Presentation of the financials

Revenue

The Group has three revenue-generating segments:

  • financial market,
  • commodity market,
  • other revenues.

Revenues from the financial market include revenues from:

  • trading;
  • listing;
  • information services and calculation of reference rates.

Trading revenue includes fees paid by market participants in respect of:

  • transactions on markets of equities and equity-related instruments;
  • transactions in derivative financial instruments;
  • transactions in debt instruments;
  • transactions in other cash market instruments;
  • other fees paid by market participants.

Revenues from transactions in equities and equity-related securities are the Group’s main source of trading revenues and its main source of sales revenues in general.

Revenues from transactions in derivative financial instruments are the third biggest source of trading revenues on the financial market. Transactions in WIG20 index futures account for the majority of revenues from transactions in derivatives.

Revenues from transactions in debt instruments were the second largest source of trading revenues on the financial market in 2017. Revenues from transactions in debt instruments are generated by the Catalyst market as well as the Treasury BondSpot Poland market operated by BondSpot S.A., a subsidiary of GPW.

Revenues from transactions in other cash market instruments include fees for trading in structured products, investment certificates, warrants and ETF (Exchange Traded Fund) units.

Listing revenues include two elements:

  • one-off fees paid for introduction of shares and other instruments to trading on the exchange;
  • periodic listing fees.

Revenues from other fees paid by market participants include mainly fees for services providing access to and use of the trading system.

Revenues from information services mainly include fees paid by data vendors for real-time market data as well as historical and statistical data. Real-time data fees include fixed annual fees and monthly fees based on the data vendor’s number of subscribers and the scope of data feeds used by a subscriber. Revenues from real-time information services include revenue from WIBOR and WIBID reference rates.

Revenues of the Group in the commodity market segment include revenues of TGE and IRGiT as well as revenues of InfoEngine from its activity as a trade operator and the entity responsible for balancing.

Revenue on the commodity market includes the following:

  • trading,
  • operation of the Register of Certificates of Origin,
  • clearing,
  • information services.

Trading revenue on the commodity market includes:

  • revenue from trading in electricity (spot and forward),
  • revenue from trading in natural gas (spot and forward),
  • revenue from trading in property rights (spot and forward),
  • other fees paid by market participants (members).

Other fees paid by market participants include TGE fees, including revenues from the operation of RRM, as well as revenues of InfoEngine as a trade operator and the entity responsible for balancing.

Revenues of the sub-segment “clearing” include revenues of the company IRGiT, which clears and settles exchange transactions concluded on TGE, manages the resources of the clearing guarantee system and determines the amount of credits and debits of IRGiT members resulting from their transactions.

The Group’s other revenues include revenues of GPW and the TGE Group, among others, from educational services, office space lease, and sponsorship.

The Group’s sales revenues amounted to PLN 352.0 million in 2017, an increase of 13.2% (PLN 41.1 million) year on year.

The increase in sales revenues year on year in 2017 was driven by a strong increase in revenues from the financial market segment by 13.7% (PLN 25.2 million). The increase was mainly driven by an increase in revenue from trading in equities owing to a high increase of the value of trade on the equity market. The revenue on the commodity market increased by PLN 16.8 million or 13.4% year on year in 2017. The increase of revenue on the commodity market was mainly driven by revenue from trade in property rights as well as the operation of the register of certificates of origin.

The revenue of TGE stood at PLN 97.1 million in 2017 compared to PLN 83.3 million in 2016. The revenue of IRGiT was PLN 44.3 million in 2017 compared to PLN 42.4 million in 2016. The revenue of BondSpot S.A. stood at PLN 13.0 million and PLN 11.0 million, respectively, in 2017 and 2016.

The revenue of the GPW Group by segment is presented below.

Consolidated revenues of GPW Group and revenue structure in 2015 - 2017

 Year ended 31 DecemberChange (2017 vs 2016)Change (%) (2017 vs 2016)
PLN'000, %2017%2016%2015%  
Financial market208,84959%183,69859%199,95561%25,15113.7%
Trading revenue141,33640%119,07938%136,94842%22,25718.7%
Equities and equity-related instruments109,56431%89,52029%107,94133%20,04422.4%
Derivative instruments11,8883%12,2024%11,5784%(314)-2.6%
Other fees paid by market participants7,4982%6,8362%6,3832%6629.7%
Debt instruments11,9583%10,1113%10,6693%1,84718.3%
Other cash instruments4280%4100%3760%184.4%
Listing revenue24,9687%23,9308%24,4977%1,0384.3%
Listing fees20,0136%19,9186%19,2296%950.5%
Introduction fees, other fees4,9551%4,0121%5,2682%94323.5%
Information services42,54512%40,68913%38,51012%1,8564.6%
Real-time information39,52911%37,93312%36,06911%1,5964.2%
Indices and historical and statistical information3,0161%2,7561%2,4411%2609.4%
Commodity market142,08840%125,25440%125,19338%16,83413.4%
Trading revenue70,09220%60,85720%62,55219%9,23515.2%
Electricity8,8153%10,1913%14,3904%(1,376)-13.5%
Spot2,6801%2,9761%2,7601%(296)-9.9%
Forward6,1352%7,2152%11,6304%(1,080)-15.0%
Gas10,8463%9,2353%8,3113%1,61117.4%
Spot2,4411%2,6551%1,6010%(214)-8.1%
Forward8,4052%6,5802%6,7102%1,82527.7%
Property rights in certificates of origin39,61411%32,00310%32,36910%7,61123.8%
Other fees paid by market participants10,8173%9,4283%7,4812%1,38914.7%
Register of certificates of origin30,6289%24,9078%24,1667%5,72123.0%
Clearing41,01912%39,16313%38,47512%1,8564.7%
Information services3490%3270%-0%226.8%
Other revenue1,0190%1,9101%2,7431%(891)-46.6%
Total351,956100%310,862100%327,890100%41,09413.2%

Source: Consolidated Financial Statements, Company

The Group earns revenue both from domestic and foreign clients. The table below presents revenue by geographic segment.

