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Press release from Marketwire

IGM Financial Inc. Reports Second Quarter Earnings

Thursday, August 01, 2013

IGM Financial Inc. Reports Second Quarter Earnings

10:56 EDT Thursday, August 01, 2013

WINNIPEG, MANITOBA--(Marketwired - Aug. 1, 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) (TSX:IGM) today announced earnings results for the second quarter of 2013.

Operating earnings available to common shareholders for the three months ended June 30, 2013 were $190.9 million or 76 cents per share compared to operating earnings available to common shareholders, excluding other items1, of $178.1 million or 69 cents per share in 2012.

Net earnings available to common shareholders for the three months ended June 30, 2013 were $190.9 million or 76 cents per share compared to net earnings available to common shareholders of $171.7 million or 67 cents per share for the comparative period in 2012.

Operating earnings available to common shareholders for the six months ended June 30, 2013 were $371.4 million or $1.47 per share compared to operating earnings available to common shareholders, excluding other items1, of $377.0 million or $1.47 per share in 2012.

Net earnings available to common shareholders for the six months ended June 30, 2013 were $371.4 million or $1.47 per share compared to net earnings available to common shareholders of $370.6 million or $1.44 per share in 2012.

Revenues for the three months ended June 30, 2013 were $667.0 million compared to $637.4 million in the second quarter of 2012. Revenues for the six months ended June 30, 2013 were $1.32 billion compared to $1.31 billion a year ago. Expenses were $424.6 million for the second quarter of 2013 compared to $407.8 million a year ago and $843.3 million for the six month period compared to $823.2 million in 2012.

Total assets under management at June 30, 2013 were $124.8 billion. This compared with total assets under management of $118.0 billion at June 30, 2012.

Shareholders' equity at June 30, 2013 was $4.5 billion, unchanged from June 30, 2012. Return on average common equity based on operating earnings for the six months ended June 30, 2013 was 17.1% compared to 17.4% for the comparative period in 2012.

Investors Group Operations

"Our Consultant Network grew from 4,465 to 4,550 during the quarter based primarily on higher levels of recruiting," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Investment fund sales were 14% higher than the same quarter in 2012."

Mutual fund sales for the second quarter of 2013 were $1.49 billion compared to $1.31 billion in the prior year, and mutual fund net redemptions for the second quarter were $167 million compared to net redemptions of $324 million a year ago.

Mutual fund sales for the six months ended June 30, 2013 were $3.53 billion compared to $3.14 billion in the prior year, and mutual fund net sales were $209 million compared to net redemptions of $149 million a year ago.

The twelve month trailing redemption rate (excluding money market funds) was 9.8% at June 30, 2013, unchanged from March 31, 2013.

Mutual fund assets under management at June 30, 2013 were $62.5 billion compared to $58.1 billion at June 30, 2012.

Mackenzie Operations

Total sales for the second quarter of 2013 were $3.42 billion compared to $1.96 billion in the prior year. Total net redemptions for the second quarter were $171 million compared to total net redemptions of $1.29 billion a year ago.

Total sales for the six months ended June 30, 2013 were $6.70 billion compared to $4.68 billion in the prior year. Total net sales were $83 million compared to total net redemptions of $2.22 billion a year ago.

"Investment performance of our mutual fund family remained strong, with 79% of our fund assets ranked in the first or second quartile of their respective asset categories over the five year period ended June 30, 2013," said Jeffrey R. Carney, President and Chief Executive Officer of Mackenzie Financial Corporation. "The launch of Mackenzie Strategic Bond Fund and Mackenzie Floating Rate Income Fund in the quarter builds on our history of meeting investor needs through product development and contributed to our sales during the quarter."

