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Increase of GPW Group’s Net Profit in Q2 and H1 2021

2021-09-17 13:30:16

PRESS RELEASE

  • GPW Group’s revenue stood at PLN 98.1 million in Q2 2021 (-3.0% YoY) and PLN 209.4 million in H1 2021 (+5.4% YoY)
  • Operating expenses stood at PLN 51.0 million in Q2 2021 (+15.5% YoY) and PLN 116.8 million in H1 2021 (+16.5% YoY)
  • EBITDA stood at PLN 57.8 million in Q2 2021 (-8.5% YoY) and PLN 111.4 million in H1 2021 (-1.6% YoY)
  • Operating profit stood at PLN 49.2 million in Q2 2021 (-9.2% YoY) and PLN 94.0 million in H1 2021 (-0.5% YoY)
  • Net profit stood at PLN 45.2 million in Q2 2021 (+4.1% YoY) and PLN 83.9 million in H1 2021 (+15.3% YoY)
  • The Annual General Meeting decided to pay PLN 104.9 million dividend (PLN 2.5 per share)

The Warsaw Stock Exchange Group (GPW Group) generated sales revenue of PLN 209.4 million, EBITDA of PLN 111.4 million, an operating profit of PLN 94.0 million and a net profit of PLN 83.9 million in H1 2021. Consolidated revenue in H1 2021 increased by 5.4% year on year, driven by an increase of revenue on the financial market combined with a decrease of revenue on the commodity market. The increase of the net profit by 15.3% year on year was driven by the increase of revenue on the financial market, much lower negative net financial income and expenses, and a higher share of profit of entities measured by the entity method (improved financial results of KDPW).

The GPW Group generated sales revenue of PLN 98.1 million, EBITDA of PLN 57.8 million, an operating profit of PLN 49.2 million and a net profit of PLN 45.2 million in Q2 2021. Consolidated revenue decreased by 3.0% year on year and by 11.8% quarter on quarter. The year-on-year decrease of revenue was driven by an increase of revenue on the financial market combined with a decrease of revenue on the commodity market.

The year-on-year increase of revenue on the financial market in Q2 2021 by PLN 0.3 million (+0.6% YoY) was mainly driven by an increase of revenue from trading in debt instruments by PLN 0.3 million (+10.6% YoY), an increase of listing revenue by PLN 1.5 million (+37.8% YoY) and an increase of revenue from information services by PLN 1.1 million (+8.4% YoY). The Group’s revenue on the commodity market in Q2 2021 decreased by PLN 4.0 million (-10.1% YoY). Revenue from trade in electricity decreased by PLN 0.2 million (-4.6% YoY) and revenue from trade in property rights decreased by PLN 1.2 million (-14.2% YoY). The Group’s revenue from trade in gas in Q2 2021 increased by PLN 0.1 million (+2.7% YoY) and the revenue from other fees paid by market participants increased by PLN 0.1 million (+1.8% YoY).

Members of the GPW Group continued to implement the strategy #GPW2022 in Q2 2021, focusing on technology development.

“The GPW Group is working hard to implement initiatives under our strategy for 2018-2022 with a focus on faster development of the Warsaw Stock Exchange and diversification of GPW’s services. Our priorities include new technology, which certainly represents the future of the capital market. Our youngest subsidiary GPW Tech has already commercialised its first proprietary technology products,” said Marek Dietl, President of the GPW Management Board. “GPW Tech’s first client is the Kuwait Stock Exchange for which the GPW Group member provides services based on the TCA Tool, a tool supporting the analysis of statistical measures and indicators of market macro and micro-structure. Another product, the state-of-the-art tool GPW Tech GRC (Governance, Risk & Compliance), will first be implemented on GPW and then in two other GPW Group members. GPW Tech’s third product, used to detect stock price manipulation, has already been deployed by GPW. We expect that it will attract much interest of brokers in Poland,” said Mr Dietl.

Operating expenses in Q2 2021 increased by 15.5% year on year and decreased by 22.5% quarter on quarter and stood at PLN 51.0 million. The cost/income ratio (C/I) was 51.9% vs. 43.6% in Q2 2020 and 59.1% in Q1 2021. The year-on-year increase of operating expenses was driven by an increase of external service charges and an increase of employee costs due to a higher headcount required to implement the development strategy #GPW2022.

