GPW Group’s 2016 activity focused on two areas: continued liquidity improvement and key business segment cost reduction through optimisation and efficiency improvements. As a result, in 2016 the GPW Group generated sales revenues of PLN 310.9 million and a net profit of PLN 131.1 million, the best result since 2011. EBITDA was also record-high at PLN 183.7 million. Operating expenses decreased by PLN 24.2 million year on year to PLN 150.2 million. The cost/income ratio was historically low at 48.3%.
“Investors’ perception of GPW is increasingly positive with growing trust in our company. This has a tangible financial impact. The GPW Group’s report for 2016 demonstrates that clearly. The strong financial position of GPW, as measured by its capitalisation and rising share price, a record-high increase in turnover in stocks and its average daily value clearly demonstrate that investors are mainly focusing on the strong fundamentals of the Polish economy as well as an outlook of stable returns. The very conducive conditions currently prevailing on the Warsaw Stock Exchange, as well as the emerging acceleration of the Polish economy, are the key drivers of fast growth of the GPW Group and the capital market,” said Professor Małgorzata Zaleska, President of GPW.
The 2016 financial market activity focused mainly on activating existing and attracting new investors. As a result, the financial market revenue was PLN 184.0 million (59.2% of the Group’s total revenue), despite difficult conditions on the domestic and international markets. This was possible thanks to the implementation of many programmes offering incentives to investors responsible for creating liquidity, as well as new additions to the product offer. The Warsaw Stock Exchange continued to attract new issuers as well. According to the PwC IPO Watch Europe report, in 2016 GPW ranked third in Europe in the number of IPOs (28 IPOs) and was a top 10 European market in IPO value.
The 2016 commodity market revenue was stable at PLN 124.9 million (a decrease of 0.2% year on year), contributing 40.2% to the total GPW Group revenue. The 2016 revenue from the gas market was record-high at PLN 9.2 million, while the clearing revenue increased to PLN 39.2 million, owing the the RRM trade reporting service development and an increase in the number of members of the gas market and the Register of Certificates of Origin.
“With focused efforts and a strict cost discipline in 2016, GPW generated a net profit of PLN 131.1 million in 2016, despite a demanding market environment. It was the highest net profit since 2011. We reduced our operating expenses by 13.9%. As a result, the cost/income ratio was historically low at 48.3%,” said Paweł Dziekoński, Vice-President of the GPW Management Board.
Presentation of GPW Group’s financial results for Q4 2016 and 2016
Net profit
The Q4 2016 net profit of the GPW Group was PLN 33.0 million, an increase of 19.1% year on year. The Group’s 2016 annual net profit was PLN 131.1 million, an increase of 7.9% year on year. It was the highest net profit recorded since 2011. The year-on-year increase in Q4 2016 was mainly driven by higher revenues from the financial market (+1.7%), as well as the continued cost discipline which resulted in a reduction of operating expenses by PLN 8.2 million, i.e., 17.8% year on year. The 2016 annual revenues from the financial market decreased by 8.0% year on year, while operating expenses decreased by 13.9%.
Financial market revenue
The Q4 2016 sales revenue from the financial market was PLN 49.8 million, an increase of 1.7% year on year and an increase of 6.5% quarter on quarter. The revenue from the financial market contributed 60.9% to the total GPW Group sales revenue, compared to 63.5% in Q3 2016 and 58.4% in Q4 2015. The annual sales revenue from the financial market was PLN 184.0 million, contributing 59.2% to the total 2016 sales revenue of the GPW Group, compared to 61.0% in 2015. The revenue from the financial market includes trading revenue, listing revenue and revenue from information services.
Financial market trading revenue
The Q4 2016 financial market trading revenue was PLN 33.2 million and stable year on year. The annual 2016 financial market trading revenue was PLN 119.1 million, a decrease of 13.0% year on year. The decrease in the annual financial market revenue was mainly driven by the decrease of revenue from trade in shares (-17.1%). The decrease in revenue from trade in equities and other equity-related instruments was driven by reductions of transaction fees introduced as of 1 January 2016 and November 2016. In addition, the 2016 share of HVP/HVF programme participants who benefit from lower fees, in the total value of trade in shares increased to 10.2%. The 2016 revenue from derivatives trading increased by 5.4% year on year, mainly due to an increase in WIG20 futures trade volume.
