IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

August 05, 2005 07:30 ET

IGM Financial Inc. Reports Second Quarter Earnings And Dividend Increase

WINNIPEG, MANITOBA--(CCNMatthews - Aug. 5, 2005) - IGM Financial Inc. (IGM) (TSX:IGM) today announced earnings results for the second quarter of 2005.

Net income for the three months ended June 30, 2005 was $167.9 million, compared to $152.6 million in 2004, an increase of 10.0%. Earnings per share were 63 cents compared to 57 cents, an increase of 10.5%.

For the six months ended June 30, 2005 net income was $328.6 million compared to $300.5 million in 2004, an increase of 9.4%. Earnings per share were $1.23 compared to $1.13 in 2004, an increase of 8.8%.

Gross revenues for the three months ended June 30, 2005 were $579.2 million, compared to $523.5 million in the prior year. Gross revenues for the six months ended June 30, 2005 were $1.15 billion, compared to $1.04 billion last year. Operating expenses were $336.1 million for the quarter and $676.9 million for the six months, compared with $304.2 million and $608.7 million, respectively, in 2004.

Mutual fund assets under management at June 30, 2005 totalled $87.5 billion, compared to $79.7 billion at June 30, 2004, an increase of 9.8%. Total assets under management at June 30, 2005 totalled $92.5 billion, compared to $82.2 billion at June 30, 2004, an increase of 12.5%.

Shareholders' equity at June 30, 2005 was $3.29 billion, compared to $3.15 billion at December 31, 2004. Return on average common equity for the six months was 19.7% compared with 19.8% for the same period in 2004.

INVESTORS GROUP OPERATIONS

Mutual fund sales for the second quarter were $1.25 billion compared to $1.06 billion in the prior year. For the quarter, mutual fund net sales were $40 million compared to net redemptions of $71 million in 2004 and net redemptions of long-term mutual funds (excluding money market funds) were $17 million compared to net redemptions of $92 million in 2004.

Year-to-date mutual fund sales were $2.9 billion compared to $2.6 billion in the prior year and mutual fund net sales were $468 million compared to $315 million a year ago. Net sales of long-term funds were $351 million compared to $243 million in the prior year.

"Continued growth in our Consultant network has led to a 10% increase in the number of Consultants over the last 12 months", said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "A 48% increase in mutual fund net sales over 2004 combined with strong investment performance has resulted in record levels of assets under management."

Investors Group's twelve month trailing redemption rate (excluding money market funds) was 9.1% at the end of the quarter, down from 9.6% at the same time last year. The corresponding rate at June 30, 2005 for all other members of the Investment Funds Institute of Canada (IFIC) was 16.5%.

Investors Group's mutual fund assets under management at June 30, 2005 were $46.9 billion, an increase of 10.3%, compared to $42.5 billion at June 30, 2004.

The number of Investors Group Consultants was 3,537 at June 30, 2005 compared to 3,207 at June 30, 2004, an increase of 10.3%.

MACKENZIE OPERATIONS

Mackenzie Financial recorded mutual fund sales of $1.9 billion for the second quarter compared to $1.6 billion for the same quarter last year. Mutual fund net sales for the period were $207 million, compared to $219 million in the prior year. Net sales of long-term funds (excluding money market and managed yield funds) were $231 million for the quarter, compared with $191 million in 2004.

Year-to-date mutual fund sales were $4.2 billion compared to $3.7 billion in the prior year. Mutual fund net sales were $553 million compared to $562 million in the prior year. Net sales of long-term funds (excluding money market and managed yield funds) were $599 million for the period compared to $597 million in 2004.

"Client confidence has increased along with recent gains in equity markets", said Charles R. Sims, President and Chief Executive Officer of Mackenzie Financial. "Mackenzie had another strong quarter, sales of long-term mutual funds were 23.6% higher than in 2004."

Mackenzie Financial's twelve month trailing redemption rate for long-term funds was 14.7% at the end of June 2005, compared to 13.5% at the end of June 2004. The corresponding rate at June 30, 2005 for all other members of IFIC was 15.9%.

Mackenzie Financial's mutual fund assets under management at June 30, 2005 were $38.9 billion, an increase of 8.7%, compared to $35.8 billion one year ago. Total assets under management at June 30, 2005 totalled $45.9 billion compared to $39.9 billion at June 30, 2004, an increase of 15.1%.

