IGM Financial Inc.
Summary of Consolidated Operating Results

Net income attributable to common shareholders, excluding the items noted below, was $615.6 million for the year ended December 31, 2004 compared to $533.5 million in 2003. Diluted earnings per share on this basis were $2.31 compared with $2.01 in 2003, an increase of 14.9%.

Net income in 2004 excludes a charge to earnings recorded in the fourth quarter of $28.8 million ($19.2 million after tax) which includes both compensation payments to certain unitholders of Investors Group and related costs (unitholder compensation) as discussed on page 53 of the MD&A.

Net income in 2003 excludes:

• A dilution gain of $14.8 million recorded in the third quarter resulting from the reduction in IGM Financial's percentage ownership of GWL related to their acquisition of The Canada Life Assurance Company (Canada Life).
• The reversal of $24.8 million ($15.6 million after tax) of restructuring costs related to the acquisition of Mackenzie Financial Corporation (Mackenzie) recorded in the fourth quarter.
• A non-cash income tax charge of $24.8 million recorded in the fourth quarter arising from increases in Ontario income tax rates and their effect on the future income tax liability related to indefinite life intangible assets.

Net income attributable to common shareholders in accordance with GAAP for the year ended December 31, 2004, which includes unitholder compensation noted above, was $596.4 million and diluted earnings per share were $2.24. This compares with net income attributable to common shareholders in accordance with GAAP for the year ended December 31, 2003, which includes the dilution gain, the reversal of restructuring costs, and the non-cash income tax charge noted above, of $539.1 million and diluted earnings per share of $2.03.

Shareholders' equity was $3.51 billion as at December 31, 2004, up from $3.22 billion at December 31, 2003. Return on average common equity was 19.8%, compared with 18.9% in 2003. The quarterly dividend per common share was increased to 30.0 cents in 2004 from 25.5 cents at the end of 2003.

Non-Gaap Financial Measures

Net income, diluted earnings per share (EPS) and return on common equity (ROE) for the year ended December 31, 2004 excludes unitholder compensation. Net income, EPS and ROE for the year ended December 31, 2003 exclude a dilution gain, a reversal of restructuring costs and a non-cash income tax charge related to increases in Ontario tax rates. While these non-GAAP financial measures are used to provide management and investors with additional measures to assess earnings performance, they do not have standard meanings and are not directly comparable to similar measures used by other companies.

Earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation and amortization (EBITDA) are also non-GAAP financial measures. EBIT and EBITDA are alternative measures of performance utilized by management, investors and investment analysts to evaluate and analyze the Company's results. EBITDA is discussed further on page 47 of the MD&A. These non-GAAP financial measures do not have standard meanings and are not directly comparable to any GAAP measure or to similar measures used by other companies.

The reconciliation of non-GAAP results to reported results in accordance with GAAP for net income, EPS and EBITDA is provided in Table 1. The reconciliation related to EBIT is provided in Table 2.

Reportable Segments

IGM Financial's reportable segments, which reflect the current organizational structure, are:

• Investors Group
• Mackenzie
• Corporate and Other

Management measures and evaluates the performance of these segments based on earnings before interest and taxes as shown in Table 2. Discussion of segment operations for Investors Group and Mackenzie is contained on pages 29 to 45.

On May 10, 2004, IGM Financial acquired a 74.7% interest in Investment Planning Counsel Inc. (Investment Planning Counsel). The Company's results include its earnings for the period May 10 to December 31, 2004 which are reported in the Corporate and Other segment in Table 2. Additional information related to the acquisition is included in the Outlook section of the MD&A on page 52 and in Note 21 to the Consolidated Financial Statements on page 83.

Earnings before interest and taxes for Corporate and Other, the segment which includes operating results for Investment Planning Counsel, net investment income earned on unallocated investments and other income as well as inter-segment eliminations, were $30.2 million for the year ended December 31, 2004 compared to $34.8 million in 2003. Investment Planning Counsel's earnings before interest and taxes were $6.9 million for the period May 10 to December 31, 2004. The reduction in net investment income earned on unallocated investments and other income for the year ended December 31, 2004 compared with 2003 was due to lower levels of invested assets and other income.

