June 22, 2011 / 1:08 PM / 6 years ago

UPDATE 1-AGF Management profit rises, increases dividend

* AGF Management Q2 profit, in line with expectations

* Dividend raised to C$0.27 from C$0.26

* Q2 revs up 17.1 pct, managed assets up 20.8 pct

TORONTO, June 22 (Reuters) - AGF Management Ltd (AGFb.TO) said on Wednesday its quarterly profit rose about 19 percent as the purchase of Acuity and rising global markets boosted revenues, and the wealth manager unexpectedly boosted its dividend.

Net profit for the second quarter ended May 31 climbed to C$32.7 million, or 34 Canadian cents a share, compared with C$27.5 million, or 30 Canadian cents, in the second quarter of 2010.

The Canadian wealth management firm raised its quarterly dividend to 27 Canadian cents a share from 26 Canadian cents, the 14th straight year of dividend increases.

“First, the dividend increase was a positive surprise,” Barclays Capital analyst John Aiken said in a research note. “It appears that the acquisition of Acuity has broken AGF out of its earnings range of C$0.34-C$0.35 per share over the previous five quarters.”

Revenue increased 17.1 percent to C$180.1 million from C$153.8 million in the same quarter a year earlier, while expenses rose 14.8 percent to C$104.7 million.

The higher revenues came from the firm’s investment management operations on the back of higher assets under management, including the acquisition of Acuity and global market improvements.

AGF, one of Canada’s largest independent investment managers, said it was buying privately held wealth manager Acuity for C$325 million in November 2010, continuing a consolidation in the sector.

Excluding the one-time acquisition and integration costs related to Acuity in the second quarter of 2011 and one-time charges related to Smith & Williamson Holdings Ltd in the second quarter of 2010, adjusted earnings per share were 37 Canadian cents a share, up 5.7 percent from 35 Canadian cents a share a year earlier.

Analysts were expecting earnings of 38 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Total assets under management (AUM) climbed 20.8 percent to C$51.8 billion as a result of the acquisition of Acuity and global market improvements, AGF said.

“On a fundamental basis, AGF continues to lag its peers on AUM growth, largely related to its sustained underperformance of mutual fund net sales. Consequently, we would anticipate that this positive news will largely be shrugged off by the market,” Aiken said. (Reporting by Andrea Hopkins; Editing by Frank McGurty)

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