Oslo Børs VPS Holding 2nd Quarter 2016

Oslo Børs VPS Holding reports a profit of NOK 82 million for the second quarter of 2016 (NOK 82 million).

A more detailed presentation by business areas is provided in the quarterly report (enclosed).

The second quarter was characterised by a somewhat higher level of activity in the primary market relative to the first quarter, while the level of activity in the secondary market was somewhat lower relative to the first quarter. 

Reported revenue for the second quarter was NOK 236 million, NOK 2 million higher than in the second quarter of 2015. Revenue related to listing and registration was in total NOK 2 million lower than in the second quarter of 2015. Revenue related to trading and settlement was NOK 5 million higher and revenue related to market data was NOK 1 million higher, while revenue from the mutual funds area was NOK 2 million lower. 

In addition, reported revenue for the first six months of 2016 was NOK 2 million higher. Revenue related to listing and registration was in total NOK 2 million lower than in the first six months of 2015. Revenue related to trading and settlement was NOK 3 million higher and revenue related to market data was NOK 2 million higher, while revenue from the mutual funds area was NOK 1 million lower.

Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value amounted to NOK 129 million in the second quarter of 2016, an increase of NOK 7 million from the same period in 2015. Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value for the first six months of 2016 were NOK 6 million higher than in the same period in 2015. The increase relates to VPS ending its agreement with Percival CSD Partners and continuing some activities in its modernisation program.

Net financial income for the second quarter of 2016 was down NOK 2 million, principally due to lower holdings of cash and cash equivalents and lower interest rates. Net financial income for the first six months of 2016 was down NOK 3 million.

Following an initiative by Oslo Børs VPS Holding, Oslo Børs instigated a process to have the Financial Supervisory Authority of Norway assess whether Oslo Børs VPS Holding's shares could be admitted to trading on Merkur Market, which is a multilateral trading facility (MTF). Oslo Børs has suggested measures to remedy potential conflicts of interest. The Financial Supervisory Authority of Norway's conclusion is that the shares should not be admitted to trading on Merkur Market on the grounds that this would be likely to weaken market participants' confidence in the marketplace and that such an arrangement could contribute to a lack of clarity regarding who actually has responsibility for supervision and control for the market. This rationale is thus the same as when the Ministry of Finance refused Oslo Børs VPS Holding's application to list its shares either on Oslo Børs or Oslo Axess in August 2012.


Earlier this year Statoil selected VPS to develop the system solution for its scrip dividend program which gives its approximately 92,000 shareholders the option to choose to receive their dividends in cash, shares, or a combination of the two. Development of the solution was carried out as a joint project by Statoil, DNB and VPS, and was intended to allow shareholders to use a simple and efficient electronic solution to choose to receive shares as dividends. With the agreement of Statoil, which is keen to contribute to standardisation and the development of industry solutions in the Norwegian capital markets, VPS will shortly be launching a standardised industry solution for scrip dividend programs that will be available to all companies registered in VPS. 

Operating expenses for 2016 before capitalisation of internal costs, depreciation and amortisation are expected to be in the order of NOK 470 million. The increase for 2016 relative to 2015 is due to non-recurring costs in connection with a new release of Millennium Exchange as well as to VPS continuing some activities in its modernisation program. VPS is working to adjust its underlying operating costs after the decision to end the agreement with Percival CSD Partners AS.

The Norwegian corporation tax rate is reduced from 27% for 2015 to 25% for 2016.
The Norwegian government intends to introduce a financial sector tax with effect from 2017. The tax will be a tax on the value added by the provision of financial services, and is to be seen in light of the sector's exemption from value added tax (VAT). The scheme's design is not yet known. A significant proportion of the services offered by Oslo Børs VPS Holding are financial services that are exempt from VAT.

The group's operating revenue varies in line with the level of activity in the securities market. Oslo Børs VPS is committed to offering a range of products and a pricing structure that are competitive and that encourage active use of the group's services. Oslo Børs VPS anticipates that its marketplace activities will continue to face intense competition, and it also expects increasing competition for the group's post-trade activities. Oslo Børs VPS will also in the future consider adjusting certain of its fees and prices, as well as further measures to improve the efficiency of its organisation and services for the benefit of its customers.