Oslo Børs VPS Holding ASA - 3rd Quarter 2016

Oslo Børs VPS Holding reports a profit of NOK 66 million for the third quarter of 2016 (NOK 73 million).

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

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

Reported revenue for the third quarter was NOK 205 million, which is NOK 7 million lower than in the third quarter of 2015. Revenue related to listing and registration was in total NOK 7 million higher than in the third quarter of 2015. Revenue related to trading and settlement was NOK 8 million lower and revenue from the mutual funds area was NOK 5 million lower. Revenue related to market data was in line with the same period last year.

Reported revenue for the first nine months of 2016 was NOK 5 million lower than in the same period in 2015. Revenue related to listing and registration was up NOK 5 million in total relative to the first nine months of 2015. Revenue related to trading and settlement was NOK 5 million lower while revenue from the mutual funds area was NOK 6 million lower. Revenue related to market data was NOK 2 million higher.

Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value amounted to NOK 119 million in the third quarter of 2016, an increase of NOK 6 million from the same period in 2015. Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value for the first nine months of 2016 were NOK 12 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, as well as to some non-recurring costs related to trading system projects at Oslo Børs in 2016.

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 of MNOK 16 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 ending its agreement with Percival CSD Partners and continuing some activities in its modernisation program.

Operating expenses for 2017 before capitalisation of internal costs, depreciation and amortisation are also expected to be in the order of NOK 470 million. This includes expenses in 2017 in relation to a MiFID II version of Millennium Exchange as well as expenses in relation to adapting VPS's systems to the EU's CSD Regulation (CSDR).

The Norwegian Government has proposed the introduction of a financial sector tax with effect from 2017. If the Government's proposal is adopted, it will lead to an increase of around NOK 12 million in salary and personnel expenses. The Government has as part of this proposed that the rate of corporation tax for the financial industry shall again be 25% in 2017.