Improved Profitability Ratios Of GPW Group In Q2 2016

In Q2 2016, the GPW Group generated revenue of PLN 74.5 million, a net profit of PLN 33.9 million, and EBITDA of PLN 43 million. The decrease in revenue was mainly due to a weaker quarter on the financial market, resulting from a lower turnover on the equities market, reflecting a decrease of the average capitalisation of Polish companies and less activity of “portfolio” investors. In addition, revenue from equities trading was under pressure from the reduction of trading fees starting in January 2016. As a result, the revenue from the financial market was PLN 42.9 million in Q2 2016, representing a decrease of 12.7 percent year on year. Thanks to effective acquisition efforts of GPW, the activity of new clients improved, in particular proprietary traders, who generated PLN 18.3 billion of additional turnover on the equities market in H1 2016, compared to PLN 21 billion in all of 2015.

“Similar to other exchanges, Warsaw has in the past few months faced more uncertainty and less investor activity. The falling capitalisation of companies results in a falling value of trade in equities on the GPW; hence, we are focusing on areas under our control irrespective of market conditions. We are acquiring new clients who generate revenue and liquidity on the GPW; furthermore, with the diversification of our business, stable revenues from other business lines partly offset the more difficult conditions on the equities market,” said Paweł Dziekoński, Vice President of the GPW Management Board.

In Q2 2016, revenue from the commodity market was PLN 30.9 million, accounting for 41.5 percent of the GPW Group’s revenue. All TGE revenue lines increased year on year except for revenue from transactions in electricity. The decrease of revenue in the segment (-21.1 percent YoY) was mainly driven by a decrease in the volume of trade on the forward market due to uncertainty about future electricity prices. While the Q2 2016 revenue from trade in electricity decreased year on year, the revenue from trade in gas increased significantly by 42.1 percent year on year. The same can be said for the increase in revenues from operation of the Register of Certificates of Origin and from clearing.

The Q2 2016 operating expenses were PLN 38 million, resulting in a cost/income ratio of 51.1 percent. The sharp decrease (by 17.6 percent QoQ and by 15.6 percent YoY) was mainly due to a change in the booking method of PFSA fees which were fully accounted for in Q1. The Q2 2016 expenses were impacted by a one-off increase of provisions against salaries due to reorganisation (by PLN 1.5 million). Less the one-off expenses, operating expenses decreased year on year (by 12.7 percent), and the cost/income ratio was 52.8 percent.

“The significant decrease in costs includes the change of the method of booking of the fees due to PFSA, but it is also a result of the cost discipline which we have maintained steadily for several quarters and which we are planning to continue. Under the difficult market conditions affecting the revenue of our Group, the cost discipline allows us to maintain solid financial results and consequently share the earnings with our shareholders. The dividend yield this year is a record-high 6.7 percent²,” said Paweł Dziekoński, Vice President of the GPW Management Board.