the past few years as our business model has adapted to a changing environment. We continue to partner with world-class network providers to ensure that we provide best-in-class services to our clients, and we've maintained long-term relationships with our global exchanges to cater to a wide diversity of clients. In 2023, we collaborated with Beeks Group, and we expanded our cloud-based colocation service offering.
And our best-in-class infrastructure as a service, which is called Colo 2.0, has not only resulted in an enhanced market access and improved trading speeds, but it's also provided cost savings to our clients, as I mentioned earlier, and that ranges between 25% and 30% for the infrastructure and the maintenance costs from alternative cloud providers. We've also expanded our product range to include analytics and data solutions. We launched Big XYT ecosystems, and that is a business that will offer analytics as a service, and that's a capability designed for global exchanges and their ecosystems. And then finally, transformation and innovation are essential to everything that we do.
As part of this strategy this year, we're engaging in a BDA transformation project, and I'll comment on this a little bit more in the next slide. The JSE has strong foundations which are going to enable the exchange to remain resilient and adaptable to unfavorable and unexpected macroeconomic challenges. However, moreover, we are well-positioned to execute on our strategic priorities. We've got a long-term track record of maintaining settlement assurance. Our technological infrastructure is robust, and we've delivered 99.89% availability, and we offer deep and liquid markets alongside enhanced market access, with improvements to latency and connectivity. Our very sophisticated colocation data center is aligned with global standards, and it offers the fastest trading and market data access to all of our JSE markets.
So basically, a 10-microsecond round trip latency, which is super fast, I'm told. Our indices are globally aligned, and we have credible benchmarks for the SA performance. And then finally, we are an established and credible financial market infrastructure. We have a long track record of robust regulation. We have deep and strong regulatory capital, deep equity reserves. We mentioned you would have seen in the results ZAR 4.4 billion, and a multi-class asset exchange, which gives us revenue diversification, and it supports us through the cyclicality of these businesses. And these features really underpin our competitive value proposition. Next on slide 25, I wanted to just briefly provide you with an overview of our strategic priorities for 2024.
As you know, we've got these three buckets as part of our pathway to achieving our financial targets. In order to protect the core, operational resilience, stability, expanding our cloud initiative are crucial. We migrated all of our datasets, or we will be completing the migration of all of our datasets to the cloud-based data lake, together with one year of, a minimum of one year of historical data, and this project is critical to enabling our strategy. A cloud-based solution allows us to easily access quality data and better understand the needs and trends of our clients. And in 2024, we'll continue migrating these datasets, and add additional history. Our focus will be on completing essential functionality across all four of the foundational components, which make up about 50% of our allocated investment in this area.
We'll launch new data products and expand our offering to and our revenue mix, while establishing the Big XYT ecosystems, and we'll continue to deliver on the Trade Explorer analytics solution to global exchanges and to their ecosystems. And then additionally, focusing on transformation of BDA, which I'll talk about in a moment. As part of the second bucket, which is transformation, we'll continue to grow our core products and services, increasing annuity and non-trading revenue further, but also progressing on the bond CCP, which is a multi-year product or project. And our progress on our IS strategy and M&A opportunities and partnerships for revenue in the data space will continue. And then on the sustainable marketplace, we're gonna continue to focus on client satisfaction, talent retention, and progressing listings reform.
Next, I wanted to spend a little bit of time talking to you about some detail on the BDA transformational product, project, which I mentioned earlier. So just to provide you with some context, as many of you in the room will know, the system of BDA is a more than 25-year-old, system, which is running on a legacy mainframe technology. Right now, the skill set is very niche. We're dependent on key people, and we're also dependent on a single provider. So we've therefore decided to modernize the system, and this will also enable the transfer of data to the cloud and enable cost efficiencies, which will, position us to innovate and increase our agility. We plan to convert the software from COBOL to Java, and we've partnered with Amazon Web Services to assist in this project.
They have an excellent track record in this space, and they have the experience to de-risk what is a complex project. Our first steps will involve the assessment of the application, functionality, the development of a proof of concept, and building a minimum viable project, product. Ultimately, a transformed BDA system will result in a modernized interface. It'll improve user experience, it's gonna lower costs with the running system, and it'll pass these savings on to our brokers. It'll also provide us with the ability to innovate a lot faster. Now, I know that one or two people in the audience or dialing in have been asking about what has our investment in the past looked like? It looks like the revenue stream is high.
