Good afternoon and good morning, everyone, and welcome to Warsaw Stock Exchange Q1 2025 results call. Let me introduce today's speakers. We have with us the CEO of Warsaw Stock Exchange, Tomasz Bardziłowski. We have our CFO, Marcin Rulnicki, and also the CEO of Commodity Exchange, Piotr Listwoń. And I'm Michal Kuzawinski , Head of Strategy and Investor Relations. You will have an opportunity to ask questions after a short presentation. If you would like to ask a question and you've dialed in, please press star two on your telephone keypad to enter the queue. Or if you've joined us online, you can either type your question in the box provided or request to ask a voice question. Now, without further ado, let me pass the line to Tomasz.
Hello everybody and welcome to our first Q2 earnings call. You'll be proud to say that first quarter 2025 was a record quarter in many areas. First, we have delivered record high revenues of the group, which amounted to PLN 132 million. This was an increase of almost 12% on a year-on-year basis. This growth was driven by an exceptional performance of our financial market segment, with revenue growing by almost 15% year-on-year, but also with the solid performance of the commodity segment, with revenue growing by 9% year-on-year. The growth in the financial segment was supported and driven by cash equity turnover. The cash equity turnover went up by 35% year-on-year in the first quarter and also was supported by record high performance of our main indices, which went up by over 20% year-to-date in the first quarter.
You will see also this good performance continued in the second quarter so far. In the first quarter, we had a good cost control. Operating costs in the group went up by 5% year-on-year, which resulted in a decline in cost-income ratio to below 60% from almost 70% a year ago. You may notice a change in accounting treatment of a fee to Polish Financial Supervisors. Previously, in the previous year, we booked the total fee in the first quarter, and now we evenly distribute the fee across all quarters. We obviously have adjusted the costs in the previous year, so you will see them on a comparable basis. In terms of the growth of EBITDA, we reported over 25% growth in EBITDA to almost PLN 55 million, and our consolidated net profit jumped by 28% to over PLN 15 million.
A few weeks ago, a board recommended to pay a dividend of PLN 132 million, which represents 89% of the consolidated net profit line, and it translates into PLN 3.15 per share, a 5% increase on a year-on-year basis. The dividend will be voted on at our upcoming shareholder meeting in June. In April, in terms of corporate events, we would like to note that in April, our Supervisory Board has appointed Ms. Dominika Niewiadomska-Siniecka as a member of the board responsible for legal regulatory affairs. Talking about what was driving our main engine of growth in the first quarter, i.e., turnover in cash equities, you see here that in Euro terms, the turnover was up 38% on a year-on-year basis, and we've been a leading European exchange in terms of turnover growth.
We're also proud to say that we are a leading exchange in Europe in terms of liquidity, measured by velocity ratio, i.e., the turnover to market cap. Our velocity ratio amounted to 56% in the first quarter, which is a significant improvement compared to 40% in the fourth quarter of last year. Here we show the performance of our main indices year-to-date. You will see that the bull market rally has continued in April and also far in May, with our main indices going up by over 30% in global currency terms. We point out that this rally is not only limited to blue chips, to big 20 index companies, but also right now we also see a growth in stock prices in mid and small cap segment. Our mid, big, and small cap indices are also joining the rally.
You see here that also with the help of a stronger currency, we are number one market with 43% increase year-to-date in MSCI Poland. We also point out that even despite such exceptional performance, the evaluation of the market looks still relatively undemanding, with over 25% discount to MSCI emerging markets on a one-year forward P/E basis. Let me now comment on the performance in the primary market. In the first quarter, we saw the continuation of a breakthrough on the IPO side, with IPO of healthcare diagnostic services provider Diagnostyka worth PLN 1.7 billion. Especially, I wanted to say that we are very happy with the aftermarket performance of Diagnostyka. The stock is up over 60% year-to-date since the IPO price. We hope that more activity on the primary market will be visible in coming quarters in those equities.
In terms of our bond segment, we are pleased to see over 40% increase in the value of bonds introduced to our Catalyst market, improvement in the corporate segment, still quite solid value of issuance of the municipal bonds, and also a big improvement in the value of the secured mortgage bonds. Here we expect a continuation of those increases going forward. As I said, we expect a more active IPO market over the next quarters, especially in the upcoming season. Let me now pass to Marcin, to our CFO, to discuss in detail our financial results in the first quarter.
