Moscow Exchange announces results for the full year 2015

Moscow Exchange (MOEX) today announces its financial results under International Financial Reporting Standards (IFRS) for the year ended 31 December 2015. Higher trading volumes on the FX, Bonds and Money Markets, as well as increased interest income coupled with strict cost control, helped the Exchange to deliver record financial results.

KEY FINANCIAL HIGHLIGHTS FOR 2015

• Net income increased 74.1% YoY to RUB 27.9 bln; basic earnings per share increased to RUB 12.5 from RUB 7.2;
• Operating income increased 51.3% YoY to RUB 46.0 bln;
• EBITDA increased 68.9% YoY to RUB 36.52 bln; the EBITDA margin was 79.4% vs. 71.1% in 2014;
• Operating expenses grew by 8.7% YoY to RUB 11.3 bln, well below Russia's average rate of inflation in 2015.

KEY CORPORATE HIGHLIGHTS OF 2015

• MOEX remained the main platform for Russian issuers to raise capital, with six equity placements (including four IPOs), 10 government bond issues and 312 corporate bond issues;
• The product offering was substantially expanded with the launch of on-exchange grain trading;
• MOEX continued to enhance market infrastructure with OFZ settlement switching from T0 to the more convenient T+1;
• MOEX further diversified its product line with the launch of new FX and index futures, as well as structured bonds;
• MOEX delivered on its strategy to attract domestic retail investors, with 88,000 individual investment accounts opened during 2015 (total 103,262 as of 1 March 2016) and significant growth in the number of individual traders on the FX Market (up 89% YoY) and Derivatives Market (up 31% YoY). 

EVENTS OCURRING AFTER THE REPORTING DATE

• MOEX completed its exit from one of its subsidiaries in Ukraine, PFTS Stock Exchange, and reduced its ownership in the other, Ukrainian Exchange. Negotiations to sell the remaining 23% stake in Ukrainian Exchange are underway.
• A new product, clearing participation certificates (CPCs), was launched on the Money Market. This gives participants greater flexibility to manage their collateral and therefore has the potential to increase liquidity. 

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

"Russia and the majority of other developing markets faced a number of serious challenges in 2015. These included negative economic performance and outflows of institutional money. In Russia this situation was complicated further by limitations on new capital markets borrowings.

"Despite all this, Moscow Exchange delivered record operational and financial results, which is a strong endorsement of the the company's business model and of the strategy adopted in 2015. It also underscores the significant demand for the products we offer.

"Commission income growth was driven mostly by increased trading volumes, as the Exchange barely increased its tariffs. Our new products, in particular repo with the CCP and precious metals trading, are making an ever-increasing contribution to revenue.

"We are pleased to note the growing share of domestic retail investors in the structure of on-exchange trading. Potential demand from Russia's retail market represents a great long-term growth opportunity for MOEX. International investors and traders, meanwhile, remain very active participants in our markets. We continue to focus both on growing the domestic investor base and also promoting the Russian stock market and local issuers in international capital markets.  

"Looking beyond Moscow Exchange's financial performance, I believe that we are meeting shareholders' expectations in other important areas. Both the corporate governance code we have adopted and recent updates to our long-standing dividend policy reflect our commitment to building trust and delivering value for our shareholders."

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

"2015 was a very successful year for Moscow Exchange. We continued to see volume growth across most asset classes, and launched new products and services to meet evolving customer needs. We benefited from a high interest rate environment in Russia, which had a positive effect on our interest income. The greatest contributions to the growth of our commission income came from the FX and Money markets as well as from depositary services. Overall, fee and commission income set a new all-time record for the full year. We remain committed to maintaining strict control over expenses, and were able to keep costs growth at below the rate of inflation for yet another year.                            

"Our investment case remains intact. We continue to grow our diversified business and return capital to shareholders by maintaining a high dividend payout. Today, Moscow Exchange has one of the broadest investor bases among Russian issuers and a free float of around 57%, the highest in the Russian market." 

FINANCIAL HIGHLIGHTS

ANALYSIS OF FULL YEAR 2015 FINANCIALS 

Total operating income. Operating income grew by 51.3% YoY to RUB 46.0 bln. Operating income growth was driven by healthy growth of fees and commissions (up 14.1% YoY) in the FX and Money Markets and Bonds, as well as an increase in interest income thanks to higher market interest rates and a larger investment portfolio.

