- In 2014, the WSE Group earned a record-high sales revenue of PLN 317.6 million, representing an increase of 11.9% year on year
- The operating profit increased by 14.1% to PLN 135.4 million
- The net profit decreased moderately year on year (PLN 112.3 million in 2014 v. PLN 113.5 million in 2013)
- In 2014, the Exchange paid a dividend of PLN 1.2 per share, resulting in a dividend yield of 3.3%[1] and amended its dividend policy for next years, making it more attractive for the shareholders
- In Q4, WSE updated the Group strategy by 2020
In 2014, the WSE Group earned a record-high sales revenue of PLN 317.6 million, representing an increase of 11.9% year on year. The revenue on the financial market was PLN 200.0 million in 2014 (a decrease of 2.6% year on year) and the revenue on the commodity market increased by 50.6% year on year to PLN 114.5 million and accounted for 36.0% of the WSE Group’s sales revenue at the end of 2014 (compared to 26.8% in 2013). The increase of revenue on the commodity market resulted in an operating profit of the WSE Group at PLN 135.4 million (an increase of 14.1% year on year). The WSE Group’s net profit was PLN 112.3 million at the end of 2014.
“In 2014, which was not an easy year, we generated solid financial results which prove that our fundamentals are sound and that we have a potential of further growth of business. The results also prove that a focus on the core business of developing the trading platforms is the right business decision. Despite the unfavourable market conditions and geopolitical factors, we reported a record-high sales revenue and a significant increase of the operating profit,” said Paweł Tamborski, President of the WSE Management Board.
In Q4 2014, the WSE Management Board presented the updated strategy WSE.2020 focused mainly on organic growth. The key objective is to strengthen the role of WSE as a market of first choice for investors and issuers in Central and Eastern Europe. According to the strategy, the Group’s revenue will grow by 7% CAGR by 2020 and EBITDA will be double that of 2013 at PLN 144.4 million.
Last year, in order to address market expectations, the WSE Management Board decided to change the exchange indices by reinstating WIG20 as the leading index, to maintain the shorter trading schedule (effective as of 2013), and to continue listing WIG20 futures with a multiplier of PLN 20 (futures with a multiplier of PLN 10 were delisted in mid-2014).
“We expect that our business decisions combined with the cost discipline and active post-sale activities will further grow our shareholder value,” said Karol Półtorak, Vice-President of the WSE Management Board.
Presentation of WSE Group’s financial results
In 2014, the WSE Group generated one of a highest operating profit at PLN 135.4 million, representing an increase of 14.1% (PLN 16.7 million) year on year. In Q4 2014, the operating profit was PLN 33.1 million, representing an increase of 25.5% compared to Q4 2013 (up from PLN 26.4 million) and a decrease of 8.1% compared to Q3 2014 (down from PLN 36.1 million). The year-on-year increase in operating profit in 2014 was mainly driven by a significant increase of the WSE Group’s revenue (PLN 317.6 million), especially on the commodity market.
The WSE Group’s net profit was PLN 112.3 million in 2014, representing a decrease of 1.1% (PLN 1.3 million) year on year. The year-on-year decrease of the net profit was due to the high base of 2013 when the WSE Group received a refund of the income tax for previous years under a new technology relief. This was reflected in the low income tax (PLN 16.3 million) and the resulting higher net profit (PLN 113.5 million). In addition, the Group reported a much lower share of profit of associates (down by PLN 8.7 million) in 2014. In Q4 2014, the WSE Group generated a net profit of PLN 24.3 million.
The WSE Group’s sales revenue was record-high at PLN 317.6 million in 2014 (an increase of PLN 33.8 million or 11.9% year on year). In Q4 2014, the Group generated a sales revenue of PLN 83.9 million, representing an increase of 18.5% compared to Q4 2013 and an increase of 7.8% compared to Q3 2014. The year-on-year and the quarter-on-quarter improvement of the sales revenue was mainly driven by the activity of the WSE Group on the commodity market.
Revenue on the financial market
The revenue on the financial market includes the revenue from trading, listing, and information services. The revenue was PLN 200 million in 2014, representing a decrease of 2.6% year on year due to lower trading revenue, mainly from derivatives. The revenue on the financial market accounted for 63.0% of the WSE Group’s total sales revenue in 2014.
In Q4 2014, the Exchange generated a revenue on the financial market at PLN 46.5 million, representing a decrease of 9.8% compared to Q4 2013 and 5.7% compared to Q3 2014.
Trading on the financial market
In 2014, the trading revenue on the financial market was PLN 137.8 million, compared to PLN 147.9 million in 2013 (a decrease of 6.8% year on year). In Q4 2014, the WSE Group reported a decrease of the trading revenue on the financial market to PLN 31.1 million from PLN 36.4 million in Q4 2013 (by 14.6% year on year) and from PLN 34.3 million in Q3 2014 (by 9.4%).
In 2014, the turnover on the Main Market in equities decreased by 9.1% (from PLN 220.2 billion in 2013 to PLN 205.4 billion in 2014; Electronic Order Book) while the volume of trading in derivatives decreased by 24.9%. Investor sentiment and investor activity on WSE were driven by several factors including the valuation of Polish stocks at a premium in relation to the global portfolio of emerging market stocks, the pension fund reform, and the military conflict in Ukraine which restrained the interest of international investors in the CEE region.