Good morning and good afternoon to all. As Tomasz said, it was a very solid, very good quarter, and we are very happy about the performance. The revenues went up 12%, and it was both due to financial market exceptional performance as well as commodity market. Details will follow in the next few slides, so let me not stop here. In terms of operating expenses, also we are very, very pleased with a 5.3% growth rate compared to Q1 2024. It shows good control over operating costs and is in line with our expectations. Technically, we changed the approach to recognition of the financial supervisor authority fee. That is the annual fee, and historically it used to be booked in Q1 in the whole amount, whereas from January 2025, we'll start recognizing it in a monthly installment over the whole year to reflect the nature of this cost.
All data in this presentation, including historical numbers, has been recalculated accordingly and is presented in comparable form. Due to very dynamic growth in revenues and reasonable growth in operating expenses, we can see that our operating performance was very good. Operating profit went up 28% and reached PLN 46 million in Q1 2025. EBITDA went up almost 26% and reached almost PLN 55 million. What happened below operating profit line? Better performance from financial activity due to lower financial costs mainly. We had a significantly higher share in profits of our associated companies. Here we mainly report the depository profits, and they were much better in Q1 2025 than the year before, mainly because of also very dynamic revenue growth together with good control over operating costs. At the end, more than PLN 10 million contributed from depository to our net results.
At the end, our net profit for the period was over PLN 50 million and went up 28% compared to the same quarter of last year. Again, very solid, very good results, and we are happy for this performance. A few words about revenues and revenue mix. Here we present trends per segment. As we mentioned before, the most dynamic growth we observed in the financial market, where the revenue from financial market grew by almost 15%, mainly in trading revenues from trading activities, and we will show details on the following slide. Also, the commodity markets showed very good performance with more than 9% growth compared to Q1 2024. As a result of these, we see a slight change in our share of revenue, which is not dependent on turnover.
In Q1 2025, it was 32.4%, and it went down by 1.5 percentage points compared to last year. Speaking about trading activity in the financial market, that is, let's say, the biggest part of our financial market segment revenue. You can see that in Q1 2025, it went up to PLN 56.4 million. The most dynamic growth was within the equity part of the trading activity. It was following the record high turnover that we had in equities in Q1 2025. It exceeded PLN 111 million in Q1 only. It was 35% higher than the year before. Following this, we had almost 29% growth in revenues from equities. In other classes of assets, we had a small decline in derivatives, stable revenue from debt, and other.
In other areas of the financial market segment, we saw reasonable growth in both information services, listing revenues, and also in our Armenia Stock Exchange. Without getting much into details, I would say that in listing revenues, we saw a growth in both listing fees and also fees for introduction. In Armenia, the growth is coming mainly from depository activity. Now, a few words about the commodity market. I will ask Piotr , the CEO of Commodity Exchange, to comment on this one.
Thank you. Revenues from the market trades on the commodity market in the first quarter reached PLN 23.5 million, which represents an increase of over 11% year-on-year and 30% quarter-on-quarter. Apart from the electricity, we recorded double-digit revenue increases in each segment of fees both on a quarterly and year-on-year basis. The decrease in revenues on the energy market is mainly due to the lower trading volumes of the forward markets, which, running without trading obligations, is more influenced by significant fluctuation in liquidity, which also translated into the lower contracting of yearly instruments in this period. Natural gas trading in the first quarter amounted to 39 % in total, so an increase of over 40% year-on-year and 10% quarter-on-quarter. These bond markets had a large share in the higher trading volumes, reaching a record level of 12 TWh, which is an increase of 77% year-on-year and over 25% quarter-on-quarter.
We are very happy with the activity of the gas market participants in the recent months and the upward trend that we are also observing in the current quarter. Regarding the property rights market, we noted year-on-year increase in the trade of renewable energy property rights by over 30%, which should be connected to the increased obligation to redeem green certificates to 8.5% in 2025. In 2024, it was 5%. Going next to the clearing and settlement revenue, we recorded in the first quarter an increase year-on-year of almost 9%, amounted to PLN 13.2 million. These are due to the higher trading volumes and transactions settled in IBIT, our clearing house. All the transactions which are executed on the TGE. We noted stable revenues in the registers when comparing year-on-year basis.
In quarterly comparison, we see an increase in revenues, but this is primarily related to the fact that rent generation in the autumn and winter period is lower than in the first quarter. Also, trading companies and some Dutch logistics customers are in the process of purchasing green certificates and energy efficiency certificates in order to redeem them by the 30th of June for the previous year.