Consolidated revenues of GPW Group by geographical segment in 2015 - 2017

 Year ended 31 DecemberChange (2017 vs 2016)Change (%) (2017 vs 2016)
PLN'000, %2017%2016%2015%  
Revenue from foreign customers83,53524%71,91723%73,30822%11,61816.2%
Revenue from local customers268,42176%238,94577%254,58278%29,47612.3%
Total351,956100%310,862100%327,890100%41,09413.2%

Source: Consolidated Financial Statements, Company

The average EUR/PLN exchange rate was 4.26 EUR/PLN in 2017, 4.36 EUR/PLN in 2016, and 4.18 EUR/PLN in 2015.

The Group is not dependent on any single client as no client has a share exceeding 10% of the total sales revenue.

Financial market

Trading

The revenues of the Group from trading on the financial market stood at PLN 141.3 million in the year ended on 31 December 2017 compared to PLN 119.1 million in 2016.

The share of trading revenue in the total revenue on the financial market was 67.7% in 2017 compared to 64.8% in 2016. The biggest share in trading revenue (85.6%) is that of the revenue on the Main Market, which stood at PLN 121.0 million in 2017 (an increase of 19.7 million year on year). The remaining share in revenue is that of Treasury BondSpot Poland, NewConnect and Catalyst.

Equities and equity-related instruments

Revenues of the Group from trading in equities and equity-related instruments amounted to PLN 109.6 million in 2017 compared to PLN 89.5 million in 2016.

The value of trading in equities on the Main Market increased by 29%, including an increase of trading on the electronic order book by 24.8% and an increase of the value of block trades by 91.1%; as a result, the trading revenue from equities increased by 22.4% year on year in 2017. The increase in revenue from trading in equities and equity-related instruments was lower that the increase in the value of trading due to the reductions of fees introduced in November 2016. In addition, the share of HVP/HVF programme participants, who pay lower fees, in the total value of trading in equities increased (from 10.2% to ca. 11.5%) in 2017.

In November 2016, GPW reduced fixed fees on an order from PLN 0.20 to PLN 0.15. The reduction affected revenue in all months of 2017 and only two months of 2016. The fee reductions were offered in 2016 in order to offset the impact of changes to market supervision fees paid to the Polish Financial Supervision Authority by a broader range of entities as of the beginning of 2016.

Data for the markets in equities and equity-related instruments

 Year ended 31 DecemberChange (2017 vs 2016)Change (%) (2017 vs 2016)
 201720162015  
Financial market, trading revenue:equities and equity-related instruments (PLN million)109.689.5107.920.022.4%
Main Market:     
Value of trading (PLN billion)261.0202.3225.358.729.0%
Volume of trading (billions of shares)15.414.016.51.49.7%
NewConnect:     
Value of trading (PLN billion)1.51.41.90.17.9%
Volume of trading (billions of shares)2.83.53.8(0.7)-19.8%

Source: Company

Derivatives

Revenues of the Group from transactions in derivatives on the financial market amounted to PLN 11.9 million in 2017 compared to PLN 12.2 million in 2016.

The decrease in revenues from transactions in derivatives year on year in 2017 was driven by a decrease in the volume of trading in WIG20 futures (by 3.7%) and a decrease of the volume of trading in other futures except single-stock futures. The volume of trade in single-stock futures increased by 7.4% year on year in 2017. The total volume of trade in futures decreased by 4.4% in 2017.

Data for the derivatives market

 Year ended 31 DecemberChange (2017 vs 2016)Change (%) (2017 vs 2016)
 201720162015  
Financial market, trading revenue:derivatives (PLN million)11.912.211.6(0.3)-2.6%
Volume of trading in derivatives (millions of contracts):7.68.08.2(0.4)-4.4%
incl.: Volume of trading in WIG20 futures (millions of contracts)4.54.74.4(0.2)-3.7%

Source: Company

Other fees paid by market participants

Revenues of the Group from other fees paid by market participants stood at PLN 7.5 million in 2017 compared to PLN 6.8 million in 2016, representing an increase of 9.7% or PLN 0.7 million. The fees mainly include fees for access to the trading system (among others, licence fees, connection fees and maintenance fees) as well as fees for use of the system.

Debt instruments

Revenues of the Group from transactions in debt instruments stood at PLN 12.0 million in 2017 compared to PLN 10.1 million in 2016, representing an increase of 18.3% or PLN 1.8 million. As a result, revenues from transactions in debt instruments were the second largest source of trading revenue. The majority of the Group’s revenues (PLN 11.2 million in 2017) from the debt instruments segment is generated by Treasury BondSpot Poland (TBSP).

The increase of revenues from transactions in debt instruments year on year in 2017 was driven by higher revenue on TBSP.

The increase of revenue on TBSP year on year in 2017 was driven mainly by changes to TBSP’s price list as of 1 January 2017.

