TMX Group Limited Reports Results for Fourth Quarter and Full Year 2017

• Diluted earnings per share of $3.63 in Q4/17, up 282% from Q4/16
• Adjusted diluted earnings per share of $1.22 in Q4/17, up 3% compared with Q4/16
• Revenue of $170.9 million in Q4/17, down 2% compared with Q4/16, excluding NGX and Shorcan Energy Brokers
• Revenue up 2% in Q4/17 over Q4/16, excluding NGX, Shorcan Energy Brokers, TMX Atrium and Razor Risk

TORONTO, Feb. 12, 2018 /CNW/ - TMX Group Limited [TSX:X] ("TMX Group") today announced results for the full year and fourth quarter ended December 31, 2017.

Commenting on 2017 and looking towards the future, Lou Eccleston, Chief Executive Officer of TMX Group, said:

"Our 2017 results were highlighted by the strong performance of some key foundational elements of our core business, including capital formation, as well as by the positive impact of maintaining enterprise-wide cost management discipline. We also made major strides in the advancement of our global growth strategy during the year, most significantly with the acquisition of Trayport, a proven and profitable technology-driven data and analytics business. As we look ahead to 2018 and beyond, we continue our work to leverage new and existing assets to fortify TMX's position as a world-leading client solutions provider and to drive growth in shareholder returns."

Commenting on operating performance in the fourth quarter of 2017, John McKenzie, Chief Financial Officer of TMX Group, said:

"We were very pleased with 12% sequential revenue growth this past quarter compared with the third quarter reflecting growth in almost all of our segments.  We had a positive contribution from Trayport, which is now an important component of our business. This business will be important as we expand our geographic reach as well as increase and diversify our mix of recurring revenue."

RESULTS OF OPERATIONS

Non-IFRS Financial Measures

Adjusted earnings per share and adjusted diluted earnings per share 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 and adjusted diluted earnings per share to indicate ongoing financial performance from period to period, exclusive of a number of adjustments.  These adjustments include amortization of intangibles related to acquisitions, acquisition costs, gain on FX forward, gain on sale of NGX and Shorcan Energy, non-cash impairment charges, product write-off, write-off of deferred income tax assets, increase in deferred income tax assets resulting from capital loss carryback, strategic re-alignment expenses, and change in net deferred income tax assets/liabilities resulting from change to Quebec, B.C., and U.S. corporate income tax rates.  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.

Additional IFRS Measures

Income from operations before acquisition costs and strategic re-alignment expenses, and income from operations are important indicators of TMX Group's ability to generate liquidity through operating cash flow to fund future working capital needs, service outstanding debts and fund future capital expenditures.  The intent of these performance measures is to provide additional useful information to investors and analysts; however, these measures should not be considered in isolation.

BOX (BOX Holdings)

In January 2015, BOX launched a program to incent subscribers to provide liquidity. In exchange for providing this liquidity and a nominal cash payment, subscribers received volume performance rights (VPRs), which are comprised of Class C units of BOX and an order flow commitment. The VPRs vest over 20 quarters of the 5-year order flow commitment period if minimum volume targets are achieved. If a subscriber fails to meet its minimum volume targets, its VPRs are available for reallocation to those subscribers that exceed their minimum volume targets, if any. Those VPRs may vest earlier. In September 2015, the VPR program was granted regulatory approval by the Securities Exchange Commission (SEC). Pursuant to the terms of the VPR program, subscribers became entitled to immediate economic participation in BOX for VPRs held.

As of July 1, 2016, we determined that we did not hold majority voting power on the board of directors as Class C units in certain vested VPRs became entitled to vote at board meetings.  As of this date, we no longer consolidated BOX as we ceased to hold the majority of voting power on the board of directors and exercise control.  As a result our financial results from July 1, 2016 forward do not include the results of BOX other than our share of BOX's net income (loss), which is reflected in Share of net income (loss) from equity accounted investees.  For periods prior to July 1, 2016 our financial results include the results from BOX on a consolidated basis.

Effective July 1, 2016, Derivatives revenue also includes revenue from licensing SOLA technology and providing other services to BOX.  This revenue was previously eliminated when BOX's operating results were consolidated in our financial statements.

Sale of NGX and Shorcan Energy - discontinued operations

On December 14, 2017, we completed the sale of NGX and Shorcan Energy.  TMX Group has classified the sale of NGX and Shorcan Energy as a discontinued operation. Prior to the sale, the operations of NGX and Shorcan Energy entirely comprised of the Energy Trading and Clearing operating segment and a small portion of the Global Solutions, Insights and Analytics operating segment. The classification of discontinued operation occurred at December 14, 2017 which is the date of disposal of the operations.  Accordingly, TMX Group has re-presented the comparative consolidated income statements to show the discontinued operations separately from continuing operations.

Three Months Ended December 31, 2017 Compared with Three Months Ended December 31, 2016

Certain comparative figures have been reclassified in order to conform with the financial presentation adopted in the current year. On December 14, 2017, we completed the sale of NGX and Shorcan Energy.  TMX Group has classified the sale of NGX and Shorcan Energy as discontinued operations. Prior to the sale, the operations of NGX and Shorcan Energy entirely comprised of the Energy Trading and Clearing operating segment and a small portion of the Global Solutions, Insights and Analytics operating segment.

The classification of discontinued operations occurred at December 14, 2017 which is the date of disposal of the operations.  Accordingly, TMX Group has re-presented the comparative consolidated income statements to show the discontinued operations separately from continuing operations.

The information below reflects the financial statements of TMX Group for the quarter ended December 31, 2017 (Q4/17) compared with the quarter ended December 31, 2016 (Q4/16).

(in millions of dollars, except per share amounts)		Q4/17	Q4/16	$ increase/ (decrease)	% increase/ (decrease)
Revenue		$170.9	$174.9	$(4.0)	(2)%
Operating expenses before acquisition costs and strategic re- alignment expenses		87.1	96.1	(9.0)	(9)%
Income from operations before acquisition costs and strategic re- alignment expenses^[1]		83.8	78.8	5.0	6%
Acquisition Costs		13.4	—	13.4	n/a
Income from operations^[2]		70.4	78.8	(8.4)	(11)%
Income from discontinued operations, net of tax		161.1	5.0	156.1	3122%
Net income attributable to TMX Group shareholders		202.3	52.6	149.7	285%
Earnings per share - before discontinued operations^[3]
	Basic	0.74	0.87	(0.13)	(15)%
	Diluted	0.74	0.86	(0.12)	(14)%
Earnings per share^[4]
	Basic	3.65	0.96	2.69	280%
	Diluted	3.63	0.95	2.68	282%
Adjusted Earnings per share^[5]
	Basic	1.23	1.19	0.04	3%
	Diluted	1.22	1.18	0.04	3%
Cash flows from operating activities		59.4	77.7	(18.3)	(24)%

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¹ See discussion under the heading "Additional IFRS Financial Measures".

² See discussion under the heading "Additional IFRS Financial Measures".

³ Earnings per share information is based on net income attributable to TMX Group shareholders, discontinued operations include NGX and Shorcan Energy.

⁴ Earnings per share information is based on net income attributable to TMX Group shareholders.