DIVIDENDS

The Board of Directors has declared a quarterly dividend of $0.359375 per share on the Company's 5.75% Non-Cumulative First Preferred Shares, Series "A" payable on September 30, 2005 to shareholders of record on August 30, 2005 and has declared an increase of 2.25 cents per share in the quarterly dividend from 32.25 cents to 34.5 cents per share on the Company's common shares payable on October 28, 2005 to shareholders of record on September 26, 2005.

FORWARD-LOOKING INFORMATION

This Release may contain forward-looking statements about the Company, including its business operations, strategy and expected financial performance and condition. 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", "intends", "plans", "believes", "estimates" or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future Company action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company, economic factors and the financial services industry generally. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Company due to, but not limited to, important factors such as general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, and the Company's ability to complete strategic transactions and integrate acquisitions. We caution that the foregoing list of important factors is not exhaustive. The reader is also cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements.

IGM Financial Inc. is one of Canada's premier personal financial services companies, and the country's largest manager and distributor of mutual funds and other managed asset products. Its activities are carried out principally through Investors Group, Mackenzie Financial and Investment Planning Counsel. IGM Financial Inc. is a member of the Power Financial Company group of companies.

Media Note: A live webcast of IGM's Analyst conference call for the Second Quarter 2005 will be held today, Friday, August 5, 2005, at 9:30 A.M. (ET) at www.igmfinancial.com. Media and interested parties may alternatively choose to listen to today's live analyst teleconference call by dialing 1-888-789-0089 or (416) 695-5261.



IGM FINANCIAL INC.
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Consolidated Statements of Income

(unaudited)

(in thousands of dollars, Three months ended Six months ended
except shares and per June 30 June 30
share amounts) 2005 2004 2005 2004
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Fee and net investment income
Management $406,462 $371,701 $797,112 $736,781
Administration 75,396 75,768 154,881 153,796
Distribution 49,756 38,892 103,092 73,827
Net investment income and
other 47,548 37,121 97,173 79,482
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Total fee and net investment
income 579,162 523,482 1,152,258 1,043,886
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Operating expenses
Commission expense 177,865 153,802 353,481 297,624
Non-commission expense 135,727 126,692 278,513 263,493
Interest expense 22,557 23,707 44,930 47,604
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Total operating expenses 336,149 304,201 676,924 608,721
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Income before income taxes and
non-controlling interest 243,013 219,281 475,334 435,165
Income taxes 74,498 66,535 145,668 134,530
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Income before non-controlling
interest 168,515 152,746 329,666 300,635
Non-controlling interest 584 160 1,040 160
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Net income $167,931 $152,586 $328,626 $300,475
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Average number of common shares
(in thousands)
- Basic 264,557 264,331 264,601 264,251
- Diluted 266,306 265,960 266,334 265,847

Earnings per share (in dollars)
- Basic $0.63 $0.58 $1.24 $1.14
- Diluted $0.63 $0.57 $1.23 $1.13
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IGM FINANCIAL INC.
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Financial Highlights
Three months ended Six months ended
June 30 June 30
2005 2004 Change 2005 2004 Change
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Net income ($millions) $167.9 $152.6 10.0% $328.6 $300.5 9.4%
Diluted earnings per
share 0.63 0.57 10.5 1.23 1.13 8.8
Return on equity 19.7% 19.8%
Dividends per share 0.3225 0.2750 17.3 0.6450 0.5500 17.3

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($millions)

Mutual funds
Investors Group
Sales $1,254 $1,064 17.9% $2,906 $2,625 10.7%
Net sales (redemptions) 40 (71) N/M 468 315 48.4
Assets under management 46,922 42,536 10.3
Mackenzie
Sales 1,894 1,633 16.0 4,171 3,654 14.1
Net sales 207 219 (5.3) 553 562 (1.7)
Assets under management 38,949 35,847 8.7
Investment Planning
Counsel (1)
Sales 94 71 N/A 226 71 N/A
Net sales 55 49 N/A 138 49 N/A
Assets under management 1,679 1,326 26.6

Combined mutual fund
assets under
management (2) 87,514 79,680 9.8

Insurance in force
(face amount) 36,029 34,513 4.4

Securities operations
assets under
administration 7,615 6,626 14.9

Mortgages serviced 5,874 6,217 (5.5)

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Employees 3,251 3,175 2.4%
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(1) From date of acquisition or as at June 30, 2005.

(2) Adjusted for $36 million in inter-segment assets. (2004 - $29 million).

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