IGM Financial Inc. Reports Fourth Quarter and 2012 Earnings

Marketwired

WINNIPEG, MANITOBA--(Marketwire - Feb 8, 2013) -

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) (IGM.TO) today announced earnings results for the fourth quarter and for the year ended December 31, 2012.

Operating earnings available to common shareholders, excluding other items(1), for the three months ended December 31, 2012 were $184.1 million or 73 cents per share compared to operating earnings available to common shareholders, excluding other items(2), of $196.0 million or 76 cents per share in 2011. 

Net earnings available to common shareholders for the three months ended December 31, 2012 were $202.9 million or 80 cents per share compared to net earnings available to common shareholders of $230.6 million or 89 cents per share for the comparative period in 2011.

Operating earnings available to common shareholders, excluding other items1, for the year ended December 31, 2012 were $749.7 million or $2.94 per share compared to operating earnings available to common shareholders, excluding other items2, of $833.0 million or $3.22 per share in 2011.

Net earnings available to common shareholders for the year ended December 31, 2012 were $762.1 million or $2.99 per share compared to net earnings available to common shareholders of $900.6 million or $3.48 per share in 2011.

Revenues for the three months ended December 31, 2012 were $632.7 million compared to $649.6 million in the fourth quarter of 2011. Revenues for the year ended December 31, 2012 were $2.58 billion compared to $2.73 billion a year ago. Expenses were $399.4 million for the fourth quarter of 2012 compared to $392.6 million in the fourth quarter of 2011 and $1.61 billion for the year ended December 31, 2012, compared to $1.64 billion a year ago.

Total assets under management at December 31, 2012 were $120.7 billion. This compared with total assets under management of $118.7 billion at December 31, 2011.

Shareholders'' equity at December 31, 2012 was $4.5 billion, unchanged from December 31, 2011. Return on average common equity based on operating earnings for the year ended December 31, 2012 was 17.3% compared to 19.7% for the comparative period in 2011.

Investors Group Operations

"Based on diversified portfolios and less volatile equity markets, our clients'' median asset growth for 2012 was 5.5%," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "In 2012, insurance sales increased by 11%, and mortgage originations increased by 45% as our Consultants assisted clients with their overall financial planning needs."

Mutual fund sales for the fourth quarter of 2012 were $1.42 billion compared to $1.29 billion in the prior year, and mutual fund net redemptions for the fourth quarter were $261 million compared to net redemptions of $158 million a year ago. 

Mutual fund sales for the twelve months ended December 31, 2012 were $5.78 billion compared to $6.02 billion in the prior year, and mutual fund net redemptions were $724 million compared to net sales of $39 million a year ago. 

The twelve month trailing redemption rate (excluding money market funds) was 10.0% at December 31, 2012, compared to 9.7% at September 30, 2012.

Mutual fund assets under management at December 31, 2012 were $60.6 billion compared to $57.7 billion at December 31, 2011.

Mackenzie Operations

Total sales for the fourth quarter of 2012 were $2.84 billion compared to $2.09 billion in the prior year. Total net redemptions for the fourth quarter were $1.00 billion compared to total net redemptions of $1.25 billion a year ago.

Total sales for the twelve months ended December 31, 2012 were $9.97 billion compared to $10.30 billion in the prior year. Total net redemptions were $4.24 billion compared to total net redemptions of $2.50 billion 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, 2012," said Charles R. Sims, FCA, President and Chief Executive Officer of Mackenzie Financial Corporation.

Mackenzie''s total assets under management at December 31, 2012 were $61.5 billion compared with total assets under management of $61.7 billion at December 31, 2011. Mutual fund assets under management at December 31, 2012 were $40.4 billion compared to $39.1 billion a year ago.

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, 2013 to shareholders of record on March 28, 2013.

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 to assist 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. 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. While the Company considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

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 and its subsidiaries'' 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 applicable Canadian 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 and material factors or assumptions on which information contained in forward-looking statements is based 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 over $123 billion in total assets under management as of January 31, 2013. 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 2012 will be held Friday February 8, 2013 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 twelve months ended December 31, 2012 consisted of:

  • A favourable change in income tax provision estimates of $24.4 million related to certain tax filings.
  • An after-tax charge of $5.6 million representing the Company''s proportionate share of net changes in Great-West Lifeco Inc.''s litigation provision. 

Other items for the twelve months ended December 31, 2012 also included 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.

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

  • Net earnings from discontinued operations of $29.6 million and $62.6 million, respectively, related to the sale of M.R.S. Trust Company and M.R.S. Inc. (MRS). 
  • An after-tax benefit of $5.0 million representing the Company''s proportionate share of net changes in Great-West Lifeco Inc.''s litigation provision.
 
IGM FINANCIAL INC.
 