⁵ Adjusted earnings per share includes discontinued operations and is a non-IFRS measure. See discussion under the heading "Non-IFRS Financial Measures".

Net income attributable to TMX Group shareholders

Net income attributable to TMX Group shareholders in Q4/17 was $202.3 million, or $3.65 per common share on a basic basis and $3.63 per common share on a diluted basis, compared with a net income of $52.6 million, or $0.96 per common share on a basic and $0.95 per common share on a diluted basis, for Q4/16. The increase in net income in Q4/17 reflected gains from the sale of NGX and Shorcan Energy of $157.8 million, as well as a gain on FX forwards relating to the Trayport acquisition. In addition, there were lower operating expenses before acquisition costs.  In Q4/16 we recorded non-cash impairment charges of $8.9 million relating to AgriClear and TMX Atrium whereas in Q4/17 we recored non-cash impairment charges and wrote off product costs totaling of $2.9 million (after tax) relating only to AgriClear.

These increases in net income were partially offset by lower revenue as well as acquisition costs on purchase of Trayport. In Q4/17, we recorded non-cash income tax adjustments relating to a change in the B.C. and U.S. corporate income tax rate of approximately $8.3 million, which increased income tax expense, whereas in Q4/16 we recorded a non-cash income tax adjustment relating to a change in the Quebec corporate income tax rate of approximately $3.2 million which reduced income tax expense. There was also an unfavorable impact on basic and diluted earnings per share from an increase in the number of weighted-average common shares outstanding in Q4/17 compared with Q4/16.

Adjusted Earnings per Share^[6] Reconciliation for Q4/17 and Q4/16  

The following is a reconciliation of earnings per share^[7] to adjusted earnings per share^[8]:

		Q4/17		Q4/16
(unaudited)		Basic	Diluted	Basic	Diluted
Earnings per share - before discontinued operations		$0.74	$0.74	$0.87	$0.86
Earnings per share - discontinued ops		$2.91	$2.89	$0.09	$0.09
Earnings per share^[9]		$3.65	$3.63	$0.96	$0.95
Adjustments related to:
	Amortization of intangibles related to acquisitions	0.13	0.13	0.13	0.13
	Acquisition costs (including finance costs)^[10]	0.25	0.24	—	—
	Gain on FX Forward	(0.16)	(0.16)	—	—
	Gain on sale of NGX and Shorcan Energy	(2.84)	(2.82)	—	—
	Non-cash impairment charges (including product write-off in 2017)^[11]	0.05	0.05	0.16	0.16
	Change in net deferred income tax assets/liabilities resulting from change to Quebec, B.C., and U.S. corporate income tax rates	0.15	0.15	(0.06)	(0.06)
Adjusted earnings per share^[12]		$1.23	$1.22	$1.19	$1.18
Weighted average number of common shares outstanding		55,368,970	55,786,624	54,966,731	55,433,196

Adjusted diluted earnings per share increased by 3% from $1.18 in Q4/16 to $1.22 in Q4/17.  The increase in adjusted diluted earnings per share reflected lower operating expenses before acquisition costs in Q4/17 compared with Q4/16.   The increase was partially offset by lower revenue and by the impact from an increase in the number of weighted-average common shares outstanding in Q4/17 compared with Q4/16.

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⁶ See discussion under the heading "Non-IFRS Financial Measures".

⁷ Earnings per share information is based on net income attributable to TMX Group shareholders.

⁸ See discussion under the heading "Non-IFRS Financial Measures".

⁹ Earnings per share information is based on net income attributable to TMX Group shareholders.

¹⁰ Includes costs related to the acquisition of Trayport (24 cents), including finance costs (1 cent).

¹¹  Related to TMX Atrium (10 cents) and Agriclear impairment (6 cents) in Q4/16; and Agriclear impairment (3 cents) and product write-off (2 cents) in 2017.

¹² Adjusted earnings per share includes discontinued operations and is a non-IFRS measure. See discussion under the heading "Non-IFRS Financial Measures".

Revenue

(in millions of dollars)		Q4/17	Q4/16	$ increase/ (decrease)	% increase/ (decrease)
	Capital Formation	$49.4	$46.6	$2.8	6%
	Equities and Fixed Income Trading and Clearing	45.6	44.7	0.9	2%
	Derivatives Trading and Clearing	27.6	28.4	(0.8)	(3)%
	Global Solutions, Insights and Analytics (formerly Market Insights)	48.3	53.2	(4.9)	(9)%
	Other	0.0	2.0	(2.0)	(100)%
		$170.9	$174.9	$(4.0)	(2)%

Revenue was $170.9 million in Q4/17, down $4.0 million or 2% compared with $174.9 million in Q4/16 largely attributable to a decline in Global Solutions, Insights, and Analytics revenue reflecting both a $1.4 million decrease in revenue from Razor Risk (sold on December 31, 2016), and a $6.7 million decrease in revenue from TMX Atrium (sold on April 30, 2017), partially offset by revenue from Trayport (acquired on December 14, 2017) of $4.5 million in Q4/17. There were also declines in Derivatives Trading and Clearing revenue and Other.  Other revenue declined largely due to the impact from recognizing net foreign exchange losses on U.S. dollar net monetary assets in Q4/17 compared with net foreign exchange gains in Q4/16. These decreases were partially offset by an increase in Capital Formation, and CDS revenue. Revenue for Q4/17 increased by 2% over Q4/16, excluding the Razor Risk and TMX Atrium businesses.

Capital Formation

(in millions of dollars)	Q4/17	Q4/16	$ increase	% increase
Initial listing fees	$3.5	$3.3	$0.2	6%
Additional listing fees	22.1	21.7	0.4	2%
Sustaining listing fees	17.8	16.6	1.2	7%
Other issuer services	6.0	5.0	1.0	20%
	$49.4	$46.6	$2.8	6%

• Initial listing fees for Q4/17 were slightly higher than in Q4/16 reflecting an increase in IPO financing dollars raised on TSXV. The increase was partially offset by a decrease in IPO financing dollars raised on TSX.
• Additional listing fees in Q4/17 increased from Q4/16 reflecting a 3% increase in the number of transactions billed on TSX. The increase was partially offset by a decrease in additional listing fees on TSXV reflecting a decrease in the number of financings in Q4/17 compared with Q4/16.
• Issuers listed on TSX and TSXV pay annual sustaining listing fees primarily based on their market capitalization at the end of the prior calendar year, subject to minimum and maximum fees. There was an increase in sustaining listing fees on both TSX and TSXV due to the increase in the market capitalization of issuers at December 31, 2017 compared with December 31, 2016.
• Other issuer services revenue in Q4/17 was higher compared to Q4/16 reflecting increased revenue from TSX Trust for transfer agent and corporate trust services.

