- GPW Group’s net profit at PLN 24.5 million in Q1 2019
- Revenue at PLN 84.2 million in Q1 2019
- Operating expenses at PLN 54.3 million in Q1 2019
- GPW Management Board recommends a dividend of PLN 133.5 million (PLN 3.18 per share) from the 2018 profit
The Warsaw Stock Exchange (GPW) Group generated revenues of PLN 84.2 million and a net profit of PLN 24.5 million in Q1 2019. Its EBITDA was 38.6 million in Q1 2019. The consolidated revenues decreased by 2.1% year on year and by 4.9% quarter on quarter in Q1 2019. The year-on-year decrease of the revenues was mainly driven by a decrease of the revenue from the commodity market by PLN 1.7 million or 4.6%, which was due in particular to a decrease of revenues from trading in property rights to certificates of origin by PLN 2.2 million. The revenue from clearing decreased by PLN 0.4 million or 3.4%. The revenue from the operation of the register of certificates of origin increased by PLN 0.5 million year on year in Q1 2019. The Group’s revenue from the financial market was stable year on year in Q1 2019. The revenue from information services continued to increase: it grew by PLN 1.4 million or 13.5% year on year.
“The environment has changed significantly in practically all business lines over the past few months. We have set precise financial targets by 2022 (revenue of PLN 470 million, EBITDA of PLN 250 million). We are focusing on the financial targets while addressing the new business and regulatory conditions. The implementation of the strategy #GPW2022 requires heavy capital expenditures and higher operating expenses; nevertheless, we report solid quarterly results. I am particularly proud that our revenue from information services increased by PLN 1.4 million. It is a recurrent income, which improves the operating leverage. We continue to diversify our business by developing new revenue lines. With a view to the long-term engagement of our investors, the Management Board recommends the payment of a dividend, which is the highest since 2010 and reflects the historically high financial results of 2018,” said Marek Dietl, President of the GPW Management Board.
Operating expenses increased to PLN 54.3 million, i.e., by 12.3% year on year and 28.0% quarter on quarter in Q1 2019. The cost/income ratio was 64.5% vs. 56.3% in Q1 2018 and 48.0% in Q4 2018. The expenses of Q1 2019 include provisions at PLN 12.9 million against the annual fee due to KNF. The provisions stood at PLN 9.0 million in Q1 2018. In addition, the year-on-year change of operating expenses in Q1 2019 was driven mainly by an increase of depreciation and amortisation charges, as well as salaries due to an additional headcount necessary to implement the GPW Group’s strategy.
The GPW Management Board recommends a dividend of PLN 133.5 million, i.e., PLN 3.18 per share, equal to 77.1% of the consolidated net profit of GPW for the financial year 2018 attributable to the shareholders of GPW adjusted for the share of profit of associates. The recommendation is consistent with GPW’s dividend policy.
Presentation of the GPW Group’s financial results for Q1 2019
Net profit
The net profit of the GPW Group was PLN 24.5 million in Q1 2019, down by 18.3% year on year and down by 34.2% quarter on quarter. The quarter-on-quarter decrease of the net profit was driven by a lower revenue on the commodity market, which decreased by 13.6%, combined with higher expenses, which grew by 28.0% in Q1 2019. The net profit was also driven by a nearly 50% decrease of the share of profit of associates quarter on quarter, to PLN 1.0 million.
Revenue from the financial market
The sales revenue on the financial market was PLN 49.5 million in Q1 2019, representing a decrease of 0.2% year on year and an increase of 2.9% quarter on quarter. The revenue on the financial market contributed 58.8% of the total sales revenue of the GPW Group compared to 57.7% in Q1 2018 and 54.4% in Q4 2018. The revenue on the financial market includes trading revenue, listing revenue, revenue from information services and revenue from the calculation of reference rates.
ü Trading revenue on the financial market
The trading revenue on the financial market was PLN 32.0 million in Q1 2019 compared to PLN 32.9 million in Q1 2018, representing a decrease of 2.7% year on year and an increase of 4.6% quarter on quarter. The revenue was mainly driven by a decrease of revenue from trading in derivatives and debt instruments, down by 17.1% year on year and 16.7% quarter on quarter and by 6.3% year on year and 8.6% quarter on quarter, respectively. The decrease in the trading revenue year on year was mainly driven by less active trading of domestic institutional investors – mutual funds and pension funds, as well as a lower share of market makers in the regulated stock market in Q1 2019.
ü Listing revenue
The GPW Group’s listing revenue on the financial market was PLN 5.3 million in Q1 2019 compared to PLN 5.9 million in Q1 2018 and PLN 5.7 million in Q4 2018. The revenue from listing fees was PLN 4.6 million in Q1 2019 (-9.6% year on year and -4.6% quarter on quarter). Lower activity on the IPO and SPO markets resulted in a decrease of revenues from fees for introduction to PLN 0.2 million in Q1 2019 vs. PLN 0.87 million in Q1 2018 and PLN 0.8 million in Q4 2018.
