The Group is not dependent on any single supplier or service provider as the expenses of the Group per contractor (other than fees to PFSA) never exceed 10% of the Group’s total expenses.
Total operating expenses of the Group amounted to PLN 166.2 million in 2013, an increase of 11.9% (PLN 17.7 million) compared to PLN 148.5 million in 2012. Depreciation and amortisation, salaries and other employee costs, external service charges, rent and other maintenance fees, fees and charges increased while other operating expenses decreased in 2013. The increase of expenses compared to 2012 was also driven by the consolidation of PolPX Group expenses for all 12 months of 2013. PolPX is consolidated as of March 2012.
Operating expenses of the PolPX Group and BondSpot S.A. amounted to PLN 27.6 million and PLN 9.0 million in 2013 and PLN 22.4 million (consolidated as of March 2012) and PLN 8.4 million, respectively, in 2012.
Consolidated operating expenses of WSE Group and structure of operating expenses in 2012 and 2013 and in selected quarters of 2012 and 2013
| PLN'000, % | Three-month period ended | Year ended 31 December | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 31 December 2013 | % | 30 September 2013 | % | 31 December 2012 | % | 2013 | % | 2012 | % | |
| Depreciation and amortisation | 7 203 | 16% | 6 921 | 17% | 4 203 | 11% | 25 723 | 15% | 16 564 | 11% |
| Salaries | 11 701 | 26% | 11 596 | 29% | 13 304 | 33% | 51 915 | 31% | 47 814 | 32% |
| Other employee costs | 3 003 | 7% | 2 631 | 7% | 3 018 | 8% | 12 121 | 7% | 12 089 | 8% |
| Rent and other maintenance fees | 2 677 | 6% | 2 661 | 7% | 3 022 | 8% | 10 572 | 6% | 9 905 | 7% |
| Fees and charges | 5 612 | 12% | 5 441 | 14% | 3 963 | 10% | 20 770 | 12% | 19 452 | 13% |
| including: PFSA fees | 4 956 | 11% | 4 578 | 11% | 2 585 | 7% | 18 249 | 11% | 16 823 | 11% |
| External service charges | 12 721 | 28% | 9 191 | 23% | 9 327 | 23% | 36 242 | 22% | 33 718 | 23% |
| Other operating expenses | 2 191 | 5% | 1 800 | 4% | 2 881 | 7% | 8 881 | 5% | 8 950 | 6% |
| Total | 45 108 | 100% | 40 241 | 100% | 39 717 | 100% | 166 224 | 100% | 148 490 | 100% |
The Group is not dependent on any single supplier or service provider as the expenses of the Group per contractor (other than fees to PFSA) never exceed 10% of the Group’s total expenses.
Depreciation and amortisation: Depreciation and amortisation was PLN 25.7 million in 2013, an increase of 55.3% (PLN 9.2 million) compared to PLN 16.6 million in 2012. The increase in depreciation and amortisation in 2013 compared to 2012 was mainly driven by the completed implementation of UTP as of April 2013.
Quarterly depreciation and amortisation was PLN 7.2 million in Q4 2013, as compared to PLN 6.9 million in Q3 2013 and PLN 4.2 million in Q4 2012. The increase of depreciation and amortisation in the quarters of 2013 under review compared to 2012 was driven by the depreciation and amortisation of UTP as of April 2013.
Depreciation and amortisation of WARSET ended on 31 December 2012 and depreciation and amortisation of UTP began in April 2013. The depreciation and amortisation period of the new trading system was originally defined as 5 years for property, plant and equipment and 8 years for intangible assets. The expected useful life of UTP’s intangible assets (licences) was revised in Q3 2013. As a result, the depreciation/amortisation period of the licences was extended prospectively as of Q3 2013 from 8 to 12 years. Consequently, the quarterly depreciation and amortisation charge for UTP decreased by nearly PLN 1.0 million compared to Q2 2013 (quarter-on-quarter decrease from PLN 4.2 million to PLN 3.2 million). Due to the shorter depreciation period of the fixed assets of the trading system, monthly depreciation charges will decrease to ca. PLN 0.6 million after 5 years.
Salaries and other employee costs: Salaries and other employee costs of the Group amounted to PLN 64.0 million in 2013, an increase of 6.9% (PLN 4.1 million) compared to PLN 59.9 million in 2012. Salaries and other employee costs in the periods under review were driven mainly by the following factors:
- settlement of the cost of medical services of WSE employees in 2012 for previous years at PLN 2.8 million;
- costs due to the capitalisation of the cost of the UTP project at PLN 3.6 million in 2012 and PLN 1.3 million in 2013;
- lower provisions against pension benefits and jubilee awards of WSE employees set up on an actuarial basis in 2013 (down by PLN 0.6 million);
- lower cost of the provision against unused holiday leave of WSE employees in 2013 (by PLN 0.8 million);
- lower costs of WSE employee bonuses, down by PLN 1,6 million;
- recognition of the cost of non-compete agreements of former WSE Management Board Members at PLN 0.8 million;
- higher costs of severance pay and employee benefits recognised in 2013 (by PLN 0.9 million);
- higher salaries and other employee costs due to changes on the WSE Management Board;
- salaries and other employee costs of the PolPX Group consolidated by the Group for 10 months of 2012 (consolidated as of March 2012), an increase of PLN 1.9 million. The total salaries and other employee costs of the PolPX Group in 2013 and 2012 (for all 12 months) were stable (ca. PLN 14.9 million);
- increase in salaries of WSEInfoEngine mainly due to implemented development projects;
- a litigation provision created in December 2013 against payments to the former Management Board of BondSpot at PLN 0.3 million.
