Poland’s main borse, the Gielda Papierow Wartosciowych (GPW) group, has today reported 2015 trading results with record-high revenues for 2015 at 327.9 million Polish Zwoty (PLN) or EUR 74.07m (converted at today's rates), following a challenging year as described by the exchange operator.
GPW is also known as the WSE (Warsaw Stock Exchange ), and held a press conference earlier where it said its 2015 net profit rose to PLN 123.7m (nearly 28m EUR) and is up 10.2% over 2014’s totals, and that EBIDTA grew by 9.4% YoY.
The announcement referenced a challenging year as capitalization fell almost 13% for domestic companies during the period, and how strict cost savings helped improve net revenue from its record gross earnings. Strict costs reductions helped lower 2015 operating expenses by 4% compared with 2014, and reduced the cost/income ratio to 53.2%.
Commodities fueled Q4 revenues
Revenues and volumes were up across almost all segments, such as information services, listing revenue, financial market trading revenue, and down across other segments, while in certain cases the exchange earned higher revenue from lower volumes (comparing to prior periods) thanks to cost-savings initiatives.
Commodity market trading revenues fell 5.4% last quarter when compared YoY to Q4 2014, coming in at PLN 17.6m (3.97m EUR) for Q4 2015, meanwhile, the 2015 total of PLN 62.6m (14.14m EUR) was 4% higher YoY. The increase was attributed to a sharp rise of almost 64% in property rights contracts.
In addition, revenue from commodity sales, a separately reported segment, fell 4.2% at 34.2 million PLN (7.72m EUR) in Q4 2015 when compared YoY, yet was up 28.3% from the previous quarter.
According to the press release, the Q4 income from the commodity sales segment represented nearly 41% of the group’s total revenue during Q4.
Corporates are key for local economy
The exchange's new president Małgorzata Zaleska took office recently as reported by Finance Magnates after the group’s prior CEO stepped down last year. She explained the importance of the role the exchange plays as a growth mechanism for the Polish economy.
She emphasized in the announcement how listings provided by the exchange support not just capital raising but also subsequent jobs creation, among other areas highlighted including companies improving their competitiveness and innovations.
Much like the aim of any capital markets platform or exchange where companies can launch an initial public offering (IPO), there are a vast array of potentially related benefits to becoming listed, as well as increased responsibilities and obligations to shareholders.
The Polish economy remains strong with GDP forecasted to rise from 3.7% this year to 3.9% in 2017 according to a current World Bank forecast, following considerable investment into the country's infrastructure from both public and European Union (EU) supported initiatives over the last decade as its economic conditions entitled it to access large degrees of EU funding.
Geo-political changes
Recent changes to the Polish government's constitutional court system, following a shift in power further right to Poland’s current conservative party, has created a different landscape of what’s possible in the country now (as certain high courts can be bypassed).
Therefore, without proper checks and balances in place, the new Polish government needs to be careful to keep Poland competitive as there is growing division among Poles, where people from both sides fear that the leaps and bounds that made the Polish economy strong could be taking steps backward.
With the U.S. elections also underway this year, 2016 could continue to be bumpy, as if it wasn't already volatile enough for markets - while that might actually fuel revenue for exchanges even more (as Volatility drives volumes).
The global wave of FinTech innovations will likely be followed by waves of regulatory changes, as rules lag behind newly created business methods. In Poland this will be important to keep innovation alive, to manage the effects of new technology within the scope of law, as it relates to political initiatives that affect laws and any subsequent changes to permitted activities such as in Financial Markets.
GPW said it is developing Catalyst, a market for issuers of corporate and municipal bonds, as well as commodity markets. The exchange’s own listed shares of GPW rose 1.57% to 37.58 PLN today and has a market value of nearly 1.56 billion PLN, and almost 42 million shares floating.