The total value of transactions in Polish Treasury securities on TBSP was PLN 534.7 billion in 2017, representing an increase of 29.5% year on year. The increase was driven mainly by conditional transactions. The value of conditional transactions was PLN 338.5 billion in 2017, representing an increase of 113.8% year on year. The value of cash transactions was PLN 196.2 billion in 2017, representing a decrease of 22.9% year on year. The sharp increase in the value of conditional transactions (sell/buy back, repo) was driven by high liquidity in the Polish banking sector and stabilisation of bank activity in this market segment following a strong decrease in the value of transactions caused by deleveraging after the bank tax was imposed in February 2016.

In 2017, the Polish bond market was impacted by strong capital flows resulting from the activity of the main central banks. On the one hand, FED’s monetary policy included three interest rate hikes in 2017; on the other hand, ECB continued its quantitative easing in pursuit of economic growth and to fend off deflation. These activities impacted the market interest rates and bond prices on the core markets, which in turn impacted prices and yields on the local market. The prices of Polish bonds were also driven by local factors including Poland’s strong economy, faster growth, improved fiscal position, return to inflation and the resulting increase of expectations of a turn in the policy of the Monetary Policy Council (RPP).

The value of trading on Catalyst decreased by 11.1% year on year in 2017. However, revenues from Catalyst have a small share in the Group’s total revenues from transactions in debt instruments.

Data for the debt instruments market

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
201720162015  
Financial market, trading revenue:debt instruments (PLN million)12.010.110.71.818.3%
Catalyst:     
Value of trading (PLN billion)2.83.12.5(0.3)-11.1%
incl.: Value of trading in non-Treasury instruments (PLN billion)1.92.11.9(0.2)-11.5%
Treasury BondSpot Poland, value of trading:     
Conditional transactions (PLN billion)338.5158.3338.7180.1113.8%
Cash transactions (PLN billion)196.2254.5260.7(58.3)-22.9%

Source: Company

Other cash market instruments

Revenues from transactions in other cash market instruments amounted to PLN 428 thousand in 2017 compared to PLN 410 thousand in 2016. The revenues include fees for trading in structured products, investment certificates, ETF units and warrants.

Listing

Listing revenues of the Group on the financial market amounted to PLN 25.0 million in 2017 compared to PLN 23.9 million in 2016.

Revenues from listing fees amounted to PLN 20.0 million in 2017 compared to PLN 19.9 million in 2016. The main driver of revenues from listing fees is the number of issuers listed on the GPW markets and their capitalisation at the year’s end.

Revenues from fees for introduction and other fees amounted to PLN 5.0 million in 2017 compared to PLN 4.0 million in 2016. The revenues are driven mainly by the number and value of new listings of shares and bonds on the GPW markets.

Listing revenues on the GPW Main Market increased by 2.8% year on year in 2017 to PLN 20.1 million. The table below presents the key financial and operating figures for the Main Market.

Data for the GPW Main Market

 Year ended 31 DecemberChange (2017 vs 2016)Change (%) (2017 vs 2016)
 201720162015  
Main Market     
Listing revenue (PLN million)20.119.620.20.52.8%
Total capitalisation of listed companies (PLN billion)1,379.91,115.71,082.9264.123.7%
including: Capitalisation of listed domestic companies671.0557.1516.8113.920.4%
including: Capitalisation of listed foreign companies708.9558.6566.1150.326.9%
Total number of listed companies482487487(5.0)-1.0%
including: Number of listed domestic companies432434433(2.0)-0.5%
including: Number of listed foreign companies505354(3.0)-5.7%
Value of offerings (IPO and SPO) (PLN billion)*98.24.944.893.31901.8%
Number of new listings (in the period)151930(4.0)-21.1%
Capitalisation of new listings (PLN billion)16.75.65.211.1197.2%
Number of delistings2019141.05.3%
Capitalisation of delistings** (PLN billion)8.17.311.10.811.4%

* including SPO of UniCredit S.p.A. at PLN 55.9 billion in Q1 2017 and SPO of Banco Santnader S.A. at PLN 30.1 billion in Q3 2017
***based on market capitalisation at the time of delisting

Source: Company

Listing revenues from NewConnect were PLN 2.2 million in 2017 compared to PLN 2.3 million in 2016. The table below presents the key financial and operating figures.

Data for NewConnect

 Year ended 31 DecemberChange (2017 vs 2016)Change (%) (2017 vs 2016)
 201720162015  
NewConnect     
Listing revenue (PLN million)2.22.32.4(0.04)-1.7%
Total capitalisation of listed companies (PLN billion)9.69.88.7(0.2)-1.9%
including: Capitalisation of listed domestic companies9.49.58.4(0.1)-0.7%
including: Capitalisation of listed foreign companies0.20.30.2(0.1)-35.7%
Total number of listed companies4084064182.00.5%
including: Number of listed domestic companies4013984083.00.8%
including: Number of listed foreign companies7810(1.0)-12.5%
Value of offerings (IPO and SPO) (PLN billion)0.30.20.40.157.6%
Number of new listings (in the period)1916193.018.8%
Capitalisation of new listings (PLN billion)1.00.50.60.586.1%
Number of delistings*173032(13.0)-43.3%
Capitalisation of delistings** (PLN billion)1.11.31.5(0.2)-18.0%

* includes companies which transferred to the Main Market*
** based on market capitalisation at the time of delisting

Source: Company

Listing revenues from Catalyst increased year on year in 2017. The increase resulted from an increase in the number of listed instruments: 608 at the end of 2017 compared to 566 at the end of 2016. The table below presents the key financial and operating figures.

