MX Announces Special Dividend of $0.35 per Share
and Launch of Carbon Trading
Financial Highlights (Q2 2007 vs. Q2 2006)
- Revenues increased 3% to $21.4 million
- Operating margin of 40% up from 36%
- Net earnings increased 7% to $6.9 million
- Diluted earnings per share of $0.22 compared to $0.24 per share
- Average daily volume of 176,560 contracts, up 1.6%
- Strong financial position - $131 million in cash
NOTE TO EDITORS: ALL REFERENCES TO EARNINGS PER SHARE AND DIVIDENDS PER
SHARE HAVE BEEN RESTATED TO REFLECT THE THREE-FOR-ONE STOCK SPLIT THAT MX
EFFECTED ON MARCH 15, 2007. ALL DOLLAR AMOUNTS IN THIS PRESS RELEASE ARE
STATED IN CANADIAN DOLLARS.
MONTREAL, July 25 /CNW Telbec/ - Montreal Exchange Inc. (MX) (TSX: MXX) announced today its financial results for the second quarter ended June 30, 2007, including a 7% increase in net earnings to $6.9 million from the same period of 2006.
Revenues for the second quarter 2007 amounted to $21.4 million, representing an increase of 3% compared to $20.7 million in the same period of 2006. This was due principally to a 1.6% increase in trading volumes in the quarter. For the six month period ended June 30, 2007, revenues grew 9% to $43.3 million, mainly because of a 13% increase in trading volumes from the same period of 2006.
"MX trading activity grew at a modest pace in the second quarter primarily because of the stable short-term interest rate environment," said Luc Bertrand, President and Chief Executive Officer of the Montreal Exchange. "Trading in our short-term interest rate futures contract, the BAX, declined in the quarter and grew at a below average rate in the first half, largely due to monetary policy trends and a slowdown in market moving economic events. The quarterly decrease in BAX trading was partly offset by double-digit increases in volumes of our long-term interest rate futures contract, the CGB, as well as in MX's equity index futures contract, the SXF."
Expenses in the second quarter 2007 declined 4% to $12.9 million. The decrease in expenses was primarily attributable to lower amortization and lower computer licences and maintenance expenses. For the first half of 2007, expenses increased 5% to $28.3 million, mainly due to non-recurring fees related to the listing of MX shares on March 27, 2007. Expenses, excluding non-recurring items, increased 1% in the second quarter and remained flat in the first half compared with the same periods of 2006.
Net earnings in the second quarter 2007 increased 7% to reach $6.9 million, compared with $6.5 million in the second quarter 2006. Adjusted net earnings (1) for the second quarter 2007 remained stable at $6.9 million. Adjusted diluted earnings per share were $0.22 in the quarter compared to $0.25 in the same period of last year. For the first six months of 2007, net earnings were up 10% to $12.5 million. Adjusted net earnings reached $14.5 million, an increase of 17% from the same period of 2006. Adjusted diluted earnings per share were $0.49 in the first half compared with $0.45 per share the previous year.
"MX's business fundamentals and financial position are strong and we remain confident about the long-term growth potential of the Canadian derivatives market," added Mr. Bertrand. "During the quarter, we also continued to pursue strategic initiatives, including today's announcement that trading in the Montreal Climate Exchange (MCeX) carbon futures will be launched on the Montreal Exchange platform. I am also happy to report further progress in executing our plan to introduce energy trading products on the Canadian Resources Exchange, CAREX."
Corporate and Business Highlights
Special Dividend
Today, the Board of Directors of the Montreal Exchange declared a special dividend of $0.35 per issued and outstanding common share of MX, payable on August 16, 2007, to shareholders of record at the close of business at 5:00 p.m. on August 3, 2007.
Normal course issuer bid
During the second quarter of 2007, MX initiated its Normal Course Issuer Bid (NCIB) program, repurchasing and cancelling 81,000 common shares for a total consideration of $3.2 million.
The NCIB program allows MX to purchase up to 2,412,143 of its common shares for the period extending from March 27, 2007 to March 22, 2008.
