- GPW Group’s EBITDA at PLN 51.9 million and EBITDA margin at 70.5% 1
- GPW Group’s revenue at PLN 73.7 million and net profit at PLN 40.4 million
- Operating expenses down in Q3 2016 to PLN 28.3 million, resulting in a cost/income ratio of 49.1% in the nine months of 2016
In Q3 2016, the GPW Group generated revenue of PLN 73.7 million, a net profit of PLN 40.4 million, and EBITDA of PLN 51.9 million. Q3 was the best quarter in 2016 in terms of trading in equities, which translated into the highest velocity ratio since Q1 2014: 37.8%. As a result, the revenue from the financial market was PLN 46.8 million in Q3 2016, representing an increase of 8.8% quarter on quarter.
“We are glad to see a clear increase in investor activity on the financial market. We support it with continued initiatives stimulating liquidity on the cash and derivatives market. We have not only extended the promotions on the equity market but also introduced new promotions addressed to clients who build the quality of the order book. We are steadily adding new products to our offer: we have introduced futures on five more stocks. We can already see the positive impact of our initiatives, and we expect the trends to continue in a longer term,” said Professor Małgorzata Zaleska, President of the Management Board of GPW.
The decrease in the total revenue was mainly due to a seasonally weaker quarter on the commodity market, mainly with respect to transactions in electricity and gas, which was only partly offset by a higher revenue from trade in property rights. The revenue from the commodity market was PLN 26.6 million in Q3 2016, accounting for 36.2% of the GPW Group’s revenue.
Operating expenses were record-low at PLN 28.3 million in Q3 2016, resulting in a cost/income ratio of 49.1% in the nine months of 2016. The decrease in expenses (by 25.7% QoQ and by 34.8% YoY) was mainly due to the consistent cost regime across the GPW Group, as demonstrated by lower operating expenses of all categories. The biggest savings were reported in the GPW Group’s salaries and external service charges. Unused provisions against employee benefits in the GPW Group at PLN 3.8 million were released on a one-off basis in Q3 2016. The cost of supervision fees due to PFSA also decreased: the total fee was recognised in Q1 2016 and later adjusted by –PLN 2.1 million in Q3 2016. Net of the one-offs, operating expenses stood at PLN 34.2 million; however, the expenses still decreased year on year (-21.2%), and the net cost/income ratio was 46.4%.
“We are determined to pursue a strict cost regime, taking into account market and macroeconomic conditions. We are monitoring the costs of all GPW Group companies and implementing effective changes wherever we can generate tangible benefits. Such solutions combined with initiatives stimulating investor activity ensure stable financial results which we want to share with our shareholders,” said Paweł Dziekoński, Vice President of the GPW Management Board.
Presentation of GPW Group’s Q3 2016 Financial Results
Net profit
The net profit reported by the GPW Group was PLN 40.4 million in Q3 2016, representing an increase of 18.9% quarter on quarter and an increase of 34.0% year on year. The net profit was driven by an increase of turnover on the equity market, a decrease in all categories of operating expenses, as well as a one-off revaluation of GPW’s interest in Aquis Exchange.
Revenue from the financial market
The sales revenue from the financial market was PLN 46.8 million in Q3 2016, representing a decrease of 9.2% year on year and an increase of 8.8% quarter on quarter. The revenue from the financial market contributed 63.5% of the total sales revenue of the GPW Group in Q3 2016, compared to 57.7% in Q2 2016 and 65.4% in Q3 2015. The revenue from the financial market includes trading revenue, listing revenue, and revenue from information services.
Trading revenue on the financial market
The trading revenue on the financial market was PLN 30.9 million in Q3 2016, compared to PLN 36.2 million in Q3 2015 (-14.6%) and PLN 26.6 million in Q2 2016 (+16.5%). The increase in the revenue quarter on quarter was mainly driven by more active investor trading on the equity market as well as several large deals and tenders (EOB trade in equities +19.3% QoQ). The decrease in the revenue year on year was mainly driven by less active investor trading (decrease of trade on the Electronic Order book by 6.4% YoY); combined with a reduction of transaction fees applicable on GPW as of 1 January 2016, this reduced the revenue from trading in equities to PLN 23.8 million (-18.1% YoY). The revenue from trading in derivatives decreased to PLN 2.8 million to in Q3 2016 compared to Q3 2015 (-9.8% YoY and -7.1% QoQ). The decrease in the revenue was mainly due to lower volumes of trade in index futures (-13.8% YoY and -10.7% QoQ). At the same time, the volume of trade in single-stock futures increased by 43.4% year on year and by 29.5% quarter on quarter.
