Moscow Exchange announces 3Q 2015 results

Moscow Exchange (MOEX) today announces its financial results for the third quarter (3Q) 2015 according to International Financial Reporting Standards (IFRS). Strong earnings were driven by growth across our highly diversified business, particularly the FX, Money, Derivatives and Bonds Markets, as well as strong interest income growth.

KEY 3Q15 FINANCIAL HIGHLIGHTS

• Total operating income rose 52.9% YoY to RUB 11.17 bln.
• EBITDA increased 66.9% YoY to RUB 9.14 bln; the EBITDA margin was 81.8%, versus 74.9% in 3Q14.
• Operating expenses grew 11.8% YoY to RUB 2.49 bln.
• Net profit increased 71.7% YoY to RUB 6.98 bln; earnings per share (EPS) increased 72.0% YoY to RUB 3.13.

KEY CORPORATE HIGHLIGHTS

• The Board approved a new long-term dividend policy, raising the payout floor to 55% of net profit.
• New indices of publicly-traded companies with a government ownership stake launched to create two new equity market benchmarks.
• A Memorandum of Understanding (MoU) was signed with China Financial Futures Exchange (CFFEX) with the aim of strengthening bilateral ties.
• Russia's first CPI-linked federal government bonds (totalling RUB 52.0 bln), known as OFZ-Ins, were placed on Moscow Exchange by the Finance Ministry.
• Moscow Exchange was recognized as Russia"s best company in investor relations in the mid-cap category in the Extel Pan-European 2015 survey.
• The RTS Index, Russia's main dollar-denominated stock market benchmark, celebrated its 20th anniversary on 1 September. The Index was launched on 1 September 1995 with a base level of 100 and opened on 1 September 2015 at 833.60.

EVENTS OCURRING AFTER THE REPORTING PERIOD

• Moscow Exchange hosted more than 300 emerging markets finance professionals at a conference in New York on October 7 that focused on recent upgrades to Russia's market infrastructure and the many trading and investment opportunities available on the Exchange.

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

"In the third quarter the Exchange achieved significant top-line growth. Combined with our focus on strict cost discipline, it enabled to achieve an excellent profitability at the EBITDA level. Significant growth of interest income was driven to a large degree by high rouble interest rates. Of particular importance for us is growth in fee and commission income even as volatility on the market has declined year-on-year. This proofs the Exchange adapt well to  actual market conditions, and that reliable trading and clearing infrastructure and our new products and services are in demand by clients."

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

"In the third quarter Moscow Exchange delivered excellent financial results thanks to higher fee and commission income across most of our markets, led by FX, commodity derivatives, REPO with the Central Counterparty as well as increased primary market bond issuance. As interest rates decline we expect to see normalization of interest income, which rose in the third quarter and continues to account for a large proportion of our operating income."

FINANCIAL HIGHLIGHTS

ANALYSIS OF 3Q 2015 FINANCIALS

Total Operating Income. Operating income increased 52.9% YoY to RUB 11.17 bln. Revenue growth for the quarter was driven by higher income from the FX and Money Markets, derivatives, bonds and depository & settlement services. Additionally, interest income increased on the back of higher interest rates and a larger securities portfolio.

Securities (Equities & Bond) Market. Fee & commission income from the Equities Market declined 1.8% YoY to RUB 389.7 mln. Equities trading volumes contracted by 1.5% YoY to RUB 2.22 trn. The equity market"s total capitalisation was RUB 28.01 trn (US$ 425.50 bln) as of 30 September 2015. Fee & commission income from the Bond Market grew 39.3% YoY to RUB 298.0 mln driven by strong primary placement activity. Bond trading volumes increased 21.8% YoY to RUB 2.77 trn. Fees from listings and other services declined 10.1% YoY to RUB 61.0 mln.

FX Market. Fee & commission income from the FX Market increased 52.9% YoY to RUB 1,249.0 mln, while trading volumes rose 70.0% YoY to RUB 94.99 trn, driven by increased FX-rate volatility. Spot trading volumes grew 77.6% YoY, while swap trading volumes increased 66.7% YoY thanks to continued strong demand for liquidity-management services from market participants.

Money Market. Fee & commission income from the Money Market increased 27.4% YoY to RUB 976.5 mln supported by the recognition of the fee and commission income which was deferred in 1H2015. Total trading volume, including repo transactions and the credit & deposit market, contracted by 4.8% YoY to RUB 49.46 trn. Trading volumes for REPO with the Central Counterparty continued to grow rapidly, increasing 2.6 times YoY. In 3Q15 REPO with the Central Counterparty comprised 34% of total repo transactions.

Derivatives Market. Fee & commission income from the Derivatives Market grew by 20.1% YoY to RUB 437.1 mln. While trading volumes grew 125.5% YoY to RUB 29.95 trn (from 324.2 to 501.9 mln contracts), open interest rose 5.7% YoY to RUB 481.7 bln at the end of 3Q15. Due to increased FX-rate volatility, futures on FX instruments comprised 72.6% of total futures trading volumes versus 49.8% in the same period last year. The share of futures on equity indexes declined from 41.9% to 20.2% of total futures trading volumes. Options accounted for 3.4% of Derivatives Market trading volumes.

Depository and Settlement Services. Fee & commission income from depository and settlement services increased 8.4% YoY to RUB 830.2 mln. The volume of assets on deposit at the National Securities Depository (NSD) increased to RUB 29.48 trn as of the end of 3Q15 from RUB 28.17 trn as of the end of 2Q15, and averaged RUB 29.26 trn for 3Q15.

Net Interest & Other Finance Income. Net Interest & other finance income increased by 82.1% YoY and totalled RUB 6.58 bln. The average amount of funds available for investment was RUB 1,088.05 bln in 3Q15. Net Interest & other finance income accounted for 58.9% of the Exchange's operating income.

Cash Position. The Exchange's own cash position totalled RUB 68.80 bln as of 30 September 2015. The Exchange had no outstanding debt as of the end of 3Q15.

Expenses. Operating expenses increased by 11.8% YoY in 3Q15 to RUB 2.49 bln. Personnel costs grew by 10.0% YoY to RUB 1.32 bln and remained the major cost item, comprising 53.0% of total costs. Administrative and other operating expenses grew by 13.9% YoY driven by higher spending on maintenance of equipment and intangible assets due to commissioning of new IT facilities and spending on IT systems maintenance and improvements, as well as depreciation of property and equipment. . Lower spending on advertising and marketing (-43.2% YoY) and taxes other than income tax (-8.8% YoY) helped to keep administrative expenses growth below inflation.   

Capital expenditures were RUB 550.7 mln in 3Q15, largely spent on software development and improvements. For 9M2015 capital expenditures amounted to RUB 1.60 bln.

The complete version of Moscow Exchange's consolidated condensed interim financial statements for the nine month period ended 30 September 2015 is available in the Investor Relations section of our website.

***

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 (NCC Clearing Bank), 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 equities trading volumes, and also among the 10 largest exchange platforms by bonds and derivatives trading. Securities of 748 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. Moscow Exchange held the initial public offering of its shares on 15 February 2013 (ticker MOEX).

Disclaimers

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.

For further information, please contact the Public Relations Department at (495) 363-3232.