The BDA system is a very expensive system to run. It costs us more than double what our MIT trading system costs, and the MIT system supports multiple asset classes. So you will remember, for those of you who've been around for a while, that the systems replacement project, which was an initiative to modernize the BDA system, was not successful, and in 2010, we had impaired ZAR 500 million as a result of that. So that was money invested, but not successful. In 2016, I actually personally ran the T+3 project. The first phase of that project, it was three phases, was focused exclusively on upgrading functionality in the BDA system, enabling a number of reporting requirements which the market wanted, as well as regulators.
The BDA costs for that project were a very material component of our T+3 project. Between 2016 and 2024, there were a number of functional enhancements. A large part of those focused on corporate action changes. In 2017, we upgraded the BCX mainframe, and there were BCX and EOH costs involved in that. Then in 2018, we upgraded the system to enable collateral management with Strate. Then, of course, we had ICBD sector classifications.
Then in 2021, we undertook a very major project to move the mainframe from BCX to the JSE data center, and that was to de-risk that system, and that was a high-costing project. Over the last year or two, there's been quite a bit of time and money spent on evaluating the potential move to a new model, removing the mandate of BDA. And, of course, this year, you would be aware that we've announced the modernization program, which has already started. So you can see over the years, quite a bit of investment has gone into the system. And really now, where we're at is a complete transformation and an upgrade to a system that is based on very old technology.
In closing, I really just wanna reiterate what we've been talking about through this presentation, and this is really just concluding by committing to our commitment to value creation. The solid foundations of our business model are underpinned by healthy cash generation, a very robust balance sheet, and a sustainably high ROE of between 17%-19% over the last sort of 5 years, and well above the cost of capital of 14.5%. We have resilient financial performance, despite declining revenue from some of our core businesses due to market dynamics, and our performance is protected through the strategy of revenue and asset class diversification.
For the year, we will remain focused on increasing revenue diversification, by continuing to diversify our segments and continuing to focus on the core two. We'll also continue to maintain our core value proposition through resilience and stable stability in our markets, making sure that we remain within our long-run average availability and our SLAs. Our client value propositions include deep and liquid, quality markets, which are enhanced by market access improvement in latency, connectivity, and broadening of our products, including the analytics and data solutions. We'll continue to explore strategic partnerships and implement innovative technology, and we are still considering value-accretive M&A opportunities. We've seen strong returns on our funds that have been invested in M&A. As I mentioned earlier, the NPAT CAGR, and...
Well, the revenue increase in the NPAT CAGR since January of 2021 of JSE has been 23.5% and 62.1%, respectively. And you will see, see in our balance sheet that we have a healthy return on the Globac ap investment. And then finally, we have a stable dividend profile, which has grown by 3.3% CAGR on dividends paid for the period of 2018 to 2023. And we remain confident in executing on our priorities, despite a very challenging environment. We're committed to delivering value to our stakeholders through operational resilience, innovation, positive, and increasing contributions of our non-trading revenue, while maintaining our capital allocation optionality. So with that, I'd like to thank you all for your time, and I'm very open to, we're open to any questions. Great.
We've got one question over here, and then we'll come over here. Thanks. If you can just state your name and then the question.
... Especially on the revenue diversification side.
Thank you very much.
Just three questions from me, please. Could you provide a bit more detail about the partnership with AWS? I think you mentioned it has already started, so maybe some broad timelines or expected costs, on that side.
Mm-hmm.
Then the FY 2023 payout ratio was slightly lower than the prior year. Are you retaining funds for maybe the AWS partnership or other systems upgrades? And then, yeah, could you comment on the trading environment, so year to date for 2024? And do you see any drivers for that improving, into the year?
Okay, great. Thank you for that. And, you know, I think, on the AWS side, we are delighted to partner with them. We have not announced at this stage, costs associated with the program. We do have, obviously, a very detailed business case. We do have cost projections. At this stage in the project, we need to just get through our proof of concept process. We need to identify any, you know, build up a bit more, certainty around the projections, and, we will come back with timelines, around the project. It is a multi-year project. We're not expecting it to be a sort of four-year project.
