- Closed Smith & Williamson merger.
- Reported adjusted diluted EPS of
$0.19 for the third quarter of 2020. - Announces intention to launch a substantial issuer bid.
- Private alternative AUM increased 14% to
$2.8 billion . Establishes new advisory committee for its alternatives business.
Equity markets performed strongly in the third quarter with many regions recovering losses experienced during the market downturn in spite of high levels of volatility from the continued impacts of the COVID-19 pandemic.
In this uncertain environment AGF’s mutual funds held up well against the industry, reporting net redemptions of
“In the current environment we have been able to maintain our business trajectory in the retail space and close the Smith & Williamson merger providing us the ability to redeploy capital in a number of ways to ensure our resources remain focused against our stated strategic goals while delivering continued value to our shareholders,” said
The Board has authorized
Focused on driving growth in its key strategic pillars,
“Now more than ever we have seen the value of alternatives as we navigate these uncertain times reaffirming this space as integral to AGF’s growth strategy, delivering value for our shareholders while providing our clients access to the uncorrelated asset classes they are seeking,” added McCreadie. “To have these two tenured industry leaders with substantial knowledge and experience at the table with us will be invaluable as we look to grow our alternatives capabilities and partnerships, including our recently announced expansion with
Business Highlights:
- On
September 1 , the merger between Tilney and Smith & Williamson to create one of the U.K.’s leading integrated wealth management and professional services groups closed. As a result,AGF received total cash of £177 million (C$296 million ), excluding tax and one-time expenses and subject to closing adjustments.
AGF has entered into a definitive option agreement with theSAF Group which grantsAGF the right to acquire an indirect controlling interest in the management fee partnerships of selectSAF Group (SAF) funds exercisable at any time in a 12 month period, in addition to any new private credit fundAGF and SAF bring to market together. Additionally,AGF announced that theGeneral Partners will commit$15 million in capital to a new private credit fund the firms expect to bring to market together later this year.AGF andWaveFront Global Asset Management Corporation announced onSeptember 21 st the launch ofAGFWave Asset Management Inc. (AGFWave), a new joint venture for providing asset management services and products inChina andSouth Korea .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 is a signatory to theUnited Nations supported Principles forResponsible Investment (PRI) as a sustaining member of theResponsible Investment Association . In *PRI’s 2020 Assessment Report,AGF maintained its overall “Strategy and Governance” score of ‘A+’, and its overall score of ‘A’ under “Listed Equity - Incorporation”. In 2020,AGF also improved to an overall score of ‘A’ for “Listed Equity – Active Ownership” and “Fixed Income – Corporate Non-Financial”. Overall,AGF either maintained or exceeded the median score in all six modules.AGF filed prospectuses with the Canadian securities regulators for the launch of two ETFs (AGF Global Sustainable Growth Equity ETF and AGF Global Opportunities Bond ETF) and two mutual funds (AGFiQ Global Balanced ETF Portfolio Fund andAGFiQ Global Income ETF Portfolio Fund ) to offer clients choice and expand its distribution reach through a variety of investment vehicles.
“During the quarter and throughout the pandemic we have been focused on delivering for our clients and strengthening relationships with our partners,” said
For further information on AGF’s pandemic response plan statement visit AGF.com.
Financial Highlights:
- Income for the three months ended
August 31, 2020 was$138.7 million , compared to$107.4 million in the prior year and$89.0 million recorded in the three months endedMay 31, 2020 . - Income in the quarter includes
$41.3 million in dividend income related to Smith & Williamson, comprised of an interim dividend of$8.8 million received in June and a special distribution of$32.5 million receivedSeptember 2, 2020 . - Adjusted EBITDA before commissions for the three months ended
August 31, 2020 was$30.1 million compared to$30.2 million in the three months endedAugust 31, 2019 and$21.2 million in the three months endedMay 31, 2020 . - For the three months ended
August 31, 2020 ,AGF reported adjusted net income of$14.8 million ($0.19 per diluted share) compared to adjusted net income of$14.6 million ($0.18 per diluted share) in the corresponding period in 2019 and net income of$5.3 million ($0.07 per diluted share) in the three months endedMay 31, 2020 . - Upon final close of the S&
WHL transaction, the Company received total cash of £177 million (C$296 million ), excluding tax and one-time expenses and subject to closing adjustments. OnSeptember 9, 2020 ,AGF received cash proceeds of £148.8 million (C$250.4 million ), resulting in a gain on the sale, after tax and one-time expenses, of approximately$96 million . With the transaction now complete,AGF possesses no financial interest in the merged group. - On
September 14, 2020 ,AGF used a portion of the proceeds from the sale of Smith &Williamson to pay down its credit facility in full.