 
Consolidated Statements of Earnings
 
(unaudited)
(in thousands of Canadian dollars, except shares and per share amounts)
 

2012
    Three
months ended
December 31
2011
   

2012
    Twelve
months ended
December 31
2011
                       
Revenues                      
  Management fees   $ 434,691     $ 444,177     $ 1,766,348     $ 1,892,728
  Administration fees     84,571       84,347       337,155       344,887
  Distribution fees     80,198       79,785       321,071       333,461
  Net investment income and other     17,540       17,791       80,611       81,887
  Proportionate share of affiliate''s earnings     15,749       23,536       72,322       79,489
      632,749       649,636       2,577,507       2,732,452
                               
Expenses                              
  Commission     213,387       214,027       858,248       894,860
  Non-commission     162,822       155,358       664,483       637,487
  Interest     23,202       23,199       92,188       102,807
      399,411       392,584       1,614,919       1,635,154
Earnings before income taxes and discontinued operations     233,338       257,052       962,588       1,097,298
Income taxes     28,198       53,902       191,604       250,497
Net earnings from continuing operations     205,140       203,150       770,984       846,801
Net earnings from discontinued operations     -       29,626       -       62,644
Net earnings     205,140       232,776       770,984       909,445
Perpetual preferred share dividends     2,212       2,212       8,850       8,850
Net earnings available to common shareholders   $ 202,928     $ 230,564     $ 762,134     $ 900,595
                               
Average number of common shares                              
(in thousands)                              
  - Basic     252,520       257,232       254,853       258,151
  - Diluted     252,862       257,981       255,277       259,075
                               
Earnings per share (in dollars)                              
Net earnings available to common shareholders from continuing operations                              
  - Basic   $ 0.80     $ 0.78     $ 2.99     $ 3.25
  - Diluted   $ 0.80     $ 0.78     $ 2.99     $ 3.24
Net earnings available to common shareholders                              
  - Basic   $ 0.80     $ 0.90     $ 2.99     $ 3.49
  - Diluted   $ 0.80     $ 0.89     $ 2.99     $ 3.48
                               
                               
   
IGM FINANCIAL INC.  
   
Financial Highlights  
   
    For the three months
ended December 31
    As at and for the twelve
months ended December 31
 
(unaudited)   2012   2011   Change     2012   2011     Change  
                               
Earnings available to                              
common shareholders
($ millions)
                             
  Operating Earnings(1)   $ 184.1   $ 196.0     (6.1 )%   $ 749.7   $ 833.0       (10.0 )%
  Net Earnings     202.9     230.6     (12.0 )     762.1     900.6       (15.4 )
                                           
Diluted earnings per share                                          
  Operating Earnings(1)     0.73     0.76     (3.9 )     2.94     3.22       (8.7 )
  Net Earnings     0.80     0.89     (10.1 )     2.99     3.48       (14.1 )
                                           
Return on equity                                          
  Operating Earnings(1)                         17.3 %   19.7 %        
  Net Earnings                         17.6 %   21.3 %        
                                           
Dividends per share     0.5375     0.5375     -       2.1500     2.1000       2.4  
                                           
                                           
Total assets under management(2)
($ millions)
                      $ 120,694   $ 118,713       1.7 %
Investors Group                                          
  Mutual funds                         60,595     57,735       5.0  
Mackenzie                                          
  Mutual funds                         40,394     39,141          
  Sub-advisory, institutional and other accounts                         21,083     22,511          
  Total                         61,477     61,652       (0.3 )
Counsel                                          
  Mutual funds                         2,950     2,811       4.9  
                                           
                                 
Mutual Funds and Institutional Sales
($ millions)
      Investors
Group
      Mackenzie     Counsel       Total(3)  
                                 
For the three months ended December 31, 2012                                
  Gross sales     $ 1,418     $ 2,842   $ 98     $ 4,063  
  Net sales (redemptions)       (261 )     (1,004 )   (16 )     (1,314 )
                                 
For the twelve months ended December 31, 2012                                
  Gross sales     $ 5,778     $ 9,969   $ 401     $ 14,693  
  Net sales (redemptions)       (724 )     (4,238 )   (24 )     (5,617 )
                                 
                                 
(1) Non-IFRS Financial Measures:
  2012 operating earnings excluded:
  A favourable change in income tax provision estimates of $24.4 million, recorded in the fourth quarter, related to certain tax filings.
  An after-tax charge of $5.6 million, recorded in the fourth quarter, representing the Company''s proportionate share of net changes in Great-West Lifeco Inc.''s litigation provisions.
  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.
  An after-tax benefit of $5.0 million, recorded in the fourth quarter, representing the Company''s proportionate share of net changes in Great-West Lifeco Inc.''s litigation provisions.
(2) Total assets under management excluded $4.3 billion of assets sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel ($3.5 billion at December 31, 2011).
(3) Total Gross Sales and Net Sales for the three months ended December 31, 2012 excluded $295 million and $33 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, 2012 excluded $1.5 billion and $631 million respectively in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.
Contact:
IGM Financial Inc.
Ron Arnst
Media Relations
(204) 956-3364
ron.arnst@igmfinancial.com
www.igmfinancial.com

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