AGF Management Limited - Second Quarter Report to Shareholders for the three and six months ended May 31, 2012

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Jun 27, 2012, 08:00 ET

AGF MANAGEMENT LIMITED REPORTS SECOND QUARTER FINANCIAL RESULTS

Company reports earnings per share of $0.25 and increases focus on its core business of investment management following the sale of AGF Trust

TORONTO, June 27, 2012 /CNW/ - AGF Management Limited (AGF) today announced financial results for the second quarter ended May 31, 2012. The quarter included improved retail fund performance, the successful launch of new mutual fund products in partnership with Eaton Vance Management and the strategic sale of AGF Trust.

Earnings per share (EPS) were $0.25 for the three months ended May 31, 2012, as compared to $0.35 in the same period of 2011. Diluted EPS from the continuing investment management operations, excluding AGF Trust as a result of the sale, was $0.17 per share in the second quarter of 2012.

Total assets under management (AUM) decreased 16.6% from $51.8 billion at May 31, 2011 to $43.2 billion as of May 31, 2012. AUM decreases were driven primarily by market depreciation from continuing global volatility as well as redemptions from the investment management segment. Given these lower AUM levels, revenue from continuing operations decreased 15.6% to $133.5 million compared to the same period in 2011.

Earnings before interest, taxes depreciation and amortization (EBITDA) from continuing operations decreased to $50.3 million compared to $66.2 million in the second quarter of 2011.

Over the quarter, AGF announced a new partnership with Eaton Vance Management, which included the launch of the AGF Floating Rate Income Fund in Canada and the AGF sub-advised Eaton Vance Global Natural Resources Fund in the United States. Also during the quarter, AGF one-year investment management performance improved with 40.3% of retail mutual funds ranked by Morningstar as being in the 1st or 2nd quartile, as compared to only 29.3% a year ago.

AGF announced the sale of AGF Trust Company for approximately $415 million in total cash proceeds to B2B Trust on June 6, 2012. The sale of the Trust business allows AGF to focus exclusively on investment management and use the capital to accelerate business growth for its Canadian operations, expand its global asset management business and provide a return of capital to shareholders in the form of share buybacks and dividends. The sale of AGF Trust is expected to close August 1, 2012, subject to regulatory approval.

"This has been a very busy quarter for AGF. We have seen improvements in our investment management performance and developed a new partnership with Eaton Vance Management, one of the oldest investment management firms in the United States. Further, the sale of AGF Trust strengthens our position as a leader focused on our retail and institutional asset management business," said Blake C. Goldring, Chairman and CEO, AGF Management Limited. "AGF has solid cash flow, a diverse product line-up and strong relationships with the advisor community. I am proud of what we have already achieved this year in a very difficult market environment and see many opportunities for the growth of our investment management operations, both in Canada and internationally."

For the three months ended May 31, 2012, AGF declared a 27 cent per share dividend on Class A Voting common shares and Class B Non-Voting shares or $1.08 per share on an annualized basis.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis (MD&A) includes forward-looking statements about the Company, including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes' or negative versions thereof and similar expressions, or future or conditional verbs such as 'may,' 'will,' 'should,' 'would' and 'could.' In addition, any statement that may be made concerning future financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future action on our part, is also a forward-looking statement. Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations, business prospects, business performance and opportunities. While we consider these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about our operations, economic factors and the financial services industry generally. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by us due to, but not limited to, important risk factors such as level of assets under our management, volume of sales and redemptions of our investment products, performance of our investment funds and of our investment managers and advisors, competitive fee levels for investment management products and administration, and competitive dealer compensation levels, size and default experience on our loan portfolio and cost efficiency in our loan operations and investment management operations, as well as interest and foreign-exchange rates, taxation, changes in government regulations, unexpected judicial or regulatory proceedings, and our ability to complete strategic transactions and integrate acquisitions. We caution that the foregoing list is not exhaustive. The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements. Other than specifically required by applicable laws, we are under no obligation (and expressly disclaim any such obligation) to update or alter the forward-looking statements, whether as a result of new information, future events or otherwise. For a more complete discussion of the risk factors that may impact actual results, please refer to the 'Risk Factors and Management of Risk' section of this MD&A.

Dear fellow shareholders,

Europe's deepening credit troubles along with slowing growth in the BRIC countries and an uncertain economic horizon in the United States all continue to weigh heavily on global markets. While Canada has largely escaped the worst of the economic issues affecting much of the world, we live in a global economy and cannot avoid the effects of the continuing volatility. At AGF, it speaks to the need to focus our efforts on our core strength of investment management with an eye on domestic and international growth opportunities particularly during this period of market uncertainty.

