QUANTITATIVE ALTERNATIVES FUNDAMENTAL SUSTAINABILITY AGF MANAGEMENT LIMITED | 2019 ANNUAL REPORT In an era of rapidly changing Global asset manager with offices Diversified investment capabilities – in five countries and retail and Fundamental, Quantitative, environments, we continue to institutional clients across the world Alternatives and Private Client deliver excellence in investment management, provide an exceptional client experience and remain disciplined to stay ahead of change. Disciplined approach aimed to deliver Focus on responsible investing consistent investment performance and sustainable practices across the organization Table of Contents 04 / Our Investment Capabilities 08 / Financial Highlights 12 / A Message to Shareholders 15 / Our Approach: Invested in Discipline 18 / Our Corporate Responsibility $ 26 / Corporate Governance Practices 27 / The Board of Directors 30 / Committees of the Board 38.81 31 / Board of Directors and Executive Officers Billion in AUM 34 / Management’s Discussion and Analysis of Financial Condition and Results of Operations 71 / Management’s Responsibility for Financial Reporting 72 / Independent Auditor’s Report 76 / Consolidated Statement of Financial Position AGF remains focused on delivering strong long-term 78 / Consolidated Statement of Income investment performance and exceptional service. 79 / Consolidated Statement of Comprehensive Income 80 / Consolidated Statement of Changes in Equity 81 / Consolidated Statement of Cash Flow 82 / Notes to Consolidated Financial Statements 122 / AGF Corporate Directory 1 Amounts presented as at November 30, 2019. Expressed in Canadian Dollars. 0202 // AAGGFF MMAANNAAGGEEMEMENNTT LLIIMIMITTEEDD 2019 A N NUA L R EPO R T / 03 Our Investment Capabilities As a diversified global asset management firm, AGF has fundamental, quantitative, alternatives and private client investment management businesses. Fundamental Quantitative AGF’s fundamental investment management We believe a culture of curiosity, open dialogue AGFiQ is the quantitative platform for AGF powered by an intellectually diverse, multi- $ 21.9 teams are focused on consistently delivering and challenging each other’s ideas leads to $8.2 disciplined team. on investment objectives for our clients better investment outcomes and helps to 1 1 Led by pioneers in factor-based investing, the team’s approach is grounded in the belief that Billion in AUM by leveraging our industry experience. Our Billion in AUM continually raise the bar for all of our clients. investment outcomes can be improved by assessing and targeting the factors that drive market fundamental teams’ lead equity and fixed AGF’s fundamental, actively-managed returns. Utilizing disciplined, factor-based approaches allows us to view risk through multiple income portfolio managers have a combined platform includes a broad range of equity lenses as we work to achieve our objective of providing better risk-adjusted returns. 280+ years of experience in investment and fixed income strategies covering a management, with deep relationships spectrum of objectives from wealth Our Un-artificial Intelligence Our In-house Research Platform across the industry. accumulation and risk management to We collectively believe that in quantitative We have found that external, third-party Throughout the years, as we have embraced income-generating solutions. In addition approaches, it’s the people behind the systems are not keeping pace with our change and innovation, our motivation has to our Global and North American equity strategies that truly drives innovation. ideas, our research and the flexibility and remained consistent. We carry a deep sense and fixed income capabilities we have We pride ourselves on thinking differently customization requirements we need to of accountability to our investors to deliver demonstrated specialist expertise in the and do so by combining diverse and deliver better outcomes. As a result, we on our objectives, allowing them to achieve areas of sustainable and alternative investing. complementary strengths which lead have developed an in-house research and their goals. to innovative investment approaches. database platform that enables us to define In an increasingly challenging environment, Our relentless passion for research and customized factors and build risk models and the ability to meet these objectives requires understanding drives our ability to advance portfolio optimizations tailored for the unique substantial experience and skill. At AGF, the wealth accumulation and preservation investment objectives of each strategy. our tenure, expertise and access to global goals of investors. firm resources has allowed us to maintain a disciplined approach while at the same time embracing a spirit of research and innovation to adapt. 1 Assets under management as of November 30, 2019. 1 Assets under management as of November 30, 2019. 