Quarterly salaries and other employee costs increased by 3.4% (PLN 0.5 million) in Q4 2013 compared to Q3 2013. The increase of costs was mainly driven by an increase of salaries of WSE (by PLN 0.3 million), an increase of costs of BondSpot (by PLN 0.3 million) and a decrease of costs of the PolPX Group (by PLN 0.3 million).
Salaries and other employee costs decreased by 9.9% (PLN 1.6 million) in Q4 2013 compared to Q4 2012. The decrease of salaries and other employee costs compared to Q4 2012 was mainly driven by the recognition of a one-off increase in the cost of settlement of medical packages for WSE employees at PLN 2.8 million and capitalisation of the cost of the UTP project of PLN 1.0 million in Q4 2012.
Employment in WSE Group
| As at | |||
|---|---|---|---|
| # FTEs | 31 December 2013 | 30 September 2013 | 31 December 2012 |
| WSE | 205 | 202 | 209 |
| Subsidiaries | 134 | 131 | 115 |
| Total | 339 | 333 | 324 |
Source: Company
Rent and other maintenance fees: Rent and other maintenance fees of the Group amounted to PLN 10.6 million in 2013, an increase of 6.7% (PLN 0.7 million) compared to 2012. The increase in costs in 2013 was mainly a result of the business expansion of WSE and the lease of additional space for the IT infrastructure.
Quarterly rent and other fees amounted to PLN 2.7 million in Q4 2013, as compared to PLN 2.7 million in Q3 2013 and PLN 3.0 million in Q4 2012. The increase in costs in Q4 2012 was driven mainly by the settlement of the cost of the project of leasing additional space for the IT infrastructure.
Fees and charges: Fees and charges stood at PLN 20.8 million in 2013, an increase of 6.8% compared to 2012. The main component of the Group’s fees and charges are fees paid by WSE to the Polish Financial Supervision Authority (PFSA), which stood at PLN 18.2 million in 2013 and PLN 16.8 million in 2012.
Quarterly fees and charges amounted to PLN 5.6 million in Q4 2013, an increase of 3.1% compared to Q3 2013. The increase in fees and charges was driven mainly by higher fees paid by WSE to PFSA (by PLN 0.4 million).
Fees and charges in Q4 2013 increased by PLN 1,6 million (41,6%) compared to Q4 2012 mainly due to higher fees to PFSA (up by PLN 2,4 million) and recognition of VAT adjustments for 2011-2012 at ca. PLN 0.6 million in Q4 2012.
The fees in the last quarter of the year are mainly due to the method of payment of fees to PFSA. In 2012, the monthly advances paid by WSE were PLN 1.6 million higher than the portion of the PFSA budget to be covered by WSE. In 2013, the advances were PLN 0.8 million short. The surplus or shortage is deducted from or added to fees and charges in Q4 of the year.
According to a PFSA letter received in January 2014, which sets the amount of advance fees to be paid to the regulator by entities operating on the capital market, the fees will be PLN 5.2 million in each of Q1 and Q2 2014.
External service charges: External service charges of the Group amounted to PLN 36.2 million in 2013, an increase of 7.5% (PLN 2.5 million) compared to 2012.
The increase of external service charges in 2013 was driven by the following factors:
- consolidation of PolPX group costs for all 12 months of 2013: the PolPX costs consolidated by the Group in 2013 were PLN 1.8 million higher than in 2012 including higher PolPX cost of modification of the trading system and cost of advisory and legal services;
- higher cost of WSE (by PLN 0.4 million) including higher cost of advisory and legal services and higher costs of data transmission lines and software modifications, as well as lower cost of promotion, education and market development, and lower cost of software and hardware maintenance;
- higher cost of WSEInfoengine (by PLN 0.4 million) due to implemented development projects.
The cost of WSE’s sponsorship was PLN 0.45 million in 2013 compared to PLN 0.65 million in 2012. The cost of sponsorship is a part of the cost of promotion, education and market development.
Quarterly external service charges increased by 38.4% (PLN 3.5 million) in Q4 2013 compared to Q3 2013, mainly due to higher costs of software maintenance and modification, costs of advisory and legal services, and costs of promotion, education and market development. External service charges increased by 36.4% (PLN 3.4 million) compared to Q4 2012 mainly due to WSE’s and PolPX’s higher costs of software maintenance and modification, costs of advisory and legal services, and costs of data transmission lines.
Other operating expenses: Other operating expenses of the Group amounted to PLN 8.9 million in 2013, a decrease of 0.8% compared to PLN 9.0 million in 2012. Other operating expenses in 2013 compared to 2012 were driven mainly by WSE’s lower costs of business travel and lower costs of membership fees, as well as the consolidation of the PolPX Group’s other operating expenses for 12 months of 2013. PolPX Group contributed PLN 2.7 million in 2013 and PLN 2.1 million in 2012 to the costs of the Group.
Quarterly other operating expenses amounted to PLN 2.2 million in Q4 2013 as compared to PLN 1.8 million in Q3 2013 and PLN 2.9 million in Q4 2012. The decrease of other operating expenses compared to Q4 2012 was driven mainly by WSE’s lower costs of low-value software, lower costs of business travel, lower costs of membership fees and lower costs of electricity.
Other operating expenses mainly included costs of materials and electricity, business travel, professional organisation fees, property insurance and conferences.