Business & Finance
Business and Finance
Business and Finance
Mon, February 16, 2009
Fri, February 13, 2009 IGM Financial Inc.: IGM Financial Inc. Reports 2008 Earnings
WINNIPEG, MANITOBA--(Marketwire - Feb. 13, 2009) - IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the year ended December 31, 2008.
Adjusted net income for the year ended December 31, 2008 was $766.1 million compared to adjusted net income of $863.8 million in 2007. Adjusted earnings per share were $2.89 in 2008 compared to adjusted earnings per share of $3.23 in 2007.
Adjusted net income in 2008 excluded items related to the Company's equity interest in Great West Lifeco Inc.:
- A $60.3 million charge recorded in the fourth quarter representing the Company's proportionate share of Great-West Lifeco Inc.'s after-tax impairment charge related to goodwill and indefinite life intangible assets;
- A $25.0 million gain recorded in the second quarter representing the Company's proportionate share of Great-West Lifeco Inc.'s after-tax gain related to the sale of its healthcare business, Great-West Healthcare.
Adjusted net income in 2007 excluded a non-cash income tax benefit of $15.3 million recorded in the fourth quarter resulting from decreases in the federal corporate income tax rates.
Net income without adjustment for the year ended December 31, 2008 was $730.8 million compared to net income without adjustment of $879.1 million in 2007. Earnings per share on this basis were $2.76 in 2008 compared to $3.29 in 2007.
Adjusted net income for the three months ended December 31, 2008 was $140.1 million compared to adjusted net income of $219.0 million in 2007. Adjusted earnings per share were 53 cents for the period compared to adjusted earnings per share of 82 cents in 2007. Net income without adjustment for the three months ended December 31, 2008 was $79.8 million compared to net income without adjustment of $234.3 million. Earnings per share on this basis were 30 cents in 2008 compared to 88 cents in 2007.
Gross revenues for the year ended December 31, 2008 were $2.70 billion, compared to $2.90 billion in the prior year. Gross revenues for the three months ended December 31, 2008 were $584.0 million, compared to $721.6 million in 2007. Operating expenses were $1.64 billion for the twelve months and $393.4 million for the three months, compared to $1.66 billion and $420.3 million, respectively, in 2007.
Total assets under management at December 31, 2008 were $101.7 billion. This compared with total assets under management of $123.0 billion at December 31, 2007, a decrease of 17.3%.
Shareholders' equity at December 31, 2008 was $4.1 billion, compared to $4.2 billion at December 31, 2007. Adjusted return on average common equity for the twelve months ended December 31, 2008 was 18.2% compared with adjusted return on average common equity of 21.5% for the same period in 2007.
INVESTORS GROUP OPERATIONS
The number of Investors Group Consultants was 4,479 at December 31, 2008, a record high for the company, up from 4,411 at September 30, 2008 and 4,331 at December 31, 2007.
"Our Consultants are very active in assisting our clients during this current volatility in the financial markets and helping them keep focused on long term financial planning." said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Our Consultant network continued to expand for the 18th consecutive quarter to a new record level."
Mutual fund sales for the year were $5.9 billion compared to $7.2 billion in the prior year and mutual fund net sales for the year were $625 million compared to net sales of $2.2 billion a year ago. Mutual fund sales for the fourth quarter of 2008 were $1.2 billion compared to $1.6 billion in the prior year and mutual fund net sales for the fourth quarter were $60 million compared to $386 million a year ago.
Investors Group's twelve month trailing redemption rate (excluding money market funds) was 7.9% at December 31, 2008, compared to the average redemption rate of approximately 19.2% for all other members of the Investment Funds Institute of Canada.
Investors Group's mutual fund assets under management at December 31, 2008 were $47.5 billion compared to $60.2 billion at December 31, 2007, a decrease of 21.1%.
MACKENZIE OPERATIONS
Total sales for 2008 were $12.3 billion compared to $12.7 billion in the prior year. Total net redemptions for 2008 were $2.7 billion compared to net sales of $1.0 billion in the prior year. Total sales for the fourth quarter of 2008 were $3.1 billion compared to $3.0 billion in the prior year. Total net redemptions for the fourth quarter were $1.5 billion compared to net sales of $189 million in the prior year.
"During the fourth quarter, global stock market volatility impacted assets under management; in spite of this, we attained total sales of $3.1 billion, slightly ahead of the prior year. The relative performance of our diversified offering of mutual funds remained strong, with 65% of our fund assets ranked in the first or second quartile of their respective asset categories over the last twelve months," said Charles R. Sims, President and Chief Executive Officer of Mackenzie Financial Corporation.
Mackenzie's total assets under management at December 31, 2008 totalled $54.7 billion. This compared with assets under management of $63.3 billion at December 31, 2007, a decrease of 13.6%. Mutual fund assets under management at December 31, 2008 were $35.8 billion, a decrease of 23.1% from one year ago.
DIVIDENDS
The Board of Directors declared a quarterly dividend of $0.359375 per share on the Company's 5.75% Non-Cumulative First Preferred Shares, Series "A" payable on March 31, 2009 to shareholders of record on March 6, 2009 and has declared a dividend of 51.25 cents per share on the Company's common shares payable on April 30, 2009 to shareholders of record on March 23, 2009.
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES
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 economics, 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 ].
This release contains non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to "adjusted net income", "adjusted earnings per share", "adjusted return on average common equity", "net income without adjustment" 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 2008 Annual Report to Shareholders which should be mailed to shareholders on or about March 20, 2009.
