2016-04-29 14:39:47

Q1 2016 Net Profit Confirms GPW Group's Stable Position

PRESS RELEASE

  • GPW Group's net profit moderately lower year on year net of one-offs
  • GPW Group's revenue at PLN 81.0 million
  • Operating expenses reduced year in year in all categories , resulting in a cost/income ratio of 46.5%

In Q1 2016, the GPW Group remained under the influence of a difficult market environment but continued its development initiatives including acquisition of new clients, improvement of liquidity on the financial and commodity markets, and a cost regime enhancing the Group's efficiency.

In Q1 2016, the GPW Group generated a revenue of PLN 81.0 million and a net profit of PLN 34.9 million, which was PLN 0.7 million (1.8%) less year on year (net of one-offs1). The reduction of the revenue was mainly a result of a weaker quarter on the financial market due to the low capitalisation of domestic companies and a resulting decrease in trade in equities, as well as a reduction of transaction fees applicable on GPW as of the beginning of 2016. The decrease of turnover was partly offset by GPW's successful initiatives aiming to acquire new clients, mainly through liquidity support programmes, who generated PLN 9.4 billion of additional equity trade in Q1 2016 compared to PLN 21 billion annually in 2015. As a result, the revenue from the financial market was PLN 44.5 million in Q1 2016, representing a decrease of 11.5% year on year. The revenue from the commodity market was PLN 36.1 million in Q1 2016.

'The conditions on the equity market have been difficult in the past few months with a strong investor flight. Hence, the importance of GPW's continued efforts to attract new international investors and liquidity providers to the market. We have continued the Polish Capital Market Days, which promote Polish companies internationally, and relaunched the colocation service as expected by market participants; ABN AMRO Clearing is starting operation within days. I am positive that all these initiatives, as well as our planned efforts, will help to improve liquidity and the value of trade on GPW,' said Grzegorz Zawada, Vice-President of the Management Board of GPW.

Operating expenses in Q1 2016 decreased by 13% year on year (net of one-offs1), resulting in a cost/income ratio of 46.5%.

'We focus our efforts on most effective management of the cost base in order to invest savings in those areas which offer the potential of growth both for the GPW Group and the whole capital market in Poland,' said Paweł Dziekoński, CFO and Vice-President of the Management Board of GPW.

Presentation of GPW Group's Q1 2016 Financial Results

Net profit
The net profit reported by the GPW Group in Q1 2016 was PLN 26.3 million. The decrease in profit was a result of GPW's new accounting practice of booking fees due to PFSA. Until the end of 2015, GPW and the subsidiaries recognised the fees in the profit and loss account pro rata in each quarter of the year. As of 2016, the cost is recognised on a one-off basis in Q1. As a result, although the new financing model of Poland's market supervision in effect as of the beginning of 2016 enables a reduction of annual charges to GPW by nearly a half year on year in 2016, the fee nearly doubled year on year in Q1. However, no fee will be recognised in the subsequent quarters of 2016. The same approach is followed by KDPW, which is GPW's associate. On a comparable basis (net of the fees due from the GPW Group and the KDPW Group for Q2-Q4), the net profit was PLN 34.9 million, representing an increase of close to 24% quarter on quarter and a decrease of only 2% year on year (Q1 2015 additionally net of the release of provisions against retirement allowances and jubilee awards).

Revenue from the financial market
The sales revenue from the financial market was PLN 44.5 million in Q1 2016, representing a decrease of 11.5% year on year and 9.2% quarter on quarter. The revenue from the financial market contributed 54.9% of the total sales revenue of the GPW Group in Q1 2016 compared to 58.4% in Q4 2015 and 57.0% in Q1 2015. The revenue from the financial market includes trading revenue, listing revenue, and revenue from information services.

Trading revenue on the financial market
The trading revenue on the financial market was PLN 28.3 million in Q1 2016 compared to PLN 34.4 million in Q1 2015 (-17.6%) and PLN 33.2 million in Q4 2015 (-14.7%). The decrease in the revenue was mainly driven by less active investor trading on the equity market (decrease of trade on the Electronic Order book by 14.4% YoY and 9.6% QoQ); combined with a reduction of transaction fees applicable on GPW as of 1 January 2016, this reduced the revenue from trading in equities to PLN 21.0 million (-22.1% YoY, -19.1% QoQ). At the same time, revenue from trading in derivatives increased to PLN 3.1 million in Q1 2016, i.e., by 11.4% year on year and by 5.5% quarter on quarter.

