Welcome to TMX Group's annual and special meeting of shareholders. To listen to the meeting in French, please click on the highlighted link within the Lumi Application. Thank you.
Good afternoon, ladies and gentlemen. My name is Charles Winograd. I am the Chair of the Board of Directors of TMX Group Limited. As prescribed by our bylaws, I will preside as Chair of this annual and special meeting of TMX Group shareholders. John McKenzie, the Interim Chief Executive Officer and Chief Financial Officer, and Cheryl Graden, the Corporation's General Counsel and Corporate Secretary, join me on the webcast this afternoon. Also joining us remotely are my fellow directors, members of senior management, and our auditor, KPMG LLP. I would like to welcome everyone who has joined us this afternoon. We are pleased to be able to connect with so many of you today, despite the unprecedented situation we are facing with the COVID-19 pandemic. It is imperative that we mitigate the risks from COVID to the health and safety of our communities, shareholders, employees, and other stakeholders.
Therefore, we have decided to hold our meeting in a virtual-only format for the first time. Our goal is to ensure that you are able to participate fully in the meeting, and we have strived to emulate our usual meeting structure as much as we could. I invite you to vote on each of the matters of business and to ask questions. I now formally call the meeting to order and, with the consent of the meeting, request Cheryl Graden to act as Secretary of the Meeting and to respond to any questions during the meeting regarding procedural matters. Our annual and special meeting is available in a virtual-only format to shareholders and proxy holders who have logged into the Lumi web platform with their control numbers.
Shareholders and proxy holders may ask questions during the meeting by clicking on the message icon displayed on their screens and following the instructions to submit them in writing. Our Corporate Secretary, Cheryl Graden, will receive all questions submitted. I encourage you to submit your questions as early as possible so that we may address them at the right moment during the meeting. We would ask that questions or comments submitted online be related to the matters currently before the meeting, and we will do our best to respond to all of your questions during the meeting. If there are questions pertinent to the meeting matters that are unanswered this afternoon due to time constraints, management will post answers to a representative set of such questions online. Members of the media are permitted to attend this meeting. However, they may not participate in the meeting.
Following the meeting, members of the media may reach out to Shane Quinn, Head of Corporate Communications and Public Affairs, or Catherine Kee, Senior Manager of Corporate Communications and Media Relationships, with any questions for John McKenzie. Pursuant to resolution of the board, I appoint TSX Trust Company by its representative, Stephen Nugent, to act as scrutineer of the meeting. The scrutineer will report on the number of voting shares represented in person or by proxy at this meeting and will compute the votes on the online balance taken. Before proceeding further, I would like to say a few words about the shareholders who have signed and delivered proxies for the meeting. Only registered shareholders who held shares on March 16, 2020, and those persons appointed as proxies for those shareholders are entitled to vote and participate at this meeting.
Registered shareholders and duly appointed proxy holders who have not voted and wish to vote during the meeting may vote live throughout the meeting until voting is closed. The matters to be dealt with at this meeting include: A, the reappointment of the Corporation's auditor. B, the election of directors for the coming year. C, the approval of amendments to our share option plan. D, the approval on an advisory basis of our approach to executive compensation. All of these matters have been set out in the Notice of Annual and Special Meeting and in the Management Information Circular made available to all shareholders in advance of the meeting. Now, I just have a few comments to make.
I'll start off my comments by saying that 49 years ago, almost exactly to the day when I started out in the investment business, I basically had not contemplated that I would be sitting in my home in a pair of jeans sharing the meeting of the TMX. At that time, the TMX was not in existence as such, but the exchanges that later made up its content, going from west to east, Vancouver Exchange, the Calgary Exchange, the Winnipeg Exchange, the Toronto Stock Exchange, and the Montreal Stock Exchange, were all major factors in our marketplace. I never thought it would be a non-virtual meeting, a virtual meeting, because frankly, the concept wasn't in place. It's only the combination of technology and a horrible pandemic that has basically brought this day to pass.