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, with over $97 billion in total assets under management. 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 Corporation group of companies.
Media Note: A live webcast of IGM's Analyst conference call for the Fourth Quarter 2008 will be held Friday, February 13, 2009, 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 1-888-280-8349 or (416) 695-9719.
IGM FINANCIAL INC.
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Consolidated Statements of Income
(unaudited) Three months ended Twelve months ended
(in thousands of dollars, except December 31 December 31
shares and per share amounts) 2008 2007 2008 2007
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Fee and net investment income
Management $ 396,325 $ 522,094 $ 1,867,223 $ 2,096,032
Administration 84,248 90,255 349,249 349,428
Distribution 67,364 66,769 286,044 255,501
Net investment income and other 36,054 42,499 202,172 194,146
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Total fee and net investment
income 583,991 721,617 2,704,688 2,895,107
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Operating expenses
Commission expense 206,421 241,428 906,271 947,053
Non-commission expense 162,566 156,685 647,854 622,988
Interest expense 24,448 22,222 90,604 88,330
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Total operating expenses 393,435 420,335 1,644,729 1,658,371
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190,556 301,282 1,059,959 1,236,736
Proportionate share of
affiliate's impairment charge,
net of tax 60,346 - 60,346 -
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Income before income taxes,
non-controlling interest and
proportionate share of
affiliate's gain 130,210 301,282 999,613 1,236,736
Income taxes 50,367 66,317 292,551 354,682
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Income before non-controlling
interest and proportionate
share of affiliate's gain 79,843 234,965 707,062 882,054
Non-controlling interest 42 630 1,266 2,919
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Net income before proportionate
share of affiliate's gain 79,801 234,335 705,796 879,135
Proportionate share of
affiliate's gain - - 25,003 -
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Net income $ 79,801 $ 234,335 $ 730,799 $ 879,135
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Average number of common shares
(in thousands)
- Basic 262,389 264,243 263,323 264,604
- Diluted 263,355 266,984 264,808 267,303
Earnings per share (in dollars)
Excluding proportionate share
of affiliate's gain
- Basic $ 0.30 $ 0.89 $ 2.68 $ 3.32
- Diluted $ 0.30 $ 0.88 $ 2.67 $ 3.29
Including proportionate share
of affiliate's gain
- Basic $ 0.30 $ 0.89 $ 2.78 $ 3.32
- Diluted $ 0.30 $ 0.88 $ 2.76 $ 3.29
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IGM FINANCIAL INC.
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Financial Highlights
Three months ended December 31 Twelve months ended December 31
(unaudited) 2008 2007 Change 2008 2007 Change
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Net income
($ millions)
Adjusted(1) $ 140.1 $ 219.0 (36.0)% $ 766.1 $ 863.8 (11.3)%
GAAP 79.8 234.3 (65.9) 730.8 879.1 (16.9)
Diluted
earnings
per share
Adjusted(1) 0.53 0.82 (35.4) 2.89 3.23 (10.5)
GAAP 0.30 0.88 (65.9) 2.76 3.29 (16.1)
Return
on equity
Adjusted(1) 18.2% 21.5%
GAAP 17.3% 21.9%
Dividends
per share 0.5125 0.4600 11.4 2.000 1.775 12.7
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Total assets
under
management(2)
($ millions) $101,742 $122,982 (17.3)%
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Investors
Group
Mutual funds 47,491 60,194 (21.1)
Mackenzie
Mutual funds 35,814 46,563
Sub-advisory,
institutional
and other
accounts 18,846 16,714
Total 54,660 63,277 (13.6)
Counsel Group
of Funds
Mutual funds 1,740 2,268 (23.3)
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Counsel
Investors Group of
Group Mackenzie Funds Total(3)
Mutual Funds and Institutional
Sales ($ millions)
For the three months
ended December 31, 2008
Gross sales $ 1,237 $ 3,132 $ 43 $ 4,388
Net sales (redemptions) 60 (1,537) (33) (1,477)
For the twelve months
ended December 31, 2008
Gross sales $ 5,946 $ 12,295 $ 244 $ 18,288
Net sales (redemptions) 625 (2,668) (80) (2,099)
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(1) Non-GAAP Financial Measures:
2008 results excluded:
- $60.3 million charge recorded in the fourth quarter which represented
the Company's proportionate share of Great-West Lifeco Inc.'s
after-tax impairment charge related to goodwill and intangible
assets; and,
- $25.0 million gain recorded in the second quarter which represented
the Company's proportionate share of Great-West Lifeco Inc.'s
after-tax gain on the sale of its healthcare business, Great-West
Healthcare.
2007 results excluded a non-cash income tax benefit of $15.3 million
recorded in the fourth quarter resulting from decreases in federal
corporate income tax rates and their effect on the future income tax
liability related to indefinite life intangible assets 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.
(2) Total assets under management excluded $2.1 billion of assets
sub-advised by Mackenzie on behalf of Investors Group ($2.7 billion
at December 31, 2007) and was adjusted for $20 million in inter-segment
assets ($31 million at December 31, 2007).
(3) Total Gross Sales and Net Redemptions for the three months ended
December 31, 2008 excluded $24 million and $33 million respectively
in accounts sub-advised by Mackenzie on behalf of Investors Group.
Total Gross Sales and Net Redemptions for the twelve months ended
December 31, 2008 excluded $197 million and $24 million
respectively in accounts sub-advised by Mackenzie on behalf of
Investors Group.