ü Information services
The revenue from information services stood at PLN 12.2 million in Q1 2019, representing an increase of 13.5% year on year and an increase of 3.2% quarter on quarter. The revenue from information services contributed 14.5% of the GPW Group’s total sales revenues.
Revenue from the commodity market
The sales revenue on the commodity market was PLN 34.6 million in Q1 2019, a decrease of 4.6% year on year and a decrease of 13.6% quarter on quarter. It contributed 41.1% to the GPW Group’s total revenues in Q1 2019. The revenue on the commodity market includes trading revenue, revenue from operation of the register of certificates of origin, revenue from clearing and information services.
ü Trading revenue on the commodity market
The trading revenue on the commodity market decreased by 10.3% year on year and by 23.6% quarter on quarter to PLN 15.9 million in Q1 2019. The revenue from trading in electricity was PLN 3.2 million in Q1 2019, an increase of 3.4% year on year and a decrease of 43.0% quarter on quarter. The revenue from trading in gas increased by 5.2% year on year and decreased by 31.6% quarter on quarter to PLN 2.4 million in Q1 2019. The revenue from trading in property rights of certificates of origin decreased by 23.1% year on year and by 15.5% quarter on quarter to PLN 7.3 million in Q1 2019. The Group’s revenue from other fees paid by commodity market participants stood at PLN 3.0 million in Q1 2019 compared to PLN 2.8 million in Q1 2018 and PLN 3.0 million in Q4 2018. The amount of other fees paid by commodity market participants depends largely on the number and the activity of IRGiT Members, in particular the number of transactions.
ü Operation of the Register of Certificates of Origin
The revenue from the operation of the Register of Certificates of Origin was PLN 7.6 million in Q1 2019, representing an increase of 6.7% year on year and 24.7% quarter on quarter. The year-on-year increase in the revenue was due to an increase in the revenue from cancelled property rights in green certificates of origin from PLN 4.6 million to PLN 5.4 million in 2019 and an increase in cancellations in the register of guarantees of origin from PLN 0.1 million to PLN 0.5 million.
ü Clearing
The revenue from clearing was PLN 10.9 million in Q1 2019, representing a decrease of 3.4% year on year and a decrease of 16.0% quarter on quarter. The change of the revenue was driven by volumes of trade on all markets operated by TGE.
ü Information services
The revenue from information services on the commodity market stood at PLN 169 thousand in Q1 2019 compared to PLN 98 thousand in Q1 2018 and PLN 117 thousand in Q4 2018.
Operating expenses
Operating expenses were PLN 54.3 million in Q1 2019, an increase of 12.3% year on year and an increase of 28.0% quarter on quarter.
Comparing expenses quarter after quarter, the GPW Group’s fees for capital market supervision increased year on year: the fees were booked at PLN 12.9 million in Q1 2019 compared to PLN 9.0 million in Q1 2018. External service charges increased to PLN 10.1 million in Q1 2019 compared to PLN 9.9 million in Q1 2018 and PLN 11.9 million in Q4 2018.
Salaries stood at PLN 19.4 million in Q1 2019, an increase of 11.5% year on year and an increase of 6.0% quarter on quarter. The increase was driven by a gradual increase of the headcount in view of a bigger workload in the implementation of the GPW Group strategy. Depreciation and amortisation charges increased by 17.4% year on year and 16.2% quarter on quarter to PLN 9.2 million. The year-on-year increase of the depreciation and amortisation charges was due to the implementation of the new IFRS 16 Leases in all Group companies. A part of the cost previously shown under operating expenses is now split between depreciation and amortisation, financial expenses, and fees and taxes. As a result of the reclassification, the GPW Group’s cost of rent decreased by PLN 1.5 million year on year and by PLN 1.3 million quarter on quarter in Q1 2019.
Share of profit of entities measured by the equity method
The GPW Group’s share of profit of entities measured by the entity method was PLN 1.0 million in Q1 2019 compared to PLN 0.7 million in Q1 2018 and PLN 1.9 million in Q4 2018. The increase was mainly driven by the sale of the interest in Aquis in 2018; in Q1 2018, Aquis reported a loss, which was charged to the GPW Group.
The Group’s share of the profit of the KDPW Group was PLN 1.1 million in Q1 2019 compared to PLN 1.6 million in Q1 2018. The share of the profit of Centrum Giełdowe was PLN 0.1 million in Q1 2019, which was stable year on year. The share of the loss of Polska Agencja Ratingowa was PLN 0.2 million in Q1 2019.
GPW Group’s Financial Results 1Q 2019
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The Warsaw Stock Exchange Group (GPW Group) operates trading platforms for shares, Treasury and corporate bonds, derivatives, electricity and gas, and calculates the benchmarks WIBOR and WIBID. The index agent FTSE Russell classifies the Polish capital market as a Developed Market since 2018. The markets operated by the GPW Group are the biggest in Central and Eastern Europe. For more information, visit www.gpw.pl