Equity and Fixed Income Trading and Clearing

(in millions of dollars)	Q4/17	Q4/16	$ increase/ (decrease)	% increase/ (decrease)
Equity and fixed income trading	$25.2	$26.5	($1.3)	(5)%
Equity and fixed Income - clearing, settlement, depository and other services (CDS)	20.4	18.2	2.2	12%
	$45.6	$44.7	$0.9	2%

• There was a decrease in Equity and fixed income trading revenue in Q4/17 compared with Q4/16 reflecting lower equity trading revenue on TSX and Alpha due to lower volumes. The decrease was partially offset by higher revenue on TSXV due to higher volumes.
• There was an increase in the overall volume of securities traded on our equities marketplaces of 3% (38.4 billion securities in Q4/17 versus 37.1 billion securities in Q4/16). Volumes on TSXV increased by 38%, while volumes on TSX decreased by 14% in Q4/17 compared with Q4/16.
• Excluding intentional crosses, in all listed issues in Canada, our combined domestic equities trading market share was 58% in Q4/17, down from 66% in Q4/16. The decline in market share reflects an increase in trading volume of issues not listed on TSX or TSXV.
• CDS revenue increased by 12% from Q4/16 to Q4/17 largely reflecting revisions to the fee schedule for issuer services implemented on March 1, 2017.

Derivatives Trading and Clearing

(in millions of dollars)	Q4/17	Q4/16	$ (decrease)	% (decrease)
	$27.6	$28.4	$(0.8)	(3)%

• The decrease in Derivatives Trading and Clearing revenue was driven by lower revenue from MX and CDCC due to lower volumes, somewhat offset by higher revenue per contract. Volumes decreased by 9% on MX (22.6 million contracts traded in Q4/17 versus 24.9 million contracts traded in Q4/16).

Global Solutions, Insights, and Analytics

(in millions of dollars)	Q4/17	Q4/16	$ (decrease)	% (decrease)
	$48.3	$53.2	$(4.9)	(9)%

• The decrease in Global Solutions, Insights, and Analytics revenue in Q4/17 compared with Q4/16 reflected a decline of $1.4 million in revenue from Razor Risk (sold on December 31, 2016), and $6.7 million in revenue from TMX Atrium (sold on April 30, 2017). The decrease also reflected lower revenue recoveries related to under-reported usage of real-time quotes in prior periods, a decrease in professional market data subscriptions, and an unfavourable impact from a stronger Canadian dollar relative to the U.S. dollar in Q4/17 compared with Q4/16. The decrease was partially offset by higher co-location revenue, and higher revenue from benchmarks and indices. There was also additional revenue from Trayport (acquired December 14, 2017) of approximately $4.5 million.
• Revenue for Q4/17 increased by 7% over Q4/16 in the Global Solutions, Insights, and Analytics business, excluding Razor Risk and TMX Atrium and including Trayport.
• The average number of professional market data subscriptions for TSX and TSXV products decreased by 3% from Q4/17 to Q4/16 (101,006 professional market data subscriptions in Q4/17 compared with 103,730 in Q4/16).
• The average number of MX professional market data subscriptions was up 2% from Q4/17 to Q4/16 (18,602 MX professional market data subscriptions in Q4/17 compared with 18,217 in Q4/16).

Other

(in millions of dollars)	Q4/17	Q4/16	$ (decrease)	% (decrease)
	$0.0	$2.0	$(2.0)	(100)%

• The decrease in Other revenue was largely due to the impact from recognizing net foreign exchange losses on U.S. dollar net monetary assets in Q4/17 compared with net foreign exchange gains in Q4/16.

Operating expenses before acquisition costs and strategic re-alignment expenses

(in millions of dollars)	Q4/17	Q4/16	$ increase/ (decrease)	% increase/ (decrease)
Compensation and benefits	$39.8	$46.8	$(7.0)	(15)%
Information and trading systems	11.7	16.4	(4.7)	(29)%
Selling, general and administration	23.9	18.7	5.2	28%
Depreciation and amortization	11.7	14.2	(2.5)	(18)%
	$87.1	$96.1	$(9.0)	(9)%

Operating expenses before acquisition costs and strategic re-alignment expenses in Q4/17 were $87.1 million, down $9.0 million or 9%, from $96.1 million in Q4/16. There were reduced costs related to Razor Risk and TMX Atrium of approximately $2.2 million and approximately $8.3 million respectively, as well as lower compensation and benefits costs.  These decreases were partially offset by higher occupancy costs including approximately $2.7 million primarily related to rent recoveries in Q4/16,  higher expenses of approximately $1.9 million related to our global marketing campaign, and increased costs related to Trayport.

Compensation and benefits^[13]

(in millions of dollars)	Q4/17	Q4/16	$ (decrease)	% (decrease)
	$39.8	$46.8	$(7.0)	(15)%

• Compensation and benefits costs decreased in Q4/17 reflecting reduced costs related to Razor Risk and TMX Atrium of approximately $2.1 million and approximately $1.4 million respectively, as well as lower compensation and benefits costs including employee performance incentive plan costs of $1.7 million, lower costs related to projects (net of labour capitalization) of $2.1 million and lower severance costs of $1.6 million (not included as part of strategic re-alignment expenses).
• The decreases were partially offset by increased costs related to Trayport, and higher costs associated with employee compensation including merit increases.
• There were 1,238 TMX Group employees at December 31, 2017 versus 1,075 employees at December 31, 2016 reflecting a higher headcount related to the acquisition of Trayport on December 14, 2017 which employs approximately 240 people. This increase is was offset by reduction in headcount due to our strategic realignment initiative, the sale of Razor Risk on December 31, 2016 which employed approximately 30 people, the sale of TMX Atrium on April 30, 2017 which employed approximately 20 people, and the sale of NGX and Shorcan Energy which collectively employed approximately 70 people.
• For compensation and benefits, we will likely have higher severance costs related to organizational changes in the range of $3.5 to $4.5 million in Q1/18, which is expected to generate an annual savings of approximately $2 million starting in Q2/18.

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¹³ The "Compensation and benefits" section above contains certain forward-looking statements.  Please refer to "Caution Regarding Forward-Looking Information" for a discussion of risks and uncertainties related to such statements.

Information and trading systems

(in millions of dollars)	Q4/17	Q4/16	$ (decrease)	% (decrease)
	$11.7	$16.4	$(4.7)	(29)%

• Information and trading systems expenses decreased in Q4/17 compared with Q4/16 reflecting reduced costs related to TMX Atrium.

Selling, general and administration

(in millions of dollars)	Q4/17	Q4/16	$ increase	% increase
	$23.9	$18.7	$5.2	28%

• Selling, general and administration expenses increased in Q4/17 compared with Q4/16 reflecting higher occupancy costs of approximately $2.7 million primarily related to rent recoveries in Q4/16, higher expenses of approximately $1.9 million related to our global marketing campaign as well as higher expenses related to increased TSX Trust revenues.
• These increases were partially offset by reduced costs related to Razor Risk and TMX Atrium.

Depreciation and amortization

(in millions of dollars)	Q4/17	Q4/16	$ (decrease)	% (decrease)
	$11.7	$14.2	$(2.5)	(18)%

• Lower Depreciation and amortization costs largely reflects a reduction in amortization related to TMX Atrium and Quantum XA as well as to assets that were fully amortized.
• The Depreciation and amortization costs of $11.7 million included $8.8 million related to amortization of intangibles related to acquisitions (12 cents per basic and diluted share). The Depreciation and amortization costs in Q4/16 of $14 million included $8.5 million related to amortization of intangibles related to acquisitions (13 cents per basic and diluted share).