We are hoping that it's—we will be working to get it done as quickly as possible, and we are impressed by the machine learning and AI technology, which enables the translation of the COBOL code to Java. So, I think it's just a bit early for us to talk about timelines. I'll go on to trading environment year to date, and then do you wanna talk to payout ratio, which is obviously affected by some non-cash items on our income statement, too? So in terms of the trading environment year to date, volumes have been thin. And we do have a number of elements at play.
Firstly, a base effect where we saw the Reg 28 impact really only starting to come in, in quarter two, so it wasn't really fundamentally in the base in quarter one. Secondly, the elections have created a risk-off appetite, and our international volumes, just chatting to the multinationals, particularly from America, have contracted quite materially, and this is obviously having a negative effect on flows. And then, of course, the global sort of election uncertainty with 40 countries going to the polls have also created a level of contraction. I mentioned earlier, the decline to around 3% of the weighting in the global index is a further contributor.
I think one of the important things for us as a country, as the Fed starts to open up and reduce interest rates, we will start to see an increase in the risk on appetite, and emerging market investors are going to start looking for yield. So it's important for South Africa to demonstrate, as a country, growth prospects, conviction in our GDP growth, management of power, management of the ports and our logistics sector, and stability coming out of the elections in May. So I think all of those, it's a culmination of a number of factors affecting the current flows.
Thanks, Leila, and thanks for your question. So the JSE did refine its dividend policy, really to reflect a more appropriate balance between the cash we return to the shareholders and the reinvestment in the business. And in 2023, we updated our dividend policy from a progressive approach to a payout ratio of between 67%-100%. So this year we've paid out sort of smack bang in the middle of that range. And the payout ratio really just reflects us wanting to get that balance right around returning cash to shareholders and reinvesting in the business.
The phenomenal value has gone up by 2%.
Yeah
of what we're giving back to shareholders.
So, does that imply the level of the payout ratio could stay more or less where it is, going forward for the next few years?
We'll continue to assess it on an annual basis, based on the requirements of the business.
Thank you.
Hi, good afternoon. Thank you for hosting us. You asked for my name, I'm Martin Lowenthal. I live in the United States. I believe I was the youngest-ever member of the JSE in 1989 at age 23, so I've got a long love affair with the exchange, as does my family. I might be the only shareholder left that owns their shares that were right, converted from right. So... Oh, good. Well done. Well done. So I've got-
You're in good company.
Yeah. Good. Okay.
Mm.
Well, I'm glad that there's some long-term shareholders. I've got two requests and four questions. You want me to get them all out at once or one at a time?
Go, go for it, Mark.
Martin. Um-
Sorry, Martin.
That's okay. Firstly, I wanna congratulate you and your team on a very solid set of results considering the operating environment. I can't imagine how difficult it must be for you or any other business owner to operate in a country and economy that's been run so poorly. It's a kudos on that, and it's nice to see all the initiatives we've been talking about for so many years coming to fruition. So I think that deserves a round of applause.
Thank you
-from the shareholders. And I really mean it, that's very difficult. Okay, so the two requests are, one, you know, I flew in from the States from this, so I was hoping to see the results on maybe Friday. They came out last night, so I really haven't had a chance to see them. Would you consider moving forward to release results maybe 48 or 72 hours ahead of the AGM? And secondly, unless I'm looking in the wrong place, it was very nice to see all the volumes from the other things that you trade other than equities. It might be a great marketing exercise, to attract new investors to maybe once a week, after the close on a Friday, publish the trading volumes of all these other markets, because people, like investors, like liquidity, and it might attract a bunch of new trading.
It's something to think about. I don't know if you're allowed to do it or if you can do it, but the only guidance we get as shareholders or investors are what the equity volumes are, and unfortunately, you know, they've been dismal, and that's not your fault, you know-
Mm
... by any stretch, but it's nice to see what's going on, that the JSE is more than just trading equities.
Mm.
I mean, this is a deep, wide, sophisticated organization that provides a platform, so I'd, I'd appreciate that-
Mm
... if it's possible. I think it could be a great marketing exercise to attract some, you know, some investors, both locally and overseas.
Yeah.
Four or five questions. So you know our favorite topic, you know what's coming, so
We have fully expected-
Yeah, yeah, you got a clear picture.
