AGF Management Limited (AGF or the Company) (TSX: AGF.B) today
announced financial results for the second quarter ended May 31,
2021.
AGF reported total assets under management and
fee-earning assets1 of $40.8 billion compared
to $35.8 billion as at May 31, 2020.
“While the pandemic persisted through another
quarter, we continued to gain sales momentum and expand our client
base and reach into new markets,” said Kevin McCreadie, Chief
Executive Officer and Chief Investment Officer, AGF. “Further, we
remain uniquely positioned to continue to redeploy capital against
our strategic growth strategy delivering value to our shareholders
by further diversifying our assets and revenue streams as we focus
on new relationships and capital opportunities within our private
alternatives business.”
“In recognition of our strong results, robust
financial position, and confidence in the future of our business,
AGF’s Board of Directors has approved to increase the quarterly
dividend by 12.5%," added McCreadie.
AGF’s mutual funds net sales improved $501
million year-over-year, with total net sales of $408 million in Q2
2021, compared to net redemptions of $93 million in Q2 2020.
Excluding net flows from institutional clients invested in mutual
funds, retail mutual fund net sales were $431 million for the
quarter compared to net redemptions of $93 million in the
comparative period of 2020. AGF mutual fund gross sales for the
quarter totaled $1,060 million, a 108% improvement over prior year.
While industry net sales were down 17% versus Q1 2021, AGF’s mutual
fund net sales are up 6% versus Q1 2021.
Mutual fund sales momentum continued into June
with AGF reporting mutual fund net sales of $76 million as at
June 28, 2021 compared to net redemptions of $32 million for
the same time last year. Mutual fund gross sales were up 87%
year-over-year.
“We are seeing the results of taking a vehicle
agnostic approach, in particular with accelerating sales into
fee-based series and separately managed accounts as well as
interest in the launch of our innovative private alternative
offerings,” said Judy Goldring, President and Head of Global
Distribution, AGF.
Key Business Highlights:
- As part of its extended partnership
with SAF Group, AGF is operationally ready with private credit
offerings for both Canadian institutional investors and retail
clients with the AGF SAF Private Credit Limited Partnership and AGF
SAF Private Credit Trust with first close expected in Q3 2021.
- Subsequent to the end of our fiscal
quarter, one of AGF’s long-term private alternative investments,
managed by SAF, was fully monetized, with a final cash distribution
of $5.9 million received. The long-term investment had a carrying
value of $5.8 million as at May 31, 2021. In addition, AGF through
its joint venture ownership interest in the manager received $2.4
million of carried interest, of which $0.2 million was recorded as
an asset in investment in joint ventures as at May 31, 2021 and the
remainder will be recorded as income in the third quarter.
- AGF announced a definitive
agreement with Instar Group Inc. (Instar) to conclude their joint
venture relationship in InstarAGF Asset Management Inc. (InstarAGF)
following the establishment of its two flagship funds, InstarAGF
Essential Infrastructure Fund I and II (together, the InstarAGF
Funds). AGF will retain its economic interest in the InstarAGF
Funds including an upcoming third fund (Fund III) managed by
Instar, which AGF has agreed to support with an anticipated US$50
million capital commitment.
- AGF’s joint venture with WaveFront
Global Asset Management Corp., AGFWave Asset Management Inc.
(AGFWave), brought its first new strategy, the Hwabao China New Era
Infrastructure mandate to market with its strategic partners,
Hwabao WP Fund Management and J Royal Asset Management, with a
focus on targeting eligible investors in China and institutions
globally looking for access to the Chinese market. The new
innovative mandate – integrating traditional and new infrastructure
– brings together AGF’s and Hwabao’s quantitative investing
capabilities for these rapidly growing markets providing
diversified access to China's robust and growing digital economy
and carbon neutrality pledge.
- At the 2021 Wealth Professional
Awards, AGF was named Digital Innovator of the Year and Employer of
Choice. These honours speak directly to two key drivers of AGF’s
success over the past year: accelerating digital transformation and
employee engagement.
“Over the last year, we have been committed to
hearing directly from our employees through a series of surveys to
better understand our employee population as it relates to our
culture, diversity and inclusion,” added Goldring. “We prioritized
employee mental health, focused on keeping engagement high and have
experienced a positive shift in our culture that enables all
stakeholders to succeed, earning us industry recognition.”
For further information on AGF’s pandemic response plan
statement visit AGF.com.
Financial Highlights:
“We delivered strong mutual fund sales again
this quarter that will generate revenue going forward, as we
continue to see an increase in success-based expenses, the expense
management discipline we have put in place has allowed our core
expenses and operations to hold steady,” added McCreadie.
- Management, advisory,
administration fees and deferred sales charges were $108.6 million
for the three months ended May 31, 2021, compared to $88.8 million
in 2020. The increase in revenue is attributable to higher sales,
increase in daily average mutual fund AUM and higher average
revenue rate as a result of product mix.
- The significant increase in mutual
fund sales in the second quarter drove higher selling, general and
administrative costs in the period associated with variable sales
and investment performance-based compensation. Selling, general and
administrative costs were $47.1 million for the three months ended
May 31, 2021, compared to $40.2 million in 2020. In addition,
the increase in the AGF.B share price during the quarter resulted
in higher share-based compensation, which is marked to market. This
increase in variable costs was partially offset by management’s
continued focus on cost control.
- EBITDA before commissions for the
three months ended May 31, 2021 was $28.2 million, compared to
$21.2 million in the prior year comparative period.
- DSC commissions for the three
months ended May 31, 2021 were $17.7 million, compared to $10.3
million in the prior year comparative period.
