The JSE has started a consultation process with capital market players to get proposals on how to further slash financial reporting costs in a move that could see the bourse remove the disclosure of headline earnings per share (HEPS) as a listing requirement.
Currently HEPS must be included with the annual financial statements, and therefore issuers also incur the additional cost of assurance over the figure.
The exchange has noticed that many issuers calculate HEPS only for JSE regulatory purposes, despite requiring financial staff resources to prepare the figure. It is largely seen as a key measure of profit in SA.
“As a reminder, the objective of HEPS is to create a comparable figure by adjusting EPS [earnings per share] for certain remeasurements that are not of an operating/trading nature. This is separate to any figure that management considers to be important for performance purposes,” Africa’s largest bourse said in a consultation paper.
“This distinction has led to a proliferation of publication of adjusted HEPS/EPS figures.”
To this end, the bourse has put forward several considerations for companies to consider, stating that if the needs of investors have changed and HEPS no longer serves a purpose, there is an option for the exchange to consider removing the disclosure of the figure.
This is after a study by the bourse found that 57% of the participants, being issuers and sponsors it surveyed, said financial reporting and auditor fees are the most costly items of being listed on the JSE.
“The JSE recognises that financial reporting costs can be incurred as a direct result of complying with the listings requirements. Compliance with laws and regulations (outside the regulation regime of the JSE) must also be considered, as they also impact financial reporting costs,” the consultation paper reads.
“The JSE has prepared this consultation paper with the aim of obtaining input on various proposals regarding costs in relation to financial reporting. The consultation paper also serves as an innovation platform to promote capital market activity and competitiveness.”
One of the matters up for discussion is whether the JSE should consider removing the trading statement provisions.
Another consideration put on the table includes the bourse possibly reconsidering the wording of trading statements and whether it is more sensible to increase the trigger percentage to, say, 30% or 40% for companies to issue trading statements.
Under the current regime issuers must publish a trading statement as soon as they are satisfied to a reasonable degree of certainty that their financial results for the upcoming period will differ by at least 20%.
“This places an obligation on issuers to have reporting procedures for trading statements over and above those required for the actual financial results. Applying these reporting procedures can take staff resources and time away from the preparation of financial results,” the paper reads.
“The JSE considered over 800 trading statements made from January 2023 to July 2025. This analysis revealed that for 10% of the trading statements, reasonable certainty was only achieved within a 48-hour window of the financial results announcement and a further 28% obtained reasonable certainty within a week before the release of the financial results.
“This raises a question as to the benefits to investors of receiving such information so close to the publication of the detailed financial results.”
In another major proposal, the consultation paper says there is a strong case for smaller companies with less complex businesses to appoint part-time CFOs.
The paper says this may assist such issuers to attract the right type of individual at a cost that is appropriate for their operations.
“For company structures such as section 15 investment entities [investment companies holding a portfolio of noncontrolled assets over which they have little or no control], it may make sense not to have a financial director. Requiring the appointment of a financial director, even on part-time basis, adds unnecessary costs.”
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