Listing revenue
The GPW Group's listing revenue on the financial market was PLN 5.9 million in Q1 2016, representing a decrease of 5.9% year on year and a decrease of 2.8% quarter on quarter. The listing revenue represented 7.2% of the GPW Group's total revenue in Q1 2016.

Information services
The revenue from information services was record-high at PLN 10.3 million in Q1 2016 compared to PLN 9.6 million in Q1 2015 (+6.8%) and PLN 9.7 million in Q4 2015 (+5.7%). The contribution of the revenue from information services to the GPW Group's total sales revenues increased to 12.7%. The increase in the revenue from information services was driven mainly by the development of the GPW Group's offer of non-display data used for electronic trading.

Revenue from the commodity market
The sales revenue on the commodity market was PLN 36.1 million in Q1 2016, representing a decrease of 3.3% year on year and an increase of 5.5% quarter on quarter. The revenue from the commodity market includes trading revenue, revenue from operation of the register of certificates of origin, and revenue from clearing.

Trading revenue on the commodity market
The trading revenue on the commodity market decreased to PLN 16.6 million in Q1 2016, i.e., by 10.2% year on year and by 5.7% quarter on quarter. The GPW Group's revenue from trade in electricity stood at PLN 2.7 million in Q1 2016 compared to PLN 4.6 million in Q4 2015 (-41.8%) and PLN 3.5 million in Q1 2015 (-25.1%). The decrease in the revenue from trade in electricity quarter on quarter and year on year was driven by a lower volume of forward transactions (-49.9% QoQ and -32.4% YoY). The revenue from trade in gas stood at PLN 2.5 million in Q1 2016, representing a decrease of 6.7% year on year and an increase of 45.5% quarter on quarter. The biggest part of the GPW Group's trading revenue on the commodity market is generated by trade in property rights. It stood at PLN 9.5 million in Q1 2016, which represented a decrease of 9.1% year on year and an increase of 4.0% quarter on quarter.

Operation of the Register of Certificates of Origin
The revenue from the operation of the Register of Certificates of Origin was PLN 8.0 million in Q1 2016, representing an increase of 4.4% year on year and an increase of 44.1% quarter on quarter. The total volume of issued certificates of origin was 16.7 TWh in Q1 2016 (-4.9% YoY and +75% QoQ) and the volume of cancelled certificates was 9.7 TWh (+128.5% YoY). The increase in the revenue from the operation of the Register of Certificates of Origin was driven mainly by a high revenue from the cancellation of green certificates of origin and, to a lesser extent, by a higher revenue from the issuance and registration of property rights.

Clearing
The revenue from clearing was PLN 11.5 million in Q1 2016, representing an increase of 2.8% year on year and an increase of 4.0% quarter on quarter. The quarter-on-quarter increase in the revenue was driven by higher volumes of deliveries on the gas market as well as volumes of trade in cogeneration certificates of origin.

Operating expenses
Operating expenses were PLN 46.1 million in Q1 2016. The expenses were mainly driven by the one-off recognition of the annual fee due to PFSA. Net of the fee due for Q2-Q4, the operating expenses stood at PLN 37.7 million, representing a decrease of 13.5% year on year (Q1 2015 additionally net of the release of provisions against retirement allowances and jubilee awards under salaries) and a decrease of 17.9% quarter on quarter. As a result, the cost/income ratio was 46.5%.

Share of profit of associates
The GPW Group's share of profit of associates was negative at PLN 1.4 million in Q1 2016 compared to a positive PLN 0.2 million in Q1 2015 and a negative PLN 1.7 million in Q4 2015. The share of profit of associates was mainly driven by the earnings of the KDPW Group and Aquis Exchange. KDPW's loss attributable to GPW was PLN 0.3 million in Q1 2016 compared to a profit of PLN 1.6 million in Q1 2015; KDPW's profit was largely impaired by the aforementioned one-off recognition of the annual fee due to PFSA in Q1 2016. The multilateral trading facility Aquis Exchange generated a loss in Q1 2016, including a loss attributable to the GPW Group at PLN 1.2 million (compared to a loss of PLN 1.5 million in Q4 2015 and in Q1 2015). Net of the PFSA fee recognised in KDPW, GPW's share of profit of associates was positive at PLN 0.5 million.

WSE - Warsaw Stock Exchange SA issued this content on 29 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 29 April 2016 12:45:31 UTC

Original Document: https://www.gpw.pl/wydarzenia_en/?ph_tresc_glowna_start=show&ph_tresc_glowna_cmn_id=58013