On behalf of the TMX Group Board of Directors, I would like to take a moment to discuss the company's response to the unprecedented crisis we find ourselves in today and the board's near-term priorities as TMX continues to pursue its global growth strategy. Canada's capital markets, like markets and economies across the world, have been severely impacted by the COVID-19 pandemic and subject to periods of severe volatility and day-to-day uncertainty. In times of extreme duress, TMX's vital role at the center of the markets as operator and essential service provider is magnified, and our priorities become crystal clear. The focus of our senior leadership team and all TMX employees throughout such challenging conditions is squarely on delivering continuity and responsive and reliable service to our clients and stakeholders. Due to the COVID-19 pandemic, 95% of TMX employees are working from home.
Despite this new way of working, our employees have stayed virtually connected to our clients and maintained service excellence while keeping TMX's critical operations running efficiently throughout this crisis. Once again, TMX employees have shown an unwavering commitment to our great company and to meeting the needs of our industry and our community in the face of adversity. On behalf of the board, I want to thank TMX employees for their exemplary effort in navigating this new way of working to support our markets through this unprecedented and most uncertain time. To our recovery staff who are on site performing critical duties to keep our markets operating, we thank you for your remarkable dedication. As we look to the future and as market conditions normalize, we firmly believe TMX has the depth of talent and expertise to execute on our long-term growth strategy.
In terms of the leadership transition prompted by the retirement of CEO Lou Eccleston in January, the board is currently engaged in an extensive search process to find our next CEO. Although the COVID-19 pandemic presents unique challenges, our process continues, focusing on internal as well as external candidates. The search committee is focused on finding the right person to lead this great company in its next evolutionary phase and not on a set timeline. We will update the marketplace when we have named a permanent CEO. In the meantime, as we have learned during this ongoing, most demanding chapter in our history, we have extremely strong leadership in place. The board has complete confidence in the ability of John McKenzie, TMX Group's interim CEO, and his senior team to continue to guide the company forward through the profound challenges of today's operating environment. Thank you very much.
We will now return to the business to be conducted at this meeting. All proxies will be voted as instructed by the shareholders. Only proxy holders and registered shareholders attending this virtual meeting who have not voted or who have not previously returned a proxy and now wish to change their instructions on how to vote at this meeting. Unless requested, I will not repeat these instructions for each motion. To vote, click on the applicable voting option. Your vote will be automatically submitted to TSX Trust, our scrutineer, after you click on your choice. Votes may be changed up to the time voting is closed.
When voting is open, if you do not choose for, withhold, or against as applicable, and if you have not previously submitted a proxy vote, your vote will not be recorded, and you will be regarded as having abstained from voting. The online ballots will be tabulated by the scrutineer and announced prior to the conclusion of the meeting. A simple majority of the votes cast in person or by proxy will constitute approval of all matters voted on at the meeting. Since the meeting is conducted in a virtual-only format this year, we've asked two employee shareholders of the corporation, Shelley Lindsay and Tony Pressuti, to move and second all motions. I will call on them at the appropriate time. Voting will be open for all resolutions at the same time.
This will allow you to choose to vote on all resolutions immediately at once or wait until the conclusion of discussion on each resolution prior to casting your vote. Cheryl, are there any questions from the participants on online voting procedures?
No, we've not received any questions related to online voting procedures.
I understand a quorum is present, so I propose to commence the business of the meeting while the scrutineer prepares the report on attendance. The polls are now open. The notice calling this meeting and the management information circular have been made available, one, to all shareholders of the corporation entitled to vote, two, to the directors of the corporation, and three, to the corporation's auditor. The last annual and special meeting of shareholders of the corporation was held on May 10, 2019. The minutes of that meeting are available for review by any shareholder by contacting the corporation. I will now request a motion that these minutes be taken as read.
I move that the minutes of the last annual and special meeting of shareholders of the corporation held on May 10, 2019, be taken as read.
I second the motion.
Thank you, Shelley and Tony. Cheryl, are there any questions relating to the motion that the minutes of the last annual meeting and annual and special meeting of shareholders of the corporation be taken as read?
No, we've not received any such questions.
We will now proceed with the vote. I will now call upon the Secretary to present the scrutineer's report on attendance.