Acquisition expenses

	Q4/17		Q4/16
(in millions of dollars, except per share amounts) (unaudited)	Pre-tax Amount	Basic and Diluted Earnings per Share Impact	Pre-tax Amount	Basic and Diluted Earnings per Share Impact
	$13.4	$0.24	—	—

• The increase in acquisition costs relate to the acquisition of Trayport that closed on December 14, 2017 (See INITIATIVES AND ACCOMPLISHMENTS - Acquisition of Trayport and Sale of Natural Gas Exchange and Shorcan Energy Brokers in the 2017 Annual MD&A).

Additional Information

Income from discontinued operations

(in millions of dollars)	Q4/17	Q4/16	$ increase	% increase
	$161.1	$5.0	$156.1	3122%

• The increase in income from discontinued operations is primarily driven by the gain in the sale of NGX and Shorcan Energy. In 2017, we completed the sale of NGX and Shorcan Energy at a combined $379.2 million as partial consideration for the related acquisition of Trayport. We disposed net assets of $174.0 million. There was an income tax expense of $45.4 million resulting in an after-tax gain of $157.8 million.

Share of net income/(loss) from equity accounted investees

(in millions of dollars)	Q4/17	Q4/16	$ (decrease)	% (decrease)
	$(0.3)	$0.9	$(1.2)	(133)%

• In Q4/17 there was a decline in our contribution of our equity accounted investees; FTSE TMX Global Debt Capital Markets Limited, BOX, and Candeal from Q4/16.

Impairment charges

(in millions of dollars)	Q4/17	Q4/16	$ (decrease	% (decrease)
	$1.7	$8.9	$(7.2)	(81)%

• In Q4/16 we determined that the fair value of TMX Atrium and Agriclear were below their carrying value, resulting in impairment charges of $8.9 million.
• In Q4/17 we determined that the fair value of Agriclear was below its carrying value, resulting in impairment charges of $1.7 million.

Net finance income/costs

(in millions of dollars)	Q4/17	Q4/16	$ (decrease)	% (decrease)
	$(3.8)	$6.9	$(10.7)	(155)%

• The decrease in net finance income/costs from Q4/16 to Q4/17 reflects a gain on FX forwards related to the Trayport acquisition of $10.2 million before tax (16 cents per share on a basic and diluted basis), and increased average cash levels, which resulted in increased finance income. In addition, foreign exchange losses on U.S. dollar denominated Commercial Paper in Q4/17 were lower than similar losses realized in Q4/16. As well, there were higher mark to market gains on interest rate swaps over the same period. Offsetting these decreases in net finance costs, we incurred finance costs of approximately $0.3 million related to the acquisition of Trayport in Q4/17.

Income tax expense and effective tax rate^[14]

Income Tax Expense (in millions of dollars)		Effective Tax Rate (%)
Q4/17	Q4/16	Q4/17	Q4/16
$30.9	$15.5	44%	25%

• The effective tax rate for Q4/17 was higher than our statutory tax rate of approximately 27% largely due to non-cash income tax adjustments of approximately $8.3 million related to changes in B.C. and U.S. corporate income tax rates. The acquisition costs related to Trayport, and non-cash impairment charge related to Agriclear are non-deductible for tax purposes, which increased the effective tax rate. The impact was somewhat offset by the gain on FX forwards being taxed at 50% of our statutory rate.
• In Q4/16, the Quebec corporate income tax rate decreased, effective January 1 of each year, starting January 1, 2017. As a result of this change there was a decrease in the value of net deferred income tax liabilities and a corresponding non-cash net decrease in deferred income tax expense of approximately $3.2 million. We also incurred non-cash impairment charges of $8.9 million as well as a loss on the sale of Razor Risk of $0.8 million. On a net basis, the related tax impact of these two items increased our effective tax rate for Q4/16. Excluding adjustments, primarily relating to all of the above items, the effective tax rate would have been approximately 27% for Q4/16.
• With the acquisition of Trayport, we expect our 2018 statutory tax rate to be approximately 26%.

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¹⁴ The "Income tax expense and effective tax rate" section above contains certain forward-looking statements.  Please refer to "Caution Regarding Forward-Looking Information" for a discussion of risks and uncertainties related to such statements.

Summary of Cash Flows

Q4/17 compared with Q4/16

(in millions of dollars)	Q4/17	Q4/16	$ increase/ (decrease) in cash
Cash flows from operating activities	$59.4	$77.7	$(18.3)
Cash flows from/(used in) financing activities	380.1	(89.3)	469.4
Cash flows (used in) investing activities	(595.1)	(7.3)	(587.8)

• In Q4/17, Cash flows from operating activities decreased compared with Q4/16 reflecting a decrease in income from operations (excluding depreciation and amortization) net of acquisition costs.
• In Q4/17, Cash flows from financing activities were higher than in Q4/16 when we used cash in financing activities. During Q4/16, we used $350.0 million in cash when we repaid our Series C Debentures whereas in Q4/17 there was an increase in cash following the issuance of $300.0 million in Series D Debentures. The impact of this $650.0 million increase in cash was partially offset by a net reduction in the issuance of Commercial Paper of almost $170.0 million.
• In Q4/17, there was an increase in Cash flows used in investing activities compared with Q4/16 reflecting a cash outflow of $613.5 million related to the purchase of Trayport. In addition, there was an increase in cash outlays for additions to premises and equipment and intangible assets. These cash outflows were partially offset by a net sale of marketable securities in Q4/17 compared with a net purchase of marketable securities in Q4/16.

Year Ended December 31, 2017 Compared with Year Ended December 31, 2016

Certain comparative figures have been reclassified in order to conform with the financial presentation adopted in the current year. On December 14, 2017, we completed the sale of NGX and Shorcan Energy.  TMX Group has classified the sale of NGX and Shorcan Energy as discontinued operations. Prior to the sale, the operations of NGX and Shorcan Energy entirely comprised of the Energy Trading and Clearing operating segment and a small portion of the Global Solutions, Insights and Analytics operating segment.

The classification of discontinued operations occurred at December 14, 2017 which is the date of disposal of the operations.  Accordingly, TMX Group has re-presented the comparative consolidated income statements to show the discontinued operations separately from continuing operations.

The information below reflects the financial statements of TMX Group for the year ended December 31, 2017 compared with the year ended December 31, 2016.

(in millions of dollars, except per share amounts)		Year Ended December 31, 2017	Year Ended December 31, 2016	$ increase/ (decrease)	% increase/ (decrease)
Revenue		$668.9	$683.7	$(14.8)	(2)%
Operating expenses before acquisition costs and strategic re-alignment expenses		356.3	383.6	(27.3)	(7)%
Income from operations before acquisition costs and strategic re- alignment expenses^[15]		312.6	300.1	12.5	4%
Acquisition costs^[16]		13.8	—	13.8	n/a
Strategic re-alignment expenses		—	21.0	(21.0)	(100)%
Income from operations^[17]		298.8	279.1	19.7	7%
Income from discontinued operations, net of tax		176.8	15.7	161.1	1,026%
Net income attributable to TMX Group shareholders		368.0	196.4	171.6	87%
Earnings per share - before discontinued operations^[18]
	Basic	3.46	3.31	0.15	5%
	Diluted	3.43	3.30	0.13	4%
Earnings per share^[19]
	Basic	6.66	3.60	3.06	85%
	Diluted	6.60	3.58	3.02	84%
Adjusted Earnings per share^[20]
	Basic	4.69	4.49	0.20	4%
	Diluted	4.65	4.47	0.18	4%
Cash flows from operating activities		276.6	314.4	(37.8)	(12%)

_____________________

¹⁵ See discussion under the heading "Additional IFRS Financial Measures".

