- Revenue of $217.7 million, up 4%
from $210.3 million in Q2/19
- Diluted earnings per share of $1.19 compared with $1.37 in Q2/19
- Adjusted diluted earnings per share of $1.52, up 5% from $1.45 in Q2/19
- Cash flows from operating activities of $130.9 million, up 17% from $111.5 million in Q2/19
- Increased quarterly dividend by 4
cents per common share, up 6% to 70
cents per common share
TORONTO, Aug. 5, 2020 /CNW/ - TMX Group Limited (TSX: X)
("TMX Group") today announced results for the second quarter
ended June 30, 2020.
Commenting on the operational environment and the company's
performance during the second quarter of 2020, John McKenzie, Interim Chief Executive Officer
and Chief Financial Officer of TMX Group, said:
"Our second quarter performance reflects the depth of our
diverse and adaptive business model and serves to demonstrate the
resiliency of Canada's capital
markets during a challenging and unprecedented period in our
history. Revenue in the second quarter grew 4% over last year
led by increased revenue from our equities trading and clearing
business as well as global solutions, insights and analytics,
partially offset by lower revenue from capital formation and
derivatives. As the COVID-19 pandemic continues to have a major
impact on our operating environment, the rapid transition to a
virtual workplace has also accelerated our digital transformation,
serving as a catalyst for innovative and adaptive client focused
solutions across our business. We remain on track with our key
initiatives and in the execution of our long-term strategy to
deliver profitable growth to shareholders."
RESULTS OF OPERATIONS
Non-IFRS Financial Measures
Adjusted earnings per share, adjusted diluted earnings per share
and adjusted net income are non-IFRS measures and do not have
standardized meanings prescribed by IFRS and are, therefore,
unlikely to be comparable to similar measures presented by other
companies. We present adjusted earnings per share, adjusted
diluted earnings per share, and adjusted net income to indicate
ongoing financial performance from period to period, exclusive of a
number of adjustments. These adjustments include amortization
of intangibles related to acquisitions, strategic re-alignment
expenses, gain on sale of interest in Bermuda Stock Exchange, transaction related
costs, change in net deferred income tax liabilities resulting from
decrease in Alberta corporate
income tax rate, increase in deferred income tax liabilities
relating to a change in the U.K. tax rate and net litigation
settlement costs. Management uses these measures, and
excludes certain items, because it believes doing so results in a
more effective analysis of underlying operating and financial
performance, including, in some cases, our ability to generate
cash. Excluding these items also enables comparability across
periods. The exclusion of certain items does not imply that
they are non-recurring or not useful to investors.
Quarter ended June 30, 2020 (Q2/20) Compared with
Quarter ended June 30, 2019 (Q2/19)
The information below reflects the financial statements of TMX
Group for Q2/20 compared with Q2/19. Certain comparative
information has been reclassified in order to conform with the
financial presentation adopted in the current year.
|
|
|
|
|
(in millions of
dollars, except per share amounts)
|
Q2/20
|
Q2/19
|
$
increase/
(decrease)
|
%
increase/
(decrease)
|
Revenue
|
$217.7
|
$210.3
|
$7.4
|
4%
|
Operating
expenses
|
119.3
|
106.2
|
13.1
|
12%
|
Income from
operations
|
98.4
|
104.1
|
(5.7)
|
(5)%
|
Net income
|
67.8
|
77.2
|
(9.4)
|
(12)%
|
Adjusted net
income1
|
86.6
|
81.8
|
4.8
|
6%
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
Basic
|
1.20
|
1.38
|
(0.18)
|
(13)%
|
Diluted
|
1.19
|
1.37
|
(0.18)
|
(13)%
|
Adjusted Earnings per
share2
|
|
|
|
|
Basic
|
1.54
|
1.46
|
0.08
|
5%
|
Diluted
|
1.52
|
1.45
|
0.07
|
5%
|
|
|
|
|
|
Cash flows from
operating activities
|
130.9
|
111.5
|
19.4
|
17%
|
Net Income and Earnings per Share
Net income in Q2/20 was $67.8
million, or $1.20 per common
share on a basic and $1.19 on a
diluted basis, compared with a net income of $77.2 million, or $1.38 per common share on a basic and
$1.37 on a diluted basis, for
Q2/19. The decrease in net income and earnings per share from
Q2/19 to Q2/20 was driven by an increase in operating
expenses. The increase in operating expenses was largely
attributable to net litigation settlement costs of $12.4 million (16
cents per basic and diluted common share). In addition,
there was lower income tax expense and a lower effective income tax
rate in Q2/19 compared with Q2/20. The reduction in net
income was somewhat offset by higher revenue in Q2/20 compared with
Q2/19. The decrease in diluted earnings per share was also
due to an increase in the number of weighted-average common shares
outstanding in Q2/20 compared with Q2/19.