The scrutineer reports that there are registered shareholders or proxy holders present and holding or representing 45,560,817 shares, or 80.93% of the issued and outstanding shares on March 16, 2020, the record date for the meeting. According to the bylaws of the corporation, the quorum is present, and the written report will be delivered to you at the end of the meeting.
Based on the scrutineer's report, I declare a quorum to be present. I therefore declare the meeting to be regularly constituted for the transaction of business. The next item of business is to consider the audited consolidated financial statements of the corporation for the year ended December 31, 2019, and accompanying notes, together with the auditor's report and the management statement, all contained in the corporation's annual report and mailed to those shareholders who requested a copy prior to this meeting. The board of directors has approved the audited consolidated financial statements, and I now place them before the meeting for consideration. Cheryl, are there any questions relating to the annual financial statements?
No, we have not received any such questions.
Okay. The next item of business is the appointment of the auditor for the current year. I will now ask for a motion appointing KPMG LLP as the auditor of the corporation at a remuneration to be fixed by the board of directors until the next annual meeting of the shareholders and for a seconder of this motion.
I move to appoint KPMG LLP as auditor of the corporation until the next annual meeting of shareholders and authorize the board of directors to fix the remuneration of KPMG LLP.
I second the motion.
Thank you, Shelley and Tony. You've heard the motion. Cheryl, are there any questions relating to the appointment of the auditor for the current year?
No, we have received no such questions.
We will now proceed with the vote. We will now proceed with the election of directors. The number of directors to be elected has been set at 12 by the board. All 12 of the recommended nominees have been approved by the board of directors and have consented to stand for election to the board. Additional information about the recommended nominees is contained in the management information circular. Our director qualification policy provides that in an uncontested election of directors, any nominee who receives a greater number of votes withheld than votes for will tender his or her resignation to the board promptly following our annual meeting. I now declare the meeting open for nominations.
I have the pleasure of nominating the following 12 individuals as directors of the corporation to hold office until the next annual meeting of shareholders or until their successors are duly elected or appointed. The individuals are Luc Bertrand, Nicolas Darveau-Garneau , Christian Exshaw , Marie Giguère , Martine Irman , Harry Jaako, William Linton, Jean Martel, Gerri Sinclair , Kevin Sullivan, Eric Wetlaufer, and Charles Winograd.
I second the motion.
Thank you, Shelley and Tony. Cheryl, are there any further nominations or any questions from the participants on the nominations?
No, we have not received any further nominations or questions on the nominations.
Thank you. Since there are no further nominations, I declare the nominations closed. Twelve persons have been nominated as directors, and there are twelve directors to be elected. We will now proceed with the vote. The next item of business is the approval of amendments to our share option plan. I will now ask for a motion approving amendments to the share option plan as described in the management information circular.
I move to approve the amendments to the share option plan to, A, replenish the total number of TMX Group shares available to be granted under TMX Group's share option plan by an additional 1,901,486 common shares, and add an additional provision whereby the TMX Group board or the human resources committee may not, without the approval of TMX Group's shareholders, amend, modify, or delete any of the amendment provisions described in section 3.5B of the share option plan.
I second the motion.
Thank you, Shelley and Tony. You've heard the motion. Cheryl, are there any questions relating to the approval of the amendments to the share option plan?
No, we have not received any questions on the amendments to the share option plan.
The next item of business is the approval on an advisory basis of our approach to executive compensation. I will now ask for a motion approving on an advisory basis our approach to executive compensation as disclosed in the management information circular.
I move to approve on an advisory basis and not to diminish the role and responsibilities of the directors that the shareholders accept the approach to executive compensation disclosed in the management information circular.
I second the motion.
Thank you, Shelley and Tony. You've heard the motion. Cheryl, are there any questions relating to the approval on an advisory basis of our approach to executive compensation as disclosed in the management information circular?
No, we have not received any such questions.
Thank you. We will now proceed with the vote. If you have not yet voted on any of the other items in the business agenda, please do so now. As we have now dealt with all business items on the agenda, I declare voting on all matters closed. I will now ask John McKenzie to make a few remarks.
