So much for attending. A warm welcome to the interim results presentation for the JSE for the first half of 2023. I'll kick us off with some highlights for the first half of the year before delving into the group performance. Then, after that, Fawzia, our CFO, will provide a detailed overview of our financials, and I'll close with a review of progress across our key strategic initiatives, and after that, we will open for Q&A. I'm going to move now to slide four, where you can see the JSE delivered a very solid set of results for the first six months of the year, with a 10% increase in net profit after tax, and this resulted in a 12% increase in headline earnings per share.
The performance comes within a challenging operating environment, which saw our largest contributor to revenue, equity, trading, and clearing, lower than the prior year. Despite this, we achieved an overall revenue growth of 5% year-on-year, and an important feature of this revenue performance is the contribution of non-trading revenue, which has grown from 34% in financial year 2022 at year-end, to 36% of operating revenue, which includes margin income. The growing contribution of revenue that is not driven by trading activity is really designed as a cushioning effect during softer markets, and I will show a little bit more of this detail in the next slide. Standing back, we have two different dynamics at play.
We delivered a 5% revenue growth on a high base set last year of 11% and an 8% OpEx growth off a very low base in the prior year of 3%. The prevailing high interest rate environment resulted in a 53% increase in net finance income. Cash generated from operations remains healthy, albeit slightly down at ZAR 488 million. Finally, operational resilience has always been a very important priority for us. I'm very pleased that the market uptime of 99.98% is well ahead of our long run historic performance. This performance really demonstrates our unwavering commitment to provide reliable and secure trading platforms for all of our investors and our clients, despite challenging market conditions.
On slide 5, we wanted to move on to illustrate the evolution of our diversification strategy and the impact that it's had on our revenue profile. I've just spoken to you about resilience in our operating environment, and I'm now moving on to the financial resilience that we are starting to demonstrate. The graph that you see on this slide demonstrates average daily value traded in the cash equity market, which is the green bar. Total operating revenue growth, which is the light blue bar, and revenue growth, including margin income, which is for the first half of 2019 to 2023. In the past periods, what.
When we've seen reduced trading activity, it's typically resulted in a decline in total operating revenue and revenue, including margin income, as you can see on the extreme right-hand side, of the graph. As the contribution of non-trading revenue, including margin income, increases, and we've seen it increase in 2019 from ZAR 316 million nominally to ZAR 536 million in the first half of 2023, we can see this has grown the contribution from 29%, the yellow dotted line, to 36%. As this grows, it's able to reduce the impact of the low trading environment, and it supports greater financial resilience of the business.
In the first half of this year, for the first time, you can see a reversal of the relationship between the green and the blue, between average daily value traded and revenue growth. Average daily value traded in the past half of the year was down 6%, and total revenue and income was up 4% and 5%, respectively in each of those graphs. If we break this down into the non-trading line items, on a full year basis, non-trading income has grown at a rate of 10% CAGR over the past 10 years to 2022, and the contributions have largely been from colocation, market data, and information services, amongst a couple of other smaller lines. That trend has continued through the first half of the year.
Our success to date in delivering on our diversification strategy has improved the overall quality of our earnings profile, and it's also an important indicator for future performance. Moving on to slide six now. It's essential to acknowledge the macroeconomic challenges and uncertainties that have persisted and, and in some cases, even worsened during the period. Global markets were influenced by geopolitical tensions, tighter monetary policy, supply chain pressures. We're all very familiar with all of these dynamics, and looking down to South Africa, we faced additional and sometimes compounding pressures that require resilience, adaptability, and responsiveness in our own operations and our, our strategy. South Africa's weak economic growth, along with higher inflation and interest rates, continue to impact investment decisions and borrowing costs.
Escalating power disruptions have had a tangible impact on various sectors, affecting productivity and profitability. In addition, recent events, such as South Africa's FATF grey listing, strained diplomatic relations, have all worked together to negatively impact investor sentiment, and these have resulted in net investment outflows. We continue to stay abreast of these changes, to ensure that we respond appropriately and effectively. Moving down to slide seven, we translate those, those more macro pictures into some of the key metrics that are defining markets, both locally and abroad. As we're all aware, recessionary fears and uncertainty around China's reopening, together with the SVB bank collapse and the US debt ceiling concerns, have all culminated to impact global market performance in the first half of the year.
