AGF Management Ltd. posted a jump of more than 75% in net income in fiscal 2004, but failed to stem the tide of redemptions that has plagued the fund company.

The Toronto-based company said Wednesday net income for the full year ended Nov. 30 was $77.3 million (84¢ per share diluted), an increase of 75.6% from $44.0 million (47¢ per share) in fiscal 2003.

In the fourth quarter, AGF lost $8.1 million (8¢) vs a loss of $25.8 million (28¢) a year earlier. Quarterly revenue rose to $156.6 million from $153.9 million. In late 2004, AGF agreed to pay $29.2 million, excluding costs, in compensation to unitholders in an agreement with the Ontario Securities Commission.

AGF was one of several mutual fund companies that agreed to pay a total of $156.5 million to fund holders in a settlement over improper trading involving market timing.

“With strong cash flow, an enhanced product line-up, excellent investment management performance and a revitalized sales and marketing function, AGF made significant moves in 2004 to reinforce and reinvest in its core mutual fund business,” the company said in a release.

But flood of mutual fund redemptions also continued. They were up 25.1% last year to $2.2 billion with the company blaming portfolio rebalancing by three institutional clients that added $299.9 million to the net figure and a lack of popular income-oriented mutual funds.

“The strategic refocusing completed in the third quarter of fiscal 2004 included a comprehensive product audit and the launch of new funds in early 2005,” the company said. “The overall goal of the refocusing was to improve gross sales and reduce redemptions.”

AGF said total assets under management increased by 11.2% to $31.4 billion as of Nov. 30, thanks to acquisitions Ottawa-based P.J. Doherty & Associates and Vancouver-based Cypress Capital Management Ltd., which boosted institutional and private investment management AUM. But mutual fund AUM were down slightly, falling 1.6% to $23.2 billion vs $23.5 billion a year ago. But AGF said average daily mutual fund AUM were up 7.0% to $23.8 billion “and a major contributor to the improved revenues in 2004 as compared to 2003.”

Elsewhere, AGF said cash flow from operations (before net change in non-cash balances related to operations) was $207.8 million, down 0.4% from $208.5 million in fiscal 2003.

“This was a pivotal year at AGF as we built a competitive platform for growth,” said Blake Goldring, president and chief executive officer, in a release. “Our operating cash flow is an important driver of growth and the creation of shareholder value. We continue to be on the lookout for strategic acquisitions that fit our game plan and make the business even more robust.”

Consolidated revenue increased by 6.5% to $639.9 million vs $600.8 million in 2003.

http://www.newswire.ca/en/releases/archive/February2005/02/c8975.html