IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

February 11, 2011 11:07 ET

IGM Financial Inc. Reports Fourth Quarter and 2010 Earnings

WINNIPEG, MANITOBA--(Marketwire - Feb. 11, 2011) -

Readers are referred to the disclaimer regarding Forward-Looking Statements and financial measures not in accordance with Canadian generally accepted accounting principles (Non-GAAP Financial Measures) at the end of this Release.

IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the fourth quarter and for the year ended December 31, 2010.

Net earnings available to common shareholders for the three months ended December 31, 2010 were $198.0 million or 76 cents per share compared to operating earnings available to common shareholders of $176.51 million or 671 cents per share in 2009. This represents an increase of 13.4% on a per share basis. Net earnings available to common shareholders, including other items, for the three months ended December 31, 2009 were $113.7 million or 43 cents per share.

Operating earnings available to common shareholders for the year ended December 31, 2010 were $733.7 million or $2.79 per share compared to operating earnings available to common shareholders of $621.91 million or $2.351 per share in 2009. This represents an increase of 18.7% on a per share basis.

Other items for the year ended December 31, 2010 consisted of an after-tax charge of $8.2 million representing the Company's proportionate share of Great-West Lifeco Inc.'s incremental litigation provision recorded in the third quarter.

Net earnings available to common shareholders, including other items, for the year ended December 31, 2010 were $725.5 million or $2.76 per share compared to net earnings available to common shareholders, including other items, of $559.1 million or $2.12 per share in 2009.

Revenues for the three months ended December 31, 2010 were $692.6 million compared to $546.7 million a year ago. Revenues for the year ended December 31, 2010 were $2.62 billion compared to $2.33 billion a year ago. Expenses were $414.4 million for the fourth quarter of 2010, compared to $395.4 million a year ago and $1.62 billion for the twelve months compared to $1.55 billion in 2009.

Total assets under management at December 31, 2010 were $129.5 billion. This compared with total assets under management of $120.5 billion at December 31, 2009, an increase of 7.4%.

Shareholders' equity at December 31, 2010 was $4.5 billion, compared to $4.4 billion at December 31, 2009. Return on average common equity based on operating earnings for the year ended December 31, 2010 was 17.0% compared to 14.8% for the comparative period in 2009.

Investors Group Operations

The number of Investors Group Consultants was 4,686 at December 31, 2010 up from 4,633 at December 31, 2009.

Mutual fund sales for the fourth quarter were $1.4 billion, unchanged from the prior year, and mutual fund net redemptions for the fourth quarter were $38 million compared to net sales of $154 million a year ago. 

Mutual fund sales for the year ended December 31, 2010 were $5.7 billion compared to $5.0 billion in the prior year and mutual fund net sales were $253 million compared to $404 million a year ago.

The twelve month trailing redemption rate (excluding money market funds) was 8.3% at December 31, 2010, compared to 7.4% at December 31, 2009.

"Our Consultant network expanded for the 26th consecutive quarter to 4,686 at December 31, 2010," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "During 2010, segregated fund assets under management increased by 55% to $880 million and insurance sales were up 17% as we served our clients with their diverse financial planning needs."

Mutual fund assets under management at December 31, 2010 were $61.8 billion compared to $57.7 billion at December 31, 2009, an increase of 7.2%.

Mackenzie Operations 

Total sales for the fourth quarter of 2010 were $3.1 billion compared to $3.0 billion in the prior year. Total net redemptions for the fourth quarter were $267 million compared to total net redemptions of $509 million a year ago.

Total sales for the year ended December 31, 2010 were $12.2 billion compared to $11.6 billion in the prior year. Total net redemptions were $1.5 billion compared to total net redemptions of $1.4 billion a year ago.

"Investment performance of our mutual fund family remained strong, with 60% of our fund assets ranked in the first or second quartile of their respective asset categories over the last three years," said Charles R. Sims, President and Chief Executive Officer of Mackenzie Financial Corporation.

Mackenzie's total assets under management at December 31, 2010 were $68.3 billion compared with total assets under management of $63.6 billion at December 31, 2009, an increase of 7.5%. Mutual fund assets under management at December 31, 2010 were $43.5 billion compared to $40.6 billion a year ago, an increase of 7.0%.

Dividends

The Board of Directors has declared a dividend of 51.25 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 is payable on May 3, 2011 to shareholders of record on March 31, 2011 and the preferred share dividend is payable on May 2, 2011 to shareholders of record on March 31, 2011.

1 Other items for the year ended December 31, 2009 were recorded in the fourth quarter and consisted of:

  • A non-cash charge of $76.5 million ($66.2 million after tax) on available for sale (AFS) equity securities related to the market environment.
  • A non-cash income tax benefit of $17.8 million resulting from decreases in Ontario corporate income tax rates and their effect on the future income tax liability related to indefinite life intangible assets arising from the acquisition of Mackenzie Financial Corporation in 2001. 
  • A premium of $14.4 million paid on the redemption of the Series A preferred shares on December 31, 2009.

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 (including adoption of International Financial Reporting Standards), 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-GAAP Financial Measures

This release contains non-GAAP financial measures. Net earnings available to common shareholders, which is a financial measure in accordance with Canadian GAAP, 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-GAAP 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-GAAP financial measures are used to provide management and investors with additional measures of performance. However, non-GAAP financial measures do not have standard meanings prescribed by GAAP 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-GAAP financial measures to measures prescribed by GAAP.