The JSE All Share Index ended the first half of the year in positive territory and remains in positive territory, still below the S&P and MSCI Index, off a low base, of course. That's really thanks to a long run, a strong run in resources and industrials. On this slide, we can also see an increasing trend in interest rates, which has had an obvious positive uplift on our net finance income, as I mentioned earlier, Sentiment towards South Africa continues to be fragile.
On the bottom right of the scale, you can see the FTSE Emerging Market Index year to date, and since the beginning of 2022, South Africa's weighting has declined from 4.2 to 3.57 at mid-year, and has shrunk slightly more even since the end of June. If we turn now to slide 8, I want to translate those factors into what's happening in our local markets and focus our attention really on volatility, foreign investments, and then the third graph, which is trade activity. All indicators that I've covered here are really important indicators for our core business.
We saw a notable decrease in volatility compared to the prior year, although all of the levels remained higher, pleasingly, than the pre-pandemic times. Sentiment has significantly impacted our foreign participation, both in the equity and the bond market, during the first half of the year. Foreign investors have continued to be net sellers in the equity market, resulting in a net outflow at the end of June of ZAR 56.7 billion. Foreign selling in the first half of the year reached a five-year high, and particularly in the month of June, we saw ZAR 20.2 billion in net flows moving out for that month alone. In the bond market, a slightly different picture.
We recorded net foreign inflows in the bond market of ZAR 8.1 million, which was significantly lower than the inflows of ZAR 32 billion. Equity market trading, which was measured by value and volume traded, was lower due to a high base effect in the same period, really off the back of the Russia-Ukraine crisis, but nonetheless, again, higher than pre-pandemic levels. In the last graph, you can see the average daily value traded reached ZAR 24 billion in the first half on an average level per day. This represents a 6% decline compared to the ZAR 25 billion which we saw in the same period. And of course, fortunately and pleasingly, these, while they were lower, still higher than our pre-pandemic levels.
Before we move into the financial presentation, I want to spend a little bit of time unpacking the drivers of the revenue in our business. Fawzia is going to unpack the revenue performance shortly, and I'll go through the drivers. We recorded flat to positive performance across all of our business units, and this resulted in a 4% growth in total operating revenue. Starting with capital markets in the green, revenue increased by 1% year-on-year, and we really start to get a sense of the operating environment in these numbers.
While we recorded growth across most of our asset classes, our largest driver of revenue in this division, as we all know, the equity market value traded, was down 6% off a high base in the prior year, more than 2x that. Really caused by market volatility on the back of Russia-Ukraine conflict, and also by negative sentiment in the current year. In the equity derivative space, similar to similar to the equity market, cash equities market, we saw a decrease in activity in index futures as well as single stock futures. Local and international clients, interestingly, were of the view that funding's become a lot more expensive, with an increase in interest rates that we're seeing, as we all know, both locally and internationally.
We, we noted an increase in bond nominal value traded of 16%. This was largely attributed to a volatile rand, which was caused by local pressures and, of course, a rising interest rate market, making the SA bonds attractive from a yield perspective. The number of contracts traded in the currency derivatives, pleasingly, was up 58% off a very soft base, thanks to volatility in the rand, particularly in the months of February and May this year, after the SARB announced rate hikes. Commodity derivative contracts traded had a subdued first half of the year relative to the previous year's Russia-Ukraine War and COVID recovery that we saw post-2021.
The post-trade environment had a flat year-on-year, impacted largely by lower equity trading activity. On the other hand, funds under management increased by 18%, largely as a result of higher JSE trustees' cash balances. JSE Clear now reporting as a separate segment, and they reported a growth of 15%. Previously, trading and clearing fees had been bundled together under the capital markets environment, under the different derivatives lines. Now with the license of the JSE independent clearing house, JSE Clear, we've unbundled the trading and clearing fees, and we'll be reporting separately on those. Fawzia will go into a little bit more detail on how the independent clearing house model is going to impact reporting.