________________________________
|
1 See
discussion under the heading "Non-IFRS Financial
Measures".
|
2 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Adjusted Earnings per Share3 Reconciliation
for Q2/20 and Q2/19
The following is a reconciliation of earnings per share to
adjusted earnings per share:
|
|
|
|
Q2/20
|
Q2/19
|
(unaudited)
|
Basic
|
Diluted
|
Basic
|
Diluted
|
Earnings per
share
|
$1.20
|
$1.19
|
$1.38
|
$1.37
|
Adjustments related
to:
|
|
|
|
|
Amortization of
intangibles related to acquisitions
|
0.18
|
0.17
|
0.17
|
0.17
|
Strategic re-alignment
expenses4
|
—
|
—
|
0.02
|
0.02
|
Net litigation
settlement costs
|
0.16
|
0.16
|
—
|
—
|
Gain on sale of
interest in Bermuda Stock Exchange
|
—
|
—
|
(0.04)
|
(0.04)
|
Transaction related
costs
|
—
|
—
|
0.01
|
0.01
|
Change in net deferred
income tax liabilities resulting from decrease in Alberta corporate
income tax rate
|
—
|
—
|
(0.08)
|
(0.08)
|
Adjusted earnings per
share5
|
$1.54
|
$1.52
|
$1.46
|
$1.45
|
Weighted average
number of common shares outstanding
|
56,384,554
|
56,920,125
|
56,006,062
|
56,459,282
|
Adjusted diluted earnings per share increased by 5% from
$1.45 in Q2/19 to $1.52 in Q2/20 largely driven by higher revenue,
somewhat offset by higher operating expenses, excluding net
litigation settlement costs of $12.4
million (16 cents per basic
and diluted common share). The increase in adjusted diluted
earnings per share was somewhat reduced by an increase in the
number of weighted-average common shares outstanding in Q2/20
compared with Q2/19.
________________________________
|
3 See
discussion under the heading "Non-IFRS Financial
Measures".
|
4 Please see Strategic re-alignment
expenses in our Q2/20 MD&A for more details. See
discussion under the heading "Non-IFRS Financial
Measures".
|
5 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Adjusted Net Income6 Reconciliation for Q2/20
and Q2/19
The following is a reconciliation of net income to adjusted net
income:
|
|
|
|
|
(in millions of
dollars)(unaudited)
|
Q2/20
|
Q2/19
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Net income
|
$67.8
|
$77.2
|
($9.4)
|
(12)%
|
Adjustments related
to:
|
|
|
|
|
Amortization of
intangibles related to acquisitions
|
9.7
|
9.4
|
0.3
|
3%
|
Strategic re-alignment
expenses7
|
—
|
0.9
|
(0.9)
|
(100)%
|
Net litigation
settlement costs
|
9.1
|
—
|
9.1
|
n/a
|
Gain on sale of
interest in Bermuda Stock Exchange
|
—
|
(2.0)
|
2.0
|
(100)%
|
Transaction related
costs
|
—
|
0.6
|
(0.6)
|
(100)%
|
Change in net deferred
income tax liabilities resulting from decrease in Alberta corporate
income tax rate
|
—
|
(4.3)
|
4.3
|
(100)%
|
Adjusted net
income8
|
$86.6
|
$81.8
|
$4.8
|
6%
|
Adjusted net income increased by 6% from $81.8 million in Q2/19 to $86.6 million in Q2/20 largely driven by higher
revenue, somewhat offset by higher operating expenses, excluding
net litigation settlement costs of $12.4
million.