A review of activities and performance for IGM Financial Inc., together with financial details and a management discussion, will be published in the Company's 2010 Annual Report to Shareholders which should be mailed to shareholders on or about March 23, 2011.

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 $131 billion in total assets under management as of January 31, 2011. 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 2010 will be held Friday February 11, 2011 at 1:30 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. 

IGM FINANCIAL INC.
           
Consolidated Statements of Earnings
           
(unaudited)
(in thousands of dollars,
Three months ended December 31   Twelve months ended December 31
except shares and per share amounts) 2010 2009   2010 2009
           
           
Revenues          
  Management fees $ 479,028 $ 449,687   $ 1,836,742 $ 1,646,636
  Administration fees   90,795   88,259     356,272   346,020
  Distribution fees   83,719   70,753     297,585   257,427
  Net investment income and other   39,077   (61,971 )   131,929   77,649
    692,619   546,728     2,622,528   2,327,732
                   
Expenses                  
  Commission   227,245   213,504     869,066   808,482
  Non-commission   158,568   148,732     635,621   614,222
  Interest   28,631   33,157     111,374   125,306
    414,444   395,393     1,616,061   1,548,010
Earnings before income taxes   278,175   151,335     1,006,467   779,722
Income taxes   78,004   37,624     270,882   220,630
Net earnings   200,171   113,711     735,585   559,092
Perpetual preferred share dividends   2,213   -     10,105   -
Net earnings available to common shareholders $ 197,958 $ 113,711   $ 725,480 $ 559,092
                   
Average number of common shares (in thousands)                  
  - Basic   260,756   263,488     261,855   263,217
  - Diluted   261,835   264,909     262,848   264,324
                   
Earnings per share (in dollars)                  
  - Basic $ 0.76 $ 0.43   $ 2.77 $ 2.12
  - Diluted $ 0.76 $ 0.43   $ 2.76 $ 2.12
                     
                     
IGM FINANCIAL INC.  
Financial Highlights  
         
  Three months ended December 31   Twelve months ended December 31  
(unaudited) 2010 2009 % Change   2010   2009   % Change  
                     
Earnings available to common shareholders ($ millions)                                
    Operating Earnings(1) $ 198.0 $ 176.5   12.2 % $ 733.7   $ 621.9     18.0 %
    Net Earnings   198.0   113.7   74.1     725.5     559.1     29.8  
                                 
Diluted earnings per share                                
    Operating Earnings(1)   0.76   0.67   13.4     2.79     2.35     18.7  
    Net Earnings   0.76   0.43   76.7     2.76     2.12     30.2  
                                 
Return on equity                                
    Operating Earnings(1)                 17.0 %   14.8 %      
    Net Earnings                 16.8 %   13.3 %      
                                 
Dividends per share   0.5125   0.5125   -     2.05     2.05     -  
                                 
                                 
Total assets under management(2) ($ millions)           $ 129,484   $ 120,545     7.4 %
  Investors Group                                
    Mutual funds                 61,785     57,655     7.2  
  Mackenzie                                
      Mutual funds                 43,452     40,624        
      Sub-advisory, institutional and other accounts             24,894     22,955        
    Total                 68,346     63,579     7.5  
  Counsel                                
    Mutual funds                 2,688     2,140     25.6  
                                 
                                 
Mutual Funds and Institutional Sales ($ millions)     Investors Group   Mackenzie   Counsel   Total (3)  
                                 
  For the three months ended December 31, 2010                            
      Gross sales         $ 1,387   $ 3,133   $ 142   $ 4,595  
      Net sales (redemptions)           (38 )   (267 )   62     (254 )
                                 
  For the twelve months ended December 31, 2010                            
      Gross sales         $ 5,748   $ 12,163   $ 499   $ 18,108  
      Net sales (redemptions)           253     (1,453 )   204     (1,124 )
                                 
(1) Non-GAAP Financial Measures:
  2010 annual operating earnings excluded:
  $8.2 million after-tax charge recorded in the third quarter which represented the Company's proportionate share of Great-West Lifeco Inc.'s incremental litigation provision.
  2009 fourth quarter and annual operating earnings excluded:
  $66.2 million which represented a non-cash after-tax charge on available for sale equity securities related to the market environment.
  $17.8 million which represented a non-cash income tax benefit resulting from decreases in Ontario corporate income tax rates and their effect on the future income tax liability related to indefinite life intangible assets arising from the acquisition of Mackenzie Financial Corporation in 2001. There is no expectation that the future tax liability will become payable as the Company has no intention of disposing of these assets.
  $14.4 million which represented the premium paid on the redemption of Series A preferred shares on December 31, 2009.
(2) Total assets under management excluded $3.3 billion of assets sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel ($2.8 billion at December 31, 2009).
(3) Total Gross Sales and Net Redemptions for the three months ended December 31, 2010 excluded $67 million and $11 million respectively in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.
  Total Gross Sales and Net Redemptions for the twelve months ended December 31, 2010 excluded $302 million and $128 million respectively in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.

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