¹⁶ Includes costs related to the acquisition of Trayport.

¹⁷ See discussion under the heading "Additional IFRS Financial Measures".

¹⁸  Earnings per share information is based on net income attributable to TMX Group shareholders, discontinued operations include NGX and Shorcan Energy.

¹⁹ Earnings per share information is based on net income attributable to TMX Group shareholders.

²⁰ Adjusted earnings per share includes discontinued operations, net of gain on sale of NGX and Shorcan Energy, and is a non-IFRS measure.  See discussion under the heading "Non-IFRS Financial Measures".

Net income attributable to TMX Group shareholders

Net income attributable to TMX Group shareholders in the year ended December 31, 2017 was $368.0 million, or $6.66 per common share on a basic basis and $6.60 per common share on a diluted basis, compared with a net income of $196.4 million, or $3.60 per common share on a basic and $3.58 on a diluted basis, for the year ended December 31, 2016. The increase in net income in the year ended December 31, 2017 included an after tax gain on the sale of NGX and Shorcan Energy, of $157.8 million as well as a gain on FX forwards relating to the Trayport acquisition. There were lower operating expenses before acquisition costs and strategic re-alignment expenses, and no strategic re-alignment expenses in 2017 compared with 2016.  There was also a decrease in income tax expense of approximately $2.4 million related to a capital loss carryback, which increased net income in 2017.   In addition, we incurred lower finance costs in the year ended December 31, 2017 compared with the year ended December 31, 2016. During 2016, we recorded non-cash impairment charges of $8.9 million relating to AgriClear and TMX Atrium whereas in 2017 we recorded non-cash impairment charges and wrote off product costs totaling of $7.7 million (after tax) relating to AgriClear and TMX Atrium.

These increases in net income were partially offset by lower revenue, acquisition costs on purchase of Trayport and a non-cash income tax adjustment of $2.9 million relating to the write off of deferred income tax assets relating to TMX Atrium.    In 2017, we recorded non-cash income tax adjustments relating to a change in the B.C. and U.S. corporate income tax rate of approximately $8.3 million, which increased income tax expense, whereas in 2016 we recorded a non-cash income tax adjustment relating to a change in the Quebec corporate income tax rate of approximately $3.2 million which reduced income tax expense. There was also an unfavorable impact on basic and diluted earnings per share from an increase in the number of weighted-average common shares outstanding in the year ended December 31, 2017 compared with the year ended December 31, 2016.

Adjusted Earnings per Share Reconciliation for Year Ended December 31, 2017 and Year Ended December 31, 2016^[21]

The following is a reconciliation of earnings per share to adjusted earnings per share:

		Year Ended December 31, 2017		Year Ended December 31, 2016
(unaudited)		Basic	Diluted	Basic	Diluted
Earnings per share - before discontinued operations		$3.46	$3.43	$3.31	$3.30
Earnings per share - discontinued operations		$3.20	$3.17	$0.29	$0.28
Earnings per share		$6.66	$6.60	$3.60	$3.58
Adjustments related to:
	Amortization of intangibles related to acquisitions	0.49	0.48	0.51	0.51
	Acquisition costs (including finance costs)^[22]	0.25	0.25	—	—
	Gain on FX Forward	(0.16)	(0.16)	—	—
	Strategic re-alignment expenses	—	—	0.28	0.28
	Increase in deferred income tax assets resulting from capital loss carryback^[23]	(0.04)	(0.04)	—	—
	Gain on sale of NGX and Shorcan Energy	(2.85)	(2.82)	—	—
	Non-cash impairment charges (including product write-off in 2017)^[24]	0.14	0.14	0.16	0.16
	Write-off of deferred income tax assets^[25]	0.05	0.05	—	—
	Change in net deferred income tax assets/liabilities resulting from change to Quebec, B.C., and U.S. corporate income tax rates	0.15	0.15	(0.06)	(0.06)
Adjusted earnings per share^[26]		$4.69	$4.65	$4.49	$4.47
Weighted average number of common shares outstanding		55,285,668	55,730,437	54,616,160	54,810,538

Adjusted diluted earnings per share increased by 4% from $4.47 in the year ended December 31, 2016 to $4.65 in year ended December 31, 2017.  The increase in adjusted diluted earnings per share reflected significantly lower operating expenses before acquisition costs and strategic re-alignment expenses, excluding amortization of intangibles related to acquisitions, partially offset by lower revenue.  In addition, we incurred lower finance costs in the year ended December 31, 2017 compared with the year ended December 31, 2016.  The increase in basic and diluted earnings per share were partially offset by the impact from an increase in the number of weighted-average common shares outstanding in the year ended December 31, 2017 compared with the year ended December 31, 2016.

_____________________

²¹ Adjusted earnings per share is a non-IFRS measure.  See discussion under the heading "Non-IFRS Financial Measures".  Earnings per share information is based on net income attributable to TMX Group shareholders.

²² Includes costs related to the acquisition of Trayport (24 cent), including finance costs (1 cent).

²³ Related to Razor Risk.

²⁴ Related to TMX Atrium (10 cents) and Agriclear impairment (6 cents) in 2016; and TMX Atrium impairment (9 cents) Agriclear impairment (3 cent) and product write-off (2 cents) in 2017.

²⁵ Related to TMX Atrium Wireless.

²⁶ Adjusted earnings per share includes discontinued operations, net of gain on sale of NGX and Shorcan Energy, and is a non-IFRS measure.  See discussion under the heading "Non-IFRS Financial Measures".

Revenue

(in millions of dollars)	Year Ended December 31, 2017	Year Ended December 31, 2016	$ increase/ (decrease)	% increase/ (decrease)
Capital Formation	188.7	$182.9	$5.8	3%
Equities and Fixed Income Trading and Clearing	182.1	173.5	8.6	5%
Derivatives Trading and Clearing	114.8	117.5	(2.7)	(2)%
Global Solutions, Insights and Analytics	186.5	208.3	(21.8)	(10)%
Other	(3.2)	1.5	(4.7)	(313)%
	$668.9	$683.7	$(14.8)	(2)%

Revenue was $668.9 million in the year ended December 31, 2017, down $14.8 million or 2% compared with $683.7 million in the year ended December 31, 2016.   There were decreases in Global Solutions, Insights and Analytics revenue reflecting both a $5.9 million decrease in revenue from Razor Risk (sold on December 31, 2016) and a $17.7 million decrease in revenue from TMX Atrium (sold on April 30, 2017), partially offset by $4.5 million revenue from Trayport (acquired on December 14, 2017).  The decrease in Other revenue was primarily due to recognizing higher net foreign exchange losses on U.S. dollar and other non-Canadian denominated net monetary assets in the year ended December 31, 2017 compared with the year ended December 31, 2016 and reclassifying revenue from BOX's regulatory entity from Other revenue to Derivatives Trading and Clearing revenue effective July 1, 2016. These decreases were partially offset by increases in Equities and Fixed Income Trading and Clearing, and Capital Formation revenue. Revenue for the year ended December 31, 2017 increased by 2% over the year ended December 31, 2016, excluding the Razor Risk and TMX Atrium businesses and the $6.5 million net impact from de-consolidating BOX (effective July 1, 2016).

