London S tock Exchange Group plc and TMX Group Inc. Join Forces in Merger of Equals Creation of an International Exchange Leader S trongly Positioned for Growth 9 February 2011
Creation of an International Exchange Leader • Premier international listings venue • Global leader in resource and S ME listings • Leader in pan-European equities • Trade across multiple asset classes • Leading fixed income business • Canada’ s premier equities platform • London is the price discovery centre for Europe • Canada’ s derivatives exchange/ clearinghouse • Post-trade expertise across asset classes • Leading North American physical energy trading/ clearing • Diversified global information services business • Comprehensive market data offerings • High-performance cost-effective technologies • Leading derivatives trading/ clearing technology Strongly Positioned for Global Growth Opportunities – 2 –
Highly Compelling Combination � Leading global listings franchise � World-class global brands � Highly diversified across asset classes and geographies � Innovative post-trade services London Calgary Vancouver � Montreal Global information business Milan Toronto Beijing Rome � Boston Chicago Leader in high-performance, Tokyo Houston cost-effective trading and Hong Kong clearing technology Joint Headquarters Colombo � Efficiencies for customers Global Centres of Excellence � Business Centres Significant scale and strong balance sheet for growth 1 st 1 st 1 st 1 st 1 st 1 st i n Electronic Globally in # of in Cash in Cash Equities Globally in # of in International Listings Natural Listings from Equities Trading and Trading of Resources, Emerging and Trading in Derivatives in European Europe Mining, Energy, Growth Markets Canada Government Clean Tech and Bonds SME Listings – 3 –
Merger of Equals: Transaction Highlights • All-share merger of equals – TMX Group Inc. (“ TMX” ) shareholders to receive consideration in London S tock Exchange Group plc (“ LS EG” ) shares or Toronto S tock Exchange-listed exchangeable shares of a Canadian subsidiary of LS EG Key Merger Terms – Post-merger ownership share: LS EG shareholders 55% , TMX shareholders 45% • Merger unanimously recommended by the Boards of both LS EG and TMX • Listings on the London S tock Exchange and Toronto S tock Exchange • Expected to be accretive to adj usted earnings per share (1) (post-cost synergies) in year one • Targeting annual run-rate cost synergies of £35m (C$56m) by end of year two Financial Highlights • Targeting revenue benefit s of £35m (C$56m) in year three growing to £100m (C$160m) in year five • Intention to maintain current gross amount of dividends paid, then maintain dividends on a progressive basis going forward • Jointly headquartered in London and Toronto Headquarters • Enhances Calgary, Colombo, London, Milan, Montreal, Toronto and Vancouver as global financial centres • Chairman: Wayne Fox; Deputy Chairmen: Chris Gibson-S mith and Paolo S caroni Board Composition • 15 Board members; LS EG: eight members (envisage three from Borsa Italiana); TMX: seven members • CEO: Xavier Rolet; President: Tom Kloet; CEO Borsa Italiana: Raffaele Jerusalmi; CFO: Michael Ptasznik Key Management • Global business units and support functions balanced across TMX and LS EG Regulatory • Each of the combined group’ s markets will continue to be regulated by their existing regulators Not e: Currencies convert ed using spot GBP-CAD exchange rat e of 1.5991 as at 8 February 2011. 1. S ee “ Account ing Mat t ers” . – 4 –
Highly Diversified by Revenue and Geography Increased Scope Increased Reach Increased Scale Revenue by Business (1) Revenue by Geography (2) Revenue by Exchanges CME Cash Equities & Technology Issuer Services Fixed Income Services & Other 13% Trading & Deutsche Borse 7% Related UK 7% NYSE Euronext North 31% America Information Trading, Clearing LSEG + TMX 38% Services & Related - 26% Derivatives NASDAQ OMX 5% ICE Trading, Clearing & Related - BM&FBOVESPA Energy 3% Post-Trade (4) SGX-ASX Italy Services (3) Capital Markets Other 16% 12% 27% 14% HKE BME £1bn £2bn C$1.6bn C$3.2bn International Scale • 20 t rading market s / plat forms across Nort h America and Europe Operat ions S ource: Company filings. Not e: LS EG and TMX revenue based on last t welve mont hs dat a as at 30 S ept ember 2010 and year ended dat a as at 31 December 2010, respect ively, except as not ed. Revenue segment s displayed do not imply fut ure report ing segment s. Net revenue shown for NYS E Euronext , NAS DAQ OMX and BM&FBovespa. TMX revenue convert ed using average GBP-CAD exchange rat e of 1.5897 for t he year ended 31 December 2010. Includes LS EG / TMX LTM int ercompany revenue of £2m / C$3m. TMX revenue adj ust ed for init ial and addit ional list ing fees billed. S ee “ Account ing Mat t ers” . LS EG revenue includes net t reasury income from CCP and Ot her income. 