Thank you very much, Chuck, and good afternoon, and welcome everyone. To start out very much as we did in our morning call with investors and analysts, I want to open my comments this afternoon by sending out a message of hope and strength from all of us at TMX to everyone participating or listening in on our meeting today. We hope that you and your families are staying safe and healthy as we together work through the COVID-19 pandemic. I want to take this opportunity to sincerely thank all the healthcare workers and first responders working to treat our most vulnerable, our family, and our friends. Thanks also to workers providing essential services throughout our communities during this unprecedented crisis. The fact is we all have a role to play in the fight against COVID-19.
The degree to which Canada's capital markets industry has stepped up to provide crucially needed assistance has been inspiring. We are proud to acknowledge the significant contributions made by our TMX stakeholders, including TSX and TSX Venture listed issuers, as well as our equities and derivatives trading and clearing participants. These contributions range from the manufacturing of safety products for healthcare workers to generous donations of funds and volunteer time to frontline support agencies. Over the past few years, our shareholder meeting has served to honor our company's roots and showcase the evolution of the modern exchange. Two years ago, we paid homage to our proud history. TMX is now almost 168 years old. By holding our AGM at the Design Exchange at 234 Bay Street, a historical landmark at the home of the Toronto Stock Exchange, for almost 50 years.
Last year, shareholder meeting was held at TMX's new Toronto offices at 100 Adelaide Street West, as we proudly showed off our award-winning state-of-the-art workspace in the city's downtown core. Today's virtual meeting is symbolic in a much different way. It's another real example of how the current crisis has altered the way the world lives and works. As virtual connections like these have temporarily replaced social and professional interactions around the world for TMX and the broader capital markets industry, technology has proven to be a vital enabler in keeping our markets up and running during the COVID-19 pandemic.
We thank our entire community, including participants and issuers, regulators, and competitors, for their partnership in keeping Canada's markets functioning efficiently and doing what they were designed to do, especially during a period of extreme turbulence and volatility, providing investors with liquidity and issuers with a world-class venue to raise capital. From a broader economic standpoint, while the impacts of the COVID-19 pandemic will be deeply felt for some time, the resiliency of Canada's financial industry is something to be proud of and bodes well for the future as measures to reopen the country and reinvigorate the economy take shape. TMX is firm and as clear-eyed as ever in our commitment to fulfilling our core mission in operating in Canada's markets.
We feel strongly that it is both in the public interest and in the best interest of all of our stakeholders that at all times, especially in times of crisis, markets must remain open and available. To carry out this core mission, we have a comprehensive and rigorously tested business continuity plan designed to functionally support our critical operations during all types of crises, including a global pandemic. While these plans bolster confidence in our ability to run our marketplaces with minimal disruption, it is the efforts of our committed professional team that really make it happen. TMX's number one priority remains consistent in all of our decision-making, protecting the health and safety of our people and their families, our clients and visitors, and the entire capital markets community.
While over 95% of TMX employees are working from home and have been for almost two months at the outset of this pandemic, we took necessary precautions to protect our critical operations staff as they have been on-site as needed. On behalf of our senior leadership team, I want to echo Chuck's sentiments here and thank every TMX employee for their perseverance, adaptability, and above all, exemplary dedication to the company throughout these last two months and all the time beforehand. Your consistent focus on maintaining continuity and service excellence to clients across our marketplaces is most appreciated. We look forward to brighter days ahead as the world continues to emerge from lockdown and a sense of normalcy returns to everyday life.
Now, I'd like to turn, with the aid of a few slides, to a discussion of TMX Group's financial performance, starting with a comparative look at the 2019 annual versus 2018. Market conditions for 2019 presented a significant challenge for the financial services industry and the exchange sector. Uncertainty fueled by macroeconomics and geopolitical factors led to a global slowdown in capital markets activity and had a negative impact on some of our business areas and growth drivers. Despite difficult conditions and prevailing headwinds in much of our operating environment, TMX delivered positive results in 2019. Overall revenue was down almost $14 million, or 2%, when compared with 2018, due to a softer capital markets environment and particularly a decrease in financing activity on all our equity exchanges and lower activity in our equities and fixed income trading products.
