AGF Management Limited Reports Fourth Quarter and Fiscal Year 2020 Financial Results

TORONTO, Jan. 27, 2021 (GLOBE NEWSWIRE) --

• Reported mutual fund net sales of $88 million for the fourth quarter, a $269 million improvement over prior year
  
  
• Completed the sale of Smith & Williamson, receiving $250.4 million in proceeds, resulting in a strengthened balance sheet, with $94 million in cash and no debt as at November 30, 2020
  
  
• Returned $45.6 million to shareholders in the quarter through the completion of a substantial issuer bid and quarterly dividend payment
  
  
• Reported diluted EPS of $1.43 for the fourth quarter of 2020, including the gain on sale of Smith & Williamson
  
  
• Adjusted diluted EPS was $0.19, including $0.08 from private alternatives

AGF Management Limited (AGF or the Company) (TSX: AGF.B) today announced financial results for the fourth quarter and fiscal year ended November 30, 2020.

AGF reported total assets under management (AUM) of $38.8 billion compared to $37.0 billion as at August 31, 2020 and $38.8 billion as at November 30, 2019.

AGF’s mutual fund net sales totaled $88 million in Q4 2020, compared to net redemptions of $181 million in Q4 2019. Excluding net flows from institutional clients invested in mutual funds, retail mutual fund net sales were $66 million for the quarter compared to net redemptions of $181 million in the comparative period of 2019. Mutual funds improved 37% year-over-year outpacing the industry year-over-year improvement of 21%⁽¹⁾. Sales momentum has continued into Q1 2021.

“During this challenging year, we have been committed to demonstrating our value by remaining close to our clients, keeping the lines of communication open and providing valuable insights and resources to help them navigate the ever-changing market environment,” said Judy Goldring, President and Head of Global Distribution, AGF. “This approach has strengthened existing relationships and helped us develop new ones, while improving our sales activity and positioning us well for 2021.”

During 2020, AGF continued to execute against its long-term strategy and stated goals, while realizing the culmination of many years’ efforts with the close of the merger of Smith & Williamson (S&WHL) and Tilney.

The Company used a portion of the proceeds from the sale of S&WHL to fully repay its long-term debt to achieve immediate interest expense savings. In addition, $40.0 million of the proceeds were used to return capital to shareholders through the completion of a substantial issuer bid (SIB) on November 6, 2020, where AGF purchased for cancellation 7,017,542 Class B non-voting shares at a price of $5.70 per share.

AUM related to AGF’s private alternatives increased 8.9% to $2.8 billion compared to $2.6 billion in the same period of 2019. During the quarter, AGF entered into a definitive option agreement with SAF Group, which grants AGF the right to acquire management contracts of select SAF funds, and any new private credit funds, exercisable until September 2021. The option agreement creates a path forward to a private credit capability that is well-positioned to capitalize on the expected growth in private debt investments. In June 2020, InstarAGF Asset Management Inc. announced the final closing of the InstarAGF Essential Infrastructure Fund II, with approximately USD$1.2 billion in aggregate equity commitments.

“We could not have imagined the impact of the pandemic or prepared for the challenges of 2020,” said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF. “Yet, in spite of all that was happening, we delivered strong relative investment performance and we made significant progress against our strategic priorities, while continuing to be prudent and practice expense discipline.”

“In 2021, we will continue to focus on organic growth and responding to evolving investor demands for trends like alternatives, sustainable investing and the shift to a vehicle agnostic approach,” added McCreadie.

Key Business Highlights:

• On September 1, 2020, AGF sold its 28.0% interest in S&WHL achieving one of its key strategic goals in realizing the value of its long-term investment. The sale of S&WHL significantly improved the strength of the Company’s statement of financial position. As at November 30, 2020, AGF had $94.0 million in cash and no debt on its statement of financial position, providing the financial strength and liquidity to execute on its future growth plans.
  
  
• In September 2020, AGF accelerated the firm’s commitment to private alternatives through an expanded partnership with the SAF Group. Early this year, AGF and SAF expect to bring to market offerings with varying liquidity and return profiles designed to meet the needs of its respective target segments of the investor market. This will include a direct lending private credit strategy with a focus on originating, structuring and lending to middle and lower middle market companies, primarily in Canada and the United States.
  
  
• AGF and WaveFront Global Asset Management launched AGFWave to deliver investment management capabilities to China and South Korea.
  
  
• AGF is a signatory to the United Nations supported Principles for Responsible Investment (PRI) as a sustaining member of the Responsible Investment Association. In 2020, AGF reinforced its commitment to furthering responsible and sustainable investing practices across the organization with new dedicated investment management hires and a new industry membership focused on enhancing sustainability research.
  
  
• AGF aims to deliver consistent and repeatable investment performance with a target of 50% over one year and 40% over three years when looking at AGF’s mutual fund gross returns (before fees) relative to peers within the same category. As at November 30, 2020, AGF’s average percentile over the past one year was 41% (above target) and the average percentile over the past three years was 53% (below target).
  
  
• During 2020, AGF received honours from the FundGrade A+^® Awards, Lipper Fund Awards and Wealth Professional Awards.

For further information on AGF’s pandemic response plan statement visit AGF.com.

Financial Highlights:

• EBITDA before commissions for the three and twelve months ended November 30, 2020 was $137.0 million and $251.1 million. EBITDA before commissions includes the pre-tax gain on sale of S&WHL of $104.4 million and the S&WHL special distribution received in Q3 2020 of $32.5 million. Adjusted EBITDA before commissions² for the three and twelve months ended November 30, 2020 was $31.6 million and $113.2 million, compared to $35.8 million and $125.0 million in prior year comparative periods.
  
  
• The Company received total cash from the sale of S&WHL of $296.2 million, including $250.4 million in proceeds from the sale of S&WHL, net of currency hedge and excluding tax and one-time expenses, and interim dividends and a special distribution totaling $45.8 million. Net cash received on the sale, after tax and one-time item expenses, was $231.4 million, resulting in a gain on the transaction of $94.4 million. With proceeds fully received, AGF no longer has an interest in or association with S&WHL.
  
  
• AGF’s interest in private alternative managers generated EBITDA of $1.6 million and $2.9 million for the three and twelve months ended November 30, 2020 (2019 ? $0.1 million and $0.3 million). The increase includes $1.0 million of carried interest revenue recognized in the fourth quarter of 2020 related to one of AGF’s private alternative funds which has exceeded its performance threshold.
  
  
• Selling, general and administrative costs were $174.7 million for the twelve months ended November 30, 2020, compared to $184.5 million (adjusted for IFRS 16) in 2019. The reduction in costs was attributable to the Company’s continued focus on cost control combined with lower travel and entertainment costs as a result of the ongoing pandemic.
  
  
• Adjusted net income for the three and twelve months ended November 30, 2020 was $15.0 million ($0.19 adjusted diluted EPS) and $46.0 million ($0.59 adjusted diluted EPS), compared to $19.4 million ($0.24 adjusted diluted EPS) and $56.7 million ($0.71 adjusted diluted EPS) in prior year comparative periods.