Listing revenue
The Q4 2016 GPW Group financial market listing revenue was PLN 6.1 million, an increase of 1.7% year on year and an increase of 6.0% quarter on quarter. The annual listing revenue represented 7.7% of the GPW Group’s 2016 total revenue and stood at PLN 23.9 million, compared to PLN 24.5 million in 2015 (-2.3%). The decrease in listing revenues was mainly driven by fewer IPOs and a lower value of shares introduced into trading in 2016. The revenue from fees for introduction decreased by 23.8% year on year to PLN 4.0 million. The listing fee revenue increased by 3.6% year on year; it should be noted the fees in 2016 were calculated based on the capitalisation of companies as of 2015.
Information services
The Q4 2016 information services revenue was record-high at PLN 10.4 million, representing an increase of 7.0% year on year and an increase of 3.8% quarter on quarter. The 2016 annual revenue from information services was PLN 41.0 million, which represents an increase of 6.5% year on year and a share of 13.2% in GPW Group’s total sales revenues.
Commodity market revenue
The Q4 2016 commodity market sales revenue was PLN 31.2 million, a decrease of 8.8% year on year and an increase of 17.3% quarter on quarter. It contributed 38.2% to the Group’s total Q4 2016 revenues. The 2016 annual revenue from the commodity market was PLN 124.9 million, representing a decrease of 0.2% and a 40.2% share of the Group’s total sales revenues. The commodity market revenue includes trading revenue, revenue from certificates of origin register operation and revenue from clearing.
Commodity market trading revenue
The Q4 2016 commodity market trading revenue decreased by 6.5% year on year to PLN 16.5 million. The 2016 annual trading revenue on the commodity market was PLN 60.9 million, representing a decrease of 2.7%. The decrease of commodity market revenue was mainly driven by a 38.0%, PLN 4.4 million decrease of revenue from forward transactions in electricity in view of high energy market uncertainty and a reduced level of mandatory sales of electricity on the regulated market. As a result, the structure of contracts changed as market participants increasingly preferred short-term contracts. The revenue from spot transactions increased by 7.8% year on year. The revenue from trade in gas was record-high at PLN 9.2 million, representing an increase of 11.1%. The Group’s revenue from other fees paid by commodity market participants increased by 26% and stood at PLN 9.4 million, compared to PLN 7.5 million in 2015. The strong increase of the Group’s 2016 revenue from other fees paid by commodity market participants was driven by fees for RRM trade reporting services.
Certificates of Origin Register Operation
The Q4 2016 revenue from the Certificates of Origin Register operations was PLN 3.7 million, representing a decrease of 33.6% year on year. The 2016 annual Certificates of Origin Register operations revenue was PLN 24.9 million, an increase of 3.1% year on year. While the 2016 volume of cancelled property rights increased sharply to 42.9 TWh (+92.3%), the revenue decreased moderately year on year due to a decrease in volume of issued property rights (by 6.1%), which have the strongest impact on the revenue level.
Clearing
The Q4 2016 revenue from clearing was PLN 11.1 million, the same as in Q4 2015 and representing an increase of 46.9% quarter on quarter. The Group’s 2016 annual clearing revenue was PLN 39.2 million, an increase of 1.8% year on year. The year-on-year increase was driven by higher trade volumes on the gas market.
Operating expenses
The Q4 2016 operating expenses were PLN 37.7 million, a decrease of PLN 8.2 million (-17.8%) year on year. The 2016 annual operating expenses were PLN 150.2 million and the strict cost discipline generated savings of PLN 24.2 million (-13.9% year on year). The 2016 cost/income ratio was historically low at 48.3%, compared to 53.2% in 2015. The reduction of operating expenses was mainly driven by a reduction of fees paid to the Polish Financial Supervision Authority following a change in the capital market supervision financing method. Fees paid to PFSA by the Group for 2016 stood at PLN 9.1 million, representing a decrease of 58.6% or PLN 12.9 million. The reduction of operating expenses was also driven by a PLN 6.9 million (-10.2%) decrease in salaries and other employee costs. The 2016 expense reductions were also helped by decreased depreciation and amortisation charges of PLN 1.0 million (-3.9%), a 1.0 million (-2.6%) reduction of external service charges and a reduction of other operating expenses by PLN 1.3 million (-19.8%).
Member firm profit share
The Q4 2016 GPW Group’s member firm profit share was positive at PLN 1.2 million, compared to a negative PLN 1.7 million in Q4 2015. The GPW Group’s 2016 annual member firm profit share was positive at PLN 3.5 million. The member firm profit share was mainly driven by the earnings of the KDPW Group and Aquis Exchange. KDPW’s 2016 profit attributable to GPW was PLN 7.7 million, compared to PLN 4.6 million in 2015. In 2016, Aquis Exchange, the multilateral trading facility, generated a loss of which PLN 4.5 million was attributable to the GPW Group (compared to a loss of PLN 6.5 million in 2015).