- Net income for the three months
ended May 31, 2021 was $5.0 million ($0.07 diluted EPS), compared
to $5.3 million ($0.07 diluted EPS) in the prior year comparative
period. The growth in mutual funds sales as well as the increase in
the Company’s stock price in the current quarter resulted in an
increase in variable sales compensation, DSC commissions and stock
compensation, which were fully recognized in the period, resulting
in a $0.12 negative impact to EPS compared to prior year.
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Three months ended |
Six months ended |
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May 31, |
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February 28, |
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May 31, |
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May 31, |
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May 31, |
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(in millions of Canadian dollars, except per share data) |
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2021 |
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2021 |
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20201 |
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2021 |
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20201 |
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Income |
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Management, advisory, administration fees |
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and deferred sales charges |
$ |
108.6 |
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$ |
102.9 |
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$ |
88.8 |
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$ |
211.5 |
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$ |
188.2 |
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Share of profit of joint ventures |
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0.1 |
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0.8 |
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0.6 |
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0.9 |
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0.7 |
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Other income from fee-earning arrangements |
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0.4 |
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– |
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– |
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0.4 |
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– |
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Dividend income (S&WHL) |
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– |
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– |
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– |
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– |
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4.5 |
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Fair value adjustments and other income |
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0.4 |
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3.6 |
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(0.4 |
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3.9 |
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2.3 |
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Total Income |
$ |
109.5 |
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$ |
107.3 |
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$ |
89.0 |
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$ |
216.7 |
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$ |
195.7 |
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Selling, general and
administrative |
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47.1 |
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48.0 |
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40.2 |
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95.1 |
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85.5 |
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Deferred selling
commissions |
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17.7 |
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15.5 |
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10.3 |
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33.3 |
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22.8 |
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EBITDA before
commissions2 |
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28.2 |
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26.8 |
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21.2 |
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54.7 |
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51.3 |
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EBITDA |
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10.5 |
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11.3 |
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10.9 |
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21.4 |
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28.5 |
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Net income |
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5.0 |
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5.6 |
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5.3 |
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10.6 |
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16.1 |
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Diluted earnings per
share |
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0.07 |
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0.08 |
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0.07 |
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0.15 |
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0.20 |
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Free cash flow2 |
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10.4 |
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10.5 |
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6.1 |
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20.9 |
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20.6 |
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Dividends per share |
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0.08 |
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0.08 |
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0.08 |
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0.16 |
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0.16 |
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Long-term debt |
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– |
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– |
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199.9 |
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– |
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199.9 |
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(end of period) |
Three months ended |
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May 31, |
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February 28, |
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November 30, |
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August 31, |
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May 31, |
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(in millions of Canadian dollars) |
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2021 |
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2021 |
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2020 |
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2020 |
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2020 |
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Mutual fund assets under
management (AUM)3 |
$ |
22,290 |
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$ |
21,394 |
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$ |
20,322 |
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$ |
19,232 |
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$ |
18,259 |
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Institutional, sub-advisory
and ETF accounts AUM |
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9,713 |
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9,403 |
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9,638 |
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9,252 |
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9,591 |
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Private client AUM |
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6,689 |
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6,300 |
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6,043 |
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5,773 |
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5,624 |
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Private
alternatives AUM4,5 |
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134 |
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142 |
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227 |
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178 |
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173 |
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Total AUM4 |
$ |
38,826 |
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$ |
37,239 |
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$ |
36,230 |
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$ |
34,435 |
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$ |
33,647 |
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Private
alternatives fee-earning assets4,5 |
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1,983 |
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2,012 |
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2,038 |
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2,029 |
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2,115 |
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Total AUM and fee-earning assets5 |
$ |
40,809 |
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$ |
39,251 |
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$ |
38,268 |
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$ |
36,464 |
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$ |
35,762 |
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Net mutual fund sales
(redemptions)3 |
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408 |
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|
385 |
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88 |
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(22 |
) |
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(93 |
) |
Average
daily mutual fund AUM3 |
|
22,011 |
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|
21,118 |
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19,487 |
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18,879 |
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17,386 |
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1 |
Refer to
Note 3 in the 2020 Consolidated Financial Statements for more
information on the adoption of IFRS 16. |
2 |
EBITDA
before commissions (earnings before interest, taxes, depreciation,
amortization and deferred selling commissions), 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. |
3 |
Mutual
fund AUM includes retail AUM, pooled fund AUM and institutional
client AUM invested in customized series offered within mutual
funds. |
4 |
Total AUM
and Private alternatives AUM have been reclassified and restated to
exclude co-investment AUM for comparative purposes. |
5 |
Fee-earning assets represents assets in which AGF has carried
interest ownership and earns recurring fees but does not have
ownership interest in the managers. |
For further information and detailed financial
statements for the second quarter ended May 31, 2021, including
Management’s Discussion and Analysis, which contains discussions of
non-IFRS measures, please refer to AGF’s website at www.agf.com
under ‘About AGF’ and ‘Investor Relations’ and at
www.sedar.com.
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/uekxsbo4. Alternatively, the
call can be accessed toll-free in North America by dialing
1 (800) 708-4540 (Passcode #: 50170228).
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 nearly $41 billion in total assets under management and
fee-earning assets, AGF serves more than 700,000 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 GuoVice-President, Finance416-865-4228,
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, the possible effects of war or terrorist
activities, outbreaks of disease or illness that affect local,
national or international economies (such as COVID-19), natural
disasters and disruptions to public infrastructure, such as
transportation, communications, power or water supply or other
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 2020 Annual MD&A.
1 Fee-earning assets represents assets in which AGF has carried
interest ownership and earns recurring fees but does not have
ownership interest in the managers.
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