Data for Catalyst

 Year ended 31 DecemberChange (2017 vs 2016)Change (%) (2017 vs 2016)
 201720162015  
Catalyst     
Listing revenue (PLN million)2.62.12.00.525.8%
Number of issuers161176192(15)-8.5%
Number of issued instruments608566532427.4%
including: non-Treasury instruments566525496417.8%
Value of issued instruments (PLN billion)751.7707.4613.144.36.3%
including: non-Treasury instruments95.881.869.614.017.1%

Source: Company

Information services

Revenues from information services amounted to PLN 42.9 million in 2017 compared to PLN 41.0 million in 2016. The increase in revenue was driven by a large increase of the number of subscribers and by the launch of WIBID and WIBOR reference rate services.

Data for information services

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
 201720162015  
Revenues from information services and WIBID and WIBOR reference rate services * (PLN million)42.941.038.51.94.6%
Number of data vendors52515412.0%
Number of subscribers ('000 subscribers)244.8224.6221.120.29.0%

*revenues from information services contein financial market data and commodity market data
Source: Company

Commodity market

Revenues on the commodity market include mainly the revenues of the TGE Group.

Revenues of the TGE Group are driven mainly by the volume of transactions in electricity, natural gas and property rights, the volume of certificates of origin issued and cancelled by members of the Register of Certificates of Origin, as well as revenues from clearing and settlement of transactions in exchange-traded commodities in the clearing sub-segment operated by IRGiT.

Revenues of the GPW Group on the commodity market stood at PLN 142.1 million in 2017 compared to PLN 125.2 million in 2016.

The increase of revenues on the commodity market year on year in 2017 was mainly driven by an increase in revenues from trade in property rights to certificates of origin and from the operation of the register of certificates of origin.

Trading

Revenues from trading on the commodity market stood at PLN 70.1 million in 2017, an increase of PLN 9.2 million compared to PLN 60.9 million in 2016.

The Group’s revenues from trade in electricity amounted to PLN 8.8 million in 2017 compared to PLN 10.2 million in 2016. Revenues from trading in electricity included PLN 2.7 million of revenues from spot transactions and PLN 6.1 million of revenues from forward transactions. The total volume of trading on the energy markets operated by TGE amounted to 111.7 TWh in 2017 compared to 126.7 TWh in 2016. The volume of trade in electricity decreased mainly for forward transactions in view of the reduction of the obligation to trade in electricity on the regulated market due to the gradual phasing out of support for long-term contracts.

The Group’s revenues from trade in gas amounted to PLN 10.8 million in 2017 compared to PLN 9.2 million in 2016. The revenue from spot transactions stood at PLN 2.4 million and the revenue from forward transactions at PLN 8.4 million in 2017. The volume of trade in natural gas on TGE was 138.7 TWh in 2017 compared to 114.5 TWh in 2016. The volume of trade in gas increased for forward transactions while the volume of spot trade decreased.

The Group’s revenue from the operation of trading in property rights stood at PLN 39.6 million in 2017 compared to PLN 32.0 million in 2016, an increase of PLN 7.6 million. The volume of trading in property rights stood at 58.4 TWh in 2017 compared to 50.5 TWh in 2016. The change of revenue from trading in property rights does not correspond directly to the change of trading volumes due to different fees for different types of property rights.

The volume of trade in property rights in green certificates of origin of electricity was 29.8 TWh in 2017 compared to 24.0 TWh in 2016. The revenue from trade in property rights in green certificates of origin of electricity (PMOZE) represented 65.1% and 67.5%, respectively, of the Group’s total revenue from trade in property rights in the periods under review. The share of revenue from cogeneration decreased from 15.6% in 2016 to 14.8% in 2017. The revenue from trade in property rights of energy efficiency (white certificates) increased sharply in 2017. The revenue stood at PLN 7.0 million in 2017 compared to PLN 5.1 million in 2016. The share of revenue from white certificates in total revenue from trade in property rights was 17.7% in 2017.

Revenues of the Group from other fees paid by commodity market participants amounted to PLN 10.8 million in 2017 compared to PLN 9.4 million in 2016, an increase of 14.7% (PLN 1.4 million). Other fees paid by commodity market participants included fees paid by TGE market participants and revenues of InfoEngine from the activity of trade operator.

Other fees paid by market participants are driven mainly by revenues from fixed market participation fees, fees for cancellation of transactions, fees for position transfers, fees for trade reporting in the RRM (Registered Reporting Mechanism), fees for access to the system, and fees for management of the resources of the guarantee fund. Other fees paid by market participants depend mainly on the activity of IRGiT Members, in particular the number of transactions, the number of new clients of brokerage houses, and the number of new users accessing the clearing system.

The increase of the revenue from other fees paid by market participants in 2017 was driven mainly by an increase of the revenue from REMIT reporting and by an increase of the revenue of InfoEngine from its activity as a trade operator.