Mackenzie's total assets under management at June 30, 2013 were $63.9 billion compared with total assets under management of $60.7 billion at June 30, 2012. Mutual fund assets under management at June 30, 2013 were $42.1 billion compared to $39.2 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 October 31, 2013 to shareholders of record on September 30, 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 approximately $125 billion in total assets under management as of June 30, 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 Second Quarter 2013 will be held Thursday August 1, 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 1-877-240-9772 or 416-340-9432.

1 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.
IGM FINANCIAL INC.
Consolidated Statements of Earnings
(unaudited)
(in thousands of Canadian dollars, except shares and per share amounts)
Three months ended
June 30
Six months ended
June 30
2013 2012 2013 2012
Restated Restated
Revenues
Management fees $ 451,956 $ 443,537 $ 894,826 $ 900,155
Administration fees 87,859 83,973 173,444 169,237
Distribution fees 79,754 80,534 161,199 165,713
Net investment income and other 26,397 12,837 49,862 39,168
Proportionate share of affiliate's earnings 20,987 16,546 40,320 36,187
666,953 637,427 1,319,651 1,310,460
Expenses
Commission 218,999 213,719 437,028 435,103
Non-commission 182,637 171,127 360,535 342,236
Interest 22,963 22,912 45,712 45,823
424,599 407,758 843,275 823,162
Earnings before income taxes 242,354 229,669 476,376 487,298
Income taxes 49,276 55,751 100,574 112,315
Net earnings 193,078 173,918 375,802 374,983
Perpetual preferred share dividends 2,212 2,212 4,425 4,425
Net earnings available to common shareholders $ 190,866 $ 171,706 $ 371,377 $ 370,558
Average number of common shares
(in thousands)
- Basic 251,935 255,835 251,953 256,202
- Diluted 252,451 256,454 252,418 256,900
Earnings per share
(in dollars)
- Basic $ 0.76 $ 0.67 $ 1.47 $ 1.45
- Diluted $ 0.76 $ 0.67 $ 1.47 $ 1.44
IGM FINANCIAL INC.
Financial Highlights
For the three months
ended June 30
As at and for the six months
ended June 30
(unaudited) 2013 2012 Change 2013 2012 Change
Earnings available to common shareholders
($ millions)
Operating Earnings (1) $ 190.9 $ 178.1 7.2 % $ 371.4 $ 377.0 (1.5 )%
Net Earnings 190.9 171.7 11.2 371.4 370.6 0.2
Diluted earnings per share
Operating Earnings (1) 0.76 0.69 10.1 1.47 1.47 -
Net Earnings 0.76 0.67 13.4 1.47 1.44 2.1
Return on equity
Operating Earnings (1) 17.1 % 17.4 %
Net Earnings 17.1 % 17.1 %
Dividends per share 0.5375 0.5375 - 1.075 1.075 -
Total assets under management (2)
($ millions)
$ 124,803 $ 117,961 5.8 %
Investors Group
Mutual funds 62,452 58,118 7.5
Mackenzie
Mutual funds 42,098 39,217
Sub-advisory, institutional and other accounts 21,846 21,435
Total 63,944 60,652 5.4
Counsel
Mutual funds 3,053 2,849 7.2
.
Mutual Funds and Institutional Sales
($ millions)
Investors Group Mackenzie Counsel Total (3)
For the three months ended June 30, 2013
Gross sales $ 1,495 $ 3,417 $ 113 $ 4,670
Net sales (redemptions) (167 ) (171 ) (1 ) (416 )
For the six months ended June 30, 2013
Gross sales $ 3,529 $ 6,695 $ 244 $ 9,721
Net sales (redemptions) 209 83 10 139
(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.
(2) Total assets under management excluded $4.6 billion of assets sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel ($3.7 billion at June 30, 2012).
(3) Total Gross Sales and Net Sales for the three months ended June 30, 2013 excluded $355 million and $77 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, 2013 excluded $747 million and $163 million respectively in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
Ron Arnst
Media Relations
IGM Financial Inc.
(204) 956-3364
ron.arnst@igmfinancial.com

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