Launch of MCeX carbon futures
The Montreal Exchange and the Chicago Climate Exchange (CCX) announced today in a separate news release their plan to launch a MCeX carbon futures contract on the Montreal Exchange platform by the end of 2007, subject to regulatory approval.
MX and CCX decided to launch trading in futures products based on underlying Canadian emission credits after a careful assessment of the federal government's air emissions policy and industry consultations. The MCeX partners are convinced that there will be growing demand for environmental derivatives. This is another step towards establishing the leading market for publicly traded environmental products in Canada.
Executive appointments at MX and CAREX
MX is pleased to announce the appointment of Alain Miquelon as Chief Financial Officer and Head of Strategic Development of the Montreal Exchange. Effective August 6, 2007, Mr. Miquelon will take on the strategic responsibilities of Philippe Loumeau, current Senior Executive Vice-President and Chief Strategy Officer, who has announced his departure at the end of this year. Mr. Miquelon will officially take over the responsibilities of Chief Financial Officer of the Montreal Exchange on October 1, 2007, replacing the Executive Vice-President and CFO, Louise Laflamme. Ms. Laflamme will remain at MX to support the executive team and the President and CEO, until her planned retirement in June 2008.
The Canadian Resources Exchange (CAREX) has announced in a separate news release issued on July 19, 2007 the appointment of Robert Laird as Vice-President of the natural gas business line. Prior to joining CAREX, Mr. Laird served as a senior energy broker at Prebon Energy Canada, a leading global energy broker. He was responsible for building market maker natural gas trading accounts, working with hedge funds, top tier banks, as well as energy producers, marketers, and utilities. Mr. Laird is based in Calgary.
Penny trading introduced on MX equity options market
Penny trading in options on nine Canadian equities and one equity index fund will be introduced on July 27, 2007 on the MX equity options market. This innovation, enabled by MX's proprietary SOLA(R) technology, permits trading in increments of a penny rather than a nickel. Earlier this year, the MX technology team introduced penny trading on the Boston Options Exchange (BOX), as part of a US pilot project, with positive results. BOX was recently named U.S. Options Exchange of the Year by FOW, the global derivatives magazine, in recognition of its role as an innovator in the options industry.
The Second Quarter Report is available on the MX website at www.m-x.ca
and the SEDAR website at www.sedar.com.
Investor / Media Conference Calls / Webcast Details
The Montreal Exchange will hold a conference call to review its second quarter results on Thursday, July 26 at 9:00 a.m. (Eastern). An investor presentation will be available on the MX website at www.m-x.ca, in the News section. Those wishing to participate in the conference call can dial the following:
July 26 at 9:00 a.m.: Financial analysts' teleconference (followed
by a question period intended for the media).
In English: 514 868-1042
1-866-898-9626 (toll-free in North America)
In French: 514 861-0443
(simultaneous translation) 1-866-696-5911 (toll-free in North America)
Replay:
A replay will be available until Thursday,
August 2, 2007. To access the replay, please
dial 514 861-2272 or 1-800-408-3053. For
English, enter passcode 3226937(number sign).
For French, enter passcode
3226938(number sign).
This teleconference will be Webcast live and archived for 90 days on the
MX website: www.m-x.ca
About Montreal Exchange Inc.
The Montreal Exchange (MX) is Canada's financial 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(R). 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 Montreal Climate Exchange (MCeX), a joint venture with the Chicago Climate Exchange(R), aiming to establish the leading market for publicly traded environmental products in Canada. For more information about the Montreal Exchange, please visit www.m-x.ca.
(1): Non-GAAP Performance Measures
Adjusted net earnings and adjusted diluted earnings per share are financial measures not recognized by or calculated in accordance with Canadian generally accepted accounting principles. MX defines adjusted net earnings as net earnings excluding: a) charges (net of tax) relating to non-recurring professional fees in connection with the preparation of our non-offering prospectus and the listing of MX shares; and b) charges (net of tax) relating to legal settlements in connection with the closing of MX trading floor. 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.