IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

February 10, 2012 11:38 ET

IGM Financial Inc. Reports 2011 Earnings

WINNIPEG, MANITOBA--(Marketwire - Feb. 10, 2012) -

Readers are referred to the disclaimer regarding Forward-Looking Statements and Non-IFRS Financial Measures at the end of this Release.

IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the year ended December 31, 2011.

Operating earnings available to common shareholders, excluding other items outlined below, for the year ended December 31, 2011 were $833.0 million or $3.22 per share compared to operating earnings available to common shareholders of $758.9 million1 or $2.89 per share1 in 2010.

Operating earnings available to common shareholders, excluding other items outlined below, for the three months ended December 31, 2011 were $196.0 million or 76 cents per share compared to operating earnings available to common shareholders of $210.2 million2 or 80 cents2 per share in 2010.

Net earnings available to common shareholders, including other items, for the year ended December 31, 2011 were $900.6 million or $3.48 per share compared to net earnings available to common shareholders of $730.7 million or $2.78 per share in 2010. Net earnings available to common shareholders, including other items, for the three months ended December 31, 2011 were $230.6 million or 89 cents per share compared to net earnings available to common shareholders of $189.9 million or 73 cents per share in 2010.

Other items for the twelve and three months ended December 31, 2011 consisted of:

  • Net earnings which have been classified as discontinued operations. On November 16, 2011, Mackenzie completed the sale of M.R.S. Trust Company and M.R.S. Inc. (MRS). Net earnings for MRS include the after-tax gain on the sale of MRS of $30.3 million recorded in the fourth quarter of 2011 and a one-time tax adjustment of $ 28.7 million recorded in the third quarter of 2011. Excluding the items noted above, net earnings from discontinued operations totalled $3.6 million for the twelve months ended December 31, 2011 and the net loss from discontinued operations totalled $0.7 million for the three month period. Including the items noted above, net earnings from discontinued operations were $62.6 million and $29.6 million for the twelve and three months ended December 31, 2011.
  • An after-tax benefit of $5.0 million representing the Company's proportionate share of net changes in Great-West Lifeco Inc.'s litigation provisions.

Revenues for the year ended December 31, 2011 were $2.73 billion compared to $2.61 billion a year ago. Revenues for the three months ended December 31, 2011 were $649.6 million compared to $694.9 million a year ago. Expenses were $1.64 billion for the year ended December 31, 2011 compared to $1.60 billion a year ago and $392.6 million for the three month period compared to $433.0 million in 2010.

Total assets under management at December 31, 2011 were $118.7 billion. This compared with total assets under management of $129.5 billion at December 31, 2010, a decrease of 8.3%.

Shareholders' equity at December 31, 2011 was $4.5 billion compared to $4.3 billion at December 31, 2010. Return on average common equity based on operating earnings for the year ended December 31, 2011 was 19.7% compared to 18.2% for the comparative period in 2010.

Investors Group Operations

At December 31, 2011 there were 2,705 Consultants with 4 years or more of Investors Group experience, up from 2,674 at September 30, 2011. The number of Investors Group Consultants was 4,608 at December 31, 2011, up from 4,595 at September 30, 2011.

"Sales increased over 2010 by 5% for mutual funds, 11% for insurance and 20% for mortgage originations as our Consultants served the diverse financial planning needs of our clients," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Our total number of Consultants reflects continued strong retention of experienced Consultants and refinements to our recruiting process introduced earlier this year."

Mutual fund sales for the year ended December 31, 2011 were $6.02 billion compared to $5.75 billion in the prior year and mutual fund net sales were $39 million compared to $253 million a year ago.

Mutual fund sales for the fourth quarter were $1.28 billion compared to $1.39 billion in the prior year, and mutual fund net redemptions for the fourth quarter were $158 million compared to net redemptions of $38 million a year ago.

The twelve month trailing redemption rate (excluding money market funds) was 8.8% at December 31, 2011, compared to 8.3% at December 31, 2010.

Mutual fund assets under management at December 31, 2011 were $57.7 billion compared to $61.8 billion at December 31, 2010, a decrease of 6.6%.

Mackenzie Operations

Total sales for the year ended December 31, 2011 were $10.30 billion compared to $12.16 billion in the prior year. Total net redemptions were $2.50 billion compared to total net redemptions of $1.45 billion a year ago.