1. Issuer S ervices, Cash Equit ies & Fixed Income Trading & Relat ed, Trading, Clearing & Relat ed (Derivat ives and Energy) are TMX only; Capit al Market s (Primary and S econdary Market s) and Post -Trade S ervices are LS EG only; Informat ion S ervices combines bot h companies’ Informat ion S ervices segment s; Technology S ervices & Ot her combines LS EG’ s Technology S ervices, Ot her revenue and Ot her income wit h TMX’ s Technology S ervices and Ot her. 2. Based on unaudit ed financial dat a. LS EG and TMX revenue based on last t welve mont hs dat a as at 31 December 2010. Correct ed 16 March 2011. 3. Post -Trade S ervices also includes LS EG’ s net t reasury income from CCP. Excludes TMX’ s post -t rade revenue, which are included in Trading, Clearing & Relat ed (Derivat ives and Energy). 4. S GX has announced t he acquisit ion of AS X, but t he t ransact ion has not yet closed. AS X last t welve mont h revenue as at 30 June 2010. – 5 –
Strong Portfolio of World-Class Global Brands Global and Large-Cap Issuer Services Venture / SME Cash Equities Derivatives Trading and Energy Post-Trade Cash Fixed Income Post-Trade Information Services Technology Services Increased opportunities for cross-selling and product innovation Not e: Businesses displayed are 100% or maj orit y owned by LS EG or TMX, wit h t he except ion of CanDeal (47% owned by TMX) and FTS E (50% owned by LS EG). – 6 –
Issuer Services Trading & Post-Trade Information Services Technology Services World’s Leading Global Listing Franchise (1) (1) Gateway to Leading Global Pools of Capital Formation and Liquidity #1 Venue by Number of Listings #1 Venue by Number of Mining & #1 Venue by Number of Venture or Energy Listings Alternative Marketplace Listings 3,679 6,707 5,034 TMX Other 48% 43% 3,532 3,452 3,345 2,777 2,293 1,026 202 202 185 174 LSEG LSEG + Bombay NASDAQ NYSE BME SGX - Tokyo SE LSEG + Korea Luxem- SIX Sw iss Tokyo SE HKEx 9% TMX SE OMX Euronext ASX TMX Exchange bourg SE S ource: World Federat ion of Exchanges, December 2010. S ource: Management analysis. S ource: Vent ure or alt ernat ive market place list ings as def ined by World Federat ion of Exchanges, December 2009. Correct ed 1. Updat ed 25 March 2011. 16 March 2011. – 7 –
Issuer Services Trading & Post-Trade Information Services Technology Services Trading & Post-Trade Platforms Across Markets & Asset Classes Cash Equities Cash Fixed Income Derivatives Energy & Commodities • #1 electronic government bond • North American oil & gas and • Pre-eminent equity exchanges • Trade and clear in Canadian, platform in Europe electricity products in t he UK, Canada and Italy Italian, UK, Nordic and Russian • MOT retail bond market in Italy • Italian electricity futures and equity/ fixed income and UK options derivatives • First fixed income IDB in Canada • Alliance with ICE Average daily volume (000s) Millions of t eraj oules 2010 share of cash equit ies t rading MTS Cash (€bn) MTS Repo (€bn) MX CAGR: 14% MTS Repo CAGR: 48% 100% 200 20 1,000 20,000 IDEM CAGR: 14% 85% ‘05–‘10 CAGR: 13% MTS Cash CAGR: 31% 72% 75% 750 15,000 150 15 65% 50% 500 10,000 100 10 25% 250 5,000 0% 0 0 50 5 Jan Feb Jun Jul Oct Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Mar May Sept Nov Dec 2003 2004 2005 2006 2007 2008 2009 2010 Apr Aug 2005 2006 2007 2008 2009 2010 IDEM MX MTS Cash (LHS) MTS Repo (RHS) NGX UK Canada Italy Post-Trade • Multi-asset • Multi-asset • Clears MX • Clears physical exchange-traded settlement derivatives gas/ crude oil & and OTC clearing services products financial gas/ power products • Clears OTC products – 8 –
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