AGF Management Limited Class B · TSX:AGF.B
AGF Management Limited Class B — CIBC World Markets Frontenac Institutional Investor Conference 2005
23 slides from AGF Management Limited Class B's conference presentation, Sep 23, 2005
Slide 1: AGF Management Limited – Focused on Results
AGF MANAGEMENT LIMITED FOCUSED ON RESULTS CIBC World Markets Frontenac Institutional Investor Conference FRIDAY, SEPTEMBER 23, 2005
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION This presentation contains certain forward-looking statements that are made based on management’s judgment and expectations but are inherently subject to risks and uncertainties beyond the Corporation’s control. These risks and uncertainties include economic conditions, m
Slide 3: AGF: Focused on Results
AGF: FOCUSED ON RESULTS Established in 1957 Market capitalization: $1.6 billion Total assets under management: $33.3 billion Current Dividend yield: 3.4% August 31, 2005
Slide 4: Revenue and EBITDA
AGF: FOCUSED ON RESULTS REVENUE AND EBITDA 180 160 159.1 166.5 140 158.2 156.6 157.4 158.1 120 100 80 60 75.5 79.0 76.2 70.5 40 69.9 52.8 20 0 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Revenue EBITDA Not including $31.0 million charge in Q4 2004
Slide 5: Corporate Profile – Business Segments
CORPORATE PROFILE — BUSINESS SEGMENTS FOCUSED ON INVESTMENT MANAGEMENT RETAIL FUNDS GROWTH, SYNERGIES MAXIMIZE ROI #1 PRIORITY WITH FUND BUSINESS Investment AGF Trust Other Management AGF Funds Inc. Top supplier to Smith & Williamson advisors of loans, AGF International Advisors mortgages and GICs I
Slide 6: Key Success Factor: Investment Management Excellence
KEY SUCCESS FACTOR INVESTMENT MANAGEMENT EXCELLENCE • Impressive internal managers and external sub advisors • Internal managers: poised to benefit from elimination of foreign content restriction – AGF American Growth Class - Manager changed in January 2005. Now 1st and 2nd quartile over 3 and 6 mon
Slide 7: Delivering on Commitments: Leadership
AGF — DELIVERING ON COMMITMENTS LEADERSHIP Initiative from last year: Action taken… • Integrate new leadership New leadership in place required to execute renewed • Greg Henderson, Senior Vice- sales and marketing plan President and CFO • Succession planning for key • Randy Ambrosie, Executive Vice-
Slide 8: Delivering on Commitments: Relationship Management
AGF — DELIVERING ON COMMITMENTS RELATIONSHIP MANAGEMENT Action taken… Initiative from last year: Advisor resources and activity • AGF had an opportunity to • Wholesaling force increased 25% reconnect with our most vital • We have almost tripled the amount constituents, our clients of activity with a
Slide 9: Delivering on Commitments: Products
AGF — DELIVERING ON COMMITMENTS PRODUCTS Initiative from last year: Action taken… • Absent from strongest selling • Yield continuum categories • Revolutionary fund of funds Initiative from last year: Action taken… • Need for innovative products • AGF U.S. Risk Managed Class • AGF Dividend Income Ini
Slide 10: Delivering on Commitments: Marketing
AGF — DELIVERING ON COMMITMENTS MARKETING Initiative from last year: Action taken… • Our research showed that • AGF Marketing advisors do not cherish Collateral Program consumer brand advertising • Focus shifted to • Our advertising focused solely channel advertising on brand advertising • Practical
Slide 11: Strategic Priorities for 2005/2006
AGF — DELIVERING ON COMMITMENTS STRATEGIC PRIORITIES FOR 2005/2006 1. Continue to enhance client-centric model in core fund business – Investment excellence – Service excellence 2. Promote international investment management competency across multiple channels – Retail funds – Institutional – SMA pl
Slide 12: Greg Henderson, Senior Vice-President and CFO