___________________________
|
6 See
discussion under the heading "Non-IFRS Financial
Measures".
|
7 Please see Strategic re-alignment
expenses in our Q2/20 MD&A for more details. See
discussion under the heading "Non-IFRS Financial
Measures".
|
8 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Revenue
|
|
|
|
|
(in millions of
dollars)
|
Q2/20
|
Q2/19
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Capital
Formation
|
$48.1
|
$52.6
|
$(4.5)
|
(9)%
|
Equities and Fixed
Income Trading and Clearing
|
59.5
|
48.6
|
10.9
|
22%
|
Derivatives Trading
and Clearing
|
30.0
|
33.8
|
(3.8)
|
(11)%
|
Global Solutions,
Insights and Analytics
|
81.0
|
75.6
|
5.4
|
7%
|
Other
|
(0.9)
|
(0.3)
|
(0.6)
|
(200)%
|
|
$217.7
|
$210.3
|
$7.4
|
4%
|
Revenue was $217.7 million in
Q2/20, up $7.4 million or 4% from
$210.3 million in Q2/19 attributable
to increases in revenue from Equities and Fixed Income Trading
and Clearing as well as Global Solutions, Insights and
Analytics offset by decreases in Capital Formation and
Derivatives Trading and Clearing revenues.
Operating expenses
|
|
|
|
|
(in millions of
dollars)
|
Q2/20
|
Q2/19
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Compensation and
benefits
|
$55.2
|
$52.1
|
$3.1
|
6%
|
Information and
trading systems
|
13.3
|
12.2
|
1.1
|
9%
|
Selling, general and
administration
|
31.3
|
21.2
|
10.1
|
48%
|
Depreciation and
amortization
|
19.5
|
19.4
|
0.1
|
1%
|
Strategic
re-alignment expenses
|
—
|
1.3
|
(1.3)
|
(100)%
|
|
$119.3
|
$106.2
|
$13.1
|
12%
|
Operating expenses in Q2/20 were $119.3
million, up $13.1 million or
12%, from $106.2 million in
Q2/19. The increase in costs was primarily attributable to
net litigation settlement costs of $12.4
million (16 cents per basic
and diluted shares) included within Selling, general and
administration expenses in Q2/20. There was also an
increase in recoverable costs related to CDS. Recoverable costs of
$1.9 million related to CDS's
clearing operation, netted in Q2/19, were included in both CDS
revenue and Selling, general and administration expenses in
Q2/20. In addition, there were higher employee performance
incentive costs, increased information technology professional
service costs, higher costs related to managing our business during
the COVID-19 pandemic as well as increased bad debt expense.
The increases were somewhat offset by a decline in travel and
entertainment expenses, consulting fees and severance
costs. In addition, there were Strategic
re-alignment expenses of $1.3
million in Q2/19 with no similar costs in Q2/20.
Additional Information
Income tax expense and effective tax
rate
|
|
Income Tax
Expense (in millions of dollars)
|
Effective Tax
Rate (%)
|
Q2/20
|
Q2/19
|
Q2/20
|
Q2/19
|
$24.2
|
$21.0
|
26%
|
21%
|
- Excluding the adjustment below, the effective tax rate would
have been approximately 26% for Q2/19.
- In Q2/19, the Alberta general
corporate income tax rate decreased. This change resulted in
a decrease in net deferred income tax liabilities and a
corresponding decrease in income tax expense of $4.3 million.