Information services is a space that we are very pleased about and excited as we look ahead. It delivered double-digit growth of 13% year-on-year, and this was underpinned by a favorable FX environment and stable performance in both the indices and the derivatives markets. JSE Investor Services, or JIS, delivered another very strong performance with revenue up 23%. We welcomed in this business 6 new transfer secretary clients, and this brings the total new number of clients since acquisition to 35. I'm now going to hand over to Fawzia, and she'll take us through the financials in a little bit more detail. Fawzia, over to you.
Thank you, Leila. Good afternoon to all of those that have dialed in today. I'm going to start with the key financial highlights, and I will then unpack some of the details in later slides. Let's start with profitability. Operating revenue was up 4% year on year, and this was driven by the double-digit growth in information services as well as JSE Investor Services. We also saw an uptick in trading activity across most of our derivatives markets, with the exception of equity derivatives. As Leila mentioned earlier, the proportion of our operating income derived from non-trading activity has increased to 36%, really demonstrating the progress we're making in our diversification strategy. OpEx was up 8% year on year, and this was mostly driven by personnel costs, reflecting annual inflationary increases.
We also had an increase in the long-term incentive scheme expense. That was against the prior year lower base. In addition, as inflation keeps trending upwards, our cost base does continue to be affected. This has impacted our EBITDA, which was down 4% year-on-year. We all recorded an EBITDA margin of 42%. We saw strong growth in net finance income, which was up fifty-three-... Supported by the rising interest rates, while our net profit after tax grew by 10% with an end margin of 34%, reflecting strong profitability for the period. Sound profit growth, together with the immense income growth, an increase of 12% for our reported headline earnings per share for the period. Moving on to the capital allocation highlights.
As Leila indicated early on, we do continue to report healthy cash generation, ZAR 488 million was generated from operations during the period. We spent ZAR 33 million on CapEx, which remains focused on protecting the core as well as investing in new business. Our capital expenditure will pick up in the second half year. We continue to maintain a robust balance, and our cash balance at the end of June was ZAR 2.08 billion, and that does include ZAR 195 million, which was allocated bond earlier during the period.
If we look at our regulatory capital, we see that ring-fenced and non-distributable cash amounts to ZAR 1.5 billion at the end of the period. The ZAR 1.5 billion rand includes ZAR 132 million being the, and then we've got ZAR 558 million being in respect of the protection and other funds. This effectively leaves us with ZAR 593 million in available cash. Slide 12. This is where we break down the revenue performance, and dedicate the impact of the revenue drivers that Leila discussed earlier on our financial performance. She mentioned equity markets were under pressure throughout the first half of the year, and as a result, all revenue based on trading value, volumes was impacted.
Security markets trading revenue, which is the largest segment in capital markets, was down by 5%. This is of a high base in the prior year, as well as subdued performance in. In primary markets, revenue was stable, both reporting a 1% increase year-on-year. The uptick in primary markets revenue reflected the higher market capitalization of the listed on the JSE. Bonds and financial derivatives delivered a strong 28%. Derivatives, although a small contributor to total revenue, increased by a healthy 8%. Overall, our capital market was up 1% year-on-year. We continue to be pleased with the growth coming out of JIS, which 20%, and this was achieved by growing market share as well as the service offering.
The post-trade segment was year-on-year, with clearing and settlement revenues down 4% in line with the lower mark value, while BDA was slightly reporting 1%. JSE Clear read 15%. Leila indicated this is a new segment for us, and we as such, started operating as an independent ICH in January this year. What we've done for illustrative purpose is for 2022, bundle the derivatives revenue and excluded it from us and include JSE Clear for comparative purposes. Finally, the segment also the growth, increasing its distribution from 16% at the end of to 17% of total operating.
If we look at next, we have a net finance income in relation to the average interest rates half year period, which is to demonstrate the growth in our finance income is linked to interest rate. We, in the interest rate, move from 0.2% in the first half of 2022 to 7.6% for the first half of 2023. Over the past few, favorable changes in interest rates, we see that that has significantly contributed to the growth in our net finance in. We've, in this slide, given you a breakdown between the interest that we earn on our own funds, the margin inc, so that reflected on this slide. I'd like in our growth, the current working environment, as well as the growth cost base that Leila spoke about earlier.