Fee and Commission Income 

Securities (Equities & Bond) Market. Fee and commission income from the Equities Market declined 7.0% YoY to RUB 1.64 bln. Total trading volumes in 2015 were RUB 9.40 trn, down 8.6% YoY. The equity market's total capitalisation was RUB 28.8 trn (US$ 393.2 bln) as of year-end 2015. Fee and commission income from the Bond Market increased by 14.3% YoY to RUB 1.18 bln, mainly driven by solid primary placements. Issuance of government bonds (OFZs) grew by 359.3% YoY, while placements of corporate bonds set a new record of RUB 2.0 trn (up 5.9% YoY). Total trading volumes in 2015 reached RUB 11.2 trn, up 5.2% YoY.

Listing and other services fees increased 28.6% to RUB 451.5 mln. 

FX Market. Fee and commission income from the FX Market increased 27.0% YoY to RUB 4.3 bln. Trading volumes on the FX Market totalled RUB 310.8 trn, up 36.0% YoY. Due to elevated FX rate volatility, spot trading volumes rose 32.8% YoY, while swap trading volumes increased 37.6% YoY on the back of continued demand for liquidity-management products.  

Money Market. Fee and commission income from the Money Market grew by a solid 19.8% YoY to RUB 3.9 bln thanks to an increase in average repo trades maturity from 5.0 to 6.6 days. Total trading volumes on the Money Market including repo transactions and the deposit and credit market, grew 4.6% YoY to RUB 213.8 trn. Repo with the CCP continued to increase rapidly and grew by 166.6% YoY. Repo with the CCP accounted for 36.9% of total repo transactions. 

Derivatives Market. Fee and commission income from the Derivatives Market declined by 10.1% YoY to RUB 1.5 bln. Trading volumes in contract terms increased 17.4% YoY and amounted to 1.7 bln contracts with a total value of RUB 93.7 trn, largely driven by FX derivatives. Open interest reached RUB 590.0 bln as of year-end 2015, a 29.0% YoY increase. 

Depository and Settlement Services. Fee and commission income from depository and settlement services increased 8.7% to RUB 3.5 bln. The volume of assets on deposit at the NSD increased to RUB 31.69 trn as of 31 December 2015 from RUB 24.94 trn at the end of 2014, and averaged RUB 29.08 trn for 2015. 

Other fee and commission income. Other fees and commissions increased by 41.9% and amounted to RUB 1.37 bln. The biggest contributors to this line were revenue from the sale of market data and information services (RUB 688.4 mln, up 57.8%) and revenue from the sale of software and technical services (RUB 526.7 mln, up 6.2%). 

Interest & other finance income. Interest and other finance income increased 96.7% YoY to RUB 28.1 bln due to a significant increase in funds available for investments (daily average of RUB 1.15 trln in 2015 compared to RUB 700 bln in 2014) and higher interest rates in Russia.

Expenses. Operating expenses grew by 8.7% YoY to RUB 11.3 bln in 2015, well below the Russian inflation rate. Administrative and other expenses grew by 10.3% YoY to RUB 5.5 bln in 2015, mostly due to growth in amortisation of intangible assets and equipment and maintenance of intangible assets. Personnel expenses grew by 7.2% Y-o-Y to RUB 5.8 bln in 2015.

Cash and cash equivalents. Moscow Exchange's cash position¹ at year-end 2015 amounted to RUB 79.0 bln. The Exchange had no debt as of 31 December 2015.

Capital expenditures amounted to RUB 2.5 bln, of which RUB 2.1 bln was spent on equipment and software purchases & development.

Moscow Exchange's consolidated IFRS financial statements for FY 2015 are available on the Investor Relations section of the company's web site.

A webcast for the FY 2015 and 4Q 2015 IFRS Financial Results is scheduled for March 3rd at 6pm (Moscow Time).

¹Cash position is calculated as the sum of cash and cash equivalents due from financial institutions, investments available for sale and financial assets at fair value minus balances of market participants, distributions payable to holders of securities and loans payable.

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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 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 total volume of equities traded, and also among the 10 largest exchange platforms by bonds and derivatives trading. As of 1 March 2015 securities of 727 issuers are admitted to trading on the Equities and Bond 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, which was reorganized into an open joint stock company (OJSC) and was named Moscow Exchange. 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.