Yeah.
Okay. So-
That test matter of-
Yeah, so-
-share buybacks.
Yeah, yeah. So when you show... So it's very nice to see that the free cash flows are rising, and there's $2.56 billion of cash. It's all very reassuring, and it's great to know that your, any company you invest in is solid. And your ROE, I think you said, was about 19%, which is exceptional. I can't think, and I don't think any investor, analyst, anyone would have a problem if that $2.56 was $2.26 or $2.36, if the difference was used to buy back shares and recapture the dividend at a slow, gentle pace of 10,000 or 15,000 shares a day. We're not looking to drive the share price up, not by any stretch. It's not a one-day exercise.
I don't think the JSE would be financially harmed in any way, compromised, or not be able to do any of the investment or M&A that they need to do if they had $100 million-$200 million a year in net cash, if, if it was being used for buybacks at these prices, all the way up to $120 million or $150 million. So I would really appreciate it, again, if you and the board would consider that, and I'm sure there's other people in the room that agree with me. The next question. I haven't had enough time to look at the numbers, unfortunately, because I've just arrived, but it looks like the personnel cost was very high, like at around 30% or something.
Please, you know, I've not had time to have a—I literally had an hour or two to look at it. The question is this: Are you properly... Are you over-resourced, or are you at the right resource level? And it seems like, and maybe you can clarify that, that a lot of the comp is done in cash, and it seems like the needs, the entire organization, or certainly maybe the top level of the organization, needs to be more—have more skin in the game in terms of owning shares. Is that something that you consider, or do that? Can you just tell us how that split goes? Because it seems like it, you know, that's a good idea as well.
The third one is that last month, the deepest, most liquid, most active markets in the world experienced their greatest-ever product launch when Bitcoin ETFs were launched. The U.S. markets were... It's unbelievable what's happened. It's beyond anybody's wildest expectations, and it's a good thing. I know there's about six or seven ETF issuers in this country, something like that, and they seem to have done a great job. There's a lot of great product here. Have they approached you, or have you approached them? And if you haven't, I would ask as a priority to get them to start launching those, because it likely bypasses all the listing, the listing stuff that they've got to go through here, which we're gonna get to next.
Because, for—I'm gonna ask for two reasons: one, is for South Africans to have an opportunity to buy Bitcoin directly, I think is an incredible hedging and investment opportunity for them. And number two, you could attract a whole lot of new investors that might broaden their horizon to a lot of the other things that you trade as well, including on equities, because there's a lot of beaten-up companies here that are looking very, very attractive at these prices. That could be a wonderful exercise to get back trading volume and bring back some new clients. So I'd appreciate it if you'd look into that and comment a little bit. Maybe it's underway. It could be, I don't know. And I hope if it isn't, I hope it's being prioritized or will be.
The fourth one, just coming back to the diversification of income, which I think is a wonderful thing in a challenging economy. So kudos at all the things you've been telling us about for years are now really starting to pay off, and which is reflected in the dividend as well, which must have been difficult in such a hard operating environment, so thank you for that as well. But that said, the two core missions of the exchange are formation of new capital and trading of shares. Formation of new capital is important to any economy, but especially one like this. Now, I know it must be very difficult, in the environment now, but it seems like the reforms to the onerous, expensive, and onerous listing rules are happening very slowly.
I think there was an announcement yesterday that was made that there's another 18-month period. Now, maybe there's some regulatory stuff around this, but surely at this level, you and the government can get together and fast-track some of the stuff and start, start, start opening up the markets again. And then secondly, is the trading of equities. As you are well aware, I think every trade that we lose to AltX and other venues is a disaster, and we're losing the NBBO, okay? Every day, AltX publishes their volumes, and I'm seeing some—in some days, it's 50% of some of the biggest stocks on the market.
I know we disagree on this, but I, I feel like the JSE is the premier exchange in the country and the continent, and we should own the NBBO mostly, if not all the time, and let as little volume dissipate away as possible. So I'll leave it at that and look forward to your answers. Thank you.
