Montréal Exchange Press Release

Transcription

1 Montréal Exchange Press Release MX REPORTS IMPROVED PROFITABILITY FOR THE FIRST QUARTER 2008 HIGHLIGHTS Q1/2008 VS. Q1/2007 Revenues of $20.7 million compared to $21.9 million Strong performance in equity and index derivatives Adjusted net earnings of $8.0 million, up 5%; adjusted diluted earnings per share of $0.26 compared to $0.27 Net earnings of $8.4 million, diluted earnings per share of $0.27 Strong control over operating expenses with 4% decrease in expenses, excluding other items Cash of $128.7 million at quarter end Green light for the historic merger of the MX and the TSX Group, to create the TMX Group effective date: May 1, 2008 and election deadline: April 29, 2008 NOTE TO EDITORS: ALL REFERENCES TO EARNINGS PER SHARE HAVE BEEN RESTATED TO REFLECT THE THREE-FOR-ONE STOCK SPLIT THAT MX EFFECTED ON MARCH 15, ALL DOLLAR AMOUNTS IN THIS PRESS RELEASE ARE STATED IN CANADIAN DOLLARS. Montréal (Quebec), April 23, 2008 Montréal Exchange Inc. (MX) (TSX: MXX) announced today its financial results for the first quarter ended March 31, Revenues for the first quarter 2008 amounted to $20.7 million, compared to $21.9 million for the first quarter 2007, a decrease of 6% that is due primarily to the decline in market trading volumes. Net earnings reached $8.4 million, or $0.27 per diluted share, up 50% compared to the first quarter Adjusted net earnings (1), excluding other items and unrealized gains on foreign exchange on temporary investments, totalled $8.0 million or $0.26 per diluted share for the first quarter 2008, compared to $7.6 million or $0.27 per diluted share for the first quarter The increase in adjusted net earnings compared to the first quarter 2007 is mainly due to a decline in operating expenses and a rise in investment income, which more than offset the revenue decrease. Expenses in the first quarter 2008 decreased by 4% compared to the first quarter 2007, excluding other items. Revenues for the first quarter 2008, compared to those for the preceding quarter ended December 31, 2007, were up 6%. Net earnings rose 33% while adjusted net earnings increased by 14%. I am very pleased with MX s first quarter earnings and with the 41% increase in combined trading activities on the Montréal Exchange and the Boston Options Exchange platforms, commented MX President and Chief Executive Officer, Luc Bertrand. We have benefited from the very strong performance of index and equity derivatives, up 35% and 22% respectively, and built on our operating efficiency to limit the impact on our results of weak trading volumes for interest rate derivatives. It is also encouraging to see that the BAX, the Three-Month Canadian Bankers' Acceptance Futures contract, also posted a 22% increase in average daily trading compared to the preceding quarter.

2 From an organizational standpoint, MX has completed the regulatory process leading to the historic merger between the Montréal Exchange and the TSX Group and to the creation of the new TMX Group, added Mr. Bertrand. The MX team firmly believes in its growth potential within the new group. We are firmly committed to the future and to the idea of contributing to the development of a Canadian exchange group that will have unique resources to meet the needs of market participants, Mr. Bertrand concluded. MX announced on April 18, 2008 that the effective date of the combination with TSX Group Inc. will be May 1, This is subject to all customary closing conditions and follows the receipt of all required approvals. Furthermore, MX shareholders holding share certificates that wish to make an election with respect to the consideration to be received under the amalgamation must deliver a completed transmittal and election form to CIBC Mellon Trust Company by 5:00 p.m., Montréal time, on April 29, For complete information, please refer to the April 18, 2008 news release on MX website. The Q Quarterly Report is available on the MX website at and the SEDAR website at (1): Non-GAAP Performance Measures Adjusted net earnings, adjusted operating earnings, and ratios using these measures, including adjusted diluted earnings per share, are financial measures not recognized by or calculated in accordance with Canadian generally accepted accounting principles. MX defines adjusted operating earnings as operating earnings excluding other items which are described in MX s Management s Discussion and Analysis. Adjusted net earnings is defined as net earnings excluding other items (net of tax) and unrealized gains on foreign exchange on temporary investments (net of tax). For more information, please refer to the Management s Discussion and Analysis released today. Forward-Looking Statements This press release contains forward-looking information within the meaning of the Quebec Securities Act and the Ontario Securities Act. Forward-looking information often contains terms such as believe, anticipate, estimate, plan, expect, intend, may, will and similar expressions. This forward-looking information is based on current expectations, estimates, forecasts and projections about the industry in which we operate, as well as certain assumptions made by our management. Although we believe that the expectations and assumptions reflected in the forward-looking information are reasonable, forward-looking information involves known and unknown risks and uncertainties and is not a guarantee of future performance. Factors that could cause actual results to differ materially from those contemplated by this forward-looking information include, but are not limited to, risks associated with general market and economic conditions, evolving national and international competition, credit risks and clearing house risk, reliability of information systems and regulatory risks. We caution you that this list of factors is not exhaustive. The forward-looking information in this press release is subject to the risks identified in our periodic filings with the Canadian securities regulatory authorities. Given the uncertainty of forward-looking information, you are cautioned not to place undue reliance on this information. We disclaim any obligation to update any forward-looking information, except as may be required by applicable law. About Montréal Exchange Inc. The Montréal Exchange (MX) is the Canadian derivatives exchange. The MX offers trading in Canadian interest rate, index and equity derivatives. Clearing, settlement and risk management services are provided by an AA rated clearing house, the Canadian Derivatives Clearing Corporation, fully owned by the MX. Our integrated trading and clearing services are supported by a proprietary suite of exchange technologies, known as SOLA. The MX also has interests in: the Boston Options Exchange (BOX), a U.S. automated equity options market, for which MX is the technical operator; the Canadian Resources Exchange (CAREX), a new corporation created with NYMEX that is dedicated to developing the Canadian energy market; and the Montréal Climate Exchange (MCeX), a joint venture with the Chicago Climate Exchange, aiming to establish the leading market for publicly traded environmental products in Canada. For more information about the Montréal Exchange, please visit

