Moscow Exchange Announces 3Q13 Results

19/11/2013

Moscow Exchange (MOEX) today announced its 3Q13 IFRS results. Strong earnings were driven by growth across our highly diversified business, particularly by FX and money market products.

KEY 3Q13 OPERATING AND FINANCIAL HIGHLIGHTS

  • Total trading volume across all markets up 25.3% YoY to RUB 123.9 trn.
  • Total operating income rose 11.2% YoY to RUB 6.28 bln.
  • EBITDA climbed 8.7% YoY to RUB 3.99 bln; EBITDA margin 64.0% versus 65.0% in 3Q12.
  • Net profit increased 29.8% YoY to RUB 2.85 bln; earnings per share (EPS) increased 24% YoY to RUB 1.29.

KEY CORPORATE HIGHLIGHTS

  • Strong additions were made to the management team, including Luis Vicente as MD of Risk & Clearing, Anna Vasilenko as Director of Primary Markets, Viktor Malakhov as IT Architecture Director, and Sergei Klinkov as IR Director.
  • Migration to T+2 settlement for equities was completed on 2 September, a major reform for the Russian financial market.
  • Closing Auction replaced the Post Trade Auction from 2 September. The Closing Auction price is recognised as the official closing price of the Russian market and is in line with best practice at leading exchanges worldwide.
  • Four major global banks have started to offer Direct Market Access (DMA) to securities trading on Moscow Exchange (five more expected to come online in the coming months).
  • New calendar spreads were introduced for futures on the RTS Index, OFZs, USD/RUB, Brent, gold, and the six most liquid stocks.
  • Trading platforms for Equities & Bonds, FX and the Derivatives Market were centralized at a single technology venue, the new state-of-the-art M1 data centre.

Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, said:

"Moscow Exchange delivered a solid set of results for the quarter. At the same time, we have continued to implement a number of important strategic initiatives that will position us well for long-term growth.

"We have been encouraged by increased equity trading volumes following the introduction of T+ settlement. In our view, investors appreciate the reforms taking place in the Russian financial market.

"We recently welcomed two issuers to Moscow Exchange, as Alrosa completed the largest Moscow-only shares listing, and Qiwi depository shares began trading locally.

"In October, we started central clearing of OTC derivatives and launched precious metals trading, both new products that represent strong potential revenue drivers. In addition we were pleased to welcome seven new ETFs to the Exchange.

"Going forward, we will maintain our focus on using our competitive advantage to attract more issuers and investors to Moscow Exchange."

Evgeny Fetisov, Chief Financial Officer of Moscow Exchange, added: "We are pleased to report another set of solid financial results. Our diversified product offering and vertically integrated business model have helped us record double-digit revenue growth. We remain focused on delivering on our financial targets and generating significant value for our shareholders."

FINANCIAL HIGHLIGHTS

RUB, mln 3Q 2013 3Q 2012 YoY 2Q 2013 QoQ
Total Operating Income 6,280.9 5,648.4 11.2% 6,303.2 -0.4%
Fee and Commission Income 3,163.3 2,932.0 7.9% 3,287.9 -3.8%
Net Interest and Other Finance Income 3,102.8 2,721.5 14.0% 2,994.5 3.6%
Other Income 14.73 (5.05) -- 20.8 -29.2%
Operating Expenses 2,711.4 2,376.4 14.1% 2,167.5 25.1%
Operating Profit 3,569.5 3,271.9 9.1% 4,135.7 -13.7%
Net Profit 2,854.0 2,198.7 29.8% 3,301.2 -13.5%
Basic Earnings per Share, RUB 1.29 1.04 24.0% 1.49 -13.4%
           
EBITDA 3,993.8 3,674.2 8.7% 4,544.0 -12.1%
EBITDA margin 64.0% 65.0%   72.1%  

ANALYSIS OF 3Q13 FINANCIALS

Total Operating Income. Operating income was up 11.2% YoY to RUB 6.28 bln. Revenue growth for the quarter was driven by higher income from all our markets except for equities, as well as an increase in depository & settlement fees & commissions and higher interest income.

Securities (Equities & Bond) Market. Fee & commission income from the Equities Market decreased 24.8% YoY to RUB 326.1 mln. Equities trading volume declined 17.3% YoY to RUB 2.1 trn. The equity market"s total capitalisation was RUB 25.0 trn (US$ 771.9 bln) as of 30 September 2013. Fee & commission income from the Bond Market increased 12.5% YoY to RUB 299.2 mln. Bonds trading volume was up 4.8% YoY to RUB 3.4 trn. Listing and other services fees increased 13.9% to RUB 49.6 mln.

Foreign Exchange Market. Fee & commission income from the FX Market increased 19.2% YoY to
RUB 647.1 mln, while trading volumes rose 37.9% YoY to RUB 44.2 trn. Spot trading volumes were down 12.4% YoY (due to low exchange rate volatility and lack of trading activity on the global FX market), while swap trading volumes increased significantly, growing by 97.1% YoY on the back of high demand for liquidity-management products and the continued effect of the extension of O/N swaps trading hours.

Money Market. Fee & commission income from the Money Market increased 23.8% YoY to
RUB 704.7 mln. Total trading volume, including repo transactions and the credit & deposit market, increased 31.7% YoY to RUB 62.7 trn. The main growth came from Central Bank Repo transactions and a significant increase in Repo with the Central Counterparty.

Derivatives Market. Fee & commission income from the Derivatives Market increased 13.8% YoY to RUB 375.9 mln. While trading volume decreased 14.6% YoY to RUB 11.4 trn (269.1 mln contracts), open interest rose 22.3% YoY to 9.97 mln contracts at the end of 3Q13. The main reason for the income growth was an increased share of higher commission options in the trading volume. At the same time FX futures and RTS Index futures remain as the most popular derivative instruments.

Depositary and Settlement Services. Fee & commission income from depositary and settlement services increased 21.7% YoY to RUB 544.2 mln. The volume of assets in deposits at the NSD increased to RUB 20.5 trn as of the end of 3Q13 from RUB 17.6 trn as of the end of 2Q13, and averaged RUB 19.1 trn for 3Q13.

Net Interest & Other Finance Income. Net Interest & other finance income increased by 14.0% YoY and totalled RUB 3.1 bln. Funds available for investment averaged RUB 332.2 bln in 3Q13. Net Interest & other finance income accounted for 49.4% of the Exchange"s operating income.

Cash Position. The Exchange"s own cash position totaled RUB 42.6 bln as of 30 September 2013. The Exchange had no material debt as of the end of 3Q13.

Expenses. Operating expenses were up 14.1% YoY in 3Q13 to RUB 2.71 bln. The major cost item was personnel, which grew by 6.3% YoY. Other operating expenses increased by 24.9% YoY driven by the rise in market makers fees, professional services and one-off impairment of investment in Ukrainian Exchange, partially offset by lower marketing and advertising expenses. Additional savings came from lower spending on rent and office maintenance.

Capital expenditures were RUB 353.0 mln in 3Q13 and totalled RUB 599.5 mln for the first nine months of 2013.

The complete version of Moscow Exchange"s consolidated interim condensed financial statements for the nine month period ended 30 September 2013 is available at the Investor Relations section on our website.