We see our now related up 15% of this ZAR. The salary adjustment inflated office. Acknowledge focus of ZAR 6 million. That increased. We've also had some increase strategy for the business. Depreciation and amortization is down 21%, 26%, and this is due to an estimate of the new lives of some of our software and systems. Regulatory compliance and other fees up end or ZAR 10 million of the ICA cost, which was imposed on April 2023. Important to note, all of these costs is recovered, those various, and recoveries are reflected in line items, including the operating income and net finance income. As for opportunity, see the impact of the eating environment on diesel as an example, has increased. We've also had some investments in OpEx and in.
Continued many versions 12 space, but implemented, that's our core and our capabilities of the future. The next slide is, is like in the appendix. The reason we brought it is to just show that there's been a change of depreciation for the current year. Obviously, so, the annual depreciation charge has reduced by ZAR 57 million, and this is as a result of change in the estimate of you about earlier. Is that I spoke to. On the next slide, just gonna speak about how we've been based our CapEx. We do see that we spend ZAR 51 million of CapEx in the first half of last year, versus ZAR 33 million, % of the current year's spend tips. These include and maintain the business initiative.
We complete 3 operating systems: platform, application of infrastructure, and upgrades, as well as the system with migration. We are also upgrading the platforms for commodities here. Regulatory enhancement related to the management of insider trading system was also completed during the period. The remaining ZAR 4 million, the first half of the year, was spent on growth initiatives, largely relating to our information services growth strategy as we continue to move our master data to the cloud. We will accelerate spend in the second half of the year, this will be an increase in asset investment as well as project delivery. Spend in the second half of the year will include spend on information services and the completion of the master data to the cloud, as well as data marketplace and self-service BI.
We'll also spend on the Bond CCP, and we'll have further upgrades to our infrastructure and systems. Our full year guidance remains unchanged at ZAR 130 million-ZAR 150 million. On the next slide, we look at the movement in our cash balance, and we see that the JSE continues to reflect a sound cash position with a closing cash and bonds balance of ZAR 2.08 billion. We did generate ZAR 488 million for the year from operations, and our investing activities encompassed a range of initiatives, including the acquisition of intangible assets and leasehold improvements. We also received dividends from our associates, and we acquired some Altus shares. Moving on to the next slide, we break down our cash position for the half year.
As you know, the group holds two levels of non-distributable cash: investor protection and other funds, and then regulatory capital, and these collectively amount to ZAR 1.5 billion. ZAR 1.5 billion of the group's total cash is thus categorized as non-distributable, leaving an available cash balance of ZAR 593 million at the end of June 2023. This cash is available for CapEx spend, shareholders' returns, other investments, and working capital, and all our currently planned investments can be funded from the group's cash resources. Moving on to the last slide, I'm just gonna touch on the guidance that we've provided for 2023 as it relates to OpEx growth, CapEx, as well as dividends.
From an OpEx perspective, we expect cost growth at the higher end of the 5%-8% guidance, the drivers for this include spend on new initiatives, as well as an increase in spend linked to higher inflation and a weaker rand. Some of our new initiatives include, amongst others, the Bond CCP, the IA strategy, and cyber security system spend. For CapEx, we provided a guidance of ZAR 130 million-ZAR 150 million, as I indicated earlier. Lastly, we provided a guidance of 67%-100% in terms of the dividend payout ratio, and this is in line with the dividend policy to maintain a dividend cover ratio of 1 to 1.5 times earnings. On that note, I'll hand back to Leila.
Thanks very much, Fawzia. I'm moving on to slide 21 now. As we conclude the earnings presentation, we just wanted to provide you with an update on our strategic focus. One of the key objectives right at the top left-hand side under our strategy, is to protect and grow the core of the business. I mentioned at the beginning of this presentation that operational resilience continues to be a very important focus area for us, and performance in this regard remains well ahead of our long-run average historic rate. Supporting the growth of sustainable finance remains a very important and key priority for us, and to this end, we are pleased to have seen notable growth in the sustainable products, which are up 50% on the prior year.
