Moscow Exchange announces 2Q 2015 results

Moscow Exchange (MOEX) today announces its financial results for the second quarter (2Q) 2015 according to International Financial Reporting Standards (IFRS). Strong earnings were driven by growth across our highly diversified business, particularly the Money Market, FX Market and Depository & Settlement Services.

KEY 2Q15 FINANCIAL HIGHLIGHTS

• Total operating income rose 50.7% YoY to RUB 10.18 bln.
• EBITDA grew by 66.4% YoY to RUB 7.95 bln; EBITDA margin was 78.1%, versus 75.3% in 2Q14.
• Operating expenses increased 12.5% YoY to Rub 2.66 bln. Cost to income ratio was 26.2%.
• Net profit increased 72.8% YoY to RUB 6.0 bln; earnings per share (EPS) increased 71.0% YoY from RUB 1.58 to RUB 2.70.

KEY CORPORATE HIGHLIGHTS

• Moscow Exchange paid a record dividend to shareholders of RUB 3.87 per ordinary share for a total of RUB 8.8 bln (a payout of 55% of IFRS net profit).
• Two IPOs were held on Moscow Exchange: United Wagon Company (MOEX: UWGN) raised RUB 9.0 bln and Credit Bank of Moscow (MOEX: CBOM) raised RUB 13.2 bln.
• 104 new bonds issues were placed, including government and corporate bonds totalling RUB 652 bln.
• Moscow Exchange expanded instruments for equities, bonds and repos trading and settlement. Among key enhancements was the migration of trading in OFZs to the T+1 settlement cycle with partial prefunding, which replaced T0.
• Moscow Exchange was recognized as the Russia"s best company in investor relations in the mid-cap category. The winners were determined by the independent in-depth Extel Pan-European 2015 survey.

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

"The strong results in Q2 again demonstrate that our business model is robust and can perform well in the current market environment. We posted the second-highest fee and commission income in the company's history and increased its share in total operating income. In recent months we hosted two IPOs that raised a combined RUB 22 bln and we rolled out a number of new products on our markets, including CPI-linked sovereign bonds and structured obligations. We also moved the sovereign bond (OFZ) market to T+1 settlement, the modern standard. The Supervisory Board adopted MOEX's inaugural Corporate Governance Guidelines, which bring us in line with international best practice and the Bank of Russia's recommendations for corporate governance. In the second half of the year, we will prioritize value-accretive initiatives such as developing our clearing function and the introduction of new Money Market products. We also see a great deal of potential in the fixed income products."

Evgeny Fetisov, Chief Financial Officer of Moscow Exchange, added:

"We are pleased to report another period of solid growth in Q2, including the second highest fee and commission income result in MOEX"s history. The Money Market, FX Market and post-trade services remained key growth drivers, all posting strong double-digit growth in fee and commission income. Lower volatility and falling interest rates saw the Fixed Income Market return to growth, with fee and commission income increasing by 22% YoY, driven by primary placements of both corporate and government bonds. We maintained our focus on cost control and were able to limit cost increases to below inflation, at 12.5%. This allowed us to post an EBITDA margin of 78.1%."

FINANCIAL HIGHLIGHTS

ANALYSIS OF 2Q15 FINANCIALS

Total Operating Income. Operating income was up 50.7% YoY to RUB 10.2 bln. Revenue growth for the quarter was driven by stronger net interest income amid higher interest rates as well as higher fee and commission income from the Money Market, FX Market, bonds, listings and depository and settlement services.

Securities (Equities & Bond) Market. Fee & commission income from the Equities Market declined 10.0% YoY to RUB 407.9 mln. Equities trading volumes decreased 10.2% YoY to RUB 2.3 trn. The equity market"s total capitalisation was RUB 27.3 trn (US$ 492.1 bln) as of 30 June 2015. Fee & commission income from the Bond Market grew 22.5% YoY to RUB 296.2 mln. Bond trading volumes increased 17.6% YoY to RUB 2.7 trn. Fees from listings and other services increased 37.3% to RUB 80.0 mln.

Foreign Exchange Market. Fee & commission income from the FX Market increased 35.2% YoY to RUB 1,004.9 mln, while trading volumes rose 41.5% YoY to RUB 74.7 trn. Spot trading volumes increased 35.9% YoY, while swap trading volumes were up 43.9% YoY, driven by continued strong demand for liquidity-management instruments by market participants.

Money Market. Fee & commission income from the Money Market increased 38.8% YoY to RUB 987.9 mln. Total trading volume, including repo transactions and the credit & deposit market, grew by 4.2% YoY to RUB 48.5 trn. Growth of fees and commissions significantly outperformed trading volume growth largely due to the stronger demand for repo transactions with longer maturity. This led to a lower number of REPO trades, which generated higher fees as the trade tenor is a basis for fees and commissions along with value traded. Trading volume of REPO with the Central Counterparty continued to grow rapidly, increasing 2.5 times YoY.

Derivatives Market. Fee & commission income from the Derivatives Market declined 4.1% YoY to RUB 321.7 mln. While trading volumes grew by 56.2% YoY to RUB 17.3 trn (348.3 mln contracts), open interest declined 17.1% YoY to 9.4 mln contracts at the end of 2Q15. Futures on FX comprised 66.8% of total futures trading volumes versus 40.8% in the same period last year due to higher FX-rate volatility, while the share of futures on equity indexes declined from 49.3% to 24.7% of total futures trading volume. The share of options in Derivatives Market trading volumes was 4.2% in 2Q15

Depository and Settlement Services. Fee & commission income from Depository and Settlement Services increased 19.0% YoY to RUB 873.9 mln. The volume of assets on deposit at the National Securities Depository (NSD) increased to RUB 28.2 trn as of the end of 2Q15 from RUB 27.4 trn as of the end of 1Q15, and averaged RUB 28.0 trn for 2Q15.

Net Interest & Other Finance Income. Net Interest & other finance income increased by 81.9% YoY and totalled RUB 5.9 bln. Funds available for investment averaged RUB 1,206.1 bln in 2Q15. Net Interest & other finance income accounted for 57.5% of the Exchange"s operating income.

Cash Position. As of 30 June 2015 the Exchange"s own cash position totalled RUB 63.7 bln and the Exchange had no outstanding debt.

Expenses. Operating expenses grew by 12.5% YoY in 2Q15 to RUB 2.7 bln. The major cost item remained personnel, which grew by 7.8% YoY to RUB 1.4 bln, driven mainly by higher social tax payments. Administrative and operating expenses grew by 18.2% YoY driven mainly by FX-linked expenses on the back of a weaker ruble as well as higher spending on professional services.

Capital expenditures were RUB 293.3 mln in 2Q15, which were largely spent on software development and improvements.

The complete version of Moscow Exchange"s consolidated interim condensed financial statements for the six month period ended 30 June 2015 is available at the Investor Relations section on our website.

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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 all 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 capitalization of securities traded, and also among the 10 largest exchange platforms by bonds and derivatives trading. Securities of over 740 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. Moscow Exchange held the initial public offering of its shares on 15 February 2013 (ticker MOEX).

Disclaimers

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