(from continuing operations) | Three months ended | Nine months ended | ||||||||
(in millions of dollars, except per share data) | 2020 | 2020 | 2019 | 2020 | 2019 | |||||
Income | ||||||||||
Management, advisory, administration fees | ||||||||||
and deferred sales charges | $ | 94.9 | $ | 88.8 | $ | 97.3 | $ | 283.2 | $ | 290.9 |
Share of profit of joint ventures | 0.6 | 0.6 | 0.1 | 1.3 | 0.2 | |||||
Share of profit of associate (S& | – | – | 5.8 | – | 16.8 | |||||
Dividend income, net of currency | ||||||||||
hedge (S& | 41.3 | – | – | 45.8 | – | |||||
Fair value adjustments and other income (loss) | 1.9 | (0.4) | 4.2 | 4.3 | 14.3 | |||||
Total Income | 138.7 | 89.0 | 107.4 | 334.6 | 322.2 | |||||
Selling, general and administrative | 46.1 | 40.2 | 47.3 | 131.6 | 143.9 | |||||
EBITDA before commissions1 | 62.6 | 21.2 | 29.0 | 114.1 | 71.2 | |||||
Adjusted EBITDA before commissions1 | 30.1 | 21.2 | 30.2 | 81.6 | 89.1 | |||||
Net income | 47.3 | 5.3 | 14.4 | 63.5 | 25.7 | |||||
Adjusted net income1 | 14.8 | 5.3 | 14.6 | 31.0 | 37.4 | |||||
Diluted earnings per share | 0.60 | 0.07 | 0.18 | 0.80 | 0.32 | |||||
Adjusted diluted earnings per share1 | 0.19 | 0.07 | 0.18 | 0.39 | 0.47 | |||||
Free cash flow1 | 15.5 | 6.1 | 9.7 | 36.1 | 34.4 | |||||
Dividends per share | 0.08 | 0.08 | 0.08 | 0.24 | 0.24 | |||||
Long-term debt | 194.3 | 199.9 | 158.9 | 194.3 | 158.9 |
(end of period) | Three months ended | |||||||||
(in millions of dollars) | 2020 | 2020 | 2020 | 2019 | 2019 | |||||
Mutual fund assets under management (AUM)2 | $ | 19,232 | $ | 18,259 | $ | 18,492 | $ | 19,346 | $ | 18,839 |
Institutional, sub-advisory and ETF accounts AUM | 9,252 | 9,591 | 10,313 | 10,755 | 10,391 | |||||
Private client AUM | 5,773 | 5,624 | 5,905 | 6,100 | 5,778 | |||||
Private alternatives AUM3 | 2,755 | 2,862 | 2,716 | 2,580 | 2,413 | |||||
Total AUM, including private alternatives AUM | 37,012 | 36,336 | 37,426 | 38,781 | 37,421 | |||||
Net mutual fund redemptions2 | (22) | (93) | (344) | (181) | (103) | |||||
Average daily mutual fund AUM2 | 18,879 | 17,386 | 19,462 | 19,015 | 18,915 |
1 | 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. |
2 | Mutual fund AUM includes retail AUM, pooled fund AUM and institutional client AUM invested in customized series offered within mutual funds. |
3 | Represents fee-earning committed and/or invested capital from |
For further information and detailed financial statements for the third quarter ended
Conference Call
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/dfgu2kmg. Alternatively, the call can be accessed toll-free in
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.
∞This press release is for informational purposes only and does not constitute an offer to buy or a solicitation of an offer to sell AGF’s Class B non-voting shares. The substantial issuer bid referred to in this press release has not yet commenced. The solicitation and offer to buy the Class B non-voting shares will only be made pursuant to a separate issuer bid circular, which will contain full details of the substantial issuer bid and will be filed with the securities regulatory authorities and mailed to AGF’s shareholders.
*The PRI works with its international network of signatories to put the six Principles for
About
Founded in 1957,
Senior Vice-President and Chief Financial Officer
416-865-4203, InvestorRelations@agf.com
Vice-President, Finance
416-865-4228, 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 and its intention to launch a substantial issuer bid. 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
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