Helping to partially offset the decrease was solid revenue growth from TradePort, our London-based network and platform for global wholesale energy markets, and from our core derivatives business of the Montreal Exchange and CBCC. Importantly, TMX's financial performance also continued to reflect the benefits of consistent cost management discipline as overall expenses decreased 6% when compared to 2018. Our income from operations increased by 4% from 2018 to 2019. Diluted earnings per share for 2019 was $4.38, which included an impairment charge of $0.32 per share on Shorcan. This was down $0.72, or 14%, from 2018, where we recorded a gain of $0.48 per share on the sale of our interest in TMX FTSE. On an adjusted basis, diluted earnings per share actually grew by 3% from 2018. Turning now to our first quarter performance.
As reported last night, TMX achieved strong results compared to Q1 2019, reflecting the extreme volatility and a surge in activity as markets reacted to the COVID-19 pandemic. Revenue was $220 million, a 12% increase over Q1 of 2019. Operating expenses were $109 million, up 2%, and with the operating leverage in our business, income from operations was up 23%. Our diluted earnings per share was $1.24, up 14% year-over-year, and $1.53 on an adjusted basis, up 18% from Q1 2019. Trading statistics for Q1, and particularly for the month of March, indicated the degree of turbulence across the marketplace. Volume traded on the Toronto Stock Exchange in the first quarter was up 36% over last year, and March TSX volumes more than doubled in comparison with March 2019.
Across all of our equity markets, trading volumes were up 24% in the quarter and 73% in March compared to last year. On the Montreal Exchange, overall derivatives volumes traded in Q1 2020 was up 27% compared with Q1 of 2019, with a 33% increase during the month of March compared with last year. In a quarter marked by unprecedented events, we did see some consistency in terms of the impact marketplace trends have on other areas of our balanced business model. High volatility had a negative impact on capital raising conditions in Q1 compared to Q1 of last year. Our additional financing activity on the Toronto Stock Exchange decreased compared with Q1 of 2019, particularly the number of larger transactions as issuers chose to avoid unpredictable and severe swings in the marketplace.
As a result, revenue from our capital formation business was down 4% year-over-year, somewhat offsetting the increase in overall revenue in the quarter. We finished Q1 with a very strong balance sheet. Our leverage continued to decline, and our debt to adjusted EBITDA ratio was at 2x at the end of March. We also spent just over $10 million to repurchase our shares in the first quarter and closed the quarter with $267 million of our cash on our balance sheet, well in excess of the $185 million that we retained for regulatory purposes. Last night, our board declared a quarterly dividend of $0.66 per share, which yields shareholders about 2% in the current economic environment.
Looking beyond the first quarter, and as the world begins to emerge from the initial phase of COVID-19 and contemplates the next important steps to recovery, the future is harder to predict than ever. I want to assure all of our shareholders that even as the company has taken necessary measures to adapt how we work in the new business usual, TMX's roadmap for growth remains in place. As we survey the still evolving and uncertain business landscape, timelines for specific initiatives may require some tweaking. TMX's corporate strategy and the competitive value proposition fundamental to our success has not changed. TMX remains focused on executing our cohesive, long-term global growth strategy centered around growth champions, capital formation, derivatives, and TradePort.
In the capital formation business, while the capital may remain on the sidelines to some degree over the near term, we continue to target specific regions where TMX's unique ecosystem and sectoral expertise give us a competitive edge. By necessity, our immediate focus is on supporting this crucial and core element of our business. History has shown public markets fuel progress, and we are confident that public markets will play again a role in leading the economy finding its feet. The capital formation process is critical in funding entrepreneurship and innovation while creating jobs for Canadians and fueling economic growth. Over the past two months, TMX has undertaken various issuer support initiatives, including relief measures and a successful government policy advocacy campaign. We continue to work together with all listed companies and all of our stakeholders to weather the COVID-19 crisis and lay the groundwork for future success.
Turning now to derivatives, our team is moving forward on a strategy to capitalize on the growing global demand, particularly on the buy side for derivative products by expanding Montreal Exchange's presence in foreign markets. Initiatives previously announced remain on track at this point, including the launch of a new Canadian overnight repo rate average, or CORRA future, a product planned for mid-June and the next phase of Montreal Exchange's extended hours initiative to sync with markets in Asia, which is scheduled for 2021. TradePort, our London-based network and platform for global wholesale energy markets, continues to make progress in the strategy as well to seize on structural energy market trends, including globalization and digitization of markets. The liquid natural gas market, or LNG market, continues to develop.
