.jpg)
It has been three years on 9 November 2013 since the exchange listing of Warsaw Stock Exchange, which attracted more than 320 thousand individual investors and more than 1.1 thousand institutional investors. The image of the company has since changed considerably as WSE has become even more safe, attractive to investors, and ready to support Polish entrepreneurship and offer attractive opportunities of diversifying Poles’ savings.
“In 2010 when we made our first steps as a public company, our business focused on the operation of a stock market. Today the exchange is stronger than ever before, not only attractive to entrepreneurs, local governments and investors but also safer for business. As we took over the Polish Power Exchange in 2012, we achieved significant diversification of our revenue sources and opened up completely new growth opportunities for WSE Group in the previously underdeveloped segment of commodity markets in Poland,” said Adam Maciejewski, President of the Management Board of WSE.
In 2012, the consolidated sales revenue of the Exchange stood at PLN 273.8 million, an average increase of more than 11% per annum since the year before the listing (2009). Trading revenue from the stock market contributed less than 37% of total revenue in 2012, compared to more than 50% in 2009. The profit and loss account now includes a new important revenue line represented by the commodity market, which generated 22.9% of the Group’s revenue in 2012. Revenue increased by another 6.6% YoY in Q1-3 2013 and the contribution of the commodity market grew to 26.8%. In order to boost the growth potential of the new segment, WSE has modified the business profile of its subsidiary WSEInfoEngine, which provides OTC commodity market services since Q3 2013.
“We are still investing in the segment. We opened a gas market in December 2012, initiated OTC power trading in 2013, and will soon operate trading in and a Register of Certificates of Origin of energy efficiency certificates. We are also running new projects including the launch of a market of commodity derivatives with cash settlement, a biomass market and a coal market, which in future should further amplify the importance of this area in WSE Group. We continue to actively strengthen and grow the financial market. We are actively working to enhance the liquidity of the stock market, to grow the debt market, to stimulate the derivatives market, and to invest in state-of-the-art trading methods on the pan-European market,” said Adam Maciejewski.
The new trading system, Universal Trading Platform (UTP) acquired from NYSE Technologies, has been operational since 15 April 2013 and represents the most important infrastructure project on the Polish capital market in many years. As a result of the transition, Warsaw Stock Exchange operates a system which conforms to the top global standards and addresses the growing requirements of market participants while ensuring the safety and organisation of trading in line with global trends. The new technology infrastructure allows to grow the product offer and to introduce new types of services, opening up the Polish capital market to new trading techniques. Since September 2013, WSE offers the co-location and High Performance Access service, where hardware and software can be installed in direct proximity to UTP. Since November 2013, WSE offers the High Volume Provider (HVP) promotional programme, which aims to attract to WSE new active investors trading exclusively for their account.
Following the implementation of UTP, WSE is gradually adding new segments to the derivatives market. WSE’s offer now includes such categories of instruments as futures contracts on WIBOR reference rates and on Treasury bonds; other instruments including stock options will be introduced to trading in 2014. In a longer term, WSE’s position in the derivatives segment will be strengthened with the implementation of a separate trading system dedicated to derivative instruments.
Another important element of WSE’s growth strategy is to strengthen the brand and the position of the Polish stock exchange on the international markets and to consolidate its role of a financial hub in the region of Central and Eastern Europe. Currently WSE’s share in equities trading in CEE is close to 60% owing to consistently superior growth in trading both in the region and in Europe. The average monthly trading in equities on WSE in the last three years has been 22% higher than the average trading in the period of three years prior to WSE’s listing on the exchange (January 2008 – October 2010). The average monthly trading on all of Europe’s regulated markets decreased by 22% in the same period1. WSE is Europe’s second exchange by the growth rate of trading in the group of mid-sized and large exchanges (i.e., monthly trading value in excess of EUR 1 bn) and has remained a European IPO leader by the number of IPOs. In the three years preceding the end of October 2013, the number of issuers on WSE’s regulated market increased from 50 to 446; including NewConnect, WSE lists 891 companies, 321 more than three years ago.
In August 2013, WSE signed an agreement to acquire a 30% stake in Aquis Exchange Ltd., a multilateral trading facility in the UK, which will launch a pan-European equities trading market on 26 November. Other previous initiatives aimed at internationalising WSE’s position include the permanent presence of a WSE representative in London, the representation office in Kiev, and on-going negotiations concerning co-operation with the CEE Stock Exchange Group (CEESEG). WSE is also reaching out to international issuers, now also in the Far East, as demonstrated by the recent IPO of the first Chinese company. More international initiatives are under development.
Organic growth and the acquisition of the Polish Power Exchange allowed WSE Group to grow its operating profit by 16% on average in the years 2009-2012. After nine months of 2013, EBIT decreased by 6.3% year on year mainly due to the strategic investment in the UTP system, which is reflected in costs (specifically in depreciation and amortisation). The Group’s consolidated net profit was PLN 85 million in Q1-3 2013, comparable to the same period of 2012.
“During its IPO, the Exchange decided that an important part of its shareholder relations should be an annual dividend payout, a policy which we have pursued consistently. Nearly 100% of the separate profit of 2011 and 50% of the annual profit in each of the following two years was paid out as dividend. The dividend payout ratio was reduced as we believe in the rationale of investing in further growth of WSE Group, which should generate a satisfactory return rate to the Exchange’s shareholders. At the same time, we do want to be perceived as a dividend-paying company,” said Adam Maciejewski.
WSE has paid out close to PLN 230 million to the shareholders in the last three years, which translates to an annual average dividend yield of 4.2%.
