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- The GPW Group’s net profit was solid at PLN 28.5 million in Q1 2018 despite adverse conditions on the financial market
- Revenue stood at PLN 85.9 million in Q1 2018
- The GPW Management Board recommends a dividend payment of PLN 92.3 million (PLN 2.20 per share)
The GPW Group generated revenue at PLN 85.9 million and a net profit of PLN 28.5 million in Q1 2018. EBITDA was PLN 42.6 million in Q1 2018. Revenue decreased by 5.6% year on year and by 6.8% quarter on quarter in Q1 2018. The year-on-year decrease of the revenue was caused by less active investor trade. The quarter-on-quarter decrease was due to lower volumes on the financial market in Q1 2018, especially compared to the record-high volumes in Q1 2017. The quarter-on-quarter decrease was also driven by less active trade on the financial market and primarily on the commodity market compared to Q4 2017.
“The GPW Management Board will in a matter of weeks publish an update of the 2014-2020 strategy including specific strategic initiatives geared to improvement of our competitive position and EBITDA. These efforts coincide with the development of the government’s capital market development strategy which focuses on regulatory and institutional issues. This year is crucial for setting the future directions of development of the exchange,” said Marek Dietl, President of the GPW Management Board.
Operating expenses increased by 4.0% year on year and decreased by 1.3% quarter on quarter and stood at PLN 48.4 million. The cost/income ratio was 56.3% compared to 51.1% in Q1 2017 and 53.1% in Q4 2017. The Q1 2018 costs include PLN 9.0 million provisions for the annual fee due to the Polish Financial Supervision Authority at Group level, compared to PLN 11.4 million in Q1 2017. The year-on-year increase of expenses in Q1 2018 was mainly driven by higher depreciation and amortisation charges following the implementation of two new systems in TGE in 2017, as well as total salaries due to a higher headcount and additional provisions against annual bonuses in 2018.
The GPW Management Board recommends a dividend payment of PLN 92.3 million, i.e., PLN 2.20 per share, representing 63.3% of the consolidated net profit of GPW for the financial year 2017 attributable to the shareholders of GPW adjusted for share of profit of associates. The recommendation is in line with GPW’s dividend policy.
Presentation of the GPW Group’s financial results for Q1 2018
Net profit
The net profit of the GPW Group was PLN 28.5 million in Q1 2018, an increase of 2.7% year on year and a decrease of 27.7% quarter on quarter. The quarter-on-quarter decrease of the net profit was driven by lower revenues from the financial market (down by 10.9%) and higher expenses in Q1 2018 (up by 4.0%). The net profit was also impacted by a decrease of the share of profit of associates, which dropped by more than a half year on year and stood at PLN 0.7 million.
Revenue from the financial market
The sales revenue from the financial market was PLN 49.6 million in Q1 2018, a decrease of 10.9% year on year and 4.4% quarter on quarter. The revenue from the financial market contributed 57.7% of the total sales revenue of the GPW Group compared to 61.1% in Q1 2017 and 56.3% in Q4 2017.
The revenue from the financial market includes trading revenue, revenue from issuers, and revenue from information services.
Trading revenue on the financial market
The trading revenue on the financial market was PLN 32.9 million in Q1 2018 compared to PLN 38.8 million in Q1 2017, representing a decrease of 15.3% year on year and 5.0% quarter on quarter. The trading revenue on the financial market was mainly driven by a decrease of the revenue from trade in equities and equity-related instruments by 17.6% year on year and 8.5% quarter on quarter to PLN 24.9 million. The revenue from trade in derivatives increased sharply by 20.9% year on year to PLN 3.2 million in Q1 2018.
Revenue from issuers
The GPW Group’s revenue from services for issuers on the financial market was PLN 5.9 million in Q1 2018 compared to PLN 6.3 million in Q1 2017 and in Q4 2017. The revenue from listing fees stood at PLN 5.1 million in Q1 2018 (-1.9% quarter on quarter and 2.2% year on year). The year-on-year increase of the capitalisation of companies at 2017 year-end, which is used as the basis of calculation of listing fees, failed to offset the year-on-year decrease of the number of companies (482 v. 487 companies). A lower value of IPOs and SPOs in Q1 2018, both year on year and quarter on quarter, caused a decrease of revenue from fees for introduction, which stood at PLN 0.8 million in Q1 2018 compared to PLN 1.2 million in Q1 2017 and PLN 1.3 million in Q4 2017.
