STRATE will not be raising its fees next year, Monica Singer, the CEO revealed yesterday. With inflation in South Africa at approximately 5%, this is a discount for investors on the cost of settlement in real terms.
STRATE’s core business is to provide clearing, settlement and depository services for equities and bonds. It plans to extend its operations to the settlement of money market instruments during 2005.
Singer says that the key factor that enabled STRATE to keep its fees at the same level as the previous year has been the company’s rigorous cost containment. “For the year to December 2005, our budgeted expenses are R104 million — well below our 2004 forecast of R111 million,” she says.
STRATE’s shareholders have not yet received any dividends on their cost for provision of capital, as the company still has an accumulated loss of approximately R113 million at the end of 2004.
“STRATE has successfully identified areas where savings can, and have been, realised. In addition to these savings, with regard to our running costs, our finance costs have declined in line with our gearing,” adds Singer.
STRATE has not accounted for the cost of capital. This together with the savings has resulted in improved profitability.
Singer emphasises that the current year’s results, along with projected improved results for 2005, should be viewed in the light of the economies of scale and better use of resources deriving from last year’s merger with UNEXcor as well as significant savings in STRATE’s outsourcing arrangements.
“One of our principal areas of focus going forward is the modification of our settlement model with the aim of yielding efficiencies to investors and the issuers of bonds, equities and money market instruments,” she says.
STRATE is investigating the viability of new products and services — in particular an alternative settlement model that should be more cost effective and efficient to the investor and issuers.
“We are committed to being the trusted and preferred centralised provider of products and services that are accessible to, and create value for, our current and future stakeholders,” concludes Singer.
Singer notes that, thanks to a successful year, STRATE has managed to fully repay its borrowings.