Moscow Exchange announces results for the full year 2014
Moscow Exchange (MOEX) today announces its financial results under International Financial Reporting Standards (IFRS) for the year ended 31 December 2014. Higher volumes on the FX, Equities and Money Markets, as well as increased interest income and fees from Depository and Settlement Services resulted in strong growth in revenue and net income.
KEY FINANCIAL HIGHLIGHTS FOR 2014
- Operating income increased 23.5% YoY to RUB 30.39 bln.
- EBITDA increased 31.9% YoY to RUB 21.62 bln; the EBITDA margin was 71.1% vs. 66.6% in 2013.
- Operating expenses grew by 5.2% YoY to RUB 10.37 bln.
- Net income increased 38.1% YoY to RUB 15.99 bln; basic earnings per share increased to RUB 7.21 from RUB 5.23.
- Proposed dividend of RUB 3.87 per share, representing 55% of 2014 net income.
KEY CORPORATE HIGHLIGHTS FOR 2014
- MOEX's free float increased to more than 50%, one of the highest on the Russian market following The Central Bank of Russia's sale of half of its stake in MOEX in July with a RUB 16 bln (USD 469 mln) SPO transaction.
- MOEX substantially expanded its product offering: corporate Eurobond listings, repo instruments for corporate Eurobonds, two new currency pairs (GBP/RUB and HKD/RUB), futures on Yandex and MOEX, volatility index and Eurobonds futures, derivatives and FX positions, currency risk netting, and intraday clearing on the Equities and Bonds Market.
- Russian equities and corporate bonds became fully available for settlement via Euroclear and Clearstream direct links to Russia's CSD, the National Settlement Depository (NSD).
Mr. Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, commented:
"2014 was another very successful year for Moscow Exchange despite the challenging environment. The main factors that drove the growth in volumes were the major market infrastructure reforms we implemented over the past several years, our strong relationships with clients, as well as the proven safety of Moscow Exchange's systems and risk management, which attracted more volumes in a volatile market. During the year we launched a range of new products and services in response to the requirements of our customers.
"We are pleased to report very strong financial results, and that we are recommending to the AGM a record dividend payout of 55% of net income, which exceeds the level that Moscow Exchange has committed to under its dividend policy.
"We are cautiously optimistic about 2015 as we see year-to-date volume growth across most of our markets. Our focus in the year ahead will be on continuing to grow revenue from our traditional business lines, diversifying the product offering, developing clearing and post-trading functions and closely monitoring costs.
"We will also continue to lead the way among Russian companies in corporate governance. We are compliant with Russia's new Corporate Governance Code, reflecting best international practice, and we remain committed to transparency and proactive engagement with investors and other stakeholders. We also have a high-calibre and rigorously engaged Board led by a strong non-executive Chairman."
Mr. Evgeny Fetisov, Chief Financial Officer of the Moscow Exchange, said:
"I am pleased to report that in 2014 we achieved outstanding financial results and successfully completed several important initiatives. The successful SPO of our shares helped to further diversify the company's high quality investor base and substantially increased the free float.
"Earnings per share increased 37.9% YoY to RUB 7.21 supported by strict cost control and solid operating income performance. Strong double-digit growth in fees and commissions was recorded on the FX Market (+41.3% YoY), Money Market (+27.8% YoY), Equities Market (+25.8% YoY), as well as Depository and Settlement Services (+37.3% YoY). We also maintained good cost discipline: operating expenses increased just 5.2% YoY, approximately half the inflation rate.
"We optimised the structure of MOEX Group through the sale of non-core assets, finalized mergers of several entities within the Group and increased our stake in NAMEX, the commodities exchange focused on grain trading, to a controlling interest."
|RUB, mln||FY 2014||FY 2013||Change||Q4 2014||Q4 2013||Change|
|Basic earnings per Share, RUB||7.21||5.23||37.9%||1.82||1.29||41.1%|
ANALYSIS OF FULL YEAR 2014 FINANCIALS
Total Operating income. Operating income was up 23.5% YoY to RUB 30.39 bln. Operating income growth for the year was driven by an increase in fees and commissions in FX, Equities and Money Markets, as well as increased interest income and strong Depository and Settlement Services fees.
