IGM FINANCIAL Scotia Capital Financials Summit. September 11, 2007

Transcription

1 IGM FINANCIAL Scotia Capital Financials Summit September 11, 2007

2 Caution Concerning Forward Looking Statements This report 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. The reader is cautioned 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 forwardlooking statements. 1

3 Non-GAAP Financial Measures This report may also contain non-gaap financial measures. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, we caution that non-gaap financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Specific instances of such measures that may be referred to within this document include Earnings before interest, taxes, depreciation and amortization ( EBITDA ), Net Income before Interest and Taxes ( EBIT ) and Adjusted EPS. We refer you to the appropriate reconciliation in the Management s Discussion and Analysis of these non-gaap financial measures to measures prescribed by GAAP. 2

4 IGM Financial Public Disclosures Please refer to the following documents relating to IGM Financial for a more comprehensive summary of the corporation s business and results: Interim reports for the quarters ended March 31, 2007 and June 30, Annual Report 2006 Annual Information Form Press releases subsequent to June 30, 2007 These documents are available on the Company s website at and/or at 3

5 1. Overview 2. Industry and Operating Environment 3. Investors Group 4. Mackenzie 5. Summary 4

6 Overview IGM Financial manufactures and distributes financial products and services through its subsidiaries. Listed on TSX as ticker IGM Market Capitalization of $13.7 billion Float of $5.6 billion Dividend yield of 3.55% Largest mutual fund manager in Canada, with $110 billion in mutual fund AUM and $124 billion in total AUM. Broad and diversified distribution, with an emphasis on financial advisors. Part of the Power Financial group of companies, which includes Great West Life, London Life and Canada Life. At August 31,

7 Leading Scale in Mutual Fund Management IGM Financial is the largest mutual fund manager in Canada, and is significantly larger than its nearest competitor. Long Term Mutual Fund Assets Under Management at June 30, 2007 ($ Billions) FT AGF BMO Fidelity CIBC TD AIM CI RBC IGM Source IFIC BMO has been adjusted to include Guardian. 6

8 Operating Companies IGM Financial operates through three subsidiaries and has consolidated assets under management of approximately $126 billion. 1 At June 30, 2007 Financial Planners > 4,000 Investors Group Consultants > 30,000 third party planners and brokers > 600 Financial Planners Assets Under Management $61.3 billion $65.0 billion $2.3 billion Client Assets Under Administration $63.7 billion $68.4 billion $12.6 billion 1. After adjusting to eliminate double-counting of assets included within more than one subsidiary, IGM Financial s consolidated assets under management were $125.9 billion and consolidated assets under administration were $138.9 billion at June 30,

9 Diversified Business Structure IGM Financial enjoys a well diversified operating model. Three competing operating subsidiaries, each with its own leadership, distribution channels, investment management expertise and brands Significant and diversified distribution Investors Group (exclusive financial planners) Mackenzie (third party financial planners, brokers, insurers, banks, institutional) Investment Planning Counsel (financial planners) Mutual fund and institutional investment management Multiple internal investment management teams supplemented by external relationships where appropriate 8

10 Operating Highlights Assets by Subsidiary All of IGM Financial s operating subsidiaries have experienced solid growth during the last year and year to date. Assets Under Management ($ Billions) Change Jun 30, 2006 Sep 30, 2006 Dec 31, 2006 Mar 31, 2007 Jun 30, 2007 Year to date Last twelve months IGM Financial % 21.4% Investors Group % 18.3% 1, 2, 3 Mackenzie % 24.5% 1 Counsel Group of Funds % 18.2% 1. Includes certain items not included within reporting to the Investment Funds Institute of Canada ( IFIC ). These items include the Mackenzie Alternative Strategies Fund and investments of certain Counsel funds in the units of mutual funds managed by other members of IFIC. 2. Includes sub-advisory mandates of Mackenzie to mutual funds managed by Investors Group or Counsel Fund Management. These mandates had assets under management of $2.7 billion at June 30, Includes $3.3 billion in institutional and sub-advisory mandates related to the acquisition of the Cundill Group during the third quarter of Excluding assets acquired through the acquisition of the Cundill Group, Mackenzie assets under management increased by 18.1% and IGM Financial assets under management increased by 18.2%. 9