Six months ended June 30, 2020
(1H/20) Compared with Six months ended June
30, 2019 (1H/19)
The information below reflects the financial statements of TMX
Group for the six months ended June 30,
2020 compared with the six months ended June 30, 2019. Certain comparative
information has been reclassified in order to conform with the
financial presentation adopted in the current year.
|
|
|
|
|
(in millions of
dollars, except per share amounts)
|
Six months
ended
June 30, 2020
|
Six months ended
June 30, 2019
|
$
increase/
(decrease)
|
%
increase/
(decrease)
|
Revenue
|
$438.0
|
$407.8
|
$30.2
|
7%
|
Operating
expenses
|
228.6
|
213.5
|
15.1
|
7%
|
Income from
operations
|
209.4
|
194.3
|
15.1
|
8%
|
Net income
|
137.9
|
138.4
|
(0.5)
|
0%
|
Adjusted net
income9
|
173.6
|
155.0
|
18.6
|
12%
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
Basic
|
2.45
|
2.47
|
(0.02)
|
(1)%
|
Diluted
|
2.42
|
2.46
|
(0.04)
|
(2)%
|
Adjusted Earnings per
share10
|
|
|
|
|
Basic
|
3.08
|
2.76
|
0.32
|
12%
|
Diluted
|
3.05
|
2.75
|
0.30
|
11%
|
|
|
|
|
|
Cash flows from
operating activities
|
209.9
|
164.0
|
45.9
|
28%
|
___________________________
|
9 See
discussion under the heading "Non-IFRS Financial
Measures".
|
10 See discussion under the heading
"Non-IFRS Financial Measures".
|
Net Income and Earnings per Share
Net income in the six months ended June
30, 2020 was $137.9
million, or $2.45 per common
share on a basic and $2.42 per common
share on a diluted basis, compared with a net income of
$138.4 million, or $2.47 per common share on a basic and
$2.46 on a diluted basis, for the six
months ended June 30, 2019. The
slight decrease in net income and earnings per share was largely
driven by significantly higher income tax expense, and a higher
effective income tax rate, in 1H/20 compared with 1H/19.
- During 1H/20, there was a change in the U.K. corporate income
tax rate. This resulted in an increase in deferred income tax
liabilities and a corresponding increase in income tax expense of
$7.4 million, which reduced net
income.
- In 1H/19, the Alberta general
corporate income tax rate decreased. This change resulted in
a decrease in net deferred income tax liabilities and a
corresponding decrease in income tax expense of $4.3 million.
The decrease in diluted earnings per share was also due to an
increase in the number of weighted-average common shares
outstanding in 1H/20 compared with 1H/19.
Largely offsetting the declines, income from operations
increased by $15.1 million. The
increase in income from operations from 1H/19 to 1H/20 was driven
by an increased revenue of $30.2
million, offset by an increase in operating expenses of
$15.1 million. The increase in
operating expenses was largely attributable to net litigation
settlement costs of $12.4 million
(16 cents per basic and diluted
common share) in Q2/20.
Adjusted Earnings per Share11 Reconciliation
for Six months ended June 30, 2020
and Six months ended June 30,
2019
The following is a reconciliation of earnings per share to
adjusted earnings per share:
|
|
|
|
Six months
ended
June 30,
2020
|
Six months
ended
June 30,
2019
|
(unaudited)
|
Basic
|
Diluted
|
Basic
|
Diluted
|
Earnings per
share
|
$2.45
|
$2.42
|
$2.47
|
$2.46
|
Adjustments related
to:
|
|
|
|
|
Amortization of
intangibles related to acquisitions
|
0.34
|
0.34
|
0.34
|
0.34
|
Strategic re-alignment
expenses12
|
—
|
—
|
0.06
|
0.06
|
Increase in deferred
income tax liabilities relating to change in U.K. tax
rate
|
0.13
|
0.13
|
—
|
—
|
Net litigation
settlement costs
|
0.16
|
0.16
|
—
|
—
|
Gain on sale of
interest in Bermuda Stock Exchange
|
—
|
—
|
(0.04)
|
(0.04)
|
Transaction related
costs
|
—
|
—
|
0.01
|
0.01
|
Change in net deferred
income tax liabilities resulting from decrease in Alberta corporate
income tax rate
|
—
|
—
|
(0.08)
|
(0.08)
|
Adjusted earnings per
share13
|
$3.08
|
$3.05
|
$2.76
|
$2.75
|
Weighted average
number of common shares outstanding
|
56,332,419
|
56,891,688
|
55,924,166
|
56,343,757
|
Adjusted diluted earnings per share increased by 11% from
$2.75 in 1H/19 to $3.05 in 1H/20 largely driven by increased
revenue, somewhat offset by higher operating expenses, excluding
net litigation settlement costs of $12.4
million.