Information services
The revenue from information services stood at PLN 10.8 million in Q1 2018, representing an increase of 3.1% year on year and a decrease of 2.1% quarter on quarter. The revenue from information services contributed 12.5% of the GPW Group’s total sales revenues.
Revenue from the commodity market
The sales revenue on the commodity market was PLN 36.2 million in Q1 2018, an increase of 3.1% year on year and a decrease of 9.9% quarter on quarter. It contributed 42.1% to the GPW Group’s total revenues in Q1 2018. The revenue from the commodity market includes trading revenue, revenue from operation of the register of certificates of origin, and revenue from clearing.
Trading revenue on the commodity market
The trading revenue on the commodity market increased by 13.9% year on year and decreased by 12.1% quarter on quarter to PLN 17.7 million in Q1 2018. The revenue from trade in electricity was PLN 3.1 million in Q1 2018, an increase of 71.0% year on year and 9.0% quarter on quarter. The revenue from trade in gas decreased by 10.4% year on year and 25.3% quarter on quarter to PLN 2.3 million in Q1 2018. The revenue from trade in property rights of certificates of origin increased by 9.9% year on year and decreased by 16.6% quarter on quarter to PLN 9.5 million in Q1 2018. The Group’s revenue from other fees paid by commodity market participants stood at PLN 2.8 million in Q1 2018 compared to PLN 2.6 million in Q1 2017 and PLN 2.9 million in Q4 2017. 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.
Operation of the Register of Certificates of Origin
The revenue from the operation of the Register of Certificates of Origin was PLN 7.1 million in Q1 2018, representing a decrease of 21.8% year on year and a decrease of 10.5% quarter on quarter. The sharp decrease in the revenue from the operation of the Register of Certificates of Origin was due to a decrease in the volume of cancelled property rights (down by 84.9% year on year and 62.0% quarter on quarter).
Clearing
The revenue from clearing was PLN 11.3 million in Q1 2018, representing a decrease of 8.9% year on year and an increase of 6.2% quarter on quarter. The change of the revenue was driven by volumes of trade on all markets operated by TGE.
Information services
The revenue from information services on the commodity market stood at PLN 98 thousand in Q1 2018 compared to PLN 85 thousand in Q1 2017 and PLN 92 thousand in Q4 2017.
Operating expenses
Operating expenses were PLN 48.4 million in Q1 2018, an increase of 4.0% year on year and a decrease of 1.3% quarter on quarter. The cost/income ratio was 56.3% in Q1 2018 compared to 51.1% in Q1 2017 and 53.1% in Q4 2017.
Comparing expenses quarter after quarter, the GPW Group’s fees for capital market supervision decreased year on year: the fees were booked at PLN 9.0 million in Q1 2018 compared to PLN 11.4 million in Q1 2017. Furthermore, external service charges decreased to PLN 9.9 million in Q1 2018 compared to PLN 9.0 million in Q1 2017 and PLN 20.3 million in Q4 2017.
Total salaries stood at PLN 17.4 million in Q1 2018, an increase of 11.3% year on year and an increase of 1.3% quarter on quarter. The year-on-year increase was driven by a higher headcount and additional provisions against unused holiday leave. Depreciation and amortisation charges increased by 22.4% year on year and 3.4% quarter on quarter to PLN 7.8 million following the implementation of two new systems in 2017: X-Stream (May) and Sapri (November). The GPW Group’s rent decreased by 3.9% year on year and increased by 19.4% quarter on quarter as the Q1 2018 expenses include the rent of the TGE head office in 2017 and Q1 2018 due to a later than expected termination of the lease.
Share of profit of associates
The GPW Group’s share of profit of associates was PLN 0.7 million in Q1 2018 compared to PLN 1.5 million in Q1 2017 and PLN 1.9 million in Q4 2017. The share of profit of associates was mainly driven by the earnings of the KDPW Group and Aquis Exchange. KDPW’s profit attributable to GPW was PLN 1.6 million in Q1 2018 compared to PLN 2.0 million in Q1 2017. The multilateral trading facility Aquis Exchange generated a loss in Q1 2018, including a loss attributable to the GPW Group at PLN 0.9 million, compared to a loss of PLN 0.8 million in Q1 2017.
Click here to download GPW Group’s Financial Results in Q1 2018.