We have already started seeing some of the results of this sharpened focus. There have been improvements in our investment management performance, with 40% of our retail mutual funds ranked by Morningstar as 1st or 2nd quartile on a one-year basis, up from just over 29% a year ago.

We also continue to offer advisors and clients a broad array of investment products. In the second quarter, we announced a new partnership with Eaton Vance Management and launched the new AGF Floating Rate Income Fund in Canada and the AGF sub-advised Eaton Vance Global Natural Resources Fund in the United States. I attended the launch and met with advisors and believe it was one of the most successful product launches we have ever had at AGF.

In June, we announced the sale of AGF Trust to B2B Trust for approximately $415 million in total cash proceeds. We had successfully grown the Trust business from a small, single product lending operation with only $200 million in loan assets to the over $3 billion multi-product loan business that it is today. By selling now, AGF can use the proceeds from the sale, current unused debt capacity and cash-on-hand to accelerate growth in our retail and institutional investment management operations, and provide value to our shareholders. We are dedicated to our advisors and clients and are now better positioned to continue to exceed their expectations for investment management excellence and grow our business through new products, partnerships and investment management opportunities.

We also recognize that there is much more to do. While we saw a drop in our total assets under management by 16.6% and a corresponding 15.6% drop in revenue in the second quarter of 2012 versus one year ago, we remain a highly profitable company with a solid cash flow. Sales of new retail mutual funds were $514 million, down from $712 million a year earlier, but we also saw a slowing in redemptions during the second quarter of 2012 versus that of 2011.

Market volatility continues to shake the confidence of many investors around the world but we approach the second half of 2012 with confidence and optimism. With a renewed focus on our core business and the resources to invest in it, our continuing strong relationships with the advisor community and an enviable product offering, we look upon this period of uncertainty as one that presents great opportunities that can further strengthen our firm and deliver on our commitment to our clients and investors.

Sincerely,

(signed)

Blake C. Goldring, M.S.M., CFA
Chairman and Chief Executive Officer
June 27, 2012

Management's Discussion and Analysis of Financial Condition and Results of Operations

For the three and six months ended May 31, 2012

This Management's Discussion and Analysis (MD&A) is as of June 26, 2012, and presents an analysis of the financial condition of AGF Management Limited (AGF) and its subsidiaries as at May 31, 2012, compared to November 30, 2011. On December 1, 2011, AGF adopted the International Financial Reporting Standards (IFRS) for financial reporting purposes, using a transition date of December 1, 2010. The financial statements for the three and six months ended May 31, 2012, including required comparative information, have been prepared in accordance with IFRS 1, First-time Adoption of International Financial Reporting Standards and with International Accounting Standards (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB). Prior to the adoption of IFRS, AGF prepared its Interim and Annual Consolidated Financial Statements in accordance with Canadian Generally Accepted Accounting Principles (GAAP). Unless otherwise noted, 2011 comparative information has been prepared in accordance with IFRS.

The adoption of IFRS has not had an impact on AGF's operations, strategic decisions and cash flow. Information on the IFRS adjustments is provided in the Notes to Consolidated Financial Statements for the three and six months ended May 31, 2012. Information on opening adjustments as a result of the adoption of IFRS are provided in the Notes to the Consolidated Financial Statements for the three months ended February 29, 2012.

On June 6, 2012, AGF signed a definitive agreement under which B2B Trust, a subsidiary of Laurentian Bank, will acquire 100% of AGF Trust Company (AGF Trust), a subsidiary offering mortgage, deposit and consumer lending products to clients of financial advisors and mortgage brokers. The results of AGF Trust for the three and six months ended May 31, 2012 and 2011 have been presented as discontinued operations.

The MD&A should be read in conjunction with our 2011 Annual MD&A and 2011 Annual Audited Consolidated Financial Statements and Notes. We also utilize non-IFRS financial measures to assess our overall performance. Details of non-IFRS measures used are outlined in the 'Key Performance Indicators and Non-IFRS Measures' section, which provides calculations of the non-IFRS measures along with reconciliation of non-IFRS financial measures to GAAP financial statements. All dollar amounts are in Canadian dollars unless otherwise indicated. Throughout this discussion, percentage changes are calculated based on results rounded to the nearest thousand. Results, except per share information, are presented in millions of dollars. Percentage changes are calculated using numbers rounded to the decimals that appear in this MD&A.

There have been no material changes to the information discussed in the following sections of the 2011 Annual MD&A: 'Risk Factors and Management of Risk,' 'Contractual Obligations,' 'Intercompany and Related Party Transactions' and 'Government Regulations.'