Great. Thank you very much for that, and welcome back to South Africa, Martin. Thank you for your for your very generous comments in the beginning. We appreciate it. So, first couple of points on releasing the SENS. Typically, we find that market participants want to engage with us as soon as the SENS is announced. So we've taken the option of actually delaying our meeting, this meeting, to the afternoon, because we had the U.S. market wanting to participate. So they do have a full day to review those, and then we have one-on-one meetings after that. We are, of course, always available afterwards. Romy will make herself available to engage on any questions. And, we'll certainly take on board your suggestion to publish trading volumes across the market and get back to you.
Do you wanna deal with share buybacks?
Sure.
For a change.
Sure. So, so Martin, let me give you the assurance that the management and board have certainly considered this. In fact, we regularly assess our capital allocation framework, and the broad approach really centers around the balance between the required investments for driving business growth, and then what we return to our shareholders on a short-term basis. So over recent months, we actually conducted a very comprehensive analysis to evaluate the feasibility, and quite importantly, the timing of a potential share repurchase in the short term. And we looked at various things. So after careful consideration of market conditions, shareholders' interest, I mean, we've heard your view. We've taken the time to hear views of many of our shareholders as we meet them through the investor roadshows.
We've taken all of that into consideration, and as well as the timing of various other investment decisions that we've got on our book, and management and the board have concluded that it would not be in the best long-term interest of shareholders to proceed with the buyback at this stage. That doesn't mean we don't continue to look at it, but because of all of the various things we've taken into consideration. So we've looked at the macroeconomic factors, we've looked at the fact that we've got elections coming up, so we've taken many different things. So all of the things that any organization would take into account for a share buyback, we've applied our minds diligently to each of those, and the ExCo and the board have decided that now is not the right time to do a share buyback. Absolutely.
Okay, so moving on to staff costs. Our staff headcount has remained relatively stable. You can see by the amount of the number of strategic items that have been delivered, that we have a small staff complement, and it would be unwise to reduce our staff complement any more. We have had a couple of lumpy one-off changes between the year. Prior year, we had quite a huge forfeiture of Altius, with some executives leaving. There were a couple of payouts, and some of those have distorted the costs. In terms of skin in the game, we'll certainly take that back on the Altius plan, and present that back to the REM.
In terms of Bitcoin ETFs, we have been engaging with the regulators for quite some time now on whether we can create ETFs with either a Bitcoin or a digital underlying. At this point in time, we must work in lockstep with our regulators. We do not have a regulatory framework in the South African context. I'm very keen to get this off the ground as soon as possible. As soon as we have a regulatory framework that's in place, and I know some of our regulators are on the line, we will look to enable that sort of product. On the capital formation, I'm gonna hand over to Andre, maybe to talk a little bit about some of the work that's happened.
Just to highlight that last year, we had ZAR 41 billion in capital raised versus ZAR 13 billion the prior year. Yes, very small number of companies listing, but there has been quite a material transformation in the number of changes that have been introduced. Andre, do you have a mic?
Thanks, Leila.
Already prepared.
Thank you for the question. Perhaps just on the listing side, there's been a significant amount of initiatives that we've launched over the last two years, specifically. I think we spoke about it at the last AGM as well, and we've made significant progress in terms of implementing some of those. There's essentially two core areas that we're focusing on. The one is making sure that our framework remains competitive, so the opening up of the listing of dual class shares, that's been allowed in many international markets. We implemented those changes last year, and we are now open for business on dual class shares, just as one of the examples.
Looking at making our framework more attractive to get new companies listed, an example there would be public spread, which has been a challenge for some of the issuers listing on the JSE, and that's been reduced significantly to facilitate those capital raisings. And then I think the other one is making sure that we cut the red tape. And there, I think over the last six months, we've published three separate releases, there's another one going out tomorrow, where we are simplifying the listing rules, making it as easy as possible for practitioners to apply. What you will see coming through there is not only making it easier, but it will certainly have an indirect impact of driving down costs.
So there's far too many initiatives to mention on this particular platform, but happy to share more detail with you in terms of the progress that we've made.
I think maybe, maybe just to add to that... Thank you, Andre. We have seen a bit of a shift in the number of listing prospects over the last few months. So themes around unbundling and then themes about dual listings, inbound listings. So the WeBuyCars unbundling from Transaction Capital, Boxer from Pick n Pay, Rainbow Chicken from RCL. And then some of the mining companies, Marula Mining, Vanadium Resources, and then Osino Resources, which is dual inbound listing from Nasdaq, are also quite pleasing. We have quite a few others that are in the wings. We're cautiously optimistic. It's all dependent on macro certainty. Companies won't raise capital in the public markets. The other thing that's in our favor is that over the past number of years, debt has been cheaper to raise than equity.
