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AGF Management Limited Reports Third Quarter 2019 Financial Results

September 25, 2019 • Quarterly Reports/Dividends
  • Reported assets under management of $37.4 billion
  • Private Alternative AUM increased 11% in the quarter to $2.4 billion
  • Reported diluted EPS of $0.18 for the third quarter of 2019, an increase of $0.04 compared to Q2 2019

AGF Management Limited (AGF or the Company) (TSX: AGF.B) today announced financial results for the third quarter ended August 31, 2019.

AGF reported total assets under management (AUM) of $37.4 billion compared to $38.8 billion in the same period in 2018.

“As we enter the final months of 2019, we continue to make progress against our stated goals and growth objectives for our business,” said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF. “Building on our diversified investment management platform, we remain focused on accelerating key areas and markets of future growth including deepening our capabilities in alternatives and quantitative investing.”

AGF’s private alternative and quantitative investment management businesses have grown 140% and 16%, respectively, compared to the same period in 2018, now representing $10.2 billion or 27% of total assets under management. Together the businesses complement AGF’s other business lines and continue to diversify the revenue sources of the firm.

“Given the current market environment, we expect the demand for alternatives to continue to rise and have continued to invest in our expertise across the spectrum of alternative investments,” added McCreadie.

Key Business Highlights:

  • On September 19, 2019, AGF confirmed a merger between Smith & Williamson and Tilney to create the U.K.’s leading integrated wealth management and professional services group with over £45 billion in assets under management. Based on the terms of the arrangement, AGF estimates that the transaction will result in total cash and equity proceeds of approximately £193.2 million (approximately C$320 million1), excluding one-time expenses and subject to closing adjustments, compared to an estimated book value at closing of $137.5 million. The transaction is anticipated to close early 2020, subject to regulatory approvals.
  • AGF filed final prospectuses for the launch of three liquid alternative funds in Canada: AGFiQ US Market Neutral Anti-Beta CAD-Hedged ETF, AGFiQ US Long/Short Dividend Income CAD-Hedged ETF, and AGFiQ US Long/Short Dividend Income CAD-Hedged Fund. These products will be available to Canadian investors in October.
  • AGF continued to experience growth across our suite of U.S. liquid alternative ETFs. This growth is a reflection of AGF’s uniquely positioned suite of solutions, including an anti-beta market neutral U.S. equity strategy to meet investor demand for diversification and non-correlated returns to cushion against anticipated market volatility.
  • To support AGF’s digital growth strategy, AGF announced this quarter the delivery of an interactive tool to equip its business development teams with portfolio stress testing, risk analytics and comprehensive investment proposals for use across a range of clients and regions, including financial advisors and institutional investors.
  • AGF is a signatory to the United Nations supported Principles for Responsible Investment (PRI) as a sustaining member of the Responsible Investment Association. In PRI’s 2019 Assessment Report, AGF maintained its overall “Strategy and Governance” score of ‘A+’, and its overall score of ‘A’ under “Incorporation under listed Equity”.

Reported mutual funds net redemptions were $103.0 million for the quarter, compared to net redemptions of $9.0 million in Q3 2018. Excluding net flows from institutional clients invested in mutual funds2, net redemptions were $32.0 million in the comparative period of 2018.

Income for the three months ended August 31, 2019 was $107.4 million, compared to $116.5 million for the three months ended August 31, 2018. EBITDA before commissions from continuing operations was $29.0 million for the three months ended August 31, 2019, compared to $32.2 million for the same period in 2018.

Diluted earnings per share (EPS) from continuing operations for the three months ended August 31, 2019 was $0.18, compared to $0.26 for the comparative period. Adjusting for one-time items in prior year, diluted EPS for the three months ended August 31, 2019 was $0.18, compared to $0.20 in 2018.

For the three months ended August 31, 2019, AGF declared an eight cent per share dividend on Class A Voting common shares and Class B Non-Voting shares, payable October 18, 2019 to shareholders on record as at October 10, 2019.

(from continuing operations) Three months ended Nine months ended
(in millions of Canadian dollars, except per share data) August 31, 20193  May 31, 20193 August 31, 2018 August 31, 20193 August 31, 2018
Income  107.4  109.8  116.5  322.2  341.6
Net income attributable to equity owners of the Company  14.4  11.5  20.7  25.7  59.1
EBITDA before commissions4  29.0  29.2  32.2  71.2  77.7
Adjusted EBITDA before commissions4  29.0  29.2  32.2  85.6  82.9
Diluted earnings per share attributable to equity owners of the Company  0.18  0.14  0.26  0.32  0.73
Adjusted diluted earnings per share attributable to equity owners of the Company4  0.18  0.14  0.20  0.46  0.48
Free Cash Flow4  9.7  8.2  12.8  34.4  25.3
Dividends per share  0.08  0.08  0.08  0.24  0.24
Long-term debt  158.9  164.9  168.7  158.9  168.7

