Warsaw Bourse Doubles Dividend as Vienna Merger Talks End

The Warsaw Stock Exchange, central Europe’s biggest equity market, proposed to double its dividend next year as earnings improved on growing gas trading and after the operator dropped plans to merge with the Vienna bourse.

The dividend will rise to 2.4 zloty a share in 2015 and 2.6 zloty in 2016 as the state-controlled bourse changed its policy to pay out at least 60 percent of annual profit, compared with an earlier plan of 30-50 percent, it said in a regulatory filing late yesterday. Third-quarter profit rose 15 percent to 30 million zloty ($8.9 million) from a year earlier, it said in a separate statement today.

“The dividend may reach even 100 percent if it turns out we have no investment needs,” Chief Executive Officer Pawel Tamborski told reporters today. “Vienna was one of the reasons for raising dividend and we are currently seeing no acquisition targets that could help us expand as a financial hub.”

The Warsaw bourse ended merger talks with the Vienna operator in September, two months after Tamborski, a former deputy treasury minister, took the CEO post. The Polish operator decided to focus on expanding its trading in debt, derivatives and commodities to solidify its position as the largest market in the region.

Its shares surged 10 percent to 41.62 zloty at 11:52 a.m. in Warsaw, posting the biggest gain in four years and recouping this year’s losses. The exchange paid a dividend of 1.2 zloty per share this year.

Gas Trading

Third-quarter sales rose 13 percent to 77.9 million zloty from a year earlier, boosted by rising revenue from natural-gas trading, it said in the statement.

“The exchange reported a very strong set of numbers and attractive upgrade to the dividend policy,” Pawel Kozub, a Warsaw-based analyst at UniCredit SpA, said in a note. “The yield of 6%-7% over the next two years should be clearly appealing to investors.”

Gas trading soared to 58.9 terawatt-hours from 0.3 terawatt-hours a year ago as new regulation forced Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s dominant gas company, to sell some of the fuel via exchange and the bourse started intraday trading.

The bourse’s expansion envisages doubling 2013 earnings before interest, taxes, depreciation and amortization at 144 million zloty by 2020 and the company expects its average annual revenue growth at 7 percent in the period, Tamborski said.

The number of companies listed on the main market is to increase to more than 550 by 2020 from the current 466 and the exchange expects to list debt of about 1,000 companies on its Catalyst market by the end of the decade, he said.

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