TORONTO, June 24, 2020 (GLOBE NEWSWIRE) —
- Reported assets under management of $36.3 billion
- Private alternatives AUM increased 5.4% in the quarter to $2.9 billion
- Reported diluted EPS of $0.07 for the second quarter of 2020
AGF Management Limited (AGF or the Company) (TSX: AGF.B) today announced financial results for the second quarter ended May 31, 2020.
AGF reported total assets under management (AUM) of $36.3 billion compared to $38.3 billion in the same period in 2019. Average daily mutual fund AUM decreased to $17.4 billion compared to $19.2 billion in the same period in 2019 driven by recent market volatility. Ending mutual fund AUM was $18.3 billion. AUM related to AGF’s private alternative business increased 31% to $2.9 billion compared to $2.2 billion in the same period of 2019.
In an uncertain environment AGF’s mutual funds held up well against the industry, reporting net redemptions of $93.0 million compared to net redemptions of $498.0 million in Q2 2019. Excluding net flows from institutional clients invested in mutual funds, net redemptions were $169.0 million in the comparative period of 2019. Eight of ten AGFiQ ETFs listed in Canada have outperformed their peers year-to-date1. Further, four of six ETFs listed in the U.S. have also outperformed peers year-to-date2. On the private alternative side, InstarAGF announced the final close of InstarAGF Essential Infrastructure Fund II (Fund II) with USD$1.2 billion in assets. Fund II follows InstarAGF’s Essential Infrastructure Fund I, which closed in 2017 with C$740.0 million in assets.
“During a challenging quarter, we continued to execute against our strategy and stated goals,” said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF. “We announced significant progress in the merger between Smith & Williamson and Tilney with a revised transaction structure and we saw continued growth in the private alternatives space as market dynamics continue to drive assets into differentiated products that provide negative correlation, enhance returns and increase income levels.”
- On June 1, AGF confirmed that a revised transaction structure has been agreed for the proposed merger between Tilney and Smith & Williamson (S&WHL).
- InstarAGF Asset Management Inc. announced the final closing of Fund II, with approximately USD$1.2 billion in aggregate equity commitments.
- AGF is a finalist at the annual Wealth Professional Awards in four categories: CEO of the Year, Fund Provider of the Year, Employer of Choice and ETF Champion of the Year.
- During the quarter, AGF announced a number of changes and enhancements to its product suite, including fund mergers, a decrease in risk ratings and a name change.
- AGF has been hosting a weekly market call since the week of March 15th with consistent attendance of over 750+ attendees and a steady growth of institutional attendees week-over-week.
- Nearly all of AGF’s global staff worked from home this quarter with no interruptions to business operations. AGF employees have proven they can effectively work from home and their engagement remains high as they have embraced technology, finding efficiency and benefits in this environment.
“Through this time of great uncertainty, we remain focused on providing the best possible stewardship of the investments entrusted to our care and to providing an exceptional client experience strengthened by our digital transformation initiatives. Looking ahead, our executive team has turned our attention to refining our back-to-office plan and have identified a number of guiding principles to ensure our employee physical and mental health continues to guide our decision-making processes,” added McCreadie.
- Income for the three months ended May 31, 2020 was $89.0 million, compared to $109.8 million for the three months ended May 31, 2019. During the current period, no earnings from S&WHL were recognized, the investment is now accounted for as a held for sale asset, as compared to equity earnings of $6.5 million recorded in the three months ended May 31, 2019.
- Selling, general & administrative (SG&A) for the three months ended May 31, 2020 declined $8.4 million or 17.3% to $40.2 million compared to $48.6 million in prior year comparative period.
- Excluding the impact of the change in accounting related to S&WHL, EBITDA before commissions was $21.2 million for the three months ended May 31, 2020, compared to $22.7 million ($23.9 million adjusted for IFRS 16) for the same period in 2019.
- Diluted earnings per share (EPS) for the three months ended May 31, 2020 was $0.07, compared to $0.14 ($0.15 adjusted for IFRS 16) for the comparative period in prior year.
- Excluding the impact of the change in accounting related to S&WHL, EPS for the three months ended May 31, 2020 was $0.07 as compared to $0.06 ($0.07 adjusted for IFRS 16) for the three months ended May 31, 2019.
- For the three months ended May 31, 2020, AGF declared an eight cent per share dividend on Class A Voting common shares and Class B Non-Voting shares payable on July 20, 2020 to shareholders on record as at July 10, 2020.