Now that the interest rate cycle has turned, it favors the raising of capital over debt, and so we're cautiously optimistic. I wouldn't say that we're out of the woods yet. Still lots to be done. We are managing the controllables. Those things that are out of our control are obviously really up to the macroeconomic certainty. Trading of equities and competition. So, you know, if we have a look at the value traded, A2X traded at their highest last year, last month, on average, under ZAR 1 billion, ZAR 730 million, I think. We trade anywhere between ZAR 15 billion-ZAR 20 billion. We don't focus our efforts on what the competitor is doing.
We really are trying to look at how we can improve our services, make ourselves more innovative, more cost effective for our clients. We see competition through a much broader lens. In fact, right now, with the risk on appetite towards South Africa, our real competitor is trying to attract flows from those emerging market investors into South Africa rather than into Mexico, Southeast Asia, India, et cetera. So we are looking to make ourselves as competitive as we can across all of the areas of competition. Who else were there? Okay, we've got two questions here. Okay, thanks.
Hello, I'm Erasmus Visser. Congratulations on the results.
Thank you, Erasmus.
What I wanted to ask, I think in 1999, there was about 611 companies listed on the JSE, and I think there's about 296 left, which is about, I think, $1 trillion. So which is like on a bit of alarming trend for me, at least, who works with this stuff. So, do you think that the trend is gonna continue of less and less companies on the JSE? And, well, how do you see that playing out? And then the size of $1 trillion, that, did that stay the same? Is it gonna go up, down? What - how do you foresee the changes in the future?
I think if you are comparing our listings over the last 30 years, and the numbers that you cite are that 30 years ago, our listings was less, the market cap was less than ZAR 1 billion. It's now between ZAR 17 trillion and ZAR 20 trillion. So, I'm talking in rands now, which is $1 trillion, exactly. So you can see that the market cap has substantially grown, even though the number of listed companies have declined. Where we have seen the contraction in listings is really in the small and mid-cap market. The market is becoming more concentrated. We do need to do more to try and encourage the small and mid-cap market. A lot of the work that Andre is doing is designed to do that.
The simplification and the segmentation projects are particularly designed for that. There are also macroeconomic certainty and growth considerations. We've built in the JPP platform, which is our private placements platform. We've had 41 companies seeking to raise capital on that platform, order of magnitude higher than the number of delistings we've had. So you can see that, there is a lot happening in that space. A lot of this is also cyclical. There was an element of structural decline. In fact, the most number of delistings happened between 2000 and 2010, and the numbers have more than halved in terms of the delistings over the last, sort of 10 years. Ultimately, we are managing the controllables.
We're doing everything that we can to encourage listings, and there are some cyclical factors which are affecting our dynamics at this juncture. Erica?
Hi, Leila. How are you? Thanks a lot, and well done again on the results. As a shareholder, I think it's great, but as a customer, I sit back, along with the rest of the brokers and ask, at what cost? And so the cost really is to the broking community and a lot of your clients who pay those fees. And so the question is, really, a lot of the brokers are asking about the alignment of cost between trading, clearing, and BDA. And clearing - clearly, trading and clearing, the big income has gone down, but BDA has gone up. Now, BDA is clearly an old system and therefore does cost a lot, and we know it's had a couple of attempts at trying to remodernize it, I think for the last 15 years or so.
As you said, in 2010, there was a project. The reality is the costs aren't aligned, and brokers don't feel that BDA is fit for purpose anymore because it's old, but they're still paying an excessive amount for it. Part of the project is how do we get the costs appropriate to the system, and how do we maybe slash costs while we innovating and modernizing it? And I know it comes at a cost, but maybe that's a shared cost.
Mm.
But right now, I think brokers are battling to survive. I think any broker who's got costs or results like that would be really proud, but I don't think there are any broker who can show such positive results.
Mm.
And so at the cost of having no brokers, you know, only 10 brokers-
Mm.
how are we going to try and help ensure we cut their costs down?