11 Operating Highlights Assets by Product IGM Financial has experienced strong growth in both mutual fund and institutional mandates. IGM Financial Assets Under Management ($ Billions) $123.8 billion at Aug 31, Total Mutual funds $110.2 billion at Aug 31, 2007 Annual Average Quarterly Average 70 Dec- 03 Mar- 04 Jun- 04 Sep- 04 Dec- 04 Mar- 05 Jun- 05 Sep- 05 Dec- 05 Mar- 06 Jun- 06 Sep- 06 Dec- 06 Mar- 07 Jun- 07 Sep- 07 Dec Includes Counsel Fund Management assets under management effective May 10, 2004 ($1.27 billion at time of acquisition) 2. Includes institutional assets of Cundill Group effective September 22, 2006 ($3.3 billion at time of acquisition) 10

12 Operating Highlights Gross Sales IGM Financial gross sales of investment products were $17.9 billion during 2006 and $11.0 billion during the first six months of IGM Financial Gross Sales ($ Millions) Twelve months ended December 31, 2006 Six months ended June 30, 2007 Investors Group Mackenzie Counsel IGM Financial Investors Group Mackenzie Counsel IGM Financial Long term mutual funds 5,198 6, ,151 3,431 3, ,230 Short term mutual funds 992 1, , , ,754 Total mutual funds 6,190 8, ,966 3,999 4, ,984 1 Institutional 3,289 2,949 2,185 1,975 1 Total 6,190 11, ,915 3,999 6, , Includes sub-advisory mandates of Mackenzie to mutual funds managed by Investors Group. These mandates had gross sales of $210 million during the six months ended June 30, 2007 and $340 million during the twelve months ended December 31, Excludes sub-advisory mandates of Mackenzie to mutual funds managed by Investors Group. 11

13 Operating Highlights Net Sales IGM Financial net sales of investment products were $3.6 billion during 2006 and $2.7 billion during the first six months of IGM Financial Net Sales ($ Millions) Twelve months ended December 31, 2006 Six months ended June 30, 2007 Investors Group Mackenzie Counsel IGM Financial Investors Group Mackenzie Counsel IGM Financial Long term mutual funds 1, ,382 1, ,488 Short term mutual funds Total mutual funds 1, ,158 1, , Institutional 1,575 1, Total 1,345 2, ,606 1,402 1, , Includes sub-advisory mandates of Mackenzie to mutual funds managed by Investors Group. These mandates had net sales of $116 million during the six months ended June 30, 2007 and $127 million during the twelve months ended December 31, Excludes sub-advisory mandates of Mackenzie to mutual funds managed by Investors Group. 12

14 Financial Highlights IGM Financial s financial performance continues to strengthen. Twelve months ended December 31 Six months ended June Change Change 1 Net Income ($ MM) % % 1 Earnings Per Share ($) % % Dividends Per Share ($) % % Net Income has been adjusted to exclude a non-cash income tax benefit of $13.7 million during the second quarter of 2006 resulting from decreases in the federal corporate tax rates and their effect on the future income tax liability related to indefinite life intangible assets. Diluted earnings per share in accordance with GAAP was $2.90 during the year ended December 31, 2006 and $1.44 during the six months ended June 30,

15 1. Overview 2. Industry and Operating Environment 3. Investors Group 4. Mackenzie 5. Summary 14

16 Attractive Industry High growth rate Demographics support continued savings, with increasing number of baby-boomers in prime savings years of years old. Built in growth through investment returns. Investors desire advice Approximately 85% of Canadians rely on an advisor for some level of 1 financial advice and decision-making. Financial planning needs of baby-boomers are evolving and increasing in complexity. Significant advantages to industry incumbents Scale, brand, distribution 1. Investment Fund Institute of Canada mutual fund investor survey (September, 2006) 15