- With the announcement of the final closing of Fund II, AGF’s private alternative AUM is $2.9 billion as at May 31, 2020, a 31% increase as compared to May 31, 2019. AGF continues to focus on growing the alternative business, with a target of $5 billion in AUM by 2022. Since inception, AGF’s long-term seed investments in the alternative platform have produced gross internal rates of return in excess of 12%.
- Based on the terms of the revised transaction structure for the sale of AGF’s ownership in S&WHL, the Company estimates that it will receive total cash of approximately £177 million (approximately C$297 million3), excluding tax and one-time expenses subject to closing adjustments. Net cash received after tax and one-time expenses will be approximately £164 million (approximately C$275 million3). Total cash includes dividends and distributions of up to £28 million (approximately C$47 million3) comprised of an interim dividend of £2.7 million (C$4.5 million) that was received on February 7, 2020, an interim dividend of approximately £5 million (approximately C$9 million3) payable on June 26, 2020 and, immediately before closing, an estimated special distribution of approximately £20 million (approximately C$33 million3). On closing, AGF is expected to receive cash proceeds of approximately £149 million (approximately C$250 million3) compared to a book value as at May 31, 2020 of $145.4 million. AGF has entered into a forward contract to secure AGF’s cash consideration at an exchange rate of 1.68. The forward contract expires on November 30, 2020. The revised transaction structure is subject to regulatory and shareholder approvals.
|(from continuing operations)||Three months ended||Six months ended|
|May 31,||February 29,||May 31,||May 31,||May 31,|
|(in millions of dollars, except per share data)||2020||2020||2019||2020||2019|
|Management, advisory, administration fees and|
|deferred sales charges||$||88.8||$||99.4||$||101.1||$||188.2||$||193.7|
|Share of profit of joint ventures||0.6||0.1||0.1||0.7||0.2|
|Share of profit of associate (S&WHL)||–||–||6.5||–||10.9|
|Dividend Income (S&WHL)||–||4.5||–||4.5||–|
|Fair value adjustments and other income (loss)||(0.4||)||2.7||2.1||2.3||10.0|
|Selling, general and administrative||40.2||45.3||48.6||85.5||96.6|
|EBITDA before commissions4||21.2||30.2||29.2||51.3||42.1|
|Adjusted EBITDA before commissions4||21.2||30.2||30.4||51.3||58.8|
|Adjusted net income||5.3||10.8||11.7||16.1||22.8|
|Diluted earnings per share||0.07||0.13||0.14||0.20||0.14|
|Adjusted diluted earnings per share4||0.07||0.13||0.15||0.20||0.28|
|Free Cash Flow4||6.1||14.5||8.2||20.6||24.8|
|Dividends per share||0.08||0.08||0.08||0.16||0.16|
|(end of period)||Three months ended|
|May 31,||February 29,||November 30,||August 31,||May 31,|
|(in millions of dollars)||2020||2020||2019||2019||2019|
|Mutual fund assets under management (AUM)5||$||18,259||$||18,492||$||19,346||$||18,839||$||18,725|
|Institutional, sub-advisory and ETF accounts AUM||9,591||10,313||10,755||10,391||11,712|
|Private client AUM||5,624||5,905||6,100||5,778||5,722|
|Private alternatives AUM6||2,862||2,716||2,580||2,413||2,179|
|Total AUM, including private alternatives AUM||36,336||37,426||38,781||37,421||38,338|
|Net mutual fund redemptions5||(93||)||(344||)||(181||)||(103||)||(498||)|
|Average daily mutual fund AUM5||17,386||19,462||19,015||18,915||19,250|
|1||Morningstar Direct, as of May 31, 2020, Net of Fees. Excludes Funds with less than one year since inception.|
|2||Morningstar Direct, as of May 31, 2020, Net of Fees.|
|3||All Canadian dollar figures assume an exchange rate of 1.68.|
|4||EBITDA before commissions (earnings before interest, taxes, depreciation, amortization and deferred selling commissions), adjusted EBITDA before commissions, adjusted net income, 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, pooled fund 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 $207.4 million, of which $146.1 million has been funded as at May 31, 2020.|
For further information and detailed financial statements for the second quarter ended May 31, 2020, 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.
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/
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, private alternatives 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 $36 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:
Senior Vice-President and Chief Financial Officer
Caution Regarding Forward-Looking Statements
This Management’s Discussion and Analysis (MD&A) 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 2019 Annual MD&A.