Warsaw Stock Exchange expands dividend policy to reflect expansion

By bne IntelliNews December 19, 2013

bne -

Warsaw Stock Exchange announced on December 18 that it will pay out dividends based on consolidated group profit starting from this year. The bourse is clearly keen to keep investors onside as it looks towards cementing itself a major role in the Central and Eastern European region by expanding the range of assets it trades.

The WSE said its management board has approved a resolution to change its policy on payouts starting in 2013. The statement said the group will strive to pay a dividend ranging from 30% - 50% of consolidated net profit of the WSE Group.

The existing dividend policy of the bourse, published in the company's prospectus in 2010, provided for a similar level of pay out, but only based on the net profit of the WSE itself. "The decision ... derives from advancing growth of WSE through acquisitions, as demonstrated among others by the take-over of the Polish Power Exchange in 2012," the statement reads.

The bourse, which is the biggest in Central Europe, and has succeeded in attracting listings from several major companies from CEE - in particular from Ukraine - paid out 50% of 2012 annual profit. WSE has seen an acceleration of business in the fourth quarter of the year as companies have rushed to float in the window provided by the delay of tapering by the US Fed.

Poland's largest waste recycler, Elemental Holding, was the latest to try its luck - making it the 22nd company to IPO on the bourse this year - on December 18, raising PLN61m. That rate of listings keeps the Warsaw exchange as the second busiest in Europe.

However, while earlier fourth quarter floats proved highly successful, those in December have struggled, as the volume of shares on offer has spiked, the worry over the effect on Polish equities of the government's pension reforms has grown, and expectations that the US central bank will trim its asset buying programme have ramped up.

Slovenia's Gorenje completed a planned SPO in Warsaw the same day, to add to its listing in Ljubljana. However, the white goods maker attracted less than €17m of the €45m it was hoping to raise. Market insiders said Slovenia's macroeconomic problems were a factor in putting off investors, according to Reuters.

Still, the disappointment is unlikely to push Warsaw's case to host the raft of privatisations planned by Ljubljana. Companies short-listed for sale by the Slovenian state include Telekom Slovenia, major bank Nova KBM, Adria Airways and Ljubljana airport.

Still, the WSE continues to push to take on a greater role in the region, and clearly hopes to keep its investors keen despite the uncertainties. "Since its new listing on Warsaw Stock Exchange, WSE has taken determined efforts to be a dividend-paying company. We want WSE to become even more attractive to investors in this regard," said CEO Adam Maciejewski.

The new policy, he notes, "will be a better reflection of the structure of our group with a growing importance of the subsidiaries. It is not unlikely that the contribution of the subsidiaries to the financial results of the exchange may increase further in the future, among others, due to a more proactive approach to growth by acquisitions."

The same day as the WSE announcement, Sweden's Vattenfall said it has started gas trading in Poland to take advantage of a market that it expects to grow quickly in the coming years, according to Reuters. The company's trading unit will be active on all standard gas products on the POLPX gas exchange, as well as in the over-the-counter market, Vattenfall said. It will also deliver gas at the German-Polish border.

"The start of our gas trading activities in Poland is a further step to expand our origination business in Central Eastern Europe," Frank van Doorn, the head of Gas Trading at Vattenfall said in a statement. "We expect a positive development of the Polish gas market and want to offer a better choice for big and midsize customers."

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