Mm.
-and make income somewhere else?
Mm.
Specifically, because a lot of the expenses are mandatory expenses.
Mm.
It's not going back into the system.
Mm.
When brokers are paying those mandatory fees, they're actually not going into BDA or-
Mm
... or how are we gonna help the brokers?
Absolutely, and, Erica, we are acutely aware of the margin pressures that our market—our most important market participants are facing, and without market participants, we don't have a market. So it really is important. You obviously would be aware of all the cost reductions that we've put through the market over the last sort of eight years, some very substantial trading reductions. We did reduce the BDA costs in 2017 quite structurally. Our aim, ultimately, is to reduce our overall cost base and to reduce that. The diversification efforts, our results would be fundamentally different had we not diversified, and the diversification efforts are really aimed at trying to alleviate the overall cost of running an exchange across multiple different business units. So, we are aware of it. It is a very difficult position.
We're working as fast as we can to try and get the modernization project in place. I hear you on, can't we go faster? And, we are looking at, you know, what we can do to, you know, to really support the market as best we can. Any other questions? Romy, any questions online? Oh, sorry. One more.
Keenan here again.
Yeah, Keenan.
I watched a presentation from Jesse, I think it was towards the end of last year, the Capital Markets Roadshow, where someone gave an update on the regulatory environment. So I think in 2007, 2008, we saw a lot of the established exchanges suffering a loss of volume from the MTFs that entered the European market. So longer term, if regulations do change here,
Mm
... in South Africa, and with the reviews currently ongoing, the Financial Markets Act review and the COFI Bill review, do you see the same story playing out for the JSE longer term? Thank you.
Look, Keenan, the MTF growth factor in Europe has certainly affected us, in, in some ways negatively, in some ways positively. It does create a fragmented market, and it reduces equal access, but many of our dual-listed counters trade on those, MTFs. Many of them trade away from the exchange, and, and so we, we have a very small percentage, ironically, of a very big trade that happens off exchange in Europe and the UK. So it's something that we are very aware of. There are some severe downsides to introducing such a market. It's exclusionary.
It doesn't necessarily enable central price formation for particularly the smaller brokers, but it's, you know, it's something that we're keeping our eyes on, and I think it may be a question that is possibly best placed to the regulators, since that's not something that we would, you know, we would have jurisdiction over. Romy?
Yes, Leila, we have one online question for you from Colin Smith. His first question is... Well, firstly, he said thank you, and well done to the team for an impressive set of results, especially given the various domestic and global challenges.
Thank you, Colin.
Then his first question is: Are the regulatory capital and investor protection funds higher because of higher trading revenue? So that's his first question. His second question is: Are you getting any traction with secondary listings from Asia, and how big is the opportunity?
Okay. Thank you, Colin. So, reg cap in South Africa is largely calculated off operating costs. Our—to the extent that our trading volumes go up and our associated trading costs go up, our variable costs, like SWIFT, Strate, the volume-based costs for our trading engine, that would affect our regulatory capital, but it's largely a function of our OpEx. There are other elements of reg cap. We are highly capitalized. We think it's a very important thing to be well-capitalized in a market of this nature. We're a volatile, emerging market. We're an institutional market with large, lumpy trades, and we want to make sure that systemically, we offer the sort of regulatory capital certainty that investors need, and particularly international investors. And then, the second question-
Sorry, Leila, just-
Yeah.
Before-
Do you wanna-
If I can just add, just to the point.
Mm
around the regulatory capital. The reason for the increase is also because we need to hold regulatory capital in JSE Clear. That is an independent clearing house, and so the reg cap requirements have increased as a result of that.
Okay, and then the second question was Asia and potential for dual listings. We haven't seen that translate. We—you would have heard that, when I discussed it, we said it's a long line of vision, and it'll take time to translate. We have had a roadshow to Hong Kong and to Shanghai. We think it's, you know, it's something... China, I think, particularly, is more focused on FDI and key point infrastructure investment. There is focus from Singapore and Hong Kong in the bond and the equity space, but we think these things are gonna take time to translate. We do think that there's potential in the US, in Europe, and also in Amsterdam for, you know, potential activity.
Val, would you like to add anything to that?
