IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

August 02, 2012 11:57 ET

IGM Financial Inc. Reports Second Quarter Earnings

WINNIPEG, MANITOBA--(Marketwire - Aug. 2, 2012) -

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

IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the second quarter of 2012.

Operating earnings available to common shareholders, excluding other items outlined below, for the three months ended June 30, 2012 were $179.0 million or 70 cents per share compared to operating earnings available to common shareholders of $212.8 million1 or 82 cents per share1 in 2011.

Operating earnings available to common shareholders, excluding other items outlined below, for the six months ended June 30, 2012 were $378.7 million or $1.47 per share compared to operating earnings available to common shareholders of $424.0 million1 or $1.63 per share1 in 2011.

Net earnings available to common shareholders, including other items, for the three months ended June 30, 2012 were $172.6 million or 67 cents per share compared to net earnings available to common shareholders of $213.9 million or 82 cents per share in 2011. Net earnings available to common shareholders, including other items, for the six months ended June 30, 2012 were $372.3 million or $1.45 per share compared to net earnings available to common shareholders of $426.0 million or $1.64 per share in 2011.

Other items for the three and six months ended June 30, 2012 consisted of a non-cash income tax charge of $6.4 million resulting from increases in Ontario corporate income tax rates and their effect on the deferred income tax liability related to indefinite life intangible assets arising from prior business acquisitions.

Revenues for the three months ended June 30, 2012 were $637.6 million compared to $697.7 million a year ago. Revenues for the six months ended June 30, 2012 were $1.31 billion compared to $1.41 billion a year ago. Expenses were $406.7 million for the second quarter of 2012 compared to $419.0 million a year ago and $821.1 million for the six month period compared to $844.8 million in 2011.

Total assets under management at June 30, 2012 were $118.0 billion. This compared with total assets under management of $130.2 billion at June 30, 2011, a decrease of 9.4%.

Shareholders' equity at June 30, 2012 was $4.5 billion compared to $4.4 billion at June 30, 2011. Return on average common equity based on operating earnings for the six months ended June 30, 2012 was 17.4% compared to 20.3% for the comparative period in 2011.

Investors Group Operations

At June 30, 2012 there were 2,727 Consultants with 4 years or more of Investors Group experience, up from 2,714 at March 31, 2012. The number of Investors Group Consultants was 4,526 at June 30, 2012, up from 4,522 at March 31, 2012.

"During the quarter, we announced enhanced pricing for 2/3 of our mutual funds and for households investing more than $500,000," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Our Consultant Network grew slightly during the quarter through strong retention of experienced Consultants and an increase in new Consultants joining Investors Group."

Mutual fund sales for the second quarter of 2012 were $1.31 billion compared to $1.40 billion in the prior year, and mutual fund net redemptions for the second quarter were $324 million compared to net redemptions of $145 million a year ago.

Mutual fund sales for the six months ended June 30, 2012 were $3.14 billion compared to $3.45 billion in the prior year, and mutual fund net redemptions were $149 million compared to net sales of $359 million a year ago.

The twelve month trailing redemption rate (excluding money market funds) was 9.4% at June 30, 2012, compared to 9.1% at March 31, 2012.

Mutual fund assets under management at June 30, 2012 were $58.1 billion compared to $62.2 billion at June 30, 2011, a decrease of 6.5%.

Mackenzie Operations

Total sales for the second quarter of 2012 were $1.96 billion compared to $2.68 billion in the prior year. Total net redemptions for the second quarter were $1.29 billion compared to total net redemptions of $173 million a year ago.

Total sales for the six months ended June 30, 2012 were $4.68 billion compared to $6.17 billion in the prior year. Total net redemptions were $2.22 billion compared to total net redemptions of $52 million a year ago.

"Investment performance of our mutual fund family remained strong, with 56% of our fund assets ranked in the first or second quartile of their respective asset categories over the three year period ended June 30, 2012," said Charles R. Sims, FCA, President and Chief Executive Officer of Mackenzie Financial Corporation.

Mackenzie's total assets under management at June 30, 2012 were $60.7 billion compared with total assets under management of $68.8 billion at June 30, 2011, a decrease of 11.9%. Mutual fund assets under management at June 30, 2012 were $39.2 billion compared to $43.6 billion a year ago, a decrease of 10.1%.

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 October 31, 2012 to shareholders of record on September 28, 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 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 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 and Additional IFRS Measures

This release contains non-IFRS financial measures and additional IFRS measures. Net earnings available to common shareholders, which is an additional 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 to assess earnings 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.

Terms by which additional IFRS measures are identified include "earnings before income taxes and discontinued operations", "net earnings from continuing operations" and "net earnings available to common shareholders". Additional IFRS measures are used to provide management and investors with additional measures to assess earnings performance. These measures are considered additional IFRS measures as they are in addition to the minimum line items required by IFRS and are relevant to an understanding of the entity's financial performance.

