News

GPW Group 2023 Financial Results

PRESS RELEASE

GPW Group's consolidated results in 2023:

• Sales revenue: PLN 444,9 mn (+14.3% YoY)
• Net profit: PLN 156.0 mn (+7.6% YoY)
• EBITDA: PLN 160.2 mn (-4.3% YoY)
• Continued index rally and significant increase in exchange turnover in Q1 2024 (+18,4% YoY) 

The GPW Group's financial results for 2023 carried the costs of strategic initiatives. While the GPW Group generated revenue of PLN 444.9 million in 2023 (up 14.3% year on year), EBITDA was down 4.3% year on year at PLN 160.2 million. The GPW Group's cost/income ratio increased to 71.8% in 2023 from 65.5% in 2022. The GPW Group's operating expenses increased 25.4% year on year in 2023, mainly driven by the recognition of costs of the new business lines and an increase in salaries. Thanks to financial income and the contribution of the associate KDPW, net profit attributable to owners of the parent entity increased by 7.6% year on year to PLN 156.0 million in 2023. The GPW Group's solid net cash position allowed it to generate high financial income in a high interest rate environment: financial income increased by PLN 4.9 million year on year to PLN 28.4 million.

In Q4 2023 alone, the GPW Group generated quarterly sales revenue of PLN 115.9 million (up 26.7% year on year). EBITDA reached PLN 41.7 million (up 2.2% year on year) and net profit attributable to owners of the parent entity amounted to PLN 44.7 million (up 18.7% year on year).

GPW used PLN 113.3 million to pay dividends in 2023, equivalent to PLN 2.70 per share and a dividend yield of 6.7%. GPW’s total shareholder return was 27.3%. The GPW Group's net cash position of PLN 392.6 million in the absence of significant financial debt will enable the continuation of an attractive dividend policy while opening an opportunity to accelerate growth through selective M&A transactions, with a focus on the Polish market.

For the second consecutive year, the markets lived with elevated inflation, relatively high interest rates and the risk of recession in the major global economies. The stock rally on the Warsaw Stock Exchange was solid in 2023 despite the ongoing war in Ukraine. Polish indices were among the best performers in Europe and the world.  

“The year 2023, especially the period following the parliamentary elections on 15 October 2023, should be considered a successful year for stocks listed on the domestic capital market. The broad market index of the Warsaw Stock Exchange WIG rose by 36.5% in 2023, one of the best performances among the indices of leading European and global stock exchanges. The large cap index WIG20 gained 35.0% (total return), while the mWIG40 and sWIG80 indices gained 39.3% and 30.1%, respectively,” said Tomasz Bardziłowski, President of the GPW Management Board.

Although the past year saw strong index performance on many European markets, it was marked by sharp declines in equity turnover. This also affected GPW. Electronic order book (EOB) equity turnover on the GPW Main Market was PLN 274.5 billion, down 3.9% year on year. Investor activity was much stronger than in the years preceding the pandemic, with average EOB equity turnover exceeding the mark of one billion zlotys at PLN 1.1 billion. Turnover on NewConnect (NC) was down 12.8% year on year (PLN 2.2 billion vs. PLN 2.5 billion in 2022), due in part to the prevailing trend of the largest and most liquid companies transferring from NewConnect to the Main Market.

Continued geopolitical and macroeconomic uncertainty affected issuer activity on the IPO (Initial Public Offering) market in 2023, which was evident not only on GPW but across Europe. According to the PwC IPO Watch Europe 2023 report, the total value of IPOs in Europe fell by 35% to EUR 10.2 billion in 2023, the lowest level in more than a decade. Ten companies were newly listed on the GPW Main Market (including nine transfers from NewConnect). Murapol was newly listed on the GPW Main Market in December 2023 with a public offering of over PLN 363 million. Fourteen companies were newly listed on NewConnect.

Despite the low IPO activity, the secondary offering (SPO) market remained strong. The total value of SPOs on the GPW equity markets amounted to PLN 2.9 billion in 2023, including Polenergia (PLN 750 million), CCC (PLN 505 million) and Atal (PLN 252 million) raising capital for further growth.

Increasing the number of IPOs on the Warsaw Stock Exchange is one of the top objectives of the President of the GPW Management Board. “My priorities for the coming year and the new term of office are to increase the share of the capital market in financing Poland’s business, to attract new issuers and investors, and to develop the educational mission of GPW aiming to improve knowledge of the capital and financial market, with a special focus on young people. I will focus on expanding the range of financial instruments and products attractive to investors. Another key objective is to work on rebuilding confidence in the market and ensuring the efficiency and security of the stock exchange infrastructure,” said Tomasz Bardziłowski.

On the spot market, 2023 was another good year for ETFs: turnover rose to a record PLN 1.1 billion and was up 8.7% year on year, corroborating growing interest in these products. The most popular derivative on GPW, the WIG20 futures, generated high turnover volumes for the second year in a row (8.67 million contracts, down 7.2% year on year). The first ETC product, which offers exposure to responsibly sourced physical gold, was newly listed on GPW in August 2023. On the derivatives market, the futures and options turnover value increased to PLN 380.1 billion (up 4% year on year) and the offering was expanded to include new single-stock derivatives.

Last year was record-breaking for the non-Treasury bond market: over 100 issues worth more than PLN 26 billion were introduced to trading. To support debt issuers, GPW launched the Warsaw Sustainable Segment in June 2023, which presents information on sustainability debt instruments listed on the markets organised by GPW. Sustainability finance bonds were introduced to trading, including bonds issued by Santander Bank, Ghelamco, Cyfrowy Polsat.

Despite the abolition of the obligation to trade on the exchange, 2023 was a relatively good year for TGE. Together with IRGiT, TGE accounts for 35% of the GPW Group's annual revenues as one of the pillars of the Group's development. TGE introduced two new instruments on the electricity forward market: lowPeak and highPeak, which contribute to more efficient management of the trading portfolio. Total turnover volumes increased for electricity (up 4.3% year on year) and guarantees of origin of electricity generated in RES (up 1.1% year on year; the volume at 42,344 GWh was the highest in the history of the Register of Guarantees of Origin). However, the total turnover volumes dropped for natural gas (down 6.0% year on year) and property rights for electricity generated from RES (down 20.5% year on year).

Q1 2024 saw a continuation of the rally on GPW, with the WIG index gaining +7.7%. ^[1] Equity turnover on GPW's Main Market increased by a high 18.4% year on year to PLN 82.7 billion. We expect an upturn in the GPW IPO market, which is already observed on foreign markets: in Q1 2024, the number of IPOs in the US increased by 48% year on year to 49 IPOs. ^[2]

In view of these positive trends, GPW is focusing on several strategic goals in the near term. One of them is to attract more individual investors, which should be supported by the changes in capital gains tax announced by the Ministry of Finance. A key strategic project of the Exchange is the implementation of a new trading platform, which will expand the growth opportunities for GPW and the entire Group. A review of strategic initiatives is planned as part of the GPW Group's strategy update, which will be presented in the next few months.

***

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