3 CONSOLIDATED BALANCE SHEETS Assets March 31, 2008 December 31, 2007 Current assets: Cash and cash equivalents $ 71,136 $ 46,648 Temporary investments 57,588 80,023 Restricted cash 1,377 1,650 Receivables 8,961 7,841 Daily settlements due from clearing members 71, ,817 Clearing members cash margin deposits 30, Clearing fund cash deposits 22,715 22,949 Prepaid expenses 1,153 1, , ,586 Long-term investment 11,768 10,869 Capital assets 15,376 15,454 Future income taxes 2,019 2,359 Other assets 2,075 1,988 Liabilities and Shareholders Equity Current liabilities: $ 296,181 $ 215,256 Accounts payable and accruals $ 9,121 $ 13,848 Daily settlements due to clearing members 71,213 23,817 Clearing members cash margin deposits 30, Clearing fund cash deposits 22,715 22,949 Income taxes payable 322 1, ,171 62,260 Future income taxes 1,624 1,606 Accrued employee benefits liability 1, Shareholders equity: Capital stock 139, ,712 Contributed surplus Retained earnings 20,928 12,553 Accumulated other comprehensive loss (2,081) (2,446) 159, ,391 $ 296,181 $ 215,256

4 CONSOLIDATED STATEMENTS OF EARNINGS (in thousands of dollars, except per share amounts and number of shares) Three months ended Revenues: Transactions $ 8,996 $ 10,768 Clearing and option exercise 3,306 3,899 Information systems services 4,334 3,600 Market data 2,978 2,635 Participants Other ,679 21,913 Expenses: Compensation and benefits 6,897 6,342 Occupancy Computer licences and maintenance 488 1,288 Amortization of capital assets and other assets General and administrative 1,762 2,362 Telecommunications Public affairs Interest on obligations under capital leases and debts due within one year 14 Other items 410 2,725 12,607 15,455 Operating Earnings 8,072 6,458 Investment income 3, Equity in results of a company subject to significant influence Earnings before income taxes 11,845 7,779 Income taxes Current 3,104 1,677 Future ,470 2,205 Net earnings $ 8,375 $ 5,574 Basic earnings per share $ 0.27 $ 0.20 Diluted earnings per share $ 0.27 $ 0.20 Weighted average number of shares outstanding - basic 30,633,959 27,792,659 Weighted average number of shares outstanding - diluted 30,656,800 28,216,474

5 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three months ended Net earnings $ 8,375 $ 5,574 Other comprehensive income (loss) Unrealized gain or (loss) on translating financial statements of a self-sustaining foreign operation 365 (113) Comprehensive income $ 8,740 $ 5,461 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY Capital stock at beginning of period $ 139,712 $ 49,258 Issuance of common shares New issuance of common shares 90,866 Transaction fees related to issued common shares, net of income taxes of $391 (1,199) Stock Option Plan 103 Variation of shares held in guarantee 100 1,928 Capital stock at end of period 139, ,956 Contributed surplus at beginning of period Stock option expense 86 Employee share purchase plan expense Stock options exercised and share purchase plan reimbursed (19) (23) Contributed surplus at end of period Retained earnings at beginning of period 12,553 16,991 Net earnings 8,375 5,574 Impact of initial adoption of new accounting standards 571 Dividends (9,293) Retained earnings, end of period 20,928 13,843 Accumulated other comprehensive loss, beginning of period (2,446) (966) Impact of changes in currency rates on net investment in self-sustaining foreign operation and impact resulting from distributions from a company subject to significant influence 365 (113) Accumulated other comprehensive loss, end of period (2,081) (1,079) Shareholders equity, end of period $ 159,317 $ 154,154

6 CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended Cash flows from (used in) operating activities: Net earnings $ 8,375 $ 5,574 Adjustments for: Amortization of capital assets and other assets Equity in results of a company subject to significant influence (534) (656) Amortization of premium on investments Interest income on discount investments 46 (295) Future income taxes Cost of stock option plan and employee share purchase plan Change in fair value of financial instruments held for trading (589) 56 Unrealized gain on foreign exchange (1,067) Net change in non-cash operating assets and liabilities: Receivables (1,120) (1,267) Prepaid expenses Accounts payable, accruals and income taxes payable (5,567) (5,305) Increase in the accrued employee benefits liability (494) Cash flows from (used in) investing activities: Purchase of capital assets (693) (854) (Increase) decrease in other assets (188) 278 Purchase of investments (71,999) (301,575) Sale of investments 96, ,160 23,149 1,009 Cash flows from (used in) financing activities: Restricted cash Repayment of obligations under capital leases and debts (372) Share issuance 81 91,675 Dividends (13,910) ,142 Net increase in cash and cash equivalents 24,488 78,657 Cash and cash equivalents, beginning of period 46,648 22,919 Cash and cash equivalents, end of period 71, ,576 Temporary investments, end of period 57,588 36,074 Cash and cash equivalents, and temporary investments, $ 128,724 $ 137,650 end of period Supplemental cash flow information: Interest paid $ $ 14 Income taxes paid 3,952 4,718