We have also, in addition to that, launched actively managed ETFs and certificates, and these are gaining momentum. We've published or had 11 actively managed certificates launched, and this brings the total to 30 for the year to date. We've also remained on track to deliver one of our biggest systems project this year, the pretty high-profile STT or Securities Trading Technology upgrade. We're pleased to announce that we are ahead of schedule and below budget. This project is really crucial for the operational stability and resilience in our market infrastructure.
In addition to this, we'll also be launching a securities collateral, and we continue to enhance and update our listings requirements in order to provide a really robust trading environment for issuers and investors. For some time now, I have been speaking about the importance of growing non-trading revenue. We continue to pursue this outcome to enhance the quality and the resilience of our earnings, and we've seen JIS has seen good growth in attracting 35 clients since its inception. With JIS really firmly on track and starting to gain scale, we'll focus our attention in the coming months on growing our information services business. We're actively transitioning market data to the cloud, and we've successfully launched big xyt ecosystems, and this is paving the way to enhanced data offerings.
I'll cover this in a little bit more detail in the next slide. Moreover, we are very pleased to see a growth in the number of deals and funds being raised by JSE Private Placements or JPP. This is strengthening our position as a preferred destination for capital raising. Our colocation service offerings have also expanded. These are providing clients with improved cloud-based access. Lastly, on structural changes and new market developments, there are three elements. Firstly, the transition to the independent clearing house, which was a really major multi-year project. JSE Clear is now operating smoothly under its new license since 2023. In addition, we are developing central clearing for the bond ETP market. This will be through JSE Clear, our derivatives and bond CCP.
t:** We're actively also working towards a voluntary carbon market, and I'll cover a little bit more about this in the next slide. And then finally, we've also been exploring a digital assets marketplace, and this is really representing the recognition of potential opportunities which are starting to emerge in this place, in this space. Next, I just wanted to spend a little bit of time looking at how innovation is starting to shape our strategy. I've got three topics that I introduced just at the back of the last slide. Just a few days ago, we announced the latest partnership with big xyt, which is a global independent provider of smart data and analytic solutions to the financial community
Together, we are launching a new business, which is called big xyt ecosystems, and this will deliver this data analytics, and it includes the innovative solution, which we recently announced as Trade Explorer. We launched that a year ago, and we will be launching this overall system to our global stock exchanges and to their ecosystems. We're very pleased with this solution because it is a world first in terms of what exchanges are offering in this space. This solution will largely contribute to the revenue of the information services business in the medium term. This is really just one of many steps that we've taken, aimed at responding to the evolving needs of our clients.
On the second block, you'll see on the sustainability front, we're exploring the development of a South African voluntary carbon markets, or VCM, and a renewable energy certificates business, which is a RECs business. This will accelerate the potential funding solutions for carbon markets and the renewable energy certificate projects, and it'll introduce carbon credit futures to enable forward pricing. It's a very exciting development for our market, and it supports the objective overall in the sustainability space. We're also investigating the feasibility, finally, of an alternative digital offering. We've developed a proof of concept solution with the SARB, South African Reserve Bank, for a tokenized securities platform that explores the benefits and the risks of trading and settling tokenized securities in the SA capital markets.
The solution, which was called Project Khokha, is a very important milestone in our journey as a country towards co-creating digital asset solutions with various regulators and market participants. The project has provided us with a more efficient way of identifying potential gaps, and it also allows us to really improve our knowledge and gain a common understanding of the evolving digital asset ecosystem. Finally, before we turn to Q&A, I, I just want to conclude with the priorities for the remainder of the year. We remain focused on investing in the core business to maintain a solid track record of robust operations. We remain focused on growing the proportion of non-trading revenue, which will provide us with continued, and we'll continue to focus on inorganic growth.