Okay. Now, let's have a look at the operating expenses. The growth here was mainly driven by higher personnel expenses, which went up by 7.6% compared to Q1 2024. Two main reasons for that. The first reason is that the number of FTEs in the group went up by 13 full-time employees. This growth is mainly coming from the mother company Warsaw Stock Exchange, where we strengthened the teams, mainly the teams which are involved in the IT-related operations. The other reason is that we booked higher provision for variable salaries in Q1 2025 as a result of better performance that we observed in the first quarter of this year. Two main reasons for this growth. External services line, and here we maintain more or less the trends that we observed already in previous quarters.
Stable services in IT with a decline in advisory and other services in Q1 compared to the previous year. What is also worth mentioning here is growth in depreciation and amortization line, over PLN 1 million up here. The reason is additional software solutions, which we implemented end of last year in our commodity exchange. Also, we started the amortization of the IP to our platform that is used by Warsaw Stock Exchange by a subsidiary. This is the platform for dynamic investment management. The two new assets generated additional amortization compared to the previous year. Due to good cost control and good revenue growth that we observed in the last quarter, you can see that cost-income ratio went down to below 66%. This is the lowest level for the last three years. We are very happy about it.
It is fair to say that maintaining this growth rate in operating expenses in the following quarters may be a challenge. We already know about additional expenses, which we will have to incur in the remaining part of the year. Also related to big projects, we are progressing with including the WASP system and also the accounting system that we are implementing. The majority of costs around these systems are capitalized, but those which are not qualified for capitalization incur our operating expenses. We should expect a higher growth rate in operating expenses in the coming quarters as a message. Capital expenditures. The number for Q1 2025 seems high, PLN 24 million, over PLN 24 million, and 62% up compared to Q1 2024. This is something that we expected, and we also communicated already in the Q4 2024 conference.
Because just to remind you, at the end of the year, we had a number of deliveries, especially of IT-related hardware, which were conducted before the end of the year, but were not paid for. Practically, we paid for these deliveries in the first weeks of 2025. This is something that, let's say, additionally increased capital expenditures for equipment in the first quarter of 2025. Intangible assets are pretty much in line with our expectations. In this line, you can also find a part of cost related to WASP development, transaction platform development, which, let's say, goes in line with our expectations. Looking at a longer perspective, when you compare 2024 to the last 12 months ending in March 2025, you can see right now the growth of 17% due to this higher CapEx in Q1.
However, it's also fair to say that we expect the same trend in the remaining quarters of the year. At the end, we expect that capital expenditures in 2025 should be significantly higher than in 2024. A few words about liquidity and cash flow. No surprises here. In this table, we are also comparing the last 12 months ending March and the last full year. In LTM March 2025, we had very strong operating cash flow, almost PLN 160 million. It represents more than 90% of our EBITDA. Our cash conversion of our result is at a pretty high level. We had slightly higher CapEx because of the reasons that I mentioned on the previous slide. Still, even after deducting this higher CapEx, our free cash flow remains higher, better than in 2024 full year. It's almost PLN 93 million.
Liquid assets on our balance sheet end of March were more than PLN 455 million. Pretty high numbers, pretty safe liquidity position. It, let's say, also supports our dividend planning. About dividends, I will remind you on this slide. In April, the management board recommended the distribution of PLN 132 million from the profit and reserve capital to our shareholders. This translates to PLN 3.15 gross per share. 5% up year-over-year. The dividend yield at the date of announcement of 6.6%. This is a little bit more than we promised in our dividend policy because we are declaring basically 60-80% of consolidated net profit to be distributed every year. Here you can see it's almost 89%.
We also mentioned that when communicating the strategic development directions that in the years when we can afford it, we will try to exceed this 80% promise. This is the case. We propose the dividend date 23rd July and the payment date on 6th of August. The Supervisory Board positively reacted to our recommendation. Right now, we are waiting for the formal decision of the shareholders.
Let me now comment on the outlook for the remaining quarters of this year. The outlook remains positive in terms of financial markets, cash equities. We still see relatively high activity in April due to increased volatility. Our turnover on our main market increased by almost 15%. We also see that so far in May, in the first half of May, the year-on-year growth is over 20% in terms of turnover on cash equities. In terms of commodity market, let me pass to Piotr to comment briefly about the outlook for the coming quarters.