Total sales for the fourth quarter of 2011 were $2.09 billion compared to $3.13 billion in the prior year. Total net redemptions for the fourth quarter were $1.25 billion compared to total net redemptions of $267 million a year ago.

"Investment performance of our mutual fund family remained strong, with 68% of our fund assets ranked in the first or second quartile of their respective asset categories over the five year period ended December 31, 2011," said Charles R. Sims, F.C.A., President and Chief Executive Officer of Mackenzie Financial Corporation.

Mackenzie's total assets under management at December 31, 2011 were $61.7 billion compared with total assets under management of $68.3 billion at December 31, 2010, a decrease of 9.8%. Mutual fund assets under management at December 31, 2011 were $39.2 billion compared to $43.5 billion a year ago, a decrease of 9.9%.

Dividends

The Board of Directors has declared a dividend of 53.75 cents per share on the Company's common shares and has declared a dividend of $0.36875 per share on the Company's 5.90% Non-Cumulative First Preferred Shares, Series "B". The common share dividend and the preferred share dividend are payable on April 30, 2012 to shareholders of record on March 30, 2012.

Forward-Looking Statements

Certain statements in this Release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect IGM Financial's current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Company's financial position and results of operations as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Company, as well as the outlook for North American and international economies, for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances.

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved.

A variety of material factors, many of which are beyond the Company's and its subsidiaries' control, affect the operations, performance and results of the Company, and its subsidiaries, and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates), the effect of applying future accounting changes, operational and reputational risks, business competition, technological change, changes in government regulations and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Company's ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Company's success in anticipating and managing the foregoing factors.

The reader is cautioned that the foregoing list of factors is not exhaustive of the factors that may affect any of the Company's forward-looking statements. The reader is also cautioned to consider these and other factors, uncertainties and potential events carefully and not place undue reliance on forward-looking statements.

Other than as specifically required by law, the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Company's business is provided in its disclosure materials filed with the securities regulatory authorities in Canada, available at www.sedar.com.

Non-IFRS Financial Measures

This release contains non-IFRS financial measures. Net earnings available to common shareholders, which is a financial measure in accordance with International Financial Reporting Standards (IFRS), may be subdivided into two components consisting of:

  • Operating earnings available to common shareholders; and
  • Other items, which include the after-tax impact of any item that management considers to be of a non-recurring nature or that could make the period-over-period comparison of results from operations less meaningful.

Terms by which non-IFRS financial measures are identified include but are not limited to "operating earnings available to common shareholders", "operating earnings per share", "operating return on average common equity" and other similar expressions. Non-IFRS financial measures are used to provide management and investors with additional measures of performance. However, non-IFRS financial measures do not have standard meanings prescribed by IFRS and are not directly comparable to similar measures used by other companies. Please refer to the attached Financial Highlights for the appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS.

The Consolidated Financial Statements and Management's Discussion and Analysis (MD&A) of operating results are available on IGM Financial Inc.'s website at www.igmfinancial.com.

IGM Financial Inc. is one of Canada's premier personal financial services companies, and one of the country's largest managers and distributors of mutual funds and other managed asset products, with $122 billion in total assets under management as of January 31, 2012. Its activities are carried out principally through Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel. IGM Financial Inc. is a member of the Power Financial Corporation group of companies.

Media Note: A live webcast of IGM's Analyst conference call for the Fourth Quarter 2011 will be held Friday February 10, 2012 at 2:30 P.M. (ET) at www.igmfinancial.com. Media and interested parties may alternatively choose to listen to the live analyst teleconference call by dialing 1-866-226-1792 or 416-340-2216.

1 Other items for the twelve months ended December 31, 2010 consisted of:

  • Net earnings for MRS of $1.8 million, which have been classified as discontinued operations.
  • A non-recurring after-tax charge of $21.8 million related to the transition to IFRS.
  • An after-tax charge of $8.2 million representing the Company's proportionate share of Great-West Lifeco Inc.'s incremental litigation provision.