Data for the commodity market

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
 201720162015  
Commodity market - trading revenue (PLN million)70.160.962.69.215.2%
Volume of trading in electricity     
Spot transactions (TWh)25.227.625.1(2.4)-8.6%
Forward transactions (TWh)86.499.0161.6(12.6)-12.7%
Volume of trading in gas     
Spot transactions (TWh)24.024.613.9(0.6)-2.5%
Forward transactions (TWh)114.789.992.924.827.6%
Volume of trading in property rights (TGE) (TWh)58.450.559.07.915.7%

Source: Company

Register of certificates of origin

Revenues from the operation of the Register of Certificates of Origin amounted to PLN 30.6 million in 2017 compared to PLN 24.9 million in 2016, representing an increase of 23.0%. The strong increase of revenues from the operation of the Register of Certificates of Origin was driven by an increase of cancelled property rights (by 21.6%) and issued property rights (by 2.7%). The increase in the volume of issued property rights has the biggest impact on revenue due to a higher fee.

Data for the Register of Certificates of Origin

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
 201720162015  
Commodity market - revenue from operation of the Register of
Certificates of Origin of electricity (PLN million)
30.624.924.25.723.0%
Issued property rights (TWh)49.047.750.91.32.7%
Cancelled property rights (TWh)52.343.022.39.321.6%

Source: Company

Clearing

The Group earns revenue from the clearing activities of IRGiT, which is a subsidiary of TGE. The revenue stood at PLN 41.0 million in 2017 compared to PLN 39.2 million in 20167. The increase in the revenue was driven by increased volumes of trade on the markets operated by TGE. Revenue from clearing stood at PLN 6.2 million on the electricity market, PLN 18.4 million on the gas market, and PLN 16.4 million on the market in property rights.

Other revenues

The Group’s other revenues amounted to PLN 1.0 million in 2017 compared to PLN 1.9 million in 2016. The Group’s other revenues include revenues from educational and PR services, office space lease, and sponsorship.

Operating expenses

Total operating expenses of the GPW Group amounted to PLN 165.8 million in 2017, representing an increase of 10.4% (PLN 15.6 million) year on year. Despite the increase of expenses, the cost/income ratio decreased to 47.1% in 2017 from 48.3% in 2016 owing to the growth rate of revenue exceeding the growth rate of expenses. The increase of operating expenses was mainly driven by an increase in external service charges (by PLN 14.6 million), depreciation and amortisation (by PLN 2.5 million), salaries and other employee costs (by PLN 1.7 million). The sharp increase in external service charges was driven by the alignment of GPW Group companies with MiFID2/MiFIR requirements.

Separate operating expenses of GPW stood at PLN 109.9 million in 2017, representing an increase of 9.8% (PLN 9.8 million) year on year.

Operating expenses of TGE stood at PLN 37.5 million in 2017 compared to PLN 28.7 million in 2016, representing an increase of 30.5% (PLN 8.8 million). Operating expenses of IRGiT stood at PLN 14.0 million in 2017 compared to PLN 11.4 million in 2016. Operating expenses of BondSpot in the periods under review stood at PLN 9.9 million and PLN 9.7 million, respectively, representing an increase of 1.8% (PLN 0.2 million).

Consolidated operating expenses of GPW Group and structure of operating expenses in 2015 – 2017

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
PLN'000, %2017%2016%2015%  
Depreciation and amortisation28,32517%25,79317%26,83715%2,5329.8%
Salaries50,76431%49,86033%56,66232%9041.8%
Other employee costs12,0817%11,3008%11,4267%7816.9%
Rent and other maintenance fees9,5056%9,4446%9,7856%610.6%
Fees and charges6,5534%10,0097%23,62714%(3,456)-34.5%
including: PFSA fees5,5793%9,1216%22,04713%(3,542)-38.8%
External service charges53,19432%38,58726%39,62123%14,60737.9%
Other operating expenses5,3413%5,1623%6,4334%1793.5%
Total165,763100%150,155100%174,391100%15,60810.4%

Source: Consolidated Financial Statements, Company

The Group is not dependent on any single supplier or provider as no contractor has a share exceeding 10% of the total expenses of the Group.

Depreciation and amortisation

Depreciation and amortisation charges stood at PLN 28.3 million in 2017, representing an increase of 9.8% (PLN 2.5 million) compared to PLN 25.8 million in 2016. The increase in depreciation and amortisation charges year on year in 2017 was driven by an increase of depreciation and amortisation charges in TGE by PLN 1.7 million and an increase of depreciation and amortisation charges in IRGiT by PLN 0.9 million. The increase of depreciation and amortisation charges of the TGE Group resulted from the settlement of several investments in December 2016 in the amount of PLN 24.5 million, including mainly XStream system servers of PLN 7.0 million, servers of PLN 4.5 million, expenditure on the international PCR project of PLN 7.0 million, Sapri system servers of PLN 2.5 million. As those assets were commissioned at the end of 2016, the depreciation and amortisation charges increased in 2017. Furthermore, the XStream system worth PLN 8.8 million was rolled out in mid-2017, which also added to the depreciation and amortisation charges of the TGE Group. The increase of depreciation and amortisation charges in IRGiT was mainly driven by the implementation of the XStream clearing system in mid-2016. The system was depreciated throughout the full financial year in 2017.

Salaries and other employee costs

Salaries and other employee costs of the Group amounted to PLN 62.8 million in 2017, representing an increase of 2.8% (PLN 1.7 million) compared to PLN 61.2 million in 2016.

The increase of salaries in the GPW Group year on year in 2017 was driven by an increase of costs by PLN 1.0 million in GPW, by PLN 0.4 million in IRGiT, by PLN 0.4 million in BondSpot, by PLN 0.6 million in GPW Benchmark, and a decrease of costs by PLN 0.2 million in the TGE, by PLN 0.2 million in InfoEngine, and by PLN 0.2 million in IAiR.