...On the listing side, Leila's mentioned that we've done enough on the regulatory side to try and do extra planning, so there's no more onerous regulations from many key centers, and following that up with a lot of foot traffic. Where we've actually seen a larger interest of dual listings coming in is from the U.K. markets, and they've had a contraction, and they haven't had depth of liquidity. Their equities market does not have high activity or investment into their market. And then we think select pockets in both trading member firms and listings in other regions in Asia. But it's not, the largest portion is from European and U.K. markets into ours, some Australia and some Canada.
Great. Thank you, Val. One more question?
We have one more online question.
Thanks. We'll come back to you now. Thanks, Val.
It's from Francois Kemp. He said: Could you expand on the, diversification, allowing you to spread overheads, and what kind of expenses and how much?
So, so it's really just, you know, things like, as I, as I mentioned, the cost of running a building, and overall, diesel, electricity costs, those sorts of things. As I mentioned, we, the JIS team has now moved into the JSE building, so there was a sunk cost. We are looking to try and optimize our building costs as best as possible. And, so it's, it's really those type of costs. We don't disclose those on a granular divisional basis, but just a direction of travel, that's where we're sort of focused. Okay, and then, Martin?
It's not a question, it's a comment. Did you say that there are regulators in the room or listening in?
Possibly dialed in.
Okay, good. And, well, I know you've got contact with them, so this is a message to them. The U.S., the U.S. markets are the most sophisticated, deep, regulated markets in the world, and the SEC is there as well. If they could figure out how to list Bitcoin ETFs, then so can you. It's not rocket science. It's good for the country, it's good for the citizens, and it's good for the JSE. So they need to fast-track it and get on it. There's no reason not to do it. So if you could pass that message along, I would appreciate it.
We'll certainly do that. Thank you, Martin.
I have one more online question, and then we can probably end off with this, Leila. It's from Chris Logan. He said: Can you please explain the ZAR 41 million benefit from the change in the useful life in terms of regards to, PDE and software, which equates to half the increase in net profit? Thank you.
Chris, sure, I'm happy to take that. So the change in the estimated useful life of our assets really related to a conscious decision that was made by management in the first instance, in 2022, to extend the licenses that support the three of our core tradings three of our core systems. That was done in 2022, and when we did. So on an annual basis, we do the estimate of useful life. When we did it in 2022, we thought that the increase in the period of the license was one of the reasons we needed to look at to change the estimate in useful life. But we realized that it was also important to make sure, secondly, that the software that those licenses related to could actually be used for the extended period of the license.
Then the third thing we needed to look at is how that fit in with the technology strategy of the company. So in 2023, so sort of at the end of last year, actually, Tebogo joined us as our CIO, and he's been with us since the beginning of this year. In the first quarter of this year, we looked at those two other elements. So could the software be extended for that period? And did that fit in with the tech strategy? And the answer to both of those were yes. So we took the decision this year to extend the useful life of the assets to match the license period, as well as the period that we thought that the software could actually be extended by and used for.
That was the reason for that change in estimate of useful life during the current year. I hope that answers the question.
Excellent.
Thanks.
Thank you very much.
Layla, we do have one more question, sorry, and then we can close. It's still from Chris Logan. He said: Personal expenses increased to 27.9% of revenue. He said, "In 2018, they were at 23%." He said: How is that justified?
So, I mean, as Leila mentioned earlier on, and I think I did say in the presentation, there were some costs this year that were exacerbated. So our personnel costs, particularly incentives, were higher for the reason that in the current year, we had some good leavers, which meant that their vesting expenses needed to be brought forward. We also had some retention payments that we needed to make, and that was against last year's expenses, which were down because of the lower vesting. The other, I guess the other thing to note is that we have also brought on the staff from JIS. That would have increased the number of people. And I think, Romy, you're saying he's quoting it as a total of our total revenue.
I guess we would need to look at what's happened to revenue, but we know what's happened to our cost over that period. So we've had the inflationary increases, we've had the additional staff, and then we had some of those one-off costs that came through this in this current year. Going forward, we are looking to normalize that cost. In fact, we're working really hard at that, so that they can come back down to single-digit growth rather than the 13% that we saw currently.
Great. Thank you so much. We appreciate your time, and Romy is available if anyone has any additional questions. Thank you. Thank you, Martin.