Listing
The Group’s listing revenue on the financial market includes fees charged from companies listed on the financial markets operated by WSE and fees paid by companies seeking admission and introduction to trading. In 2014, the WSE Group’s listing revenue was PLN 24.0 million, an increase of 7.5% (PLN 1.7 million) compared to PLN 22.3 million in 2013. In Q4 2014, the listing revenue was PLN 5.8 million, representing an increase of 1.7% compared to Q4 2013 and 2.3% compared to Q3 2014.
Information services
The revenue from information services was PLN 38.2 million in 2014, an increase of 9.0% year on year. In Q4 2014, the revenue from information services was PLN 9.5 million, an increase of 1.7% compared to Q4 2013 and 2.8% compared to Q3 2014.
Revenue on the commodity market
The WSE Group’s revenue on the commodity market depends mainly on the volume of trading on the markets in electricity, natural gas and property rights, the volume of certificates of origin issued and cancelled by members of the Register of Certificates of Origin, and the revenue from clearing and settlement of transactions in exchange-traded commodities in the clearing subsegment operated by WCCH.
The sales revenue on the commodity market was PLN 114.5 million in 2014, representing an increase of 50.6% year on year. In Q4 2014 alone, the WSE Group’s sales revenue on the commodity market was PLN 35.7 million, representing an increase of 89.6% compared to Q4 2013 and 26.2% compared to Q3 2014.
At the end of 2014, the revenue on the commodity market represented 36.0% of the WSE Group’s sales revenue, compared to 26.8% in 2013.
Trading
In 2014, the trading revenue on the commodity market increased by 50.7% year on year to PLN 60.1 million. In Q4 2014, the trading revenue on the commodity market was PLN 18.7 million, representing an increase of 73.2% compared to Q4 2013 and an increase of 23.3% compared to Q3 2014.
The increase of the trading revenue was driven mainly by the growing volume of trade on the gas market (from 2.4 TWh in 2013 to 111.6 TWh at the end of 2014). In addition, the trade volume increased significantly in the segment of property rights in certificates of origin of energy from renewable energy sources (an increase of 47.2% to 32.1 TWh). The volume of trade in electricity increased by 5.8% to 186.8 TWh.
Register of Certificates of Origin
The WSE Group’s revenue from the operation of the Register of Certificates of Origin was PLN 22.5 million in 2014 compared to PLN 15.6 million in 2013, representing an increase of 44% year on year. In Q4 2014, the revenue from the operation of the Register of Certificates of Origin was PLN 5.9 million, compared to PLN 3.0 million in Q4 2013 (an increase of 96.8%) and PLN 4.7 million in Q3 2014 (an increase of 25.3%). The increase in the revenue from the operation of the Register of Certificates of Origin was mainly driven by a higher number of issued property rights in certificates of origin of energy (renewable energy sources and cogeneration; 42.2 TWh in 2014 v. 29.5 TWh in 2013).
Clearing
The WSE Group earns a revenue from clearing on the commodity market through PolPX’s subsidiary WCCH. In 2014, the Group’s revenue from clearing on the commodity market was PLN 31.9 million, compared to PLN 20.5 million in 2013 (an increase of 55.5%). In Q4 2014, the Group’s revenue from clearing on the commodity market was PLN 11.2 million, an increase of 120.3% compared to Q4 2013 (up from PLN 5.1 million) and 32.1% compared to Q3 2014. The year-on-year increase in the revenue from clearing on the commodity market in 2014 was driven mainly by a higher volume of trade on the gas market and the property rights market.
Operating expenses
The WSE Group’s total operating expenses in 2014 were PLN 181.6 million, representing an increase of 9.3% (PLN 15.4 million) year on year. In Q4 2014, operating expenses were PLN 51.3 million, representing an increase of 13.8% compared to Q4 2013 and 22.4% compared to Q3 2014.
The WSE Group’s operating expenses increased among others due to higher depreciation and amortisation charges as a result of the implementation of the trading system UTP (an increase of 11.8% from PLN 25.7 million in 2013 to PLN 28.8 million in 2014), the cost of supervision over the capital market (an increase from PLN 18.2 million in 2013 to PLN 21.1 million in 2014), higher expenses for development and promotion, as well as one-off expenses including mainly external service charges (PLN 42.0 million v. PLN 36.2 million in 2013) and salaries (PLN 56.6 million in 2014 v. PLN 51.9 million in 2013).
Share of profit of associates
The WSE Group’s share of profit of associates in 2014 was PLN 3.7 million, representing a decrease of 70.0% compared to PLN 12.5 million in 2013. In Q4 2014 alone, the WSE Group’s share of profit of associates was negative at PLN 2.2 million (PLN 1.6 million in Q4 2013 and PLN 1.1 million in Q3 2014). The decrease in the share of profit of associates was mainly driven by the share of losses of Aquis Exchange Limited at PLN 6.7 million attributable to the WSE Group in 2014 (Aquis Exchange became an associate of WSE in February 2014), as well as a year-on-year decrease of the profit of KDPW S.A. (PLN 30.0 million v. PLN 36.1 million) and Centrum Giełdowe (PLN 1.5 million v. PLN 1.9 million).
[1] dividend yield as the dividend per share to the closing price of WSE shares at 4 August 2014
