Presentation of the financials

Revenue

The Company has the following revenue-generating segments:

  • financial market,
  • commodity market including only information services on the 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 Company’s main source of trading revenues and its main source of sales revenues in general.

Revenues from transactions in derivative financial instruments are the second 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 other fees paid by market participants include mainly fees for services providing access to and use of the trading system.

Revenues from transactions in debt instruments are generated by the Catalyst market.

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 information services mainly include fees paid by data vendors for real-time market data on the financial market and the commodity market as well as historical and statistical data on the financial market. 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 information services include revenue from WIBOR and WIBID reference rates.

The Company’s other revenues include revenues from office space lease and sponsorship.

The Company’s sales revenues amounted to PLN 203.4 million in 2017, an increase of 16% (PLN 28 million) year on year. The revenue from trade in equities and equity-related instruments was the biggest contributor of the increase of revenue.

The revenue from trading in equities and equity-related instruments increased by 22.4% or PLN 20 million year on year in 2017. The increase of revenue in 2017 was driven by an increase of the value of trade on the equity market.

The revenue from trade in derivatives decreased by 2.6% or PLN 0.3 million year on year in 2017 due to a decrease in the volume of trade in derivatives by 4.4% year in year. The rate of the decrease in the revenue from trade in derivatives was lower than the rate of the decrease in the volume of trade in derivatives due to a lower decrease in the volume of trade in WIG20 futures (by 3.7%) and the disproportion between the revenue and the volume of trade in view of the structure of fees including the applicable fixed fees.

In the years under review, the share of revenue from trade in derivatives in total operating income decreased from 7.0% in 2016 to 6.0% in 2017 while the share of revenue from trade in equities increased from 51% in 2016 to 54.0% in 2017. The sharp increase in the revenue from trade in equities caused the share of listing revenue to drop from 13.0% in 2016 to 12.0% in 2017 and the revenue from information services from 23% in 2016 to 21% in 2017.

Separate revenues of GPW S.A. and revenue structure in 2015 - 2017

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
PLN'0002017%2016%2015%  
Financial market196,22996%172,89999%188,73098%23,33013.5%
Trading129,74964%109,32862%126,56266%20,42118.7%
Equities and equity-related instruments109,56454%89,52051%107,94156%20,04422.4%
Derivative instruments11,8886%12,2027%11,5786%(314)-2.6%
Other fees paid by market participants7,4984%6,8354%6,3833%6639.7%
Debt instruments3710%3610%2830%102.8%
Other cash instruments4280%4100%3760%184.4%
Listing24,02712%23,16713%23,65212%8603.7%
Listing fees19,57010%19,50811%18,86210%620.3%
Introduction fees, other fees4,4572%3,6592%4,7902%79821.8%
Information service42,45321%40,40423%38,51620%2,0495.1%
Real-time information39,41219%37,74322%36,13319%1,6694.4%
Historical and statistical information and indices3,0411%2,6612%2,3831%38014.3%
Commodity market3480%3270%-0%21-
Information services *3480%3270%-0%216.4%
Other revenue6,8663%2,2281%3,0522%4,638208.2%
Total203,443100%175,454100%191,781100%27,98916.0%

*a new segment was extracted on the commodity market, therefor the Information services data on the financial market were adjusted in previous quarters

Source: Consolidated Financial Statements, Company

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

Separate revenues of GPW S.A. by geographical segment in 2015 - 2017

 Year ended 31 DecemberChange
(2017 vs 2016)
Change (%)
(2017 vs 2016)
PLN'0002017%2016%2015%  
Revenue from foreign customers75,61037%63,88736%62,78233%11,72318.4%
Revenue from local customers127,83363%111,56764%128,99967%16,26614.6%
Total203,443100%175,454100%191,781100%27,98916.0%

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 Company 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 Company from trading on the financial market stood at PLN 129.7 million in the year ended on 31 December 2017 compared to PLN 109.3 million in 2016.

The share of trading revenue on the financial market in the total sales revenue of the Company was 64% in 2017 compared to 62% in 2016. The biggest share in trading revenue (93.3%) is that of the revenue on the Main Market, which stood at PLN 121 million in 2017 (an increase of 19.7 million year on year). The remaining share in revenue is that of NewConnect and Catalyst.