Securities (Equities & Bond) Market. Fee and commission income from the Equities Market rose 25.8% YoY to RUB 1.77 bln. Total trading volume in 2014 was RUB 10.28 trn, up 18.1% YoY. The equity market's total capitalisation was RUB 23.2 trn (US$ 385.9 bln) by year-end 2014. Fee and commission income from the Bond Market declined 25.0% YoY to RUB 1.03 bln. Total trading volume in 2014 was RUB 10.6 trn, down 30.8% YoY.
Listing and other services fees increased 61.0% to RUB 351.03 mln.
FX Market. Fee and commission income from the FX market increased 41.3% YoY to
RUB 3.41 bln. Trading volumes on the FX market totalled RUB 228.5 trn, up 46.5% YoY. Thanks to elevated volatility, spot trading volumes rose 35.8% YoY, while swap trading volumes increased 52.7% YoY on the back of high demand for liquidity-management products.
Money Market. Fee and commission income from the Money Market increased by 27.8% YoY to RUB 3.24 bln. Total trading volume on the Money Market including repo transactions and deposit and credit market declined 7.4% YoY to RUB 204.38 trn, largely due to a move to 1-week repo auctions with the CBR instead of 1-day repo, which led to a lower number of repo trades, though with longer maturity.
Derivatives Market. Fee and commission income from the Derivatives Market increased 4.5% YoY to RUB 1.64 bln. The trading volume in contract terms increased 24.6% YoY and amounted to 1.41 bln contracts totalling RUB 61.32 trn, largely driven by FX derivatives. Open interest reached RUB 457.3 bln by year-end 2014, a 17.3% YoY increase. The growth shows increasing depth of the market thanks to new players, and also reflects the elevated volatility of FX rates.
Depository and Settlement Services. Fee and commission income from depository and settlement services increased 37.3% to RUB 3.19 bln. The volume of assets on deposit at the NSD increased to RUB 24.94 trn as of 31 December 2014 from RUB 21.77 trn at the end of 2013, and averaged RUB 22.82 trn for 2014.
Other Revenue. Other revenue remained flat and amounted to RUB 966.90 mln. The biggest contributors to this line are revenue from the sale of software and technical services (RUB 496.17 mln) and revenue from the sale of market data (RUB 436.17 mln, up 44.8%).
Interest & Other Finance Income. Interest and other finance income increased 21.5% YoY to RUB 14.28 bln due to a significant increase in funds available for investments and higher interest rates.
Cash and Cash Equivalents. Moscow Exchange's cash position1 at year-end 2014 totalled RUB 57.65 bln. The Exchange had no debt as of 31 December 2014.
Expenses. Operating expenses in 2014 grew by 5.2% YoY to RUB 10.37 bln, more than two times lower than Russia's inflation rate. Personnel expenses remained the major cost item, comprising 52.0% of total costs. Administrative and other operating expenses declined by 1.0% YoY in 2014 due to lower spending on professional services, market makers and taxes, other than income tax.
Capital expenditure for FY 2014 totalled RUB 784 mln, of which RUB 530 mln was spent on software purchases and development.
A complete version of the Moscow Exchange consolidated IFRS financial statements for the year ended 31 December 2014 is available on the Investor Relations section of the company's web site.
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NOTES TO EDITORS
About Moscow Exchange
Moscow Exchange Group manages the sole multifunctional exchange platform in Russia for equities, bonds, derivative instruments, currencies, money market instruments and commodities. The Group includes the central depository (National Settlement Depository), and a clearing centre (National Clearing Centre), performing the functions of central counterparty on the markets, which allows Moscow Exchange to render the full spectrum of trading and post-trading services to its clients.
Moscow Exchange ranks among the world's top 25 exchanges by total volume of equities traded, and also among the 10 largest exchange platforms by bonds and derivatives trading. As of 1 March 2015 securities of 726 issuers are admitted to trading on the securities market of Moscow Exchange, including securities of the largest Russian companies by market capitalization.
Moscow Exchange was formed in December 2011 as a result of a merger between Russia's two main exchange groups - MICEX Group, the oldest domestic exchange and operator of the leading securities, foreign exchange and money market platform in Russia; and RTS Group, at the time the operator of Russia's leading derivatives market. This combination created a vertically integrated public trading market across most major asset classes, which was reorganized into an open joint stock company (OJSC) and was named Moscow Exchange. Moscow Exchange held the initial public offering of its shares on 15 February 2013 (ticker MOEX).
Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations.
1 Cash position is calculated as the sum of cash and cash equivalents due from financial institutions, investments available for sale and financial assets at fair value minus balances of market participants, distributions payable to holders of securities and loans payable.
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