Table 1 : Reconciliation Of Non-GAAP Financial Measures

Certain items reflected in Table 2 are not allocated to segments:

• Restructuring (costs) reversal - There were no restructuring costs recorded in 2004. In the fourth quarter of 2003, the Company recorded a $24.8 million ($15.6 million after tax or $0.06 per share) restructuring reversal related to the restructuring provision taken in 2001 following the acquisition of Mackenzie. A restructuring provision of $95.6 million ($56.0 million after tax or $0.22 per share) was recorded in the second quarter of 2001 to restructure and exit certain operations of Mackenzie. In the fourth quarter of 2003 the Company changed its estimate for the restructuring provision required to complete remaining restructuring activities.
• Interest expense - Represents the interest cost on debt issued pursuant to the Mackenzie acquisition and outstanding during the period totalling $74.9 million in 2004 compared with $85.3 million in 2003. The
  
  Table 2 : Consolidated Operating Results By Segment
  
  reduction in the rate of interest on the $175 million Floating Bankers' Acceptance contributed to the decrease in interest expense in the year ended December 31, 2004 compared with 2003. The reduction in the average balance of outstanding long-term debt also contributed to the decrease in interest expense in 2004 compared with 2003. In the fourth quarter of 2004 the Company repaid the balance of the Floating Bankers' Acceptance related to the Mackenzie acquisition.
• Dilution gain - In the third quarter of 2003, the Company purchased $100 million of common shares of GWL which were issued as part of the funding of the Canada Life acquisition by GWL. Investors Group's percentage ownership of GWL was reduced to 4.2%, resulting in a dilution gain of $14.8 million ($0.05 per share).
• Income taxes - The effective rate of tax in 2004 was 30.0% compared with 34.8% in 2003. Income taxes in 2003 included a non-cash charge as a result of an increase in Ontario tax rates. In connection with the Mackenzie acquisition in the second quarter of 2001, the Company valued the indefinite life intangible assets of Mackenzie and allocated a portion of the purchase price to such assets. A future tax liability associated with the assets was estimated based upon future income tax rates substantively enacted at the time. During the fourth quarter of 2003, the Ontario provincial government increased income tax rates in respect of future years and, as a result, the Company increased the estimate of the future tax liability and recorded a $24.8 million ($0.09 per share) non-cash income tax charge. This charge increased the 2003 effective tax rate by 2.9%. Excluding the impact of this change in 2003, the effective tax rate declined by 1.94% in 2004 primarily as a result of the decrease in federal statutory tax rates.

Selected Annual Information

Financial information for the three most recently completed years is included in Table 3.

• Net Income and Earnings per Share - Table 1 on page 24 of the MD&A shows the reconciliation of non-GAAP financial results to GAAP results for the three years under review. Net income in 2003 was $533.5 million excluding the dilution gain, the reversal of restructuring costs, and the non-cash income tax charge (a non-GAAP financial measure) compared with net income of $491.1 million in 2002. Except as noted above, variations in net income and total revenues result primarily from changes in total mutual fund assets under management. The impact on earnings and revenues of changes in mutual fund assets under management are discussed in the Review of Segment Operations sections of the MD&A.
• Dividends per Common Share - Dividends per common share have increased in each of the three years under review. Increases in dividends on common shares are consistent with increases in net income during the three year period.

Summary Of Quarterly Results

Financial information for the eight most recently completed quarters is included in Table 4. Significant variations in quarterly earnings occurred in the fourth quarter of 2004 due to the $28.8 million charge ($19.2 million after-tax) recorded by IGM Financial related to unitholder compensation. Other quarterly variations occurred in the third and fourth quarters of 2003 and related to:

• A dilution gain of $14.8 million in the third quarter,
• The reversal of restructuring costs of $24.8 million ($15.6 million after tax) in the fourth quarter, and
• A non-cash income tax charge of $24.8 million in the fourth quarter arising from increases in Ontario tax rates and their effect on the future income tax liability related to indefinite life intangible assets.

A detailed discussion of the items noted above is contained on page 23 of the MD&A in the Summary of Consolidated Operating Results. With the exception of the items noted above, there were no significant variations to quarterly results. Quarterly results are not subject to significant seasonal fluctuations because earnings are primarily dependent on the level of mutual fund assets under management. Average mutual fund assets under management by quarter are shown in the Summary of Quarterly Results. Although mutual fund sales are higher in the first quarter of each year as a result of the RSP season, the impact of the higher sales on that quarter's earnings is not significant.

Table 3 : Selected Annual Information

Table 4 : Summary Of Quarterly Results