Moscow Exchange Announces Results For The Full-Year 2012

02/04/2013

Moscow Exchange (MOEX) today announces its financial results¹ for the year ended December 31, 2012. Higher volumes on FX and Money Markets as well as increased interest income resulted in strong growth in revenues and net income year-over-year.

KEY OPERATIONAL AND FINANCIAL HIGHLIGHTS FOR FY 2012

  • Total trading volume across all markets was up 24% YoY, reaching RUB 369.7 trn.
  • Revenues were up 27% YoY to RUB 21.55 bln.
  • EBITDA was up 32% YoY to RUB 13.72 bln; EBITDA margin increased to 63.7% from 61.1% in 2011.
  • Net income increased by 22% YoY to RUB 8.20 bln; earnings per share increased from RUB 3.14 to RUB 3.86.

KEY CORPORATE HIGHLIGHTS FOR 2012

  • Clearing of securities was centralized at the National Clearing Centre.
  • The National Settlement Depository was granted status as the Central Securities Depositary.
  • FX market access was granted to brokers. Now all market participants have access.
  • The new Spectra IT platform was introduced on the derivatives market, reducing latency and increasing the capacity and modularity of the system.
  • The ASTS trading and clearing system was updated to support T+2 trading and trading REPO with the central counterparty.

Mr. Alexander Afanasiev, Chief Executive Officer of the Moscow Exchange, commented, "2012 was a break-out year for the Moscow Exchange. Following the merger in 2011, we completed the integration of the MICEX and RTS exchange groups in 2012. We introduced major changes to the financial markets infrastructure, including the centralization of clearing and the launch of a central securities depository. In 2012, we also opened up the FX market for trading by all categories of participants, introduced a repository and launched the new Spectra IT platform."

"Significantly, in 2012 we completed much of the groundwork for our successful initial public offering, which was held on our own trading platform in February 2013. Despite challenging markets, the IPO raised RUB 15 billion and demonstrated to other Russian issuers that the local market is an attractive venue for sizeable capital raisings."

"We are on track with delivery on our strategic goals for 2013. We rolled out the first stage of the transition to T+2 settlement for equities and bonds, bringing our procedures in line with international best practices. We are working on listing reform and the centralized clearing of OTC derivatives. In the first quarter, we have also continued to work closely with the government and regulators on additional reforms that will grow the domestic investor base and attract more international investors to Moscow Exchange."

Mr. Evgeny Fetisov, Chief Financial Officer of the Moscow Exchange, said, "Our results were very strong in 2012, with trading volumes across all markets totaling RUB 369.7 trillion, a 24% increase versus combined MICEX and RTS volumes in 2011. In particular, FX, Money Market and Derivative trading volumes were higher as a result of organic growth and new products and innovations, while global factors negatively impacted equities volumes resulting in lower trading volumes in that segment."

"Our strong organic growth in 2012 was supplemented by the consolidation of RTS starting from June 29, 2011. We are also very proud that we were able to increase profitability in 2012, achieving an impressive EBITDA margin of 63.7%."

"The largest use of capital in 2013 will be to increase the capitalization of our clearing center, National Clearing Centre"

FINANCIAL HIGHLIGHTS

RUB, mln FY 2012 FY 2011² YoY
Revenues 21,546.97 16,948.03 27%
Fee and Commission Income 11,406.82 9,950.98 15%
Net Interest and Other Finance Income 10,033.26 6,920.06 45%
Other Operating Income 106.89 76.99 39%
Operating Profit 12,124.57 9,258.45 31%
Net Profit 8,200.33 6,696.76 22%
Basic Earnings per Share, RUB 3.86 3.14 23%
       
EBITDA 13,719.28 10,363.58 32%
EBITDA margin 63.7% 61.1%  

ANALYSIS OF FY 2012 FINANCIALS

Total Revenues. Revenues were up 27% YoY to RUB 21.55 bln. Revenue growth for the year was driven by growth in derivatives fees and commissions, higher volumes on FX and Money Markets as well as increased interest income.

Securities Market. Fee & commission income from the securities market decreased 26% YoY to RUB 3.08 bln. Total trading volume in 2012 was RUB 24.1 trn, down 21% YoY. The 41% decline in equity volumes was offset by trading in bonds that was up 19% YoY. Total capitalization of the Exchange's equity market amounted to RUB 25.2 trn (US$ 816.9 bln) by YE 2012. The decline in equity trading volumes was largely driven by the negative backdrop for equity markets globally.

Foreign Exchange Market. Fee & commission income from the FX market increased by 28% YoY to RUB 2.08 bln. Trading volumes on the FX market totaled RUB 117.0 trn, up 34% YoY. Growth on the FX Market was driven by both favorable market conditions for this segment and as well improvements adopted by the Exchange.

Money Market. Fee & commission income from the money market increased by 108% YoY to RUB 2.01 bln. Total trading volume on the money market including repo transactions and lending market amounted to RUB 179 trn (with the repo volume reaching RUB 169 trn), an increase of 45% YoY. The growth was due to the Central Bank of Russia's implementation of monetary policy and economic stimulus via the Exchange.

Derivatives Market. Fee & commission income from the derivatives market increased by 56% YoY to RUB 1.25 bln. The trading volume amounted to 1.06 bln contracts representing RUB 50.0 trn, down 3% YoY. Open interest reached RUB 270.0 trn by YE 2012, up 24% YoY. During 2012 trading volume in some specific instruments increased significantly: volume of USD/RUB FX futures was up 91% YoY, OFZ futures were up 191% YoY.

Depositary and Settlement Services. Fees & commission income from depositary and settlement services increased 8% to RUB 1.92 bln.

Other Revenues. Other revenues increased by 56% YoY to RUB 1.11 bln. The biggest contributors to this line are revenues from the sale of IT services (RUB 528.15 mln, up 149% YoY) and revenues from the sale of information (RUB 404.00 mln, up 45%).

Interest & Other Finance Income. Interest & other finance income increased by 45% YoY to RUB 10.03 bln. This was primarily due to an increase in funds available for investments (RUB 285.86 bln as of YE 2012, up 6% YoY) and a more favorable interest rate environment.

Cash and Cash Equivalents. The Exchange cash position³ at YE 2012 totaled RUB 31.61 bln. The Exchange had no debt as of year-end 2012.

Expenses. Operating expenses in 2012 increased by 23% YoY to RUB 9.42 bln, driven mainly by growth in personnel expenses4. Significant savings came from lower spending on professional services (RUB 826.03 mln, a decrease of 26% YoY), rent and office maintenance as well as advertising and marketing costs (RUB 492.16 mln and RUB 273.49 mln, respectively, down 3% YoY for both costs lines).

Capital expenditures for the FY 2012 totaled RUB 1.81 bln, most of which related to renovation costs of a new office building for the National Clearing Centre and National Settlement Depository on Spartakovskaya street, which totaled RUB 1.22 bln.

The complete version of the Moscow Exchange consolidated IFRS financial statements for the year ended December 31, 2012 is available on the web site at the Investor Relations section.

 


¹ In accordance with International Financial Reporting Standards (IFRS).
² Financial results for 2011 reflect the consolidation of RTS starting from June 29, 2011.
³ Cash position is calculated as cash and cash equivalents plus financial assets minus the balance of market participants and distributions payable to holders of securities.
4 Personnel expenses increased due to the consolidation of RTS as of June 29, 2011 as well as the introduction of a stock option scheme for employees in 2012.