The increase of salaries in GPW in 2017 was driven by higher costs of annual bonuses for 2017, mainly due to the effect of a lower base of 2016. The lower base of costs of annual bonuses in 2016 was due to the release of provisions for bonuses of the Management Board for 2015 at PLN 2.6 million, which reduced the cost in 2016. Furthermore, the effect of a lower base of salaries in the GPW Group in 2016 was due to the release of provisions for bonuses of the Management Board for 2015 in the TGE Group and an adjustment of provisions for 2016 totalling PLN 2.8 million.

The increase of salaries in IRGiT and BondSpot was driven by higher provisions for bonuses for 2017. BondSpot set up no provisions for bonuses of the Management Board for 2016 by decision of its Supervisory Board. The increase of salaries in GPW Benchmark was driven by higher base salaries and provisions for bonuses for 2017 as the company launched its operations in 2017.

The headcount of the Group was 328 FTEs as at 31 December 2017. The decrease of the headcount of the Group year on year in 2017 resulted from workforce additions in GPW SA, IRGiT, GPW Benchmark, IAiR and workforce reductions in TGE, BondSpot, InfoEngine. The increase of the headcount of GPW in 2017 was a result of the recovery of some human resources reduced in the workforce restructuring in 2016.

Employment in GPW Group

 As at 31 December
# FTEs201720162015
GPW189185201
Subsidiaries139146150
Total328331351

Source: Company

Rent and other maintenance fees

Rent and other maintenance fees of the GPW Group amounted to PLN 9.5 million in 2017 compared to PLN 9.4 million in 2016. The increase of rent was mainly driven by the temporary payment of rent at two locations by subsidiaries in the process of relocation. The physical integration of the GPW Group was completed in 2017.

Fees and charges

Fees and charges stood at PLN 6.6 million in 2017, a decrease of 34.5% (PLN 3.5 million) year on year. The main component of fees and charges of the Group are fees paid to the Polish Financial Supervision Authority, which were reduced and stood at PLN 5.6 million for the Group in 2017 as compared to PLN 9.1 million paid for supervision in 2016. According to internal analyses, the much lower fee paid to PFSA in 2017 was probably due to an excessive fee paid in 2016 when the PFSA cost was lower than initially expected by PFSA.

External service charges

External service charges amounted to PLN 53.2 million in 2017 compared to PLN 38.6 million in 2016.

Consolidated external service charges of GPW Group and structure of external service charges in 2015 – 2017

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
PLN'000, %2017%2016%2015%  
IT cost:32,46761%22,16157%20,20951%10,30646.5%
IT infrastructure maintenance15,75230%12,39532%12,52432%3,35727.1%
TBSP maintenance service1,0912%1,4534%1,1853%(362)-24.9%
Data transmission lines5,24210%5,92415%5,70414%(682)-11.5%
Software modification10,38220%2,3896%7962%7,993334.6%
Office and office equipment maintenance:3,3256%2,8607%2,7497%46516.3%
Repair and maintenance of installations1,0122%1,0383%9382%(26)-2.5%
Security1,3963%9042%8202%49254.5%
Cleaning5281%4951%4831%336.7%
Phone and mobile phone services3891%4231%5081%(34)-8.1%
International (energy) market services2,0034%3991%--1,604402.0%
Leasing, rental and maintenance of vehicles6591%5271%4371%13225.1%
Transportation services1390%1250%1950%1411.4%
Promotion, education, market development4,6189%5,39214%6,15516%(774)-14.4%
Market liquidity support5221%5832%9302%(61)-10.5%
Advisory (including: audit, legal services, business consulting)6,21312%3,71610%5,47414%2,49767.2%
Information services9562%8922%8232%647.2%
Training8132%7002%1,1473%11316.2%
Mail fees950%780%860%1721.7%
Bank fees1230%1350%1150%(12)-8.9%
Translation3641%2241%2601%14062.5%
Other8972%7952%1,0413%10212.8%
Total53,194100%38,587100%39,621100%14,60737.9%

Source: Consolidated Financial Statements, Company

The increase of external service charges year on year was mainly driven by an increase of IT costs including an increase of the cost of software modifications by PLN 8.0 million and the cost of IT infrastructure maintenance by PLN 3.4 million. In addition, costs of advisory increased by PLN 2.5 million, costs of international market services by PLN 1.6 million, and cost of security services by PLN 0.5 million.

Other external service charges increased modestly or decreased year on year as presented in the table above.

The increase of the cost of software modifications was mainly driven by an increase of the cost of GPW by PLN 7.7 million, mainly due to the modifications of the trading system UTP in line with the MiFID2 requirements. The cost of modification of GPW’s software was PLN 9.5 million in 2017, including PLN 9.3 million of the cost of modifications of the trading system UTP in line with the MiFID2 requirements. The cost of software modifications in TGE was PLN 0.7 million. The cost mainly included the implementation of MiFID2 modifications in TGE’s systems.

The increase of the cost of IT infrastructure maintenance was mainly driven by an increase of the cost of IT infrastructure in TGE by PLN 1.5 million, in GPW by PLN 0.7 million, and in IRGiT and BondSpot by PLN 0.2 million each. The increase of the cost of IT infrastructure in TGE was due to the implementation of XStream system in May 2017 and the cost of licences and support. The increase of the cost of IT infrastructure in GPW was mainly driven by a higher cost of licences and maintenance fees.