We'll progress our information services growth strategy with an acceleration in the CapEx spend in the second half of the year. We'll focus on growing new business lines related to the initiatives that I've just mentioned on the previous slide. Finally, we'll continue to practice a disciplined approach to our cost management to maintain our OpEx growth within the guided range. We remain confident in executing our priorities to really deliver value to our stakeholders through operational resilience, innovation, and positive and increasing contributions from our non-trading revenue, whilst maintaining our capital allocation optionality. I'll close with just saying that the JSE has a very solid foundation, and we are making steady progress in a very challenging macro and political backdrop.
I'd like to thank you now, and open for any questions which you and Fawzia, you, you may have for Fawzia and I. If you have any questions, if you can just raise your hands, we'll unmute you, or you can note your questions in the chat box, and Romy and, and Fatima will facilitate the questions. Thank you.
Hi, Leila. Hi, Leila and Fawzia. We've got two questions in the chat. I'll ask the first one. It's from Charles Boles . He says: "Please, can you provide some clarity on the competition, especially to A2X?" He said there is a perception that they have lower costs to execute and more modern technology. He asked if you could please talk about the market share changes for the JSE over time and how competitive the threat is. Thank you.
Great. Thanks for that question. On, on A2X, they have been in operation for, I think it's over 5 years now. The JSE still processes more than 98% in value traded, and we remain competitive on a pricing level. The scale of our operations is very different, so it's very difficult to compare costs of an operation that's processing 2% of the market relative to the costs and the complexity of processing volumes such as, as we are processing. As, as we mentioned earlier, ZAR 24 billion a day. We remain very focused on ensuring that any services that we provide are competitive. The important feature of our market is the, that we provide depth of market.
Our bid-ask spreads enable enable traders to move large blocks of trade. Given that we're in an institutional market, that's a very important feature, and our pricing remains competitive. As you've seen with some of the solutions that we've offered, the technology that we are offering provides, you know, innovative and new technology, although some of our systems are large and legacy, and we are working on that. So far, we feel comfortable with the performance that we're delivering in that regard, and we'll continue to focus on making sure that we remain competitive in every possible way.
We have another question in the chat. It's from Alistair Lee. He asked if you can explain the margin income that is included in your net finance income. Thanks.
Sure. Thank you, Romy. The margin income, is the income that we, that we earn largely, in our JSEC business, and that's the income, that we earn on the margin deposits that our clients place with us. We take a third, and that is essentially the revenue that we earn from that service that we provide to our clients.
We can see 2 hands are raised. They're not connected to the audio. We're just waiting for them to type their question into the chat. Give us 1 minute. Thank you.
No problem.
Where is it? We've got another question in the chat. It says, Where has it gone? From a strategic standpoint, what can be done to scale up revenue contribution from a derivatives market segment, and how big is foreign participation in these derivative markets?
The derivative market is, is an important market for us, and, and I think, there's a lot of work to do. If you look at South Africa's performance, particularly in the interest rate derivative market, there is opportunity for growth and development. We believe that it's... We've been engaging market participants, and the importance of margin costs, risk costs, and a couple of other operational issues are a key focus for us. We are engaging international providers to provide on-screen trading, but it's certainly a, a big area of focus for us. We agree that, you know, an important priority needs to be placed on that market.
There's been a lot of friction in the market, particularly one of the areas for attracting international investment is around the fact that they have to post Rand margin or Rand collateral. We have been engaging policymakers to encourage an openness to accepting hard currency or dollar-based collateral. Many have, given the volatility of the Rand, having to place a Rand collateral just adds to the volatility and the risk. That's an important initiative. We have been engaging, and we'll continue to engage to try and expedite that.
We've got another question in the chat. It's from Keenan Chenery . He says, "Well done on the revenue diversification initiatives." He said, "Although you don't provide revenue guidance, do you think group operating revenue can continue to grow ahead of the cash equity ADV growth for the next year or 2?
Look, as, as you very appropriately noted, we don't provide... We can't provide forward-looking guidance. What I can give you is a bit of a sense of how our revenue ADV has looked over the past number of years. In 2019, we were doing ZAR 19.9 billion a day. Of course, with the hyper volatility that we saw in the pandemic, we went up to ZAR 25 billion in 2020. 2021, we went down to ZAR 22.7 billion per day, which was down 7%. Then back up to just over ZAR 25 billion last year, and that was up 10.8%. This year, half year to date, we're at just under ZAR 24 billion per day.