2 Other items for the three months ended December 31, 2010 consisted of:

  • Net earnings for MRS of $1.5 million, which have been classified as discontinued operations.
  • A non-recurring after-tax charge of $21.8 million related to the transition to IFRS.
IGM FINANCIAL INC.
Consolidated Statements of Earnings
(unaudited) Three months ended
December 31
Twelve months ended
December 31
(in thousands of Canadian dollars, except shares and per share amounts) 2011 2010 2011 2010
Revenues
Management fees $444,177 $479,079 $1,892,728 $1,836,884
Administration fees 84,347 85,480 344,887 334,748
Distribution fees 79,785 83,325 333,461 296,181
Net investment income and other 17,791 28,365 81,887 78,235
Proportionate share of affiliate's earnings 23,536 18,611 79,489 62,639
649,636 694,860 2,732,452 2,608,687
Expenses
Commission 214,027 221,587 894,860 855,109
Non-commission 155,358 182,748 637,487 634,348
Interest 23,199 28,631 102,807 111,374
392,584 432,966 1,635,154 1,600,831
Earnings before income taxes and discontinued operations 257,052 261,894 1,097,298 1,007,856
Income taxes 53,902 71,245 250,497 268,805
Net earnings from continuing operations 203,150 190,649 846,801 739,051
Net earnings from discontinued operations 29,626 1,465 62,644 1,753
Net earnings 232,776 192,114 909,445 740,804
Perpetual preferred share dividends 2,212 2,212 8,850 10,105
Net earnings available to common shareholders $230,564 $189,902 $900,595 $730,699
Average number of common shares (in thousands)
- Basic 257,232 260,756 258,151 261,855
- Diluted 257,981 261,848 259,075 262,867
Earnings per share (in dollars)
Net earnings from continuing operations
- Basic $0.78 $0.72 $3.25 $2.78
- Diluted $0.78 $0.72 $3.24 $2.77
Net earnings available to common shareholders
- Basic $0.90 $0.73 $3.49 $2.79
- Diluted $0.89 $0.73 $3.48 $2.78
IGM FINANCIAL INC.
Financial Highlights
Three months ended
December 31
Twelve months ended
December 31
(unaudited) 2011 2010 % Change 2011 2010 % Change
Earnings available to common shareholders
($ millions)
Operating Earnings (1) $ 196.0 $ 210.2 (6.8 ) % $ 833.0 $ 758.9 9.8 %
Net Earnings 230.6 189.9 21.4 900.6 730.7 23.3
Diluted earnings per share
Operating Earnings (1) 0.76 0.80 (5.0 ) 3.22 2.89 11.4
Net Earnings 0.89 0.73 21.9 3.48 2.78 25.2
Return on equity
Operating Earnings (1) 19.7 % 18.2 %
Net Earnings 21.3 % 17.6 %
Dividends per share 0.5375 0.5125 4.9 2.1000 2.0500 2.4
Total assets under management (2)
($ millions)
$ 118,713 $ 129,484 (8.3 ) %
Investors Group
Mutual funds 57,735 61,785 (6.6 )
Mackenzie
Mutual funds 39,141 43,452
Sub-advisory, institutional and other accounts 22,511 24,894
Total 61,652 68,346 (9.8 )
Counsel
Mutual funds 2,811 2,688 4.6
Mutual Funds and Institutional Sales($ millions) Investors Group Mackenzie Counsel Total (3 )
For the three months ended December 31, 2011
Gross sales $ 1,285 $ 2,088 $ 128 $ 3,437
Net sales (redemptions) (158 ) (1,246 ) 56 (1,373 )
For the twelve months ended December 31, 2011
Gross sales $ 6,021 $ 10,303 $ 543 $ 16,404
Net sales (redemptions) 39 (2,499 ) 225 (2,524 )
(1) Non-IFRS Financial Measures:
2011 operating earnings excluded net earnings from discontinued operations and an after-tax benefit of $5.0 million representing the Company's proportionate share of net changes in Great-West Lifeco Inc.'s (Lifeco) litigation provisions recorded in the fourth quarter.
2010 operating earnings excluded net earnings from discontinued operations, a non-recurring after-tax charge of $21.8 million related to the transition of IFRS recorded in the fourth quarter, and an after-tax charge of $8.2 million representing the Company's proportionate share of Lifeco's incremental litigation provision recorded in the third quarter.
(2) Total assets under management excluded $3.5 billion of assets sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel ($3.3 billion at December 31, 2010).
(3) Total Gross Sales and Net Sales for the three months ended December 31, 2011 excluded $64 million and $25 million respectively in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.
Total Gross Sales and Net Sales for the twelve months ended December 31, 2011 excluded $463 million and $289 million respectively in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.

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