Operating expenses before acquisition costs and strategic re-alignment expenses

(in millions of dollars)	Year Ended December 31, 2017	Year Ended December 31, 2016	$ increase/ (decrease)	% increase/ (decrease)
Compensation and benefits	$171.4	$183.1	$(11.7)	(6)%
Information and trading systems	51.2	67.2	(16.0)	(24)%
Selling, general and administration	82.1	76.7	5.4	7%
Depreciation and amortization	51.6	56.6	(5.0)	(9)%
	$356.3	$383.6	$(27.3)	(7)%

• Operating expenses before acquisition costs and strategic re-alignment expenses in the year ended December 31, 2017 were $356.3 million, down $27.3 million or 7%, from $383.6 million in the year ended December 31, 2016. There were lower compensation and benefits costs (including employee performance incentive plan costs) of approximately $7.7 million related to our strategic re-alignment initiative, as well as reduced costs related to Razor Risk and TMX Atrium of approximately $11.9 million and approximately $20.8 million respectively. Effective July 1, 2016, we excluded operating expenses related to BOX when we ceased to consolidate BOX's results from operations, which were approximately $7.6 million in 1H/16. The decreases in costs were partially offset by approximately $4.7 million of higher employee performance incentive plan costs and increased severance costs of $5.3 million (not included as part of strategic re-alignment expenses). There were also higher compensation costs related to Trayport, higher occupancy costs, and approximately $2.2 million higher expenses related to our global marketing campaign.

Acquisition expenses

	Year Ended December 31, 2017		Year Ended December 31, 2016
(in millions of dollars)	Pre-tax Amount	Basic and Diluted Earnings per Share Impact^[27]	Pre-tax Amount	Basic and Diluted Earnings per Share Impact^[28]
	$13.8	$0.25	$—	$—

• The increase in acquisition costs relate to the acquisition of Trayport that closed on December 14, 2017 (See INITIATIVES AND ACCOMPLISHMENTS - Acquisition of Trayport and Sale of Natural Gas Exchange and Shorcan Energy Brokers in our 2017 Annual MD&A).

_________________

²⁷ Earnings per share information is based on net income attributable to TMX Group shareholders.

²⁸ Earnings per share information is based on net income attributable to TMX Group shareholders.

Additional Information

Income from discontinued operations

(in millions of dollars)	Year Ended December 31, 2017	Year Ended December 31, 2016	$ increase	% increase
	$176.8	$15.7	$161.1	1026%

• The increase in income from discontinued operations is primarily driven by the gain in the sale of NGX and Shorcan Energy. In 2017, we completed the sale of NGX and Shorcan Energy at a combined amount of $379.2 million as partial consideration for the related acquisition of Trayport. We disposed net assets of $174.0 million. There was an income tax expense of $45.4 million resulting in an after-tax gain of $157.8 million.
• Income from NGX and Shorcan Energy was $19.1 million net of tax from January 1, 2017 to December 14, 2017, an increase of $3.4 million from the year ended December 31, 2016.

Impairment charges

(in millions of dollars)	Year Ended December 31, 2017	Year Ended December 31, 2016	$ decrease	% decrease
	$6.5	$8.9	$(2.4)	(27)%

• In Q4/16 we determined that the fair value of TMX Atrium and Agriclear were below their carrying value, resulting in impairment charges of $8.9 million
• In Q1/17 we determined that the fair value of TMX Atrium was below its carrying value, resulting in impairment charges relating to the write-down of goodwill of $4.8 million. In February 2017, we entered into an agreement to sell TMX Atrium. The transaction closed on April 30, 2017 (see INITIATIVES AND ACCOMPLISHMENTS - Global Solutions, Insights and Analytics in our 2017 Annual MD&A). There was no material gain or loss on sale in Q2/17.
• In Q4/17 we determined that the fair value of Agriclear was below its carrying value, resulting in impairment charges of $1.7 million.

Income tax expense and effective tax rate^[29]                                   

Income Tax Expense (in millions of dollars)		Effective Tax Rate (%)
Year Ended December 31, 2017	Year Ended December 31, 2016	Year Ended December 31, 2017	Year Ended December 31, 2016
$89.0	$61.8	32%	26%

• Excluding adjustments, primarily related to the items noted below, the effective tax rate would have been approximately 27% for both 2017 and 2016.
• With the acquisition of Trayport, we expect our 2018 statutory tax rate to be approximately 26%.

_____________________

²⁹ The "Income tax expense and effective tax rate" section above contains certain forward-looking statements.  Please refer to "Caution Regarding Forward-Looking Information" for a discussion of risks and uncertainties related to such statements.

2017

• In Q4/17, there were non-cash income tax adjustments related to changes in B.C. and U.S. corporate income tax rates. These changes increased net deferred income tax liabilities and decreased net deferred income tax assets, respectively, resulting in a corresponding non-cash net decreased in deferred income tax expense of approximately $8.3 million.
• In Q4/17, we incurred acquisition costs related to Trayport, and non-cash impairment charges related to Agriclear that are non-deductible for tax purposes, which increased our effective tax rate in Q4/17. The impact was somewhat offset by the gain on FX forwards being taxed at 50% of our statutory rate.
• In Q1/17, we incurred non-cash impairment charges of $4.8 related to TMX Atrium. We also wrote-down $2.9 million of deferred tax assets relating to TMX Atrium Wireless which increased our effective tax rate for Q1/17. These items increased our effective tax rate and income tax expense in Q1/17.

2016

• In Q4/16, the Quebec corporate income tax rate decreased, effective January 1 of each year, starting January 1, 2017. As a result of this change there was a decrease in the value of net deferred income tax liabilities and a corresponding non-cash net decrease in deferred income tax expense of approximately $3.2 million.
• In Q4/16, we incurred non-cash impairment charges of $8.9 million as well as a loss on the sale of Razor Risk of $0.8 million. On a net basis, the related tax impact of these two items increased our effective tax rate for Q4/16.
• In Q3/16, we recorded non-cash income tax adjustments of approximately $2.0 million (net) largely related to the de-consolidation of results from BOX, which reduced income tax expense.

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 2017 audited annual consolidated financial statements and related Management's Discussion and Analysis (MD&A) and recommended they be approved by the Board of Directors.  Following review by the full Board, the 2017 audited annual consolidated financial statements, MD&A and the contents of this press release were approved.

CONSOLIDATED FINANCIAL STATEMENTS

Our 2017 audited annual consolidated 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.

TMX Group has filed its 2017 audited annual consolidated financial statements and MD&A with Canadian securities regulators.  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 [phone] or by e-mail at [email protected].