Overview

AGF Management Limited, with $43.2 billion in assets under management (AUM) as at May 31, 2012, is one of the largest independent Canadian-based investment management firms, with operations and investments in Canada, the United States, the United Kingdom, Ireland and Asia.

The origin of our Company dates back to 1957 with the introduction of the American Growth Fund, the first mutual fund available to Canadians seeking to invest in the United States. As of May 31, 2012, our products and services include a diversified family of award-winning mutual funds, mutual fund wrap programs and pooled funds. AGF also manages assets on behalf of institutional investors including pension plans, foundations and endowments as well as for high-net-worth clients.

For purposes of this discussion, the operations of AGF and our subsidiary companies are referred to as 'we,' 'us,' 'our' or 'the Company.'

On June 6, 2012, the Company signed a definitive agreement under which B2B Trust, a subsidiary of Laurentian Bank, will acquire 100% of AGF Trust in a share purchase transaction. B2B Trust will acquire AGF Trust for a consideration corresponding to the net book value of AGF Trust at closing and will also cause AGF Trust to repay subordinated indebtedness owed to AGF and redeem preferred shares held by AGF for a consideration of $173.5 million. Based on the March 31, 2012, net book value of AGF Trust of $242.0 million, total consideration of approximately $415.5 million will be received in cash. At May 31, 2012, the net book value of AGF Trust was $246.3 million, which implies total cash consideration of $419.8 million. The agreement also includes a contingent consideration of a maximum of $20.0 million over five years if credit quality reaches certain criteria. The transaction is expected to close on August 1, 2012, subject to applicable regulatory notifications and approvals.

During the quarter, we transitioned the Emerging Markets and Global mandates under a new team as a result of the departure of a senior portfolio manager.The transition is complete and performance within these mandates continues to perform above industry benchmarks. The impact to AUM to date as a result of this transition has been minimal. Investment performance within our other mandates continues to be a concern and a focus for the Company.

Strategy and Quarterly Overview

AGF Management Limited is committed to providing world-class financial solutions to clients in Canada and abroad. We look to expand our business through organic growth supplemented by strategic acquisitions while continuing to focus on our key financial priorities to create long-term value for shareholders, clients and unitholders.

Our Investment Management Operations provide a diverse suite of investment solutions to retail, institutional and high-net-worth clients. We are focused on delivering strong long-term investment performance and excellence in client service while continuing to build and maintain strong relationships with our distribution partners.

As part of a continued focus on our core investment management business, AGF Management Limited announced the sale of its subsidiary AGF Trust. The sale will allow AGF to focus exclusively on investment management and use the capital to accelerate business growth for its Canadian operations, expand its global asset management business and provide a return of capital to shareholders in the form of share buybacks and dividends.

During the second quarter of 2012:

On June 6, 2012, AGF Management Limited (AGF) announced the sale of AGF Trust to B2B Trust, a subsidiary of Laurentian Bank, for approximately $415.5 million in cash. AGF expects the transaction to close on August 1, 2012, subject to regulatory approvals.
Total AUM decreased 16.6% from $51.8 billion at May 31, 2011, to $43.2 billion at May 31, 2012.
Global market volatility continued and the decline in markets resulted in a 6% or $1.4 billion decline in retail AUM during the quarter.
Retail fund net redemptions were $729.0 million in the second quarter of 2012, compared to net redemptions of $574.0 million in the second quarter of last year.
Revenue from continuing operations decreased 15.6% to $133.5 million compared to the same period in 2011, which was related to lower AUM levels.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations decreased to $50.3 million compared to $66.2 million in the second quarter of 2011. EBITDA margin decreased to 37.7% compared to 41.9% in the second quarter of 2011. The second quarter of 2011 included $3.6 million in acquisition and integration costs related to Acuity. Adjusted EBITDA of $69.8 million, excluding one-time expenses in 2011, decreased 27.9%.
Diluted EPS from continuing operations in the second quarter of 2012 was $0.17 per share compared to $0.28 per share in the second quarter of 2011. Excluding one-time items referenced above, diluted EPS from continuing operations was $0.31 per share in the second quarter of 2011.
We delivered value directly to our shareholders through dividend payments. Dividends paid, including dividends reinvested, on Class A Voting common shares and Class B Non-Voting shares were $26.0 million in the second quarter of 2012 compared to $24.8 million in the same period in 2011.
AGF one-year investment management performance improved during the quarter, with 40.3% of retail mutual funds ranked by Morningstar being in the 1^st and 2^nd quartile, as compared to only 29.3% a year ago.
On May 2, 2012, AGF and Eaton Vance Management (Eaton Vance) announced a strategic partnership which included the launch of AGF Floating Rate