Sure. Having in mind that the gas in the energy mix in Poland is growing, the role of the gas is growing. We expect that the market turnover should be going up. We see this in our results in the first quarter. We forecast that it should go up for the further months of this year. The second thing we should have in mind is that the second quarter of each year is seasonal higher contracting and redemption of the green certificates. It should be also noted in respect of the revenues of the second quarter.
Thank you, Piotr. In terms of operating costs, we expect higher year-on-year cost dynamics in coming quarters due to several factors. First, we have higher development spending, especially for the new trading platform, which will be launched on the 10th of November this year. Secondly, due to the new financial accounting system that we will launch in mid this year. Also due to a base effect, just to remind you that we have started our cost reduction program in the second quarter of last year. So there's our base of comparison. In terms of CapEx, we have already talked about that, that this year CapEx is expected to become higher than last year. This is mainly related to the launch of the new trading platform. We would expect that in the following years, 2026, and so on, the CapEx will decline to more normal levels.
Also, we'd like to point out and stress that we are quite positive in terms of midterm growth factors. We see a big focus in terms of the development of the capital market, both at the European level and also here at the domestic level. We should be a big beneficiary of those structural changes and structural positive trends.
Thank you. With that, we are ready to take questions.
Thank you. Thank you very much. Just a reminder on the question and answer section. If you would like to ask a voice question and you are connected via the telephone, please press star two on your keypad. That is star two . If you are connected via the web, you may also ask a voice question or send your question as a text. We see our first voice question from Miguel from Wood & Co. Please go ahead. Your line is now open.
Hi. Thank you. Congratulations on the strong results and thanks for the presentation. I would like to start maybe with TGE. Two questions for Piotr, if I may. Is there any particular reason why we are seeing record high turnover on the gas spot market? I also noticed that in April, forward transactions in gas were very high. If you can just provide some color on this, it would be appreciated. Has this been a consequence of any changes that you've implemented, or is this just pure market function?
Sure. You would like to ask a specific question, or you want me to answer the first one?
No. If you can answer that question, it would be appreciated.
I just mentioned just a couple of minutes ago that the gas market is growing in Poland. We are expecting—I don't know if you can hear me well.
I also can hear myself typing. Yeah. I do not know if you could.
Okay. The growing role of gas in the energy mix in Poland is growing. This is the first thing. There are lots of plans for creating new power plants basing on the gas. As you may know, physically, it takes about three, four years to build the generation that would be based on the gas. Having in mind that the lifetime of the coal power plants is pretty short now, within three, four, five years, they'll be at the end of their life. The Polish government is looking for some new possibilities. We found that very good and stable production would be from the gas. We see a lot of contracts that our major gas company in Poland, ORLEN, is buying from the LNG. That might be also those contracts could be sold on the Polish market, on TGE.
This is the case that we can see the growing numbers of trades on the forward connectivity contracts, but also on the spot market, which is the we noted record on the spot market leveling amounting to 12 TWh in the first quarter. It is because that is really good for TGE and for the market and the competition is that for those power plants that will be basing or are already basing on the gas market, on the gas source, mostly they are contracting on the exchange. Mostly, they are contracting on the spot. Now we are at the time when renewable sources are generated, the power from renewable sources, but basing on the weather conditions. When the sun is not shining and the wind is not blowing, then we need to have something instead.
We find that the gas is a really good example of the source that could be used. Most of the power plants are contracting on the gas market that we are running. This is the case that we have bigger volumes, and we expect that the volumes will stay with us and will be also higher in the future.
Okay. Thank you. Also, in terms of revenues from property rights, would you say this is close to the run rate for the next quarters?
Yes. I mentioned that the second quarter is the time of redemption of the green and efficiency certificates. It is seasonal that the second quarter is usually high in the revenues and also in the volumes. I expect that the second quarter will be as good as last year or even more because we already have the obligation to redemption of those green certificates a little bit higher than it was last year. I expect that it will be also bigger volumes and also revenues coming from those goods.
Right. For the second half of the year, do you see Q1 as sort of the run rate for those quarters?
As I just said, the second quarter will be the biggest one, probably, because of the period of redemption. However, in terms of trading, I expect that the volumes should be bigger than last year because of the obligation. In 2024, the obligation to redeem the green certificates was at the level of 5%. For 2025, the level was increased to 8.5%. So we expect that the volumes should be higher than in last year.
Got it. Got it. Thanks a lot. Now, maybe in terms of OpEx, just general question. Where would you say the yearly increase would land for 2025? I understand that moving forward, it's going to be a bit higher growth in the next quarters. On a yearly basis, where would you see that OpEx is landing?