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, the anticipated benefits of the Trayport acquisition to TMX Group; the expected impact of the Trayport acquisition on TMX Group's earnings and adjusted earnings per share; the ability and timing to integrate Trayport into TMX Group and the potential synergies; the acquisition of Trayport bolstering TMX Group's strategy to shift towards recurring data and analytics revenue globally; the impact of the Trayport acquisition on certain of TMX Group's segments, including capital markets, derivatives markets and global solutions, insights and analytics businesses as a result of a European presence; Trayport's expected conversion to the SaaS model and the timing thereof; the potential for geographic expansion; the ability for TMX Group to accelerate Trayport's growth; the ability of TMX Group to de-leverage and the timing thereof; TMX Group's business integration initiative including the integration of clearing platforms, including the expected cash expenditures related to the integration of our clearing platforms and the anticipated cost savings resulting from this initiative and the timing of the integration and the anticipated savings; costs associated with the consolidation of office premises, and anticipated cost savings related to consolidation of office premises statements; other statements related to cost reductions and strategic realignment expenses;  the impact of changes to each of our equity trading fees, market data fees, additional listing fees on TMX Group's revenue; the impact of the increase of market capitalization of TSX and TSXV issuers overall (from 2016 to 2017) net of changes to sustaining fees on TMX Group's revenue; anticipated increases to severance costs as a result of organizational changes, the expected annual cost savings related to these changes, and the timing thereof; TMX Group's anticipated statutory income tax rate for 2018;  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 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; 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, including the Trayport acquisition, to achieve planned economics, or divest under-performing 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 British pound sterling), 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.

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 under the heading RISKS AND UNCERTAINTIES in the 2017 Annual MD&A.

About TMX Group (TSX:X)

TMX Group's key subsidiaries operate cash and derivative markets and clearinghouses for multiple asset classes including equities, and fixed income. Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montréal Exchange, Canadian Derivatives Clearing Corporation, Trayport, and other TMX Group companies 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, Beijing and Singapore. For more information about TMX Group, visit our website at http://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 Q4/17.

Time: 8:00 a.m. - 9:00 a.m. ET on Tuesday, February 13, 2018.

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 passcode for the replay is 6376298.

TMX GROUP LIMITED
Consolidated Balance Sheets

(In millions of Canadian dollars)
(Unaudited)		December 31, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents		$	175.0		$	240.6
Restricted cash and cash equivalents		116.3			66.0
Marketable securities		50.1			61.8
Trade and other receivables		102.3			84.9
Energy contracts receivable		—			781.3
Fair value of open energy contracts		—			122.8
Balances with Clearing Members and Participants		19,946.0			16,315.5
Other current assets		18.1			16.2
		20,407.8			17,689.1
Non-current assets:
Fair value of open energy contracts		—			27.4
Goodwill and intangible assets		5,067.6			4,319.8
Other non-current assets		134.4			128.3
Deferred income tax assets		15.0			36.8
Total Assets		$	25,624.8		$	22,201.4
Liabilities and Equity
Current liabilities:
Trade and other payables		$	90.3		$	77.5
Participants' tax withholdings		116.3			66.0
Energy contracts payable		—			781.3
Fair value of open energy contracts		—			122.8
Balances with Clearing Members and Participants		19,946.0			16,315.5
Debt		795.0			309.9
Credit and liquidity facilities drawn		—			4.6
Other current liabilities		61.1			56.0
		21,008.7			17,733.6
Non-current liabilities:
Fair value of open energy contracts		—			27.4
Debt		547.6			648.7
Other non-current liabilities		61.3			58.0
Deferred income tax liabilities		824.4			813.0
Total Liabilities		22,442.0			19,280.7
Equity:
Share capital		2,915.5			2,896.4
Contributed surplus		11.8			10.3
Retained earnings (deficit)		252.6			(5.3)
Accumulated other comprehensive income		2.9			19.3
Total Equity		3,182.8			2,920.7
Commitments and contingent liabilities
Total Liabilities and Equity		$	25,624.8		$	22,201.4

TMX GROUP LIMITED
Consolidated Income Statements

(In millions of Canadian dollars,  except per share amounts)       (Unaudited)		For the three months ended December 31,						For the year ended December 31,
		2017				2016			2017			2016
Revenue		$	170.9		$	174.9		$	668.9		$	683.7
REPO interest:
	Interest income	29.5			14.7			78.4			61.7
	Interest expense	(29.5)			(14.7)			(78.4)			(61.7)
	Net REPO interest	—			—			—			—
Total revenue		170.9			174.9			668.9			683.7
Compensation and benefits		39.8			46.8			171.4			183.1
Information and trading systems		11.7			16.4			51.2			67.2
Selling, general and administration		23.9			18.7			82.1			76.7
Depreciation and amortization		11.7			14.2			51.6			56.6
Total operating expenses before acquisition costs and strategic re-alignment expenses		87.1			96.1			356.3			383.6
Income from operations before acquisition costs and strategic re-alignment expenses		83.8			78.8			312.6			300.1
	Acquisition costs	13.4			—			13.8			—
	Strategic re-alignment expenses	—			—			—			21.0
Income from operations		70.4			78.8			298.8			279.1
Share of income from equity accounted investees		(0.3)			0.9			2.9			2.4
Impairment charges		(1.7)			(8.9)			(6.5)			(8.9)
Other income		—			(0.8)			—			0.6
Finance income (costs):
	Finance income	11.2			0.4			13.1			1.7
	Finance costs	(7.5)			(7.3)			(28.1)			(33.1)
	Net finance costs	3.7			(6.9)			(15.0)			(31.4)
Income before income tax expense and income from discontinued operations		72.1			63.1			280.2			241.8
Income tax expense		30.9			15.5			89.0			61.8
Net income before income from discontinued operations, net of tax		41.2			47.6			191.2			180.0
Income from discontinued operations, net of tax		161.1			5.0			176.8			15.7
Net income		$	202.3		$	52.6		$	368.0		$	195.7
Net income attributable to:
Equity holders of the Company		$	202.3		$	52.6		$	368.0		$	196.4
Non-controlling interests		—			—			—			(0.7)
		$	202.3		$	52.6		$	368.0		$	195.7
Earnings per share (attributable to equity holders of the Company):
	Net income before discontinued operations, net of tax - basic	$	0.74		$	0.87		$	3.46		$	3.31
	Net income before discontinued operations, net of tax - diluted	$	0.74		$	0.86		$	3.43		$	3.30
	Net income - basic	$	3.65		$	0.96		$	6.66		$	3.60
	Net income - diluted	$	3.63		$	0.95		$	6.60		$	3.58

TMX GROUP LIMITED
Consolidated Statements of Comprehensive Income (Loss)

(In millions of Canadian dollars)  (Unaudited)			For the three months ended December 31,							For the year ended December 31,
			2017			2016				2017			2016
Net income (loss)			$	202.3		$	52.6			$	368.0		$	195.7
Other comprehensive income (loss):
Items that will not be reclassified to the consolidated income statements:
	Actuarial (losses) gains on defined benefit pension and other post-retirement benefit plans		(2.3)			(0.7)				(2.3)			(0.7)
Total items that will not be reclassified to the  consolidated income statements			(2.3)			(0.7)				(2.3)			(0.7)
Items that may be reclassified subsequently to the consolidated income statements:
	Unrealized gains (losses) on translating financial statements of foreign operations		(13.5)			1.1				(16.4)			(5.6)
	Reclassification to net income of losses on interest rate swaps		—			—				—			1.1
Total items that may be reclassified subsequently to the consolidated income statements			(13.5)			1.1				(16.4)			(4.5)
Total comprehensive income (loss)			$	186.5		$	53.0			$	349.3		$	190.5
Total comprehensive income (loss) attributable to:
Equity holders of the Company			$	186.5		$	53.0			$	349.3		$	193.1
Non-controlling interests			—			—				—			(2.6)
			$	186.5		$	53.0			$	349.3		$	190.5