Volumes in the signature European and Asian benchmark gas contracts accessible through TradePort's system increased significantly in 2019 compared to 2018 and continued to grow in Q1 2020 as compared to last year. TradePort has also reaped the benefit of extending their presence in new markets during 2019 and the first quarter of 2020. In the spring, the acquisition of Vienna-based VISIOTECH added advanced algorithmic trading capabilities to JUUL, TradePort's core trading screen. In October, TradePort entered into agreement with Nodal Exchange, a Washington, D.C.-based derivatives exchange serving commodity markets, to add U.S. energy contracts to TradePort's screens and expand the reach of JUUL's network to include Nodal Exchange participants. This is a good strategic fit for TradePort and for TMX, establishing an entry point into the U.S. energy market. TMX's long-term global growth strategy remains on track despite the near-term uncertainty.
At the corporate level, this has been a very busy week for TMX already. Along with the release of our Q1 results and related disclosure documents and our AGM, we are excited to announce another important TMX milestone. The inaugural TMX Group Environmental, Social, and Governance Report was approved by the board today and is now live on our website. Over the last few years, ESG factors have become priority criteria for investors and asset owners, and sustainability practices have become increasingly important considerations for companies across all sectors. Perhaps now more than ever, sustainability is a top priority for all companies. The goal of our new report is to inform all of our stakeholders of our progress of incorporating ESG matters into the TMX Group's corporate strategy, process, and operations.
TMX's commitment to sustainable business and investing is enterprise-wide and includes our equities and derivatives trading and clearing businesses, as well as capital formation. I invite you all to read through the report, and we look forward to hearing your feedback. In closing, I want to emphasize that as recovery measures continue to take shape, TMX remains firmly focused on serving clients across all of our markets with excellence and executing against our global growth strategy. With that, I will turn the meeting back over to Chuck. Thank you very much.
Thank you, John. I've received the report on the ballots from the scrutineer and will ask that Cheryl Graden read the report.
The scrutineer reports that the shareholders present virtually or represented by proxy have voted as follows. On the appointment of KPMG LLP, its auditor, and remuneration to be fixed by the board, for $45,419,368, withheld $141,459. On the election of directors, the average vote total for the 12 nominees set out in the circular, for $45,326,607, withheld $192,163. In the interest of time, I will not read the results for each of the directors. I do, however, confirm that no director received a greater number of withheld votes than votes in favor of that director. On the approval of certain amendments to the share option plan, as set out in the circular, for $41,964,892, against $2,985,948. On the acceptance on an advisory basis of the approach to executive compensation, as set out in the circular, for $41,355,657, against $3,977,123.
Thank you, Cheryl. As Chair, I adopt the report of the scrutineer. Based on these results, I declare that KPMG LLP has been appointed as auditor of the corporation at a remuneration to be fixed by the Board of Directors. I also declare that Mercie, Bertrand, Darveau-Garneau, Eccleston, Jaako, Linton, Martel, Sullivan, Wetlaufer, Winograd, and Erman, and Sinclair have been duly elected as directors of the corporation to hold office until the next annual meeting of shareholders or until the director resigns, becomes ineligible or unable to serve, or until his or her successor is elected or appointed. I also declare that the shareholders have approved the amendment to the share option plan and that, on an advisory basis, the shareholders have accepted our approach to executive compensation. This concludes the business of the meeting. I would like to call for a motion terminating the meeting.
I move to terminate the meeting.
I second the motion.
Thank you, Shelley and Tony. I declare that the formal part of this meeting is now terminated. The formal part of the meeting is completed. Cheryl, are there any questions for John or me from shareholders or proxy holders who are attending the meeting virtually?
Mr. Chair, we received a question on how many people are in attendance today virtually. The answer to that is there were approximately 145 people connected to our meeting today. We were in receipt of no other questions.
Okay. As there are no further questions, I will now conclude the informal portion of today's meeting. Thank you all for your attendance. Stay safe.
This concludes today's conference call. You may now disconnect.