04 / AGF MANAGEMENT LIMITED 2019 ANNUAL REPORT / 05 OUR INVESTMENT CAPABILITIES Alternatives Private Client At AGF, our expertise and partnerships across the alternatives spectrum allows investors to $ AGF’s private client platform – which includes Cypress Capital Management Ltd., $2.6 have access to and benefit from allocations to alternative investments as part of a disciplined 6.1 Doherty & Associates Ltd. and Highstreet Asset Management Inc. – provides investment approach. From alternative asset classes to alternatives strategies, we offer investment solutions for high-net-worth individuals, endowments and foundations 1 1 Billion in AUM solutions for a wide range of objectives. Billion in AUM in key markets across Canada. Publicly Listed Liquid Alternatives Private Alternative Investments Cypress Capital Management provides quality investment Alternative Asset Classes Private Infrastructure services at a reasonable cost, where the best interest of the Through our fundamental and quantitative Innovative investment solutions with an client is paramount. They are committed to being honest platforms, we offer investments in publicly- emphasis on essential infrastructure in the and transparent regarding return expectations, risks, fees listed companies related to real assets North American middle market offered through and their capabilities as investment managers. including infrastructure, energy, precious InstarAGF Asset Management Inc. – AGF’s metals and real estate through a variety joint venture with Instar Group Inc., in which of vehicles including mutual funds, ETFs AGF holds a 51% economic interest. Doherty & Associates was founded on the principle that and separately managed accounts. their clients come first in all they do. Their philosophy of “Great Companies at Great Prices” coupled with a Alternative Strategies disciplined investment process guides them to grow AGFiQ offers deep expertise employing Structured Credit wealth responsibly over time. innovative quantitative and alternative Structured credit opportunities in partnership approaches, including long/short, market with SAF Group, a Canadian-based investment neutral and derivative-based strategies Highstreet is committed to their core principles of doing two firm with expertise constructing bespoke to meet investment objectives. things exceptionally well – serving their clients and managing financial products across the capital structure, money. They believe that investment success can be achieved providing opportunities linked to real assets through blending quantitative and fundamental analysis to including, but not limited to, the oil and capture alpha drivers. gas sector. 1 Assets under management as of November 30, 2019. 1 Assets under management as of November 30, 2019. 06/ AGF MANAGEMENT LIMITED 2019 ANNUAL REPORT / 07 Financial Highlights Consolidated 10-year Review (from continuing operations) (in millions of Canadian dollars, except per share amounts) IFRS IFRS IFRS IFRS IFRS (in millions of Canadian dollars, except per share amounts) IFRS IFRS IFRS IFRS GAAP Years ended November 30 20191,2 20183 20174 20165 20156 Years ended November 30 2014 20137 20128 2011 2010 Income $ 436.7 $ 450.2 $ 455.5 $ 428.7 $ 449.6 Income $ 464.5 $ 484.5 $ 510.2 $ 585.7 $ 513.0 Expenses9 326.7 343.7 339.1 319.2 322.4 Expenses9 309.6 320.9 321.2 337.5 303.2 EBITDA before commissions10 110.0 106.5 116.4 109.5 127.2 EBITDA10 154.9 163.6 189.0 248.1 209.7 Pre-tax income 57.3 62.5 61.8 52.7 63.9 Pre-tax income 79.1 66.0 58.5 114.7 119.0 Net income attributable to equity owners Net income attributable to equity owners of the Company 47.9 73.9 52.1 42.5 48.3 of the Company 61.3 22.4 52.3 103.6 85.7 Earnings per share attributable to equity owners Earnings per share attributable to equity owners of the Company of the Company Basic $ 0.61 $ 0.94 $ 0.66 $ 0.53 $ 0.59 Basic $ 0.69 $ 0.25 $ 0.29 $ 0.80 $ 0.96 Diluted 0.60 0.92 0.64 0.53 0.58 Diluted 0.68 0.25 0.29 0.80 0.95 Free cash flow10 $ 52.8 $ 41.4 $ 58.7 $ 61.5 $ 67.8 Free cash flow10 $ 82.0 $ 102.3 $ 95.8 $ 135.9 $ 173.8 Dividends per share $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.51 Dividends per share $ 1.08 $ 1.08 $ 1.08 $ 1.07 $ 1.04 Long-term debt11 $ 207.3 $ 188.6 $ 138.6 $ 188.2 $ 268.8 Long-term debt11 $ 308.2 $ 307.9 $ 312.3 $ 315.1 $ 143.7 Weighted average basic shares 78,739,081 79,292,775 79,330,190 79,278,876 82,295,595 Weighted average basic shares 86,000,437 88,163,616 94,117,8 89 94,295,903 89,112,595 Weighted average fully diluted shares 79,672,961 8 0,637,94 8 81,245,279 80,253,600 83,584,539 Weighted average fully diluted shares 87,38 4,8 8 0 88,690,410 94,932,213 95,111,318 90,157,585 1 Refer to Note 3 in the Consolidated Financial Statements for more information on the adoption of IFRS 15. 6 2015 includes a $5.7 million distribution related to a crystallization of an asset and a one-time restructuring cost of $7.2 million. 2 2019 includes income of $4.1 million related to one-time fund expense tax recovery, and $14.4 million related to restructuring costs. Refer to the ‘Restructuring Provision’ 7 2013 includes a $25.0 million one-time adjustment to tax provision related to the transfer pricing case.