Listing revenue
The GPW Group’s listing revenue on the financial market was PLN 5.8 million in Q3 2016, representing a decrease of 5.5% year on year and an increase of 1.9% quarter on quarter. The listing revenue represented 7.9% of the GPW Group’s total revenue in Q3 2016. Despite a strong decrease in the capitalisation of companies at the end of 2015, which was the basis of the listing fees, the listing revenue increased by 8.6% year on year but decreased by 0.5% quarter on quarter. The decrease in capitalisation of companies on the Main Market did not affect listing fees due to the structure of the change in the capitalisation of companies and the structure of fees (the annual listing fee is capped at PLN 70 thou.).
Information services
The revenue from information services was PLN 10.0 million in Q3 2016, compared to PLN 9.6 million in Q3 2015 (+4.4%) and PLN 10.3 million in Q2 2016 (-2.4%). The contribution of the revenue from information services to the GPW Group’s total revenues remained stable at 13.6%. The increase in the revenue from information services year on year was driven mainly by further development of contracts with clients who use GPW data in automatic trading and other applications, and by a rising demand for commodity market data.
Revenue from the commodity market
The sales revenue on the commodity market was PLN 26.6 million in Q3 2016, representing a modest decrease of 0.2% year on year and a decrease of 13.8% quarter on quarter. The share of the revenue on the commodity market was 36.2% of the GPW Group’s total revenue in Q3 2016. 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 decreased to PLN 13.6 million in Q3 2016, i.e., by 3.6% quarter on quarter, and increased by 6.7% year on year. The GPW Group’s revenue from trade in electricity stood at PLN 2.3 million in Q3 2016, compared to PLN 2.7 million in Q2 2016 (-13.8% QoQ) and PLN 2.9 million in Q3 2015 (-19.5% YoY). The decrease in the revenue from trade in electricity year on year was driven by a lower volume of forward transactions (-9.8% QoQ and -28.2% YoY). Trade in electricity on the spot market increased by 13.3% YoY and by 12.0% QoQ. The revenue from trade in gas stood at PLN 1.3 million in Q3 2016, representing a decrease of 39.9% quarter on quarter and by 39.9% year on year. The decrease in the revenue from trade in gas year on year was due to a lower volume of forward transactions while the volume of spot transactions increased (+75.4% YoY and -35.4% QoQ). The biggest part of the GPW Group’s trading revenue on the commodity market is generated by trade in property rights. It stood at PLN 7.4 million in Q3 2016, which represented an increase of 28.2% year on year and an increase of 5.0% quarter on quarter.
Operation of the Register of Certificates of Origin
The revenue from the operation of the Register of Certificates of Origin was PLN 5.5 million in Q3 2016, representing a decrease of 0.8% year on year and a decrease of 29.6% quarter on quarter. The total volume of issued certificates of origin was 12.4 TWh in Q3 2016 (+29.2% YoY and -4.6% QoQ); the volume of cancelled certificates of origin was 0.6 TWh (+94.2% YoY and -98.2% QoQ). A sharp increase in the volume of issued certificates was reported for energy efficiency white certificates.
Clearing
The revenue from clearing was PLN 7.5 million in Q3 2016, representing a decrease of 16.3% quarter on quarter and a decrease of 10.2% year on year. The year-on-year decrease in the revenue was driven mainly by the decrease in turnover on the electricity and gas market.
Operating expenses
Operating expenses were PLN 28.3 million in Q3 2016, representing a decrease of 34.8% year on year and a decrease of 25.7% quarter on quarter. Provisions against employee benefits at PLN 3.8 million were released in Q3 2016. The reorganisation completed in Q2 2016 reduced salaries by PLN 0.6 million quarter on quarter. Furthermore, external service charges in Q3 2016 decreased by PLN 1.1 million QoQ and by PLN 0.9 million YoY. The nominal decrease in operating expenses was also driven by the GPW Group’s fees due to PFSA, which were fully booked in Q1 2016 both for GPW and its associate KDPW. The cost was later adjusted by PLN 2.1 million in the GPW Group in Q3 2016.
Share of profit of associates
The GPW Group’s share of profit of associates was PLN 2.3 million in Q3 2016, compared to PLN 0.3 million in Q3 2015 and PLN 1.4 million in Q2 2016. 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 3.2 million in Q3 2016, compared to a profit of PLN 1.7 million in Q3 2015. The multilateral trading facility Aquis Exchange generated a loss in Q3 2016, including a loss attributable to the GPW Group at PLN 1.0 million (compared to a loss of PLN 1.3 million in Q2 2016 and PLN 1.6 million in Q3 2015).
1 Figures based on the reported financial results; net of one-offs including an adjustment of PFSA fees booked in Q1 2016, released provisions against employee benefits in the GPW Group and a positive revaluation of GPW’s interest in Aquis Exchange, the EBITDA margin is 62.5%.