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 approximately $117 billion in total assets under management as of July 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 Second Quarter 2012 will be held Thursday August 2, 2012 at 3:00 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 three and six months ended June 30, 2011 consisted of net earnings from discontinued operations of $1.1 million and $2.0 million, respectively, related to the sale of M.R.S. Trust Company and M.R.S. Inc. (MRS).

IGM FINANCIAL INC.
Consolidated Statements of Earnings
(unaudited) Three months ended Six months ended
(in thousands of Canadian dollars, except shares and per share amounts)
2012
June 30
2011

2012
June 30
2011
Revenues
Management fees$443,537 $491,787 $900,155 $983,902
Administration fees 83,973 87,924 169,237 175,424
Distribution fees 80,534 83,556 165,713 172,917
Net investment income and other 12,837 16,293 39,168 41,726
Proportionate share of affiliate's earnings 16,726 18,111 36,423 35,091
637,607 697,671 1,310,696 1,409,060
Expenses
Commission 213,719 228,679 435,103 462,329
Non-commission 170,109 164,133 340,200 326,097
Interest 22,912 26,139 45,823 56,410
406,740 418,951 821,126 844,836
Earnings before income taxes and discontinued operations

230,867



278,720



489,570



564,224
Income taxes 56,027 63,693 112,866 135,820
Net earnings from continuing operations 174,840 215,027 376,704 428,404
Net earnings from discontinued operations - 1,055 - 2,023
Net earnings 174,840 216,082 376,704 430,427
Perpetual preferred share dividends 2,212 2,212 4,425 4,425
Net earnings available to common shareholders$172,628 $213,870 $372,279 $426,002
Average number of common shares
(in thousands)
- Basic 255,835 258,296 256,202 258,792
- Diluted 256,454 259,559 256,900 259,892
Earnings per share (in dollars)
Net earnings from continuing operations
- Basic$0.67 $0.83 $1.45 $1.64
- Diluted$0.67 $0.82 $1.45 $1.63
Net earnings available to common shareholders
- Basic$0.67 $0.83 $1.45 $1.65
- Diluted$0.67 $0.82 $1.45 $1.64
IGM FINANCIAL INC.
Financial Highlights
Three months ended June 30 Six months ended June 30
(unaudited) 2012 2011 Change 2012 2011 Change
Earnings available to common shareholders ($ millions)
Operating Earnings (1) $ 179.0 $ 212.8 (15.9 )% $ 378.7 $ 424.0 (10.7 )%
Net Earnings 172.6 213.9 (19.3 ) 372.3 426.0 (12.6 )
Diluted earnings per share
Operating Earnings (1) 0.70 0.82 (14.6 ) 1.47 1.63 (9.8 )
Net Earnings 0.67 0.82 (18.3 ) 1.45 1.64 (11.6 )
Return on equity
Operating Earnings (1) 17.4 % 20.3 %
Net Earnings 17.1 % 20.4 %
Dividends per share 0.5375 0.5125 4.9 1.075 1.025 4.9
Total assets under management (2)($ millions) $ 117,961 $ 130,159 (9.4 )%
Investors Group
Mutual funds 58,118 62,158 (6.5 )
Mackenzie
Mutual funds 39,217 43,601
Sub-advisory, institutional and other accounts 21,435 25,206
Total 60,652 68,807 (11.9 )
Counsel
Mutual funds 2,849 2,845 0.1

Mutual Funds and Institutional Sales ($millions) Investors Group Mackenzie Counsel Total (3)
For the three months ended June 30, 2012
Gross sales $ 1,306 $ 1,958 $ 87 $ 3,151
Net sales (redemptions) (324 ) (1,291 ) (25 ) (1,662 )
For the six months ended June 30, 2012
Gross sales $ 3,140 $ 4,679 $ 227 $ 7,508
Net sales (redemptions) (149 ) (2,224 ) 6 (2,515 )
(1) Non-IFRS Financial Measures:
2012 operating earnings excluded a non-cash income tax charge of $6.4 million recorded in the second quarter resulting from increases in Ontario corporate income tax rates and their effect on the deferred income tax liability related to indefinite life intangible assets arising from prior business acquisitions. There is no expectation that the deferred tax liability will become payable as the Company has no intention of disposing of these assets.
2011 operating earnings excluded net earnings from discontinued operations.
(2) Total assets under management excluded $3.7 billion of assets sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel ($3.7 billion at June 30, 2011.)
(3) Total Gross Sales and Net Sales for the three months ended June 30, 2012 excluded $200 million and $22 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 six months ended June 30, 2012 excluded $538 million and $148 million respectively in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.

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