AGF MANAGEMENT LIMITED GREG HENDERSON SENIOR VICE-PRESIDENT AND CHIEF FINANCIAL OFFICER
Slide 13: Delivering on Commitments: Capital Stewardship
AGF — DELIVERING ON COMMITMENTS CAPITAL STEWARDSHIP Initiative from last year: Action taken… • Look at opportunities to be Aggressive moves efficient with capital • Unisen divestiture • Share buy backs • Dividend increases • Debt Reduction • ING funds acquisition
Slide 14: Capital Management: Divestitures – Sale of Unisen
CAPITAL MANAGEMENT DIVESTITURES Sale of Unisen • Unisen has a promising business model, but AGF was not the natural owner to grow the business further • Potential benefit to AGF ERs • $120 million of capital for redeployment • Accounting gain estimated at over 30% • Double-digit internal rate of ret
Slide 15: Capital Management: Share Buy Backs
CAPITAL MANAGEMENT SHARE BUY BACKS Millions Sh Share Buy Backs: 93 a re sO /S • To Q3 2005 2.2 million h ave 92 dec • 2004 2.1 million 92.2 line d • 2003 0.5 million 91 90 90.7 89.9 89 88 2003 2004 Q3 2005 To Q3 2005
Slide 16: Capital Management: Dividends
CAPITAL MANAGEMENT DIVIDENDS Annual Dividends • Dividends increased Paid Per Share* 36.4% in Q2 2005 to an annual rate of $0.60 % 26 $0.60 per share $0.50 R $0.40 A G • 8 consecutive years $0.30 C of dividend increases $0.20 $0.10 $0.00 '97 '05 * ’05 estimate based on one $0.11 dividend and three $0
Slide 17: Capital Management: Debt Elimination?
CAPITAL MANAGEMENT DEBT ELIMINATION? • Debt elimination would occur only if opportunities to acquire or invest do not materialize • AGF does believe in financial leverage • AGF generates approximately $150-160 million in free cash flow annually • Long-term debt of $85.3 million as at May 31, 2005
Slide 18: AGF Trust Profile
AGF TRUST PROFILE AGF TRUST • ROI above 15% Loan Profile Other • Increasing contribution Conventional 3% to EBITDA Mortgages 13% RSP • High growth lender in Loans two segments: CMHC 35% Mortgages – Investment & RSP loans 21% – Mortgages Investment • Total assets of Loans $1.1 billion 28% To Q2 2005
Slide 19: AGF Trust Profile: Mortgages and Consumer Loans
AGF TRUST PROFILE Mortgages Consumer Loans • Assets: $383.1 million • Assets: $658.4 million • Distributed 90% via brokers • Strict underwriting standards • Average LTV 65% (max 75%) • Loans secured by asset • Net interest margin 240 bps • Net interest margin 320 bps 5% Conventional RSP ILP CMHC 33%
Slide 20: AGF Trust Profitability
AGF TRUST PROFITABILITY • The value embedded in our loan portfolio is not apparent in accounting earnings, because of: – Smaller scale relative to publicly traded competitors – Conservative provisioning: conventional mortgages and RSP loans – Capital structure: no securitizations to date – Low risk
Slide 21: AGF Trust Growth Sustainability
AGF TRUST GROWTH SUSTAINABILITY • AGF Trust loan assets are growing at an annual rate of 50%+ • Strong growth is sustainable and operational risks are well controlled: – Scalable IT systems and processes – Risk modelling and risk management – Geographic diversification – Product diversification
Slide 22: AGF Trust External Factor Sensitivity
AGF TRUST EXTERNAL FACTOR SENSITIVITY Mortgage Loans Consumer Loans • What happens if interest • What happens if the stock rates rise? market falls? – We utilize swaps to – Strict underwriting standards achieve interest rate neutrality – Advance loans only to very high credit clients – Gradual rate
Slide 23: AGF Management Limited – The Opportunity
AGF MANAGEMENT LIMITED — THE OPPORTUNITY • Substantial change, managed seamlessly – Enhanced leadership, more disciplined management • Prudent capital management – Active share buy back, increased dividends • Demonstrated ability to realize value from existing assets – Proceeds from Unisen sale exce
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