GPW’s Annual General Meeting decided in Q2 2021 to pay PLN 104.9 million dividend, equal to PLN 2.5 per share and representing 77.3% of the GPW Group’s consolidated net profit for 2020 attributable to GPW’s shareholders adjusted for the share of profit of associates. The dividend record date was 23 July and the dividend payment date was 5 August 2021. The dividend yield at the closing price on the dividend record date was 5.23%. The aggregate dividend paid by GPW since it because a public company in 2010 is PLN 999.771 million representing PLN 23.82 per share.

Presentation of the financial results of the GPW Group for Q2 2021

Net profit
The net profit of the GPW Group was PLN 45.2 million in Q2 2021, an increase of 4.1% year on year and an increase of 17.0% quarter on quarter. The year-on-year increase of the net profit was driven by much lower negative net financial income and expenses at (PLN 2.9 million) vs. (PLN 4.5 million) in Q2 2021. The negative net financial income and expenses were impacted by lower financial expenses at PLN 3.2 million in Q2 2021 vs. PLN 5.6 million in Q2 2020. The Group’s net profit of Q2 2021 was supported by a higher share of profit of entities measured by the equity method at PLN 7.9 million vs. PLN 4.4 million in Q2 2020.

Revenue on the financial market
Sales revenue on the financial market stood at PLN 61.2 million in Q2 2021, an increase of 0.6% year on year and a decrease of 15.8% quarter on quarter. Revenue on the financial market contributed 62.4% of the total sales revenue of the GPW Group. Revenue on the financial market includes trading revenue, listing revenue, and revenue from information services.

  • Trading revenue on the financial market
    Trading revenue on the financial market was PLN 41.8 million in Q2 2021 vs. PLN 44.0 million in Q2 2020. The revenue decreased by 5.1% year on year and by 21.4% quarter in quarter. The year-on-year decrease of the revenue was driven mainly by a decrease of revenue from trading in equities and derivatives. In turn, listing revenue and revenue from information services increased.
  • Listing revenue
    The GPW Group’s listing revenue on the financial market was PLN 5.5 million in Q2 2021 vs. PLN 4.0 million in Q2 2020. Revenue from listing fees stood at PLN 4.1 million (+0.9% YoY and -10.0% QoQ). The key drivers of revenue from listing fees include the number of issuers listed on the GPW markets and their capitalisation at the end of previous year. Revenue from fees for introduction and other fees was PLN 1.4 million. The key drivers of this revenue line include the number of IPOs on the GPW markets and the value of shares and bonds introduced to trading. There were eight IPOs on the Main Market and 14 IPOs on NewConnect in Q2 2021 vs. one IPO and four IPOs, respectively, in Q2 2020.

Information services
Revenue from information services on the financial market stood at PLN 14.0 million in Q2 2021, an increase of 8.4% year on year and 4.8% quarter on quarter. The increase was driven by the acquisition of new clients of GPW Group data (non-display users and data vendors).

Revenue on the commodity market
Sales revenue on the commodity market was PLN 36.1 million in Q2 2021, a decrease of 10.1% year on year and a decrease of 5.2% quarter on quarter. It contributed 36.7% of the Group’s total revenue in Q2 2021. 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
    Trading revenue on the commodity market in Q2 2021 decreased by 6.4% year on year and increased by 0.7% quarter on quarter to PLN 18.1 million. Revenue from trade in electricity in Q2 2021 decreased by 4.6% year on year due to a lower turnover volume on the electricity forward market. Revenue from trade in property rights decreased by 14.2% due to a sharp decrease of turnover in RES certificates outside trading sessions and a decrease of turnover volume in certificates of energy efficiency. Revenue from trade in gas increased by 2.7% year on year in Q2 2021 driven by a strong increase of spot turnover. The Group’s revenue from other fees paid by commodity market participants increased by 1.8% year on year in Q2 2021. Other fees paid by commodity market participants depend mainly on the number and activity of IRGiT Members, in particular the number of transactions.
  • Operation of the Register of Certificates of Origin
    Revenue from the operation of the Register of Certificates of Origin was PLN 6.5 million in Q2 2021, representing a decrease of 28.4% year on year and a decrease of 4.4% quarter on quarter. The decrease of revenue from the operation of the Register of Certificates of Origin was driven mainly by a sharp decrease in the number of issued and cancelled RES property rights.
  • Clearing
    The Group earns revenue from clearing services provided by IRGiT, which is TGE’s subsidiary. Revenue from clearing stood at PLN 11.2 million in Q2 2021, a decrease of 1.4% year on year and a decrease of 13.7% quarter on quarter. The revenue depends on the turnover volume on TGE’s markets.
  • Information services
    Revenue from information services on the commodity market in Q2 2021 stood at PLN 238 thousand, representing a decrease of 19.4% year on year and a decrease of 8.5% quarter on quarter.

