AGF Management CEO Discusses Q4 2010 Earnings Call Transcript

AGF Management (AGF.B)

Q4 2010 Earnings Call

January 28, 2011 11:00 am ET

Executives

Blake Goldring - Chairman of the Board and Chief Executive Officer

Robert Bogart - Chief Financial Officer, Executive Vice President and Member of Executive Committee

Mario Causarano - President of AGF Trust Company and Chief Operating Officer of AGF Trust Company

Analysts

Doug Young - TD Newcrest Capital Inc.

Jason Chen

John Reucassel - BMO Capital Markets Canada

Paul Holden - CIBC World Markets Inc.

Geoffrey Kwan - RBC Capital Markets, LLC

Stephen Boland - GMP Securities, Ltd.

Scott Chan - Canaccord Genuity

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to AGF's Fiscal 2010 Financial Earnings Conference Call. [Operator Instructions] Your speakers for today are Mr. Blake C. Goldring, Chairman and Chief Executive Officer of AGF Management Limited; and Mr. Robert J. Bogart, Executive Vice President and Chief Financial Officer of AGF Management Limited.

Today's call and accompanying presentation may include forward-looking statements. Such forward-looking statements are given as of the date of this call and involve risks and uncertainties. A number of factors and assumptions were applied in the formulation of such statements, and actual results could differ materially.

For additional information regarding such forward-looking statements, factors and assumptions, AGF directs you to the caution regarding forward-looking statements, which is contained at Page 2 of the presentation, AGF's MD&A for the year ended November 2010, and AGF's most recent annual information form.

I would now like to turn the call over to Mr. Bogart. Please go ahead, Mr. Bogart.

Robert Bogart

Thank you, operator. Good morning, everyone. I'm Bob Bogart, CFO of AGF Management Limited, and it's my pleasure to have you join us for today's call. Please note that the slides supporting today's call and webcast can be found in the Investor Relations section of agf.com.

Today, Blake Goldring, Chairman and CEO, and I will discuss AGF's 2010 fiscal year and fourth quarter results. Also joining us on the call and available to answer questions is Mario Causarano, President and COO of AGF Trust.

I'll now turn the call over to Blake.

Blake Goldring

Thank you, Bob, and welcome to everyone listening to today's conference call. Since our last update in late September, AGF has taken an important step to growing our company with the acquisition of Acuity Funds Ltd. We expected that the deal will close next week on February 1. When completed, the acquisition will strengthen our position as one of the largest independent investment management firms in Canada with total assets under management increasing to over $51 billion. This important acquisition comes during a sluggish year of recovery for the global economy. After signs of improvement during the first quarter of 2010, the second and third quarter brought a return to global market volatility. Internationally, we saw a sovereign debt crisis in Europe, while domestically, Canada's growth became more subdued by the end of year. There was cooling of the housing market, slowdown in exports and slower job growth. Despite that, AGF continue to forge ahead with growth plans and strategic initiatives, leaving that a long-term focus will overcome short-term volatility.

Let me begin by providing you with our financial highlights from the past year. From a financial standpoint, 2010 was a positive year, despite the ups and downs face the economy. Investment Management assets remained stable at $43 billion. Year-over-year consolidated revenue increased 4.9% to $614 million. Our EBITDA rose 17% to almost $257 million. We also saw an increase in earnings per share to $1.30 compared to $1.09. We returned 58.3% of our cash flow to shareholders through dividends and share buybacks. On the downside, mutual funds remained in net redemptions, and I'll speak to that and our strategy to address that in a moment.

Trust loan assets declined 11.1% from 2009, reflecting our strategy to a slow growth in the Trust segment, while profitability rose sharply, with the EBITDA increasing 31%. Bob's going to speak more about that shortly.

Moving to the next slide. Let's turn to assets under management. As I mentioned, our investment assets didn't change much year-over-year. The acquisition of Acuity will boost our assets under management to more than $51 billion. We continue to work hard to turning redemptions around, and the acquisition is part of our overall growth strategy. As you know, balance and fixed income categories are still popular with clients. Acuity has a well-known reputation for excellent offerings in these areas.

At AGF, we filled out our product suite in this area in 2010, where we launched five new funds in the fixed income and balance categories, and these continue to garner investor attention. We're particularly excited about the emerging market bond and balanced funds, which we launched just in November and are being well received by advisers. We also continue to spend a lot of time focusing on relationships. For example, I've just been on the road, hosting a number of dinners across the country, and our sales team and fund managers are in the midst of a multi-city tour that is taking them from coast-to-coast.

Our enhanced product lineup, combined with our strong advisor relationships and our focus on strategic partnerships, positioned us well for the future. I should note, too ,that when investors return to equities, AGF, with our equally rated lineup, is placed to benefit even more. Another key part of our growth strategy is increase our institutional assets by leveraging our Investment Management capabilities. You'll notice from the slide that the institutional assets have remained relatively stable. As I've noted in the past, institutional mandates take longer to work their way through the business cycle, and adding remaining mandates will be more evident than in the retail space. As well, you've heard me talk about our expansion into other markets. You will recall that it was last year that we opened a new office in Hong Kong to foster business development, and we've added new resources in Europe. Recently, we've been awarded several new mandates in the last quarter, and we continue to gain traction in the United States.

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