 

(end of period) Three months ended
(in millions of Canadian dollars) August 31, 2019 May 31, 2019 February 28, 2019 November 30, 2018 August 31, 2018
Mutual fund assets under management (AUM)5
 (including retail pooled funds)
 18,839  18,725  19,028  18,713  19,401
Institutional, sub-advisory and ETF accounts AUM  10,391  11,712  12,023  12,475  12,694
Private client AUM  5,778  5,722  5,633  5,513  5,714
Private Alternative AUM6  2,413  2,179  2,140  1,011  1,009
Total AUM, including Private Alternative AUM  37,421  38,338  38,824  37,712  38,818
Net mutual fund sales (redemptions)5  (103)  (498)  (104)  111  (9)
Average daily mutual fund AUM5  18,244  18,497  17,762  18,382  18,788

1 Canadian dollar figure assumes an exchange rate of 1.6542. 
2 Net sales in retail mutual funds are calculated as reported mutual fund net sales (redemptions) less non-recurring institutional net sales (redemptions) in excess of $5.0 million invested in our mutual funds.
3 Refer to Note 3 in the Condensed Consolidated Interim Financial Statements for more information on the adoption of IFRS 15.
4 EBITDA before commissions (earnings before interest, taxes, depreciation, amortization and deferred selling commissions), adjusted EBITDA before commissions, adjusted diluted earnings per share and Free Cash Flow are not standardized measures prescribed by IFRS. The Company utilizes non-IFRS measures to assess our overall performance and facilitate a comparison of quarterly and full-year results from period to period. They allow us to assess our investment management business without the impact of non-operational items. These non-IFRS measures may not be comparable with similar measures presented by other companies. These non-IFRS measures and reconciliations to IFRS, where necessary, are included in the Management’s Discussion and Analysis available at www.agf.com.
5 Mutual fund AUM includes retail AUM and institutional client AUM invested in customized series offered within mutual funds.
6 Represents fee-earning committed and/or invested capital from AGF and external investors held through joint ventures. AGF’s portion of this commitment is $208.8 million, of which $119.8 million has been funded as at August 31, 2019.

Conference Call

AGF will host a conference call to review its earnings results today at 11 a.m. ET.

The live audio webcast with supporting materials will be available in the Investor Relations section of AGF’s website at www.agf.com or at  https://edge.media-server.com/mmc/p/ep39e6fq. Alternatively, the call can be accessed toll-free in North America by dialing 1 (800) 708-4539 (Passcode #:48963561).

A complete archive of this discussion along with supporting materials will be available at the same webcast address within 24 hours of the end of the conference call.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

AGF has investment operations and client servicing teams on the ground in North America, Europe and Asia. With over $37 billion in total assets under management, AGF serves more than one million investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.

AGF Management Limited shareholders, analysts and media, please contact:

Adrian Basaraba
Senior Vice-President and Chief Financial Officer
416-865-4203, InvestorRelations@agf.com   

Baoqin Guo 
Vice-President, Finance
416-865-4203, InvestorRelations@agf.com   

Caution Regarding Forward-Looking Statements

This press release includes 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,’ ‘estimates,’ ‘anticipates,’ ‘intends,’ ‘plans,’ ‘believes’ or negative versions thereof and similar expressions, or future or conditional verbs such as ‘may,’ ‘will,’ ‘should,’ ‘would’ and ‘could.’ In addition, any statement that may be made concerning future financial performance (including income, revenues, earnings or growth rates), ongoing business strategies or prospects, fund performance, and possible future action on our part, is also a forward-looking statement. Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations, business prospects, business performance and opportunities. While we consider these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. 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 our operations, 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 us due to, but not limited to, important risk factors such as level of assets under our management, volume of sales and redemptions of our investment products, performance of our investment funds and of our investment managers and advisors, client-driven asset allocation decisions, pipeline, competitive fee levels for investment management products and administration, and competitive dealer compensation levels and cost efficiency in our investment management operations , as well as general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, taxation, changes in government regulations, unexpected judicial or regulatory proceedings, technological changes, cybersecurity, catastrophic events, and our ability to complete strategic transactions and integrate acquisitions, and attract and retain key personnel. We caution that the foregoing list is not exhaustive. The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements. Other than specifically required by applicable laws, we are under no obligation (and expressly disclaim any such obligation) to update or alter the forward-looking statements, whether as a result of new information, future events or otherwise. For a more complete discussion of the risk factors that may impact actual results, please refer to the ‘Risk Factors and Management of Risk’ section of the 2018 Annual MD&A.

MEDIA

Media Contact

Amanda Marchment
Director, Corporate Communications
Phone: 416-865-4160
Email: amanda.marchment@agf.com

Karrie Van Belle
SVP, Head of Marketing and Communications
Phone: 416-865-4320

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