Operating expenses
Operating expenses in Q2 2021 stood at PLN 51.0 million, an increase of 15.5% year on year and a decrease of 22.5% quarter on quarter. The year-on-year increase of operating expenses was driven by an increase of employee costs and an increase of external service charges. Employee costs stood at PLN 26.5 million, an increase of 17.9% year on year. The increase of employee costs was due to a higher headcount required to implement the development strategy #GPW2022. In view of GPW’s development projects, a part of employee costs is capitalised and will be charged to expenses following project roll-out. External service charges stood at PLN 13.2 million, an increase of 29.6% year on year, driven among others by higher IT costs and advisory costs. Depreciation charges decreased by 4.3% year on year to PLN 8.6 million in Q2 2021 while maintenance fees stood at PLN 1.2 million, an increase of 10.7% year on year.

Share of profit of entities measured by the equity method
The GPW Group’s share of profit of entities measured by the equity method was PLN 7.9 million in Q2 2021, representing an increase of 78.5% year on year and an increase of 46.7% quarter on quarter. The year-on-year increase of the share of profit was driven by higher earnings of the KDPW Group. KDPW’s improved financial results were owed to a higher revenue from: (i) clearing and safe-keeping; (ii) services for issuers: increase of revenue from recording of securities following the entry into force of the obligation to record shares of non-public companies; increase of revenue from handling of cash payments from securities; and (iii) clearing: increase of turnover and the number of transactions on GPW’s cash and derivative markets; clearing TBSP transactions.

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History of the WSE
On 12 April 1991, the then Ministers of Ownership Transformation and Finance signed the Deed of Incorporation of the joint stock company "Giełda Papierów Wartościowych w Warszawie S.A." Four days later, on the day of the WSE's inaugural session, shares of five companies were traded and the turnover amounted to PLN 1990. Since 2018, the WSE has been classified as one of the 25 developed markets by the FTSE Russell agency. The history of the capital market on Polish soil dates back to the early 19th century. The first in Poland and one of the few in Europe, the Merchant Exchange, was established in Warsaw on 2 May 1817, soon became the largest market in Tsarist Russia, responsible for 5-6% of global securities trading. A thriving stock exchange, accounting for 90% of the domestic turnover, also operated in Warsaw in the interwar period. After the period of the People's Republic of Poland and the planned economy, it was not until 1989, with the political and economic transformation, that the Polish capital market was able to develop again.

Stock exchange today
The average EoB equity daily trading volume on the WSE was PLN 804.7 million in August 2021. The Main Market listed 429 companies (382 domestic and 47 foreign) and the NewConnect market listed 366 companies (362 domestic and 4 foreign) at the end of August 2021. Last year, the WSE Group generated record sales of PLN 403.8 million and one of the highest ever net profits of over PLN 151 million. According to the Federation of European Securities Exchanges, in 2020 the WSE ranked first in Europe in terms of percentage increase in equity turnover and third in terms of the value of initial offerings. At the end of 2020, the WSE was also the second market in Europe in terms of liquidity and achieved the status of world leader in terms of the number of listed companies in the gamedev sector.

WSE position in the region
The WSE is the leader among stock exchanges in Central and Eastern Europe by the number of listed companies and the total capitalisation of domestic companies. The WSE's share in trading on stock exchanges in the region is 81%. The WSE leads the initiative of the Three Seas Stock Exchanges and aspires to the role of a regional hub for young technological companies with huge potential, the so-called unicorns. Negotiations are currently underway for the WSE to acquire a majority stake in the Armenian Exchange.

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The Warsaw Stock Exchange Group (GPW Group) operates trading platforms for shares, Treasury and corporate bonds, derivatives, electricity and gas, and provides indices and benchmarks including WIBOR and WIBID. The index agent FTSE Russell classifies the Polish capital market as a Developed Market since 2018. The markets operated by the GPW Group are the biggest in Central and Eastern Europe. For more information, visit www.gpw.pl