17 Operating Environment Sales Mix Income-oriented funds continue to represent a less prominent component of industry net flows. Canadian Mutual Fund Industry Long Term Mutual Fund Net Sales ($ Billions) Q1, 2006 Q2, 2006 Q3, 2006 Q4, 2006 Q1, 2007 Q2, 2007 Income-oriented Share 51% 57% 228% 46% 23% 30% Balanced Share 36% 74% 134% 45% 41% 52% Equity 1.5 (0.7) (1.6) Share 13% (31%) (262%) 9% 36% 18% Total Source: IFIC Classifications are based upon CIFSC categories. Money Market, U.S. Money Market, and Specialty and Miscellaneous categories have been excluded. This equates to excluding the Money Market and Mortgage categories used by IFIC. 16

18 Operating Environment Sales Mix Global and foreign funds continue to represent a majority of the net sales into balanced and equity funds. Canadian Mutual Fund Industry Mutual Fund Net Sales into Balanced & Equity Funds ($ Billions) Q1, 2006 Q2, 2006 Q3, 2006 Q4, 2006 Q1, 2007 Q2, 2007 Domestic 2.7 (0.3) (0.9) (0.6) Share 49% (29%) 116% (20%) 18% 10% Global / foreign Share 51% 129% (16%) 120% 82% 90% Total Balanced & Equity (0.8) % of long term funds 49% 43% (128%) 54% 77% 70% Source: IFIC Classifications are based upon CIFSC categories. Money Market, U.S. Money Market, and Specialty and Miscellaneous categories have been excluded. This equates to excluding the Money Market and Mortgage categories used by IFIC. 17

19 Operating Environment Financial Markets Financial markets have continued to contribute to Canadian mutual fund industry growth during Canadian Mutual Fund Industry Long Term Mutual Fund Assets Under Management ($ Billions) 700 Year to date at June 30, 2007 Year to date at August 31, S&P / TSX Composite IFIC Long Term Assets Under Management IFIC Long Term Assets 7.0% S&P / TSX Composite 7.7% 5.8% S&P % 3.9% Dow Jones Industrial 7.6% 7.2% Nasdaq Composite 7.8% 7.5% FTSE % 1.3% DAX 21.4% 15.8% Nikkei % (3.8%) 100 US dollar relative to CAD (8.6%) (9.5%) Dec- 98 Dec- 99 Dec- 00 Dec- 01 Dec- 02 Dec- 03 Dec- 04 Dec- 05 Dec- 06 Dec- 07 Euro relative to CAD (6.2%) (6.5%) Source: IFIC, Bloomberg All index returns are local market returns, not Canadian dollar (except S&P / TSX Composite) 18

20 1. Overview 2. Industry and Operating Environment 3. Investors Group 4. Mackenzie 5. Summary 19

21 Investors Group Investors Group provides comprehensive financial planning through its network of over 4,000 Consultants. Product Offering Support Platform Investment management Extensive mutual fund offering Masterseries TM brand External brands Symphony TM asset allocation Insurance Securities Banking Consultant - Client Relationship Comprehensive Financial Planning Financial planning centers located throughout Canada Industry-leading training Advanced financial planning Product specialists Marketing 20

22 Investors Group Emphasis Enduring client relationships Long term Consultant / client relationship Financial planning heritage Entrepreneurial Strong culture Community involvement Solid growth Strong client & Consultant loyalty Region office, field management and recruiting expansion 21