Revenue from:

  • trade in equities and equity-related instruments;
  • trade in derivatives;
  • other fees paid by trading participants

is presented in detail in section V.2.

Debt instruments

Revenues of the Company from transactions in debt instruments were stable and stood at PLN 0.37 million in 2017, an increase of 2.8% year on year (PLN 0.36 million in 2016).

The revenue of the Company from transactions in debt instruments is generated by the Catalyst market.

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)0.370.360.280.012.8%
Catalyst:     
Value of trading (PLN billion)2.332.371.930.01-1.7%
incl.: Value of trading in non-Treasury instruments (PLN billion)1.451.391.340.064.3%

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. The revenue from trade in structured certificates had the highest share (73.6%).

Listing

Listing revenues of the Company on the financial market amounted to PLN 24.0 million in 2017 compared to PLN 23.2 million in 2016.

Revenues from listing fees amounted to PLN 19.6 million in 2017 compared to PLN 19.5 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 4.5 million in 2017 compared to PLN 3.7 million in 2016. The revenues are driven mainly by the number and value of new listings of shares and bonds on the GPW markets. The value of IPOs and SPOs in 2017 increased significantly year on year.

Listing revenue on the GPW Main Market and NewConnect is presented in detail in section V.2.

Listing revenues from Catalyst increased by 26.7% year on year in 2017. The increase resulted from an increase in the number of listed instruments: 573 at the end of 2017 compared to 505 at the end of 2016, as well as the value of issued instruments, in particular non-Treasury instruments by 35.3%. 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)1.71.31.10.426.7%
Number of issuers148152160(4)-2.6%
Number of issued instruments5735054526813.5%
including: non-Treasury instruments5314644166714.4%
Value of issued instruments (PLN billion)743.0690.0594.453.07.7%
including: non-Treasury instruments87.164.450.922.735.3%

Source: Company

Information services

Revenues from information services on the financial market and the commodity market amounted to PLN 42.8 million in 2017 compared to PLN 40.7 million in 2016. One new data vendor was acquired and the number of subscribers grew. The increase in revenue from information services in 2017 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)
PLN'000201720162015  
Revenues from information services and WIBID and WIBOR
reference rate services * (PLN million)
42.840.738.52.15.1%
Number of data vendors52515412.0%
Number of subscribers ('000 subscribers)244.8224.6221.120.29.0%

Source: Company

Other revenues

The Company’s other revenues amounted to PLN 6.9 million in 2017 compared to PLN 2.2 million in 2016. The Company’s other revenues include revenues from educational and PR services, office space lease, services provided to GPW Group companies, colocation services, and sponsorship. The biggest revenue item in 2017 was the revenue from services provided to GPW subsidiaries (PLN 3.2 million). These include financial, accounting, HR, office and marketing services. The second biggest revenue category was the revenue from office space lease and colocation (PLN 2.9 million). The remaining amount of revenues were revenues from sponsorship.

Operating expenses

Total operating expenses stood at PLN 109.9 million in 2017, representing an increase of 9.8% (PLN 9.8 million) year on year. The cost/income ratio decreased to 54.0% in 2017 from 57.0% in 2016. The increase of operating expenses was mainly driven by the cost of software modifications in harmonisation with MiFID2 requirements.

Separate operating expenses of GPW S.A. 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 amortisation19,47218%19,34019%21,47218%1320.7%
Salaries29,39127%29,08929%30,39825%3021.0%
Other employee costs7,9687%7,2817%7,6026%6879.4%
Rent and other maintenance fees7,4727%6,3476%7,1086%1,12517.7%
Fees and charges3,8654%6,2126%21,81518%(2,347)-37.8%
including PFSA fees3,0993%5,4605%21,09418%(2,361)-43.2%
External service charges37,78334%28,05528%27,64623%9,72834.7%
Other operating expenses3,9654%3,7464%4,3134%2195.8%
Total109,916100%100,070100%120,354100%9,8469.8%

Source: Consolidated Financial Statements, Company

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

Depreciation and amortisation

Depreciation and amortisation charges stood at PLN 19.5 million in 2017, representing an increase of 0.7% (PLN 0.1 million) compared to PLN 19.3 million in 2016. Consequently, depreciation and amortisation charges were stable year on year.