The increase in adjusted diluted earnings per share was somewhat
offset by an increase in the number of weighted-average common
shares outstanding in 1H/20 compared with 1H/19.
____________________________
|
11 See discussion under the heading
"Non-IFRS Financial Measures".
|
12 Please refer to "Initiatives and
Accomplishments - Strategic re-alignment" in 2019 MD&A for more
details.
|
13 See
discussion under the heading "Non-IFRS Financial
Measures".
|
Adjusted Net Income14 Reconciliation for Six
months ended June 30, 2020 and Six
months ended June 30, 2019
The following is a reconciliation of net income
to adjusted net income:
|
|
|
|
|
(in millions of
dollars)(unaudited)
|
Six months
ended
June 30, 2020
|
Six months ended
June 30, 2019
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Net income
|
$137.9
|
$138.4
|
$(0.5)
|
0%
|
Adjustments related
to:
|
|
|
|
|
Amortization of
intangibles related to acquisitions
|
19.2
|
18.9
|
0.3
|
2%
|
Strategic re-alignment
expenses15
|
—
|
3.4
|
(3.4)
|
(100)%
|
Increase in deferred
income tax liabilities relating to change in U.K. tax
rate
|
7.4
|
—
|
7.4
|
n/a
|
Net litigation
settlement costs
|
9.1
|
—
|
9.1
|
n/a
|
Gain on sale of
interest in Bermuda Stock Exchange
|
—
|
(2.0)
|
2.0
|
(100%)
|
Transaction related
costs
|
—
|
0.6
|
(0.6)
|
(100%)
|
Change in net deferred
income tax liabilities resulting from decrease in Alberta corporate
income tax rate
|
—
|
(4.3)
|
4.3
|
(100%)
|
Adjusted net
income16
|
$173.6
|
$155.0
|
$18.6
|
12%
|
Adjusted net income increased by 12% from $155.0 million in 1H/19 to $173.6 million to 1H/20 largely driven by an
increased revenue, somewhat offset by higher operating expenses,
excluding net litigation settlement costs of $12.4 million.
____________________________
|
14 See discussion under the heading
"Non-IFRS Financial Measures".
|
15 Please refer to "Initiatives and
Accomplishments - Strategic re-alignment" in 2019 MD&A for more
details.
|
16 See discussion under the heading
"Non-IFRS Financial Measures".
|
Revenue
|
|
|
|
|
(in millions of
dollars)
|
Six months
ended
June 30, 2020
|
Six months ended
June 30, 2019
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Capital
Formation
|
$88.2
|
$94.4
|
$(6.2)
|
(7)%
|
Equities and Fixed
Income Trading and Clearing
|
117.7
|
97.1
|
20.6
|
21%
|
Derivatives Trading
and Clearing
|
70.5
|
66.4
|
4.1
|
6%
|
Global Solutions,
Insights and Analytics
|
160.8
|
150.2
|
10.6
|
7%
|
Other
|
0.8
|
(0.3)
|
1.1
|
(367)%
|
|
$438.0
|
$407.8
|
$30.2
|
7%
|
Revenue was $438.0 million in
1H/20, up $30.2 million or 7%
compared with $407.8 million in 1H/19
attributable to increases in revenue from Equities and Fixed
Income Trading and Clearing, Derivatives Trading and Clearing
as well as Global Solutions, Insights and Analytics offset
by a decrease in Capital Formation revenue.
