2006 ANNUAL REPORT
CHAIR’S LETTER
TO SHAREHOLDERS
CEO’S LETTER
TO SHAREHOLDERS
STATEMENT OF CORPORATE
GOVERNANCE PRACTICES
2006 MANAGEMENT’S
DISCUSSION AND ANALYSIS
Non-GAAP Financial Measures
Vision
Overview of the Business
Review of Operations – 2006
Liquidity, Capital Resources and Deferred Revenue
Selected Annual Information
Quarterly Information
Critical Accounting Estimates
Disclosure Controls and Procedures
Strategy and Outlook
Forward-Looking Statements, Risks and Uncertainties

FINANCIALS
CORPORATE INFORMATION

QUARTERLY INFORMATION 

(in thousands of dollars, except per share amounts) 


Dec.
31/06

Sept.
30/06

June
30/06

Mar.
31/06

Dec.
31/05

Sept.
30/05

June
30/05

Mar.
31/05

Revenue

$ 91,025

$ 81,197

$ 92,612

$ 88,013

$ 76,264

$ 75,333

$ 68,621

$ 69,746
Net Income
35,116
33,217
28,464
34,727
27,813
28,717
23,748
23,075
Earnings per share:
Basic
0.51
0.49
0.42
0.51
0.41
0.42
0.35
0.34
Diluted
0.51
0.48
0.41
0.50
0.40
0.42
0.35
0.34

2005

  • Revenue in Q2/05 declined slightly from revenue in Q1/05 primarily due to lower trading revenue. Net income for Q2/05 improved over net income for Q1/05 primarily due to lower compensation and benefits costs.
  • Revenue in Q3/05 improved over the revenue in Q2/05 primarily due to higher trading, listing and market data revenue. Net income for Q3/05 improved over net income in Q2/05 primarily due to increased revenue combined with lower general and administration costs.
  • Revenue in Q4/05 improved over revenue in Q3/05 primarily due to higher listing and market data revenue somewhat offset by lower trading revenue. Net income for Q4/05 declined over net income from Q3/05 primarily due to higher overall expenses.

2006

  • Revenue in Q1/06 improved over revenue in Q4/05 primarily due to higher trading, listing and market data revenue. Net income for Q1/06 increased over net income for Q4/05, primarily due to the increased revenue partially offset by higher overall expenses.
  • Revenue in Q2/06 improved over revenue in Q1/06 primarily due to higher market data, listing and trading revenue. However, net income for Q2/06 decreased over net income for Q1/06, primarily due to higher income taxes. In Q2/06, the federal government enacted legislation to reduce corporate tax rates for 2008-2010 and beyond. The future tax asset was reduced, and income taxes increased by $9.6 million, primarily as a result of these changes in federal corporate tax rates.
  • Revenue in Q3/06 declined over revenue in Q2/06 largely due to lower trading revenue, reflecting lower trading volumes and following the introduction of a volume-based fee structure for most issuers listed on Toronto Stock Exchange and TSX Venture Exchange, effective July 1, 2006. Net income for Q3/06 increased over Q2/06 primarily due to higher investment income as well as lower income taxes. The increase was partially offset by the decreased revenue and higher overall expenses.
  • Revenue in Q4/06 improved over revenue in Q3/06 primarily due to higher trading, market data and listing revenue. Net income for Q4/06 increased over Q3/06 primarily due to the increased revenue partially offset by higher overall expenses.

Review of Fourth Quarter Results

Compared with Q4/05

  • Revenue in Q4/06 improved over revenue in Q4/05 primarily due to higher market data, listing and trading revenue. Net income for Q4/06 increased over Q4/05 primarily due to the increased revenue partially offset by higher compensation and benefits and information and trading systems expenses. Investment income increased over Q4/05 due to an increase in cash and marketable securities and increased returns from short-term bond and mortgage fund investments. Cash flows from operating activities in Q4/06 decreased compared with Q4/05 largely due to an increase in accounts receivable and prepaid expenses, a decrease in income taxes payable, partially offset by an increase in net income.

Compared with Q3/06

  • Revenue in Q4/06 improved over revenue in Q3/06 primarily due to higher trading, market data and listing revenue. Net income for Q4/06 increased over Q3/06 primarily due to the increased revenue partially offset by higher compensation and benefits and amortization expenses. Cash flows from operating activities in Q4/06 increased compared with Q3/06 primarily due to an increase in net income and a decrease in the value of the future tax asset.