Salaries and other employee costs

Salaries and other employee costs amounted to PLN 37.4 million in 2017, representing an increase of 2.7% (PLN 1.0 million) compared to PLN 36.4 million in 2016.

The increase of salaries in 2017 was driven by a decrease of the cost of gross salaries by PLN 1.7 million, an increase of the cost of annual bonuses by PLN 2.7 million, a decrease of the cost of reorganization by PLN 1.4 million, and an increase of the cost of provisions for unused holiday leave by PLN 0.3 million and the cost of overtime pay by PLN 0.4 million. The higher cost of annual bonuses was mainly due to the effect of a lower base of 2016 due to the release of provisions for bonuses of the Management Board for 2015 at PLN 2.6 million. Furthermore, social security contributions paid to ZUS and allocations to the Company Social Fund increased as well in 2017.

The headcount of the Company was 189 FTEs as at 31 December 2017 compared to 185 FTEs as at 31 December 2016. The increase of the headcount of the Company year on year in 2017 was a result of the recovery of some human resources reduced in the workforce restructuring in 2016.

Employment in GPW S.A.

 As at
# FTEs31 December 201731 December 201631 December 2015
GPW189185201
Total189185201

Source: Company

Rent and other maintenance fees

Rent and other maintenance fees amounted to PLN 7.5 million in 2017 compared to PLN 6.3 million in 2016, representing an increase of 17.7% year in year. The increase of rent in 2017 was mainly driven by additional space leased by GPW for its subsidiaries in the process of physical integration of the Group, i.e., relocation of the offices of the subsidiaries to the principal offices of GPW. The cost of additional space leased by GPW is reinvoiced to the subsidiaries as shown in Other sales revenues.

Fees and charges

Fees and charges stood at PLN 3.9 million in 2017, a decrease of 37.8% (PLN 2.3 million) year on year. The main component of fees and charges of the Company are fees paid to the Polish Financial Supervision Authority, which changed as of the beginning of January 2016 with the extension of the group of entities which pay the cost of market supervision. The supervision fees stood at PLN 3.1 million in 2017 as compared to PLN 5.5 million paid 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 37.8 million in 2017 compared to PLN 28.1 million in 2016.

Separate external service charges of GPW S.A. 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:23,72263%15,66856%14,27552%8,05451.4%
IT infrastructure maintenance10,01827%9,33133%9,74635%6877.4%
Data transmission lines4,21811%4,50816%4,41616%(290)-6.4%
Software modification9,48625%1,8297%1130%7,657418.7%
Office and office equipment maintenance:2,7687%2,2448%2,2608%52423.4%
Repair and maintenance of installations8702%8633%8753%70.8%
Security1,1813%7353%6752%44660.7%
Cleaning4491%3701%3721%7921.4%
Phone and mobile phone services2681%2761%3381%(8)-2.9%
Leasing, rental and maintenance of vehicles1590%1350%2251%2418.1%
Transportation services910%810%1000%1012.3%
Promotion, education, market development3,80410%4,38116%4,29816%(577)-13.2%
Market liquidity support5211%5642%9203%(43)-7.7%
Advisory (including: audit, legal services, business consulting)2,9188%2,3018%2,63310%61726.8%
Information services2,2126%1,3485%1,1324%86464.1%
Training6212%5402%8233%8115.0%
Mail fees400%440%400%(5)-9.1%
Bank fees420%480%520%(6)-12.5%
Translation3181%1771%1851%14179.7%
Other5672%5242%7033%438.2%
Total37,783100%28,055100%27,646100%9,72834.7%

Source: Consolidated Financial Statements, Company

The increase of external service charges by PLN 9.7 million year on year in 2017 was mainly driven by an increase of the cost of software modifications by PLN 7.7 million to PLN 9.5 million in 2017. In addition, the following costs also increased:

  • information services – increase by PLN 0.9 million,
  • IT infrastructure maintenance – increase by PLN 0.7 million,
  • advisory – increase by PLN 0.6 million,
  • security – increase by PLN 0.4 million,
  • translation – increase by PLN 0.1 million.

The increase of the cost of software modifications by PLN 7.7 million was 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 increase of the cost of IT infrastructure maintenance in GPW was mainly driven by a higher cost of licences and maintenance fees, including the cost of harmonisation with the MiFID2 requirements, which stood at PLN 0.6 million.