What I can say is that the dynamics affecting trade on our market are at a global level, the risk on appetite, which is driven, or fears of recession, the inflationary environment, the Russia-Ukraine situation. In the local dynamics, we have had a number of concerning elements that have driven flows. Firstly, the FATF grey listing, the risk of that being adopted by UK. We have already seen that the EU has, has put South Africa onto the high-risk list, and that has obvious implications. Of course, the increase of the Regulation 28 limit has seen an immediate jump and created a liquidity vacuum of between 10% and 12%, an increase of 30% to around 42%, and that wavers depending on the rand.
All of these factors create a drag and friction on the inbound flows into South Africa. That said, what we have seen is a much shorter cycle of response rates. The response of the Russia-Ukraine diplomatic situation had a very immediate impact, but we've seen that impact starting to reverse over the last sort of month to six weeks. South Africa is seen as a proxy for emerging markets globally, and we certainly see that that's been the case over the event-driven markets over the past sort of four years or three and a half years. Really, what needs to happen in the year ahead is that there is policy certainty. One of the biggest drivers that investors internationally are citing is the policy certainty around the elections next year.
Whether that translates into subdued, react, flows, between now and our election period is yet to be seen. All of these factors are playing heavily. Of course, the strength of the dollar, and therefore the weakness of the rand, has a very important, role to play, both for and against, for those rand hedgers, large exporters who stand to gain. It's a very complex and very difficult environment. I do believe South Africa is in a vulnerable position in our investor confidence cycle, and as much needs to be done to put forward a reasonable and pragmatic narrative, about South Africa as an investment opportunity.
We've got three questions in the chat from, from Cornick Van Zyl. She asked, a CapEx question: What was CapEx in H1 2023? To get to ZAR 130-ZAR 150 for full year 2023, what acceleration is expected, and on what will it be spent? I'm gonna go to the second question. Were there any changes to derivative pricing, in particular, currencies and commodity derivatives? The third question is: What is the outlook for the equity derivatives? The volumes look to remain low. Thank you.
Thanks, Romy. I'll, I'll handle the first question, just as it relates to CapEx. The CapEx for the first half of 2023 was ZAR 33 million. We do intend to meet the target, or we'll be within guidance in terms of the spend for the full year. That's gonna come from two places, really. We'll be accelerating our project delivery, but we'll also have some spend in terms of asset investments. We are fairly certain that we will meet the target at, probably at the lower end of the ZAR 130 million-ZAR 150 million. I think the second question was just related to pricing in commodities.
Yes, it's, it was.
Let me quickly-
What was, what is derivative pricing? In particular, were there any changes to the currency and the commodities derivatives pricing?
The pricing of... The new pricing obviously became effective at the beginning of this year, and last year we looked at CPI within the JSE, and we determined that the CPI was 5.5%. We applied that CPI to all of the price points within capital markets, including commodities and derivatives. There's been no change in that since the beginning of the year. Price increases became effective on January. What did happen, though, was in the beginning of April this year, with some of the new costs coming through from the regulators, those were passed on through, to, to our customers, through, through small price increases to recover that.
Can I answer the last one? Then, the question on, on the outlook for equity derivatives. Of course, hedging activity is tied to our cash equity market, and all of the drivers that I mentioned earlier will be important to consider. Ultimately, of course, the rand and our positioning in both Europe and the UK will be affected - will affect foreign flows. The placement of South Africa on the high-risk list of the EU, and the potential impact that that has on our derivatives market is yet unknown. That will result if we lose our status as a qualifying CCP in the derivatives market.
That will, of course, have an impact on those companies, those, those traders, who are established in the EU, who will have to hold higher capital costs.
We've got another three questions here from Keenan Chenery. He asked: Will you consider any interest rate hedges for the interests earned on own funds? The second one is: What proportion of total expenses come from load shedding costs, for example, diesel? The third question is: What is the longer-term growth rate in the JSE's operating expenses? Is it roughly in line with professionals, so salary inflation, plus CPI, 1 or 2? Saying thank you.
