AGF Management Limited Reports Second Quarter 2021 Financial Results

• Mutual fund gross sales of $1.1 billion for the second quarter of 2021, an improvement of 108% year-over-year
• Mutual fund net sales of $408 million for the quarter
• Total assets under management and fee-earning assets¹ of $40.8 billion
  
• Dividend increase to $0.09 from $0.08 per share

TORONTO, June 30, 2021 (GLOBE NEWSWIRE) -- 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.