Operating expenses
|
|
|
|
|
(in millions of
dollars)
|
Six months
ended
June 30, 2020
|
Six months ended
June 30, 2019
|
$ increase /
(decrease)
|
% increase /
(decrease)
|
Compensation and
benefits
|
$111.4
|
$105.1
|
$6.3
|
6%
|
Information and
trading systems
|
26.0
|
24.7
|
1.3
|
5%
|
Selling, general and
administration
|
51.9
|
39.4
|
12.5
|
32%
|
Depreciation and
amortization
|
39.3
|
39.7
|
(0.4)
|
(1)%
|
Strategic
re-alignment expenses
|
—
|
4.6
|
(4.6)
|
(100)%
|
|
$228.6
|
$213.5
|
$15.1
|
7%
|
Operating expenses in 1H/20 were $228.6
million, up $15.1 million or
7%, from $213.5 million in
1H/19. The increase in costs was primarily attributable to
net litigation settlement costs of $12.4
million (16 cents per basic
and diluted shares) included within Selling, general and
administration expenses for Q2/20. There was also an
increase in recoverable costs related to CDS. Recoverable costs of
$3.0 million related to CDS's
clearing operation, netted in 1H/19, were included in both CDS
revenue and Selling, general and administration expenses in
1H/20. In addition, there were higher employee performance
incentive costs, higher information technology professional
services costs, increased bad debt expense as well as higher costs
related to managing our business during the COVID-19
pandemic. The increases were somewhat offset by a decline in
travel and entertainment expenses, consulting fees and severance
costs. In addition, there were Strategic
re-alignment expenses of $4.6
million in 1H/19 with no similar costs in 1H/20.
Additional Information
Income tax expense and effective tax rate
|
|
Income Tax
Expense (in millions of dollars)
|
Effective Tax
Rate (%)
|
Six months
ended
June 30,
2020
|
Six months
ended
June 30,
2019
|
Six months
ended
June 30,
2020
|
Six months
ended
June 30,
2019
|
$58.5
|
$42.1
|
30%
|
23%
|
Excluding adjustments, primarily related to the items noted
below, the effective tax rate would have been approximately 26% for
both 1H/20 and 1H/19.
1H/20
- In 1H/20, there was an increase in deferred income tax
liabilities and a corresponding increase in income tax expense of
$7.4 million relating to the U.K.
corporate income tax rate. In Q1/20, it was announced that
the U.K. corporate income tax rate would not decline as previously
anticipated; therefore, we were required to revalue deferred income
tax liabilities related to acquired intangible assets.
1H/19
- In 1H/19, the Alberta general
corporate income tax rate decreased. This change resulted in
a decrease in net deferred income tax liabilities and a
corresponding decrease in income tax expense of $4.3 million.
FINANCIAL STATEMENTS GOVERNANCE PRACTICE
The Finance & Audit Committee of the Board of Directors of
TMX Group (Board) reviewed this press release as well as the Q2/20
unaudited condensed consolidated interim financial statements and
related Management's Discussion and Analysis (MD&A) and
recommended they be approved by the Board. Following review
by the full Board, the Q2/20 unaudited condensed consolidated
interim financial statements, MD&A and the contents of this
press release were approved.
CONSOLIDATED FINANCIAL STATEMENTS
Our Q2/20 unaudited condensed consolidated interim financial
statements are prepared in accordance with IFRS and are reported in
Canadian dollars unless otherwise indicated. Financial measures
contained in the MD&A and this press release are based on
financial statements prepared in accordance with IFRS, unless
otherwise specified and are in Canadian dollars unless otherwise
indicated.
