JSE re­struc­tur­ing will shed 14% of its work force within two years

The Star Early Edition - - BUSINESS REPORT - Di­neo Faku

THE JSE, Africa’s old­est and largest stock ex­change, an­nounced the re­struc­tur­ing of its op­er­a­tions that will see it shed 14 per­cent of its work­force by the end of the year as it adapted to tech­no­log­i­cal changes.

JSE chief ex­ec­u­tive, Nicky New­ton-King, said in a state­ment on Fri­day that the com­pany was re­struc­tur­ing against the back­drop of South Africa’s low eco­nomic rate, rat­ings down­grades and low busi­ness con­fi­dence and as ex­changes were adapt­ing to fast paced tech­no­log­i­cal changes.

New­ton-King said the cost cut­ting would see the tech­nol­ogy ex­pen­di­ture cut by a min­i­mum of R70 mil­lion over two years.

It said the changes would also in­volve a re­duc­tion in the com­pany’s full time staff com­ple­ment by 60 peo­ple, re­sult­ing in an­nu­alised cost sav­ings of nearly R170m, to be fully re­alised from 2019 on­wards.

The JSE made R65m in an­nu­alised sav­ings to date through a com­bi­na­tion of re­mov­ing va­can­cies and re­duc­ing dis­cre­tionary spend, she said.

“If we want to cre­ate a build­ing block for fu­ture growth we must take some early de­ci­sions and there are none tougher than those that in­volve our peo­ple,” she said.

“We looked at all av­enues be­fore con­sid­er­ing this ac­tion. While we ap­pre­ci­ate this will be a very dif­fi­cult time for the af­fected em­ploy­ees, the newly aligned com­pany will be in a strong po­si­tion to serve its cur­rent and fu­ture clients more ef­fec­tively,” said New­ton-King. She said this was pre­par­ing the JSE to meet the chal­lenges head-on.

“The fast mov­ing na­ture of our busi­ness re­quires us to change the way in which we op­er­ate so that we are as nim­ble and as cost ef­fec­tive as pos­si­ble.

“We can­not do so with­out sig­nif­i­cantly re­think­ing our cost base, our op­er­at­ing model and the way we are struc­tured as a busi­ness,” she said.

She also said the re­struc­tur­ing would see the re­fresh­ing of the JSE’s IT op­er­at­ing struc­ture to align to best prac­tice.

“At the same time, our large de­pen­dency on IT re­quires that we look at us­ing tech­nol­ogy in a more ag­ile man­ner to sup­port the ex­e­cu­tion of our busi­ness strat­egy,” New­ton-King said.

Ge­off Cook, di­rec­tor and co-founder of JSE com­peti­tor ZAR X, South Africa’s first ad­di­tional stock ex­change in 60 years, said on Fri­day it was not sur­pris­ing that the JSE was re­struc­tur­ing, ow­ing to the high costs as­so­ci­ated with its old­world ex­change model.

“The JSE model at­tracts high in­fra­struc­ture costs and its tech­nol­ogy model is in­ef­fi­cient – the mar­ket dis­rup­tion brought about by modern tech­nol­ogy is forc­ing these changes for it to re­main rel­e­vant,” said Cook.

Global law firm Baker McKen­zie’s lat­est Cross Bor­der Ini­tial Public Of­fer­ing In­dex said South Africa’s three do­mes­tic list­ings raised a to­tal of $250m (R3.34 bil­lion) in the first half of 2017. This was the high­est amount of cap­i­tal raised by South African com­pa­nies recorded dur­ing the first half of any year since 2012.

A to­tal of 388 com­pa­nies are listed on the JSE which has a cap­i­tal­i­sa­tion of R14.271bn.

Lumk­ile Mondi, a se­nior lec­turer at the school of eco­nomic and busi­ness sciences at the Univer­sity of the Wit­wa­ter­srand, said the coun­try’s eco­nomic prob­lems made it dif­fi­cult for the JSE to at­tract list­ings.

PHOTO: TI­MOTHY BERNARD

The JSE in Sand­ton. Its op­er­a­tions are to be re­struc­tured.

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