TMX GROUP LIMITED
Consolidated Statements of Changes in Equity

(In millions of Canadian dollars)	For the year ended December 31, 2017
(Unaudited)													Total equity
	Share capital			Contributed surplus			Accumulated other comprehensive income			Retained earnings (deficit)
Balance at January 1, 2017	$	2,896.4		$	10.3		$	19.3		$	(5.3)		$	2,920.7
Net income	—			—			—			368.0			368.0
Other comprehensive (loss) income:
Foreign currency translation differences	—			—			(16.4)			—			(16.4)
Actuarial losses on defined benefit pension and other post-retirement benefit plans, net of taxes	—			—			—			(2.3)			(2.3)
Total comprehensive income (loss) income	—			—			(16.4)			365.7			349.3
Dividends to equity holders	—			—			—			(107.8)			(107.8)
Proceeds from exercised share options	17.3			—			—			—			17.3
Cost of exercised share options	1.8			(1.8)			—			—			—
Cost of share option plan	—			3.3			—			—			3.3
Balance at December 31, 2017	$	2,915.5		$	11.8		$	2.9		$	252.6		$	3,182.8

TMX GROUP LIMITED 
Consolidated Statements of Changes in Equity

(In millions of Canadian dollars)								For the year ended December 31, 2016
		Attributable to equity holders of the Company															Non-controlling interests			Total equity
		Share capital			Contributed surplus			Accumulated other comprehensive income			Retained earnings (deficit)			Total attributable to equity holders
Balance at January 1, 2016		$	2,861.7		$	11.0		$	21.9		$	(106.6)		$	2,788.0		$	30.3		$	2,818.3
Net income (loss)		—			—			—			196.4			196.4			(0.7)			195.7
Other comprehensive (loss) income:
Foreign currency translation differences		—			—			(3.7)			—			(3.7)			(1.9)			(5.6)
Net change in interest rate swaps designated as cash flow hedges, net of taxes		—			—			1.1			—			1.1			—			1.1
Actuarial losses on defined benefit pension and other post- retirement benefit plans, net of taxes		—			—			—			(0.7)			(0.7)			—			(0.7)
Total comprehensive (loss) income		—			—			(2.6)			195.7			193.1			(2.6)			190.5
Dividends to equity holders		—			—			—			(90.2)			(90.2)			—			(90.2)
Dividend to non-controlling interests		—			—			—			—			—			(3.4)			(3.4)
Changes to BOX Holdings  non-controlling interests		—			—			—			(4.2)			(4.2)			(24.3)			(28.5)
Proceeds from exercised share options		31.6			—			—			—			31.6			—			31.6
Cost of exercised share options		3.1			(3.1)			—			—			—			—			—
Cost of share option plan		—			2.4			—			—			2.4			—			2.4
Balance at December 31, 2016		$	2,896.4		$	10.3		$	19.3		$	(5.3)		$	2,920.7		$	—		$	2,920.7

TMX GROUP LIMITED
Consolidated Statements of Cash Flows

(In millions of Canadian dollars)		For the three months ended December 31,						For the year ended December 31,
		2017				2016			2017			2016
Cash flows from (used in) operating activities:
Income (including discontinued operations) before income taxes		$	280.7		$	69.1		$	507.5		$	261.5
Adjustments to determine net cash flows:
	Depreciation and amortization	12.8			15.4			56.1			61.2
	Impairment charges and write-offs	2.7			8.8			8.3			10.7
	Gain on sale of NGX and Shorcan Energy before income taxes	(203.2)			—			(203.2)			—
	Other income	—			0.8			—			(0.6)
	Net finance costs	(4.0)			6.7			14.4			30.9
	Share of income of equity accounted investees	0.4			(0.9)			(2.9)			(2.4)
	Cost of share option plan	0.8			0.6			3.3			2.4
	Employee defined benefits expense	0.6			0.7			3.8			3.7
	Unrealized foreign exchange losses	(2.5)			(0.1)			(2.5)			0.3
Trade and other receivables, and prepaid expenses		(8.5)			(3.9)			(11.8)			(9.5)
Trade and other payables		10.3			12.3			0.8			1.5
Provisions		(0.5)			(3.3)			(7.9)			14.0
Deferred revenue		(17.5)			(16.6)			(2.8)			7.7
Other assets and liabilities		6.2			4.9			11.0			7.2
Cash paid for employee defined benefits		(0.7)			(0.5)			(2.2)			(5.2)
Income taxes paid		(18.2)			(16.3)			(95.3)			(69.0)
		59.4			77.7			276.6			314.4
Cash flows from (used in) financing activities:
Interest paid		(15.8)			(13.2)			(29.0)			(31.8)
Net settlement on derivative instruments		10.2			—			10.2			(1.1)
Reduction in obligations under finance leases		—			(0.3)			(0.1)			(1.0)
Proceeds from exercised options		1.3			6.6			17.3			31.6
Dividends paid to equity holders		(27.7)			(24.7)			(107.8)			(90.2)
Dividend paid to non-controlling interests		—			—			—			(3.4)
Credit facility and debt financing fees		(2.0)			—			(2.0)			(1.0)
Repayment of debenture		—			(350.0)			—			(350.0)
Proceeds from issuance of debenture		300.0			—			300.0			—
Net movement of Commercial Paper		123.9			288.8			86.4			235.2
Credit and liquidity facilities drawn, net		(9.8)			3.5			(4.6)			4.4
		380.1			(89.3)			270.4			(207.3)
Cash flows from (used in) investing activities:
Interest received		1.2			0.6			3.6			2.2
Dividends received		—			1.6			0.5			1.6
Additions to premises and equipment and intangible assets, net of grants		(9.5)			(4.6)			(39.6)			(13.5)
Decrease in cash from loss of control of BOX Holdings		—			—			—			(17.6)
Marketable securities, net		26.7			(3.5)			11.7			9.4
Acquisition of Trayport and sale of NGX and Shorcan Energy, net of cash		(613.5)			—			(613.5)			—
Proceeds from sale of operations, net of cash disposed of		—			—			25.3			—
Other investing activities		—			(1.4)			—			(0.4)
		(595.1)			(7.3)			(612.0)			(18.3)
(Decrease) increase in cash and cash equivalents		(155.6)			(18.9)			(65.0)			88.8
Cash and cash equivalents, beginning of the period		331.3			259.7			240.6			154.1
Unrealized foreign exchange losses on cash and cash equivalents   held in foreign currencies		(0.7)			(0.2)			(0.6)			(2.3)
Cash and cash equivalents, end of the period		$	175.0		$	240.6		$	175.0		$	240.6

SOURCE TMX Group Limited

Catherine Kee, Manager, Corporate Communications, TMX Group, 416-814-8834, [email protected]; Amanda Tang, Manager, Investor Relations, TMX Group, 416-947-4787, [email protected]