ACCESS TO MATERIALS
TMX Group has filed its Q2/20 unaudited condensed consolidated
interim financial statements and MD&A with Canadian securities
regulators. This press release should be read together with our
Q2/20 unaudited condensed consolidated interim financial statements
and MD&A. These documents may be accessed through
www.sedar.com, or on the TMX Group website at www.tmx.com. We
are not incorporating information contained on the website in this
press release. In addition, copies of these documents will be
available upon request, at no cost, by contacting TMX Group
Investor Relations by phone at (416) 947-4277 or by e-mail at
TMXshareholder@tmx.com.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This press release of TMX Group contains "forward-looking
information" (as defined in applicable Canadian securities
legislation) that is based on expectations, assumptions, estimates,
projections and other factors that management believes to be
relevant as of the date of this press release. Often, but not
always, such forward-looking information can be identified by the
use of forward-looking words such as "plans," "expects," "is
expected," "budget," "scheduled," "targeted," "estimates,"
"forecasts," "intends," "anticipates," "believes," or variations or
the negatives of such words and phrases or statements that certain
actions, events or results "may," "could," "would," "might," or
"will" be taken, occur or be achieved or not be taken, occur or be
achieved. Forward-looking information, by its nature, requires us
to make assumptions and is subject to significant risks and
uncertainties which may give rise to the possibility that our
expectations or conclusions will not prove to be accurate and that
our assumptions may not be correct.
Examples of forward-looking information in this press release
include, but are not limited to, growth objectives; the expected
impact of the VisoTech acquisition on TMX Group's results; the
proposed relaunch of the Two-Year Government of Canada Bond
Futures; our target dividend payout ratio; the ability of TMX Group
to de-leverage and the timing thereof; the modernization of
clearing platforms, including the expected cash expenditures
related to the modernization of our clearing platforms and the
timing of the modernization; other statements related to cost
reductions; the impact of the market capitalization of TSX and TSXV
issuers overall (from 2019 to 2020) on TMX Group's revenue; future
changes to TMX Group's anticipated statutory income tax rate for
2020; factors relating to stock, and derivatives exchanges and
clearing houses and the business, strategic goals and priorities,
market conditions, pricing, proposed technology and other
initiatives, financial results or financial condition, operations
and prospects of TMX Group which are subject to significant risks
and uncertainties.
These risks include: competition from other exchanges or
marketplaces, including alternative trading systems and new
technologies, on a national and international basis; dependence on
the economy of Canada; adverse
effects on our results caused by global economic conditions
(including COVID-19) or uncertainties including changes in business
cycles that impact our sector; failure to retain and attract
qualified personnel; geopolitical and other factors which could
cause business interruption (including COVID-19); dependence on
information technology; vulnerability of our networks and third
party service providers to security risks, including cyber-attacks;
failure to properly identify or implement our strategies;
regulatory constraints; constraints imposed by our level of
indebtedness, risks of litigation or other proceedings; dependence
on adequate numbers of customers; failure to develop, market or
gain acceptance of new products; failure to effectively integrate
acquisitions to achieve planned economics, or divest
underperforming businesses; currency risk; adverse effect of new
business activities; adverse effects from business divestitures;
not being able to meet cash requirements because of our holding
company structure and restrictions on paying dividends; dependence
on third-party suppliers and service providers; dependence of
trading operations on a small number of clients; risks associated
with our clearing operations; challenges related to international
expansion; restrictions on ownership of TMX Group common shares;
inability to protect our intellectual property; adverse effect of a
systemic market event on certain of our businesses; risks
associated with the credit of customers; cost structures being
largely fixed; the failure to realize cost reductions in the amount
or the time frame anticipated; dependence on market activity that
cannot be controlled; the regulatory constraints that apply to the
business of TMX Group and its regulated subsidiaries, costs of on
exchange clearing and depository services, trading volumes (which
could be higher or lower than estimated) and revenues; future
levels of revenues being lower than expected or costs being higher
than expected.