The increase of the cost of advisory was driven by an increase of the cost of advisory in GPW by PLN 0.6 million, in TGE by PLN 1.4 million, in IRGiT by PLN 0.3 million, and in BondSpot by PLN 0.1 million. The cost of advisory in GPW was PLN 2.9 million in 2017 compared to PLN 2.3 million in 2016. The increase of the cost was driven by an increase of the cost of legal advisory and the cost of accounting and tax audits. The increase of the cost of advisory in TGE was mainly driven by the cost of legal advisory concerning VAT. The increase of the cost of advisory in IRGiT in 2017 was due to advisory in actions taken in the CCP process.

Other operating expenses

Other operating expenses amounted to PLN 5.3 million in 2017, including the cost of material and energy consumption at PLN 3.2 million, industry organisation membership fees at PLN 0.6 million, non-life insurance at PLN 0.3 million, perpetual usufruct write-downs at PLN 0.1 million, business travel at PLN 0.8 million, conference participation at PLN 0.2 million, and other costs at PLN 0.02 million.

Other operating expenses amounted to PLN 5.2 million in 2016, including the cost of material and energy consumption at PLN 3.1 million, industry organisation membership fees at PLN 0.6 million, non-life insurance at PLN 0.3 million, business travel at PLN 0.8 million, conference participation at PLN 0.1 million, and other costs at PLN 0.1 million.

Other income and expenses

Other income of the Group stood at PLN 3.9 million in 2017 compared to PLN 1.7 million in 2016. Other income includes the annual correction of VAT at PLN 0.2 million, medical services reinvoiced for employees at PLN 0.3 million, the reversal of debt write-downs at PLN 2.9 million, gains on the sale of property, plant and equipment at PLN 0.03 million, and other income at PLN 0.3 million. The biggest item in 2016 was other income at PLN 1.3 million. Other income mainly includes TGE’s income from PSE in the Price Coupling of Regions (PCR) project. Other income from the PCR project was recognised at PLN 0.3 million in 2017 and PLN 0.5 million in 2016.

Price Coupling of Regions ensures common ownership of day-ahead market software by seven European energy exchanges. The project aims to harmonise the European market based on a common calculation algorithm. TGE participates in the project. In 2016, TGE received a refund of part of the PCR cost from Polskie Sieci Energetyczne S.A. in the implementation of international projects aiming among others to implement European regulations applicable to cross-border energy exchange. The refund took place under agreements signed with the operator and letters of guarantee issued by the Polish energy regulator as a partial refund of capital expenditure and operating expenses paid by the company in the project.

The total refund was PLN 7.0 million, including PLN 6.5 million recognised in deferred income and PLN 0.5 million recognised in other income in 2016.

Other expenses of the Group stood at PLN 6.1 million in 2017 compared to PLN 4.6 million in 2016. The increase of other expenses was due to higher donations paid by GPW: PLN 3.6 million in 2017 compared to PLN 3.1 million in 2016.

In 2017, the GPW Group paid donations of PLN 3.0 million to the Polish National Foundation, PLN 140 thousand to the Archdiocese of Warsaw, PLN 414 thousand to the GPW Foundation, PLN 25 thousand to the Wolność i Demokracja Foundation, and PLN 2 thousand to the Foundation “Dziecięca Fantazja”.

In 2016, the GPW Group paid donations of PLN 3.0 million to the Polish National Foundation, PLN 34.4 thousand to the Lesław A. Paga Foundation, PLN 28.5 thousand to the Polish-Chinese Cooperation Forum Association, PLN 27.5 thousand to the GPW Foundation, and PLN 10 thousand to the Youth Entrepreneurship Foundation and Caritas Diecezji Łowickiej each.

Financial income and expenses

Financial income of the Group stood at PLN 5.5 million in 2017 compared to PLN 12.9 million in 2016.

Financial income includes mainly interest on bank deposits, financial income on investment in Treasury bonds, as well as positive FX differences. Income from interest on bank deposits was PLN 5.3 million in 2017 and PLN 6.4 million in 2016. FX differences were negative in 2017, shown under financial expenses. FX differences were negative in 2016, as well.

GPW’s associate Aquis Exchange Limited issued no additional capital in 2017. Aquis completed several new issue shares in 2016 without the participation of GPW. As a result of the transactions, GPW’s share in economic and voting rights decreased from 26.33% to 20.31%. GPW’s stake remained unchanged in 2017. As a result of the issue, the net asset value of Aquis increased and GPW recognised gains at PLN 5.8 million shown under financial income in 2016. GPW recognised no such gains in 2017, hence the lower level of financial income.

Financial expenses of the Group stood at PLN 11.1 million in 2017 compared to PLN 12.1 million in 2016. The lower level of financial expenses in 2017 year on year was mainly driven by lower interest cost of TGE’s overdue tax liabilities. The overdue tax liabilities were due to changes in the taxation of certain services as of 1 January 2017 and a resulting adjustment of VAT for the period from December 2011 to December 2016.

The largest item of financial expenses is the interest cost under GPW’s outstanding bonds (including the cost of the issue spread over time) at PLN 7.6 million in 2017 compared to PLN 8.0 million in 2016.

The cost in 2017 resulted from interest on series D and E bonds at 2.76%, which remained unchanged throughout the year despite the floating interest rate on the bonds, and interest on series C bonds at 3.19%. The interest cost in 2016 resulted from interest on series A and B bonds at 2.94% in H1 2016 and 2.96% in H2 2016 and interest on series C bonds at 3.19%.