23 Investors Group Consultant Network The Investors Group Consultant Network now exceeds 4,000, having increased over 27% during the last three years as a result of strong recruiting and retention. Number of Investors Group Consultants 4,200 4,000 3,800 Since Since June June 30, 30, Consecutive Consecutive quarterly quarterly growth growth for for three three years years net net additional additional Consultants Consultants An An increase increase of of over over 27% 27% 3,668 3,676 3,766 3,860 3,917 3,985 4,093 3,600 3,400 3,207 3,391 3,496 3,503 3,537 3,560 3,200 3,000 Q2, 2004 Q3, 2004 Q4, 2004 Q1, 2005 Q2, 2005 Q3, 2005 Q4, 2005 Q1, 2006 Q2, 2006 Q3, 2006 Q4, 2006 Q1, 2007 Q2,

24 Investors Group Asset Retention Driven by strong retention of Consultants, Investors Group s redemption rate has improved considerably during the last three years to a record low level. Redemption Rate on Long Term Mutual Funds (Last Twelve Month Trailing % of Average Assets Under Management) 18% 16% 14% 12% 14.5% Industry (IFIC) excluding Investors Group 10% 8% 6% Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec % Investors 1 Group Source - IFIC 1. Numbers have been retroactively restated to exclude Maxxum redemptions (Maxxum operations were transferred to Mackenzie October 5, 2001) 23

25 Investors Group Mutual Fund Sales Investors Group s sales momentum has continued to improve during Mutual Fund Gross Sales Six Months Ended June 30 ($ Millions) Mutual Fund Net Sales Six Months Ended June 30 ($ Millions) 18.3% 18.3% Growth Growth 3, % 58.8% Growth Growth 1,402 3,

26 Investors Group Investment Management Investors Group s investment management teams are located in North America, Europe and Asia. Winnipeg Toronto Montreal Dublin Hong Kong 25

27 Investors Group Investment Performance Strong long term risk-adjusted investment performance by the Investors Group investment management team is demonstrated by 78% of our Masterseries funds being rated 3, 4 or 5 star by Morningstar. Morningstar Ratings at June 30, 2007 Proportion of Morningstar-rated funds 45% 33% 33% 35% 32% 22% Investors Group Masterseries All Morningstar- Rated Funds 1 & 2 Stars 3 Stars 4 & 5 Stars Source - Morningstar 26

28 Investors Group Management Focus 1. Growing the Investors Group Consultant Network 27% growth in number of Consultants during last three years 12 new region offices in 2005 and 2006, and 7 region offices opening in 2007 Consultant retention resulting in record low redemption rates 2. Building upon Investors Group s strong culture and heritage 3. Enhancing Investors Group s product and service offering to clients Symphony TM Strategic Investment Planning introduced in 2003 Recent fund launches: Global Dividend, Canadian Dividend Growth, U.S. Dividend Growth, European Dividend Growth, Greater China, Canadian Growth, Maxxum Canadian Equity Growth, Cundill Value Insurance and banking product emphasis 4. Responding to evolving regulatory environment 5. Continuing to pursue innovation and efficiency opportunities with Mackenzie and other Power Financial companies 27

29 1. Overview 2. Industry and Operating Environment 3. Investors Group 4. Mackenzie 5. Summary 28

30 Mackenzie Mackenzie is one of Canada s premier investment managers. Investment Management Retail mutual funds Extensive mutual fund offering Sub-branding approach In-house and external investment talent Symmetry TM and Keystone asset allocation Segregated funds Structured products Advisor Relationships financial planners retail brokers insurance agents Service Platform Experienced wholesaling team located across Canada Client-focused culture Systems & technology infrastructure Advisor education Support services Securities Banking Administration 29

31 Mackenzie Asset Management Mackenzie continues to experience strong growth in assets under 1 management, with growth of 23% during 2006 and 6% during the first six months of Mackenzie Assets Under Management ($ Billions) 65.0 Institutional & other Mutual funds June, 2007 Institutional accounts Sub-advisory Investment advisory High net worth Structured products Total institutional & other % of total assets 9% 12% 17% 24% 25% June, Includes $3.3 billion in institutional mandates related to the acquisition of the Cundill Group during the third quarter of Excluding the impact of the acquisition of the Cundill Group assets under management increased by 16.6%. 30