Forward-looking information is based on a number of assumptions
which may prove to be incorrect, including, but not limited to,
assumptions in connection with the ability of TMX Group to
successfully compete against global and regional marketplaces;
business and economic conditions generally; exchange rates
(including estimates of exchange rates from Canadian dollars to the
U.S. dollar or GBP), commodities prices, the level of trading and
activity on markets, and particularly the level of trading in TMX
Group's key products; business development and marketing and sales
activity; the continued availability of financing on appropriate
terms for future projects; productivity at TMX Group, as well as
that of TMX Group's competitors; market competition; research and
development activities; the successful introduction and client
acceptance of new products; successful introduction of various
technology assets and capabilities; the impact on TMX Group and its
customers of various regulations; TMX Group's ongoing relations
with its employees; and the extent of any labour, equipment or
other disruptions at any of its operations of any significance
other than any planned maintenance or similar shutdowns.
In addition to the assumptions outlined above, forward looking
information related to long term revenue cumulative average annual
growth rate (CAGR) objectives, and long term adjusted earnings per
share CAGR objectives are based on assumptions that include, but
not limited to:
- TMX Group's success in achieving growth initiatives and
business objectives;
- continued investment in growth businesses and in transformation
initiatives including next generation post-trade systems;
- no significant changes to our effective tax rate, recurring
revenue, and number of shares outstanding;
- moderate levels of market volatility;
- level of listings, trading, and clearing consistent with
historical activity;
- economic growth consistent with historical activity;
- no significant changes in regulations;
- continued disciplined expense management across our
business;
- continued re-prioritization of investment towards enterprise
solutions and new capabilities;
- free cash flow generation consistent with historical run rate;
and
- a limited impact from the COVID-19 pandemic on our plans to
grow our business over the long term including on the ability of
our listed issuers to raise capital.
While we anticipate that subsequent events and developments may
cause our views to change, we have no intention to update this
forward-looking information, except as required by applicable
securities law. This forward-looking information should not be
relied upon as representing our views as of any date subsequent to
the date of this press release. We have attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those current expectations
described in forward-looking information. However, there may
be other factors that cause actions, events or results not to be as
anticipated, estimated or intended and that could cause actual
actions, events or results to differ materially from current
expectations. There can be no assurance that forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue
reliance on forward-looking information. These factors are
not intended to represent a complete list of the factors that could
affect us. A description of the above-mentioned items is contained
in the section "Enterprise Risk Management" of our
2019 Annual MD&A which is incorporated by reference into our
Q2/20 MD&A, and also in the section "Update to Enterprise
Risk Management" in our Q2/20 MD&A.
About TMX Group (TSX:X)
TMX Group operates global markets, and builds digital
communities and analytic solutions that facilitate the funding,
growth and success of businesses, traders and investors. TMX
Group's key operations include Toronto Stock Exchange, TSX Venture
Exchange, TSX Alpha Exchange, The Canadian Depository for
Securities, Montréal Exchange, Canadian Derivatives Clearing
Corporation, and Trayport which provide listing markets, trading
markets, clearing facilities, depository services, technology
solutions, data products and other services to the global financial
community. TMX Group is headquartered in Toronto and operates offices across
North America (Montréal,
Calgary, Vancouver and New
York), as well as in key international markets including
London and Singapore. For more information about TMX
Group, visit our website at www.tmx.com. Follow TMX Group on
Twitter: @TMXGroup.
Teleconference / Audio Webcast
TMX Group will host a teleconference / audio webcast to discuss
the financial results for Q2/20.
Time: 8:00 a.m. - 9:00 a.m. ET on
Thursday, August 6, 2020.
To teleconference participants: Please call the following number
at least 15 minutes prior to the start of the event.
The audio webcast of the conference call will also be available
on TMX Group's website at www.tmx.com, under Investor
Relations.
Teleconference Number: 647-427-7450 or 1-888-231-8191
Audio Replay: 416-849-0833 or 1-855-859-2056
The pass code for the replay is 9749889.
SOURCE TMX Group Limited