AGF Management Ltd. today announced record financial results for the year ended Nov. 30, 2007.

AGF also announced a 25% increase to quarterly dividends on its Class A voting common and Class B non-voting shares to 25¢ a share from 20¢ a share, effective March 2008. “In 2007, between dividends and share buybacks, we returned close to 73% of our free cash flow to shareholders,” said Blake Goldring, chairman and CEO of AGF, during a conference call today. The firm has issued dividends for 11 straight years.

AGF stock dropped sharply after the announcement, falling below $23 just before noon, a 52-week low on the TSX.

AGF will release sales figures for the month of January on February 4. The firm says market volatility has created a challenging environment for the sales of long-term funds. It’s message is cautious yet optimistic. “When this market starts to show a sign that its bottomed out, I think its going to turn very quickly,” said Randy Ambrosie, during the conference call. “All the cash that’s parked on the sidelines can hit the markets and be invested very rapidly. Advisors, I’m quite certain, will be ready to do that.”

In fiscal 2007, revenue from continuing operations rose to $780.3 million compared with $607.2 million the year before, with both operating segments reporting year-over-year increases.

Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $357.2 million for fiscal 2007, compared with $248.5 million for 2006.

Pre-tax income from continuing operations rose 95.6% to $222.6 million, compared with $113.8 million for 2006.

Net income from continuing operations for fiscal 2007 was up 72.3% to $175.9 million or $1.93 per share diluted, compared with $102.1 million or $1.14 per share diluted for 2006. AGF says the year-over-year increase in net income was affected by the inclusion in 2006 of a recovery in income tax expense of $13.5 million, the result of the Canadian federal income tax reduction that was substantively enacted in June 2006.

For 2008, the company is expecting a tax recovery because of inactive tax rates on Dec. 12 of last year. “We should have a pick up of about 19.3 million, said Greg Henderson, senior vice-president and CFO at AGF, today. “What that’s going to mean is in the first quarter, we’re going to have a tax reduction in our statements and after that we’ll probably settle back down to the 25% mark.”

Total assets under management (AUM) rose to $53.8 billion at the end of fiscal 2007 from $42.8 billion, a gain of 25.7%. Over the same period, institutional and private client assets grew 48.9% and mutual fund assets rose 11.9%.

Institutional and high-net-worth assets grew as a result of strong investment performance, new mandates and the acquisition of Highstreet Partners Limited (Highstreet). The Highstreet acquisition, which closed on December 1, 2006, added $4.8 billion in AUM.

High Street funds were launched mid-January, a time when advisors were focused on communicating with clients about market. “We were launching them right into some tremendous market turmoil, and it was very hard to get a strong interest in the road shows,” said Randy Ambrosie, president of AGGF Funds Inc., during the conference call
“It’s the launch follow-up that will really tell the story.”

The trust company operations segment also grew, with loan originations totaling $416 million for the fourth quarter, $260 million in real estate loans, and $216 in investments.

Two retail institutions redeemed $101.8 million due to the rebalancing of principal protected notes and the internalization of a portfolio by a third party. Redemptions of long-term funds, as at January 25, 2008, excluding the above mentioned amount, is $137.2 million.

On the heels of losing two portfolio managers this month, Charles Oliver and Jamie Horvat, AGF says it is in the process of looking for a senior person in the resource category to round out its team.