Let me take this one. I think in our strategic direction that we announced end of last year, we defined that our compound annual growth in OpEx should not exceed 6% in the period of three years, which were covered by this analysis. I think we should maintain it. Yes, we do not have any reasons to change. However, I think 2025 can be the most challenging of the three years. I would say that in the three-year period, we should still maintain stick to this 4-6% growth rate that we assumed. In 2025, we have our challenges, as we mentioned. There is maybe one more thing to consider here. Because in the same document, we also announced that our expected revenue growth rate is between 6-8%. Of course, we have limited control over it.
If our revenues allow us to spend a little bit more, I think we have good ideas how to invest in the development of our business and how to, let's say, maybe stimulate further growth in the future. Depending on the revenues, we may also in a controlled way decide to increase the operating costs and invest in the business development.
Got it. Got it. Thanks a lot. In which areas of the business would you consider spending a bit more if revenues allow?
I think we should consider investing a bit more in business development, creating new products, also maybe in promotion and marketing around Warsaw Stock Exchange. These are the areas where I can see potential to invest. Of course, we'll still maintain investing in IT-related teams and services. This is where we see also the need to increase spending, at least short term.
Okay. Thanks so much. Just one last question. This one a little bit more technical. Could you explain how the changing accounting policy related to the KNF fee changed the income recognized and booked coming from KDPW?
Yeah. That's actually a technical one, but a valid one. Actually, the depository, they were recognizing this fee over time already in the past. For presenting consolidated numbers, we had to adjust their numbers to our policy. Okay? What they were recognizing over time, we were changing and recognized in Q1 entirely. Now, due to the change in our policy, we had to consistently present their results. We, let's say, reversed what we did before. Yes? That's why you can see that this line changed as well in our comparable data. Looking for details of or detailed impact of these changes on our P&L, you can either refer to a separate slide, which we show in the appendix to this presentation. We also have a dedicated note in our financial statements that describes the impact.
Okay. Understood. Thank you so much. That's all from me. Thanks, guys.
Okay. Thank you. Thank you very much. Just another reminder for the rest of participants. If you would like to ask a voice question, please press star two on your keypad. If you are connected via the web, you can also ask a voice question or send your question as a text. Our next question is a text question from Usman Olubajo from Letko Brosseau . "Could you provide insights on the expected IPO activity for this year? Please share an update on new ETF developments, including any plans related to REITs and other products.
Of course, we are very happy with the extremely strong performance and aftermarket performance of the first IPO we had this year, Diagnostyka, with the share price up over 60%. Also with the record high level of our indices. So far this year, Warsaw Stock Exchange is the first performing market in the world. Of course, this draws attention of potential issuers. We hope that the IPO market will therefore be more active over the next few quarters. We would expect one medium-sized IPO in this quarter and then several other IPOs including, hopefully, a few larger ones by the end of this year.
I also would like to say that we are much more active right now in terms of contacts with the potential issuers, with the contacts and our initiatives related to private equity funds and various candidates, which may think about listing and IPOs on the Warsaw Stock Exchange.
Okay. Thank you very much.
Yes. Yes. In terms of ETFs, we now have 13 ETFs listed on the market. We expect the new ETFs to come to the market over, we hope, over the next few months. Here, in particular, we have high hopes with the dividend ETF, which is based on our index of highest dividend-paying companies, which will pay a cash dividend on a quarterly basis. We think that this could be very, very attractive for especially for retail investors. We've heard from our ETF providers that they are planning to introduce some other ETFs, including the ETF on Bitcoin, which we would expect to be launched this year.
Usman is also asking about any plans related to REITs.
In terms of REITs, we understand from various public statements by the government representatives that the legislation on REITs may be finalized this year. If so, we would expect the first IPO of REITs next year on the Warsaw Stock Exchange.
Okay. Thank you. Thank you very much. Just a final reminder. If you would like to ask a voice question, please press star two on your keypad. If you are connected via the web, you may also ask a voice question or send your question as a text. Just give a moment or so for any other questions to come in.
If there are no further questions, thank you, everybody, for joining the call. Thank you for listening. Thank you for your active participation. We are looking forward to speaking to you again during our Q2 results call in the summer. In the meantime, if you have any questions, please do not hesitate to reach out to us in the Warsaw Stock Exchange Investor Relations team. Thank you and goodbye.
Thank you.
Thank you.
Thank you. We are now closing all the lines.