The cost of advisory was PLN 2.9 million in 2017 compared to PLN 2.3 million in 2016, an increase of 26.8%. The cost of advisory included:

  • legal advisory – PLN 553.8 thousand,
  • tax advisory – PLN 383.3 thousand,
  • other advisory – PLN 1,580.3 thousand,
  • tax and accounting audits – PLN 400.3 thousand.

Other advisory of PLN 1.5 million mainly includes the cost of business and management consulting as well as the representation office in London.

The cost of promotion, education and market development decreased at the biggest rate from PLN 4.4 million in 2016 to PLN 3.8 million in 2016. The cost of promotion, education and market development included:

  • Financial and in-kind sponsorship – PLN 284.2 thousand,
  • Promotion and business development – PLN 639.9 thousand,
  • Conference partnership – PLN 1,140.7 thousand,
  • Catering – PLN 354.6 thousand,
  • Media monitoring – PLN 46.0 thousand,
  • Public relations – PLN 644.1 thousand,
  • Radio, TV and press advertising – PLN 539.3 thousand,
  • Conferences and training – PLN 155.3 thousand.

Other operating expenses

Other operating expenses increased by 5.8% or PLN 0.2 million year on year in 2017. Other operating expenses amounted to PLN 3.96 million, including the cost of material and energy consumption at PLN 2.4 million, industry organisation membership fees at PLN 0.4 million, non-life insurance at PLN 0.23 million, perpetual usufruct write-downs at PLN 0.1 million, business travel at PLN 0.6 million, conference participation at PLN 0.14 million, and other costs at PLN 18 thousand.

Other income and expenses

Other income of GPW S.A. stood at PLN 0.94 million in 2017 compared to PLN 0.68 million in 2016. Other income in 2017 included mainly gains on the sale of property, plant and equipment at PLN 0.26 million, medical services reinvoiced for employees at PLN 0.27 million, the annual correction of input VAT at PLN 0.11 million, and other income at PLN 0.29 million, mainly income from reinvoicing.

Other expenses of GPW S.A. stood at PLN 4.8 million in 2017 compared to PLN 4.3 million in 2016 mainly due to higher donations paid.

In 2017, GPW 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, and PLN 25 thousand to the Wolność i Demokracja Foundation.

In 2016, GPW 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.

Other expenses also include receivables write-offs (PLN 0.5 million) and reinvoiced costs of subsidiaries in respect of the modernisation and remodelling of office space, as well as advisory services in the WIBOR project.

Financial income and expenses

Financial income of the Company stood at PLN 5.0 million in 2017 compared to PLN 66.4 million in 2016. Financial income includes mainly dividends paid by subsidiaries and associates, interest on bank deposits, as well as positive FX differences.

Dividends received stood at PLN 1.3 million in 2017 compared to PLN 61.6 million in 2016. The difference was due to the fact that the subsidiary TGE paid no dividend for 2016 in 2017. The subsidiary paid no dividend as it was required to repay the bank loan taken in Q1 2017 to pay outstanding VAT liabilities.

Income from interest on bank deposits was PLN 3.6 million in 2017 and PLN 4.1 million in 2016. The Company earned income of loans granted at PLN 152 thousand.

Financial expenses of the Company stood at PLN 8.9 million in 2017 compared to PLN 8.1 million in 2016. The higher expenses in 2017 were mainly driven by FX differences which stood at negative PLN 1.2 million in 2017 comparted to a positive balance in 2016 shown under financial income.

The largest item of the Company’s financial expenses is the interest cost under outstanding bonds. The interest cost of the bonds decreased to 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 bonds issued by GPW are presented in detail in section V.2.

Income tax

Income tax of the Company was PLN 16.8 million in 2017 and PLN 13.9 million in 2016. The effective income tax rate in the periods under review was 19.6% and 10.7%, respectively, as compared to the standard Polish corporate income tax rate of 19%. The difference between the effective tax rate and the standard tax rate was mainly due to non-taxable dividends paid by subsidiaries and associates and shown in profit before tax. The Company uses a tax relief for dividends paid by subsidiaries and associates as it holds more than 10% of their stake for a period longer than two years.

GPW received no dividend from the subsidiary TGE in 2017; hence, the effective tax rate for 2017 was similar to the official corporate income tax rate in Poland.