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• Net profit of the WSE Group in Q1 2012 at PLN 33.5 million, down by 13.2% YoY and up by 36.6% QoQ.
• Sales revenues at PLN 63.9 million, down by 7.6% YoY.
• Operating profit at PLN 35.7 million, down by 7.4% YoY.
• EBITDA margin at 69.1 percent, stable YoY (69.3% in Q1 2011).
• ROE at 23%, up by 3.8 percentage points.
• Quarterly EPS at PLN 0.79 in Q1 2012 v. PLN 0.92 in Q1 2011.
• Polish Power Exchange consolidated by the WSE Group as of March 2012.
The Warsaw Stock Exchange Group generated a net profit of PLN 33.5 million in Q1 2012, down by 13.2% year on year and up by 36.6% quarter on quarter. Revenues were PLN 63.9 million, down by 7.6% year on year. The decrease in the financial results was due to a significant decrease of equities trading (down by 12.6% year on year) and a temporary anti-crisis reduction of trading fees introduced in November 2011 (the value of the reduction was PLN 1.7 million in Q1), as well as a 31 percent decrease in the derivatives trading volume.
The decrease in trading on the WSE’s markets reflects a general trend affecting stock exchanges in Q1 2012. According to the World Federation of Exchanges, equities trading denominated in local currencies on EMEA (Europe, Middle East, Africa) markets decreased by 21% on average. The WSE’s equities trading ratio (trading value to capitalisation of listed companies), which remained stable compared to all of 2011 (close to 46%), suggests that the decrease in trading results from lower share prices rather than an outflow of investors from the Polish capital market. Combined with active presence of the IPO market (according to PwC IPO Watch, the WSE with 25 IPOs ranked #1 in Europe by the number of IPOs in Q1 2012), this demonstrates the strong condition of the Polish capital market, which continued to strengthen its regional position in Q1 2012. The WSE’s share in equities trading in Central and Eastern Europe increased to 54% from 50% in 2011. The WSE’s advantage in financial instruments trading over other exchanges in the region has recently increased as a result of the WSE’s focused capital market growth strategy.
Further improvement of the WSE’s market position will be driven by the new trading platform UTP currently in implementation (to go live on 2 November 2011), which will consume a major part of the WSE’s capital expenditures in 2012 (some UTP costs were paid in 2010 and 2011). Total capital expenditures are planned at PLN 93 million net of the equity investment in the acquisition of the Polish Power Exchange (PolPX) closed in February 2012.
The acquisition of PolPX is a result of the WSE’s long-term strategy which includes expansion in exchange commodity trading and derivatives based on commodities. The effect of the investment is visible already in the WSE Group’s financial results for Q1 2012.
The pace of the decrease in revenues was less sharp than the negative trend in equities and derivatives trading would have suggested, among others due to continued dynamic growth of bonds trading (turnover on the Treasury BondSpot Poland cash market increased by 64% year on year and the Group’s revenues from debt instrument trading increased by nearly 21%), a nearly 15% growth of revenues from information services, and primarily the results of the acquisition of the Polish Power Exchange. PolPX is consolidated in the results of the WSE Group as of March 2012, adding PLN 2.8 million to the net profit.
The commodity market generated 10% of revenues and the share of revenues from equities trading in the WSE Group’s total revenues decreased to 46% from 53% in 2011. Had PolPX been consolidated as of the beginning of Q1, the commodity market would have generated 23% of the Group’s revenues while the share of equities trading in total revenues would have decreased to 39%. This proves that the WSE has made great progress in diversifying its business model. The WSE is already a key capital and commodity market infrastructure institution which sets strategic trends on these markets and caters to the needs of a wide range of market participants. With the acquisition of PolPX in February 2012, the WSE reported less sharp decrease in the consolidated financial results than in the single results, where the net profit decreased by over 38% to PLN 19.8 million in Q1 2012. In addition to lower equities and derivatives trading, the WSE’s single results were also affected by PLN 3.9 million of debt service related to bonds issued by the WSE in December 2011 and February 2012.
“The business of the WSE Group has been put to many a test over the past months. It is happening as we implement the most important and expensive IT project in the history of the Polish capital market: the implementation of a new trading system in collaboration with the New York Stock Exchange. The WSE Group’s strategy, which is inevitably the growth strategy of the Polish capital market, has stood the test. The WSE Group is in a better position now than ever before to responsibly contribute to a vision of growth and good prospects of the Polish capital and commodity markets. It will soon substantiate in further projects which we are planning to implement,” said Ludwik Sobolewski, President of the Management Board of the Warsaw Stock Exchange.
For a detailed financial report visit: http://www.gpw.pl/raporty_okresowe