32 Mackenzie Emphasis Investment Management Investment performance Diversification Capabilities, processes & talent Distribution Wholesaling capabilities and relationships Alternative distribution channels Product innovation Customer Service Advisor & dealer support Client / investor support (tax / estate) Training & technology 31

33 Mackenzie Investment Performance 40% of Mackenzie s mutual fund assets under management have delivered first or second quartile performance in terms of five year returns. Mackenzie Funds in First or Second Quartile at June 30, % 34% 38% 37% 32% 40% 27% 44% % of assets under management % of funds 1 Year 3 Year 5 Year 10 Year Source - Morningstar 32

34 Mackenzie Sales Mackenzie gross sales have remained strong during Gross Sales of Investment Products Six months ended June 30 ($ Millions) 1 Net Sales of Investment Products Six months ended June 30 ($ Millions) 6,640 6,952 1,625 1, ,185 1,170 Institutional, Sub-Advised & Other Money Market Funds 981 1, ,114 3,597 Long Term Funds Institutional, sub-advised & other includes sub-advisory mandates of Mackenzie to mutual funds managed by Investors Group. These mandates had gross sales of $210 million and $201 million during the six months ended June 30, 2007 and 2006, respectively, and net sales of $116 million and $75 million during the first six months of 2007 and 2006, respectively. 33

35 Mackenzie Sales by Sub-Brand Mackenzie s gross sales of long term mutual funds have become more diversified across sub-brands during the last year. Gross Sales Mix of Long Term Mutual Funds by Mackenzie Sub-Brand 4.6% 4.5% 8.3% 9.5% 16.3% 7.3% 7.6% 12.7% 12.0% Other Sentinel Universal Ivy 23.6% Maxxum 56.7% 36.9% Cundill Q1, 2006 Q2, 2006 Q3, 2006 Q4, 2006 Q1, 2007 Q2,

36 Product Developments 35

37 Award-Winning Investor & Advisor Education Mackenzie offers educational programs and training through Mackenzie University. 36

38 Mackenzie Management Focus Focused on investment performance Providing advisors, dealers and clients with industry-leading levels of service and support Building upon track record of product and service innovation Continuing to pursue opportunities in new and evolving distribution channels Expense management through cost controls and efficiency initiatives Employee development 37

39 Celebrating 40 Years 2007 marks the 40 th anniversary of Mackenzie and the 25 th anniversary of its subsidiary MRS. 38

40 1. Overview 2. Industry and Operating Environment 3. Investors Group 4. Mackenzie 5. Summary 39

41 Summary IGM Financial provides an attractive vehicle for participation in a high growth industry. Advantages of scale from being the largest player in the mutual fund industry Diversified distribution model, with a focus on advisory segments Broad investment fund product offering through recognized brands, and strong growth in institutional business Extensive domestic and international investment management capabilities Part of the Power Financial group of companies Long history of excellent financial performance 40

42 IGM Financial Adjusted Earnings Per Share ($) 1 IGM Financial s earnings continued to strengthen during year year CAGR CAGR of of 17.8% 17.8% Earnings Per Share has been adjusted to exclude a non-cash income tax benefit of $13.7 million resulting from decreases in the federal corporate tax rates and their effect on the future income tax liability related to indefinite life intangible assets Earnings Per Share has been adjusted to exclude unitholder compensation provision Earnings Per Share has been adjusted to exclude a dilution gain, restructuring reversal and non-cash income tax charge Earnings Per Share has been adjusted to exclude goodwill amortization and Mackenzie restructuring costs. Diluted Earnings Per Share in accordance with GAAP was $2.90 during 2006, $2.24 in 2004, $2.03 in 2003 and $1.05 in

43 IGM Financial Dividends Per Share (cents) IGM Financial has consistently increased its dividends year year CAGR CAGR of of 20.1% 20.1%

44 IGM FINANCIAL Scotia Capital Financials Summit September 11, 2007