The series A and B bonds issued in December 2011 and February 2012 with a total nominal value of PLN 245.0 million were redeemed in full in Q1 2017. The bonds were due for redemption on 2 January 2017. The bonds bore interest at a floating rate equal to WIBOR 6M + 1.17%, interest was paid semi-annually. The series A and B bonds were redeemed in part before maturity in 2015. On 6-12 October 2015, GPW bought back 1,245,163 bonds for a total price of PLN 126,010,495.60. The early redemption of the series A and B bonds was paid for with cash raised by GPW through the issue of series C bonds.

The series C bonds bear interest at a fixed rate of 3.19% p.a.

In view of the approaching maturity of the series A and B bonds, the GPW Management Board passed a resolution on 13 October 2016 to issue 1,200,000 bearer bonds with a nominal value of PLN 100 per bond and a total nominal value of PLN 120.0 million. The decision provided for the issue of two series of bonds: series D bonds with a total nominal value up to PLN 60 million and series E bonds with a total nominal value up to PLN 60 million. The bonds bear interest at a floating rate equal to WIBOR 6M plus a margin. The margin on series D and E bonds is 0.95%. The interest on the bonds is paid semi-annually. The series D and E bonds are due for redemption on 31 January 2022.

The issue of series D and E bonds started in 2016 but the bonds were registered in January 2017. Therefore, liabilities under the series D and E bonds were recognised on the books in January 2017.

The series D and E bonds were introduced to trading on the regulated market Catalyst operated by GPW and in the alternative trading system Catalyst operated by BondSpot.

The financial expenses of 2017 included the cost of interest on credit facilities and loans at PLN 1.3 million. The cost included mainly interest on a loan of PLN 60 million taken by TGE from DNB Polska to pay outstanding VAT liabilities for 2011-2016. The interest rate on the loan was WIBOR 1M plus a margin of 1.4%. The loan was fully repaid in November 2017.

Share of profit of associates

The Group’s share of profit of associates stood at PLN 10.1 million in 2017 compared to PLN 3.5 million in 2016. The increase was mainly driven by a higher profit of the KDPW Group (PLN 37.7 million) and a much lower net loss of Aquis Exchange Limited at PLN 15.9 million in 2017 compared to PLN 19.0 million in 2016.

Aquis Exchange Limited became an associate upon GPW’s acquisition of the second tranche of shares in February 2014. The Group’s share of the loss of Aquis Exchange Ltd was PLN 3.2 million in 2017 compared to PLN 4.5 million in 2016.

In 2017, Aquis Exchange Limited issued no shares so GPW’s share in economic and voting rights remained unchanged at 20.31%. In 2016, Aquis Exchange Limited completed several new issue shares without the participation of GPW. As a result of the issues, GPW’s share in Aquis measured by the number of shares decreased to 22.99% and GPW’s share in economic and voting rights decreased to 20.31%.

The Group’s share of the KDPW Group profit was PLN 12.6 million in 2017 compared to PLN 7.7 million in 2016.

The share in the net profit of Centrum Giełdowe was PLN 0.7 million in 2017 compared to PLN 0.3 million in 2016.

Profit / (Loss) of associates

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
PLN'000201720162015  
KDPW S.A. Group37,69323,82913,75013,86458.2%
Centrum Giełdowe S.A.2,8961,1001,4221,796163.3%
Aquis Exchange Ltd(15,874)(19,004)(23,093)3,130-16.5%
Total24,7145,925(7,920)18,789317.1%

Source: Consolidated Financial Statements, Company

GPW’s share of profit / (loss) of associates

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
PLN'000201720162015  
KDPW S.A. Group12,5657,6984,5844,86763.2%
Centrum Giełdowe S.A.718273353445163.0%
Aquis Exchange Ltd(3,224)(4,453)(6,467)1,229-27.6%
Total10,0593,518(1,530)6,541185.9%

Source: Consolidated Financial Statements, Company

Income tax

Income tax of the Group was PLN 32.3 million in 2017 and PLN 31.1 million in 2016. The effective income tax rate in the periods under review was 17.1% and 19.2%, respectively, as compared to the standard Polish corporate income tax rate of 19%. The income tax paid by the Group was PLN 46.5 million in 2017 compared to PLN 21.1 million in 2016.

The method of payment of taxes by the Group changed in 2017 following the formation of a Tax Group by GPW and its subsidiaries. Taxes were paid on a quarterly basis in the amount of current tax liabilities. In 2016, GPW used the simplified method of monthly income tax advances equal to 1/12 of the tax due for 2014.

On 28 September 2016, the following companies: Giełda Papierów Wartościowych w Warszawie S.A., Towarowa Giełda Energii S.A., BondSpot S.A. and GPW Benchmark S.A., entered into a notarised agreement creating the GPW Tax Group (“GPW TG” or “TG”) for a period of three tax years from 1 January 2017 to 31 December 2019.

The companies participating in TG are not treated individually but collectively as one corporate income taxpayer under the Corporate Income Tax Act. Such taxpayer’s income is determined as the surplus of the sum of incomes of the companies participating in TG over the sum of their losses.

As the Company Representing the Tax Group, Giełda Papierów Wartościowych w Warszawie S.A. is responsible for the calculation and payment of quarterly corporate income tax advances of the Tax Group pursuant to the Corporate Income Tax Act.

While income taxes of the companies participating in TG are no longer paid individually, the companies are still required to individually pay other taxes including VAT and local taxes.