Okay, sorry, Romy, what was the first question?
Interest rate hedges.
First question is: Will you consider any interest rate hedges for the interests earned on own funds?
Okay.
Let me talk about quick.
In terms of the interest earned on own funds, I think the, the primary mandate that we've got in terms of managing those funds is preservation of the funds. A large portion of that is regulatory capital. Obviously, within those mandates, we do look to maximize returns in as much as we possibly can. We haven't looked at hedging at interest rates to date, and we-- I mean, we would, we would consider it. It's just not something that's been on our radar up to date, up to now. In terms of the diesel cost, the increase for the first half of the year relating to diesel cost was ZAR 5 million per annum.
I think last year we did indicate to the market that we see an increase of approximately ZAR 3.8 million per annum for every additional level of load shedding. I think those numbers do still hold true. We can't give you an exact increase in the number of levels that we've had, but based on the increased load shedding we've had, we've seen that increase by ZAR 5 million for the 6 months. In terms of long-term growth on our OpEx, that's not a number that we disclose. We obviously continue to manage cost, and we manage cost within the current operating environment, as well as taking into account any additional spend that we need to do in order to deliver on our strategic initiatives. Thank you.
Another question here from Sam Piwe. He said: Can you explain the decline in depreciation, and what changed the methodology?
Okay. Sure. The decline in depreciation was as a result of the change in our estimated useful life. There was no change in policy, there was no change in methodology. What we have to do annually is we look, we have to look at the estimated useful life of our assets. In doing the, the most recent exercise, we took into consideration the fact that we've had increased licensing periods for some of our assets, and looking at the assets, we're confident that the assets related to those licenses can be used for the term of the license, and based on that, we increased the useful life of those particular assets. It was really just a change in estimate rather than any change in accounting policy.
... We've got 2 more questions here. We've got, again, from Charles Bowles. He says: How does management and the board weigh up the dividend policy of a high dividend payout relative to a share buyback? Thank you.
Dividend policy, dividend payout ratios, as well as share buybacks, is looked at within the context of our capital allocation framework. We've had a number of discussions, with our shareholders, and I think, as you can imagine, the views are always divergent in terms of a preference for share buybacks versus a preference for dividends. From a JSE perspective, we do look at it annually, but we look at the usage of our cash on a continuous basis. We look at the cash that we've got available, and we look at it in the context of what do we require from a regulatory perspective, as well as what we need for investment in the business, for potential organic and inorganic growth, as well as our obligation from a dividend perspective. We take all of that into account.
In addition, we also look at where investor sentiment is, where the JSE price is. We look at market dynamics, we look at the conditions in the market, and we take all of that into account, and we'll weigh all of that up, each time we look at whether we go with a share buyback versus a, a dividend payout. Thank you.
One more question, from Charles Bowles. He said, "From a long-term perspective, can you give us a sense, what you would think what the impact would be, if there was a removal of exchange controls?" Thank you.
Ultimately, it's a highly speculative view on how that would impact. I suppose one would have to consider, the timing in the market, the graduation. We have shifted quite dramatically over the past sort of decade or so, to what is now, you know, 45% offshore limit. What we have seen changing in the regulations is that, if any of the companies regulated by Reg 28 go above their 45% limit, they have to immediately rectify that, whereas previously, there was a year to do that. I think it all depends on global dynamics, country dynamics, and of course, the health and situation, within our local financial markets.
Of course, there, there may be a, a short-term impact, and that might be moderated by a medium to long-term impact. It's, it's very difficult for us, given the, the number of factors that are at play, to indicate where that might land. There are no indications from government. We haven't heard anything, that this is likely to shift dramatically in the short term. Of course, the health of the markets in South Africa, given a very healthy profile of, of dual-listed companies and, the proxy for emerging markets, together with the arb that, that exists between those dual-listed companies, do give us a, a very high level of liquidity within the country.
No more questions. Thank you very much.
Thank you so much. We'll take that opportunity then to thank you all for your time. Romy will be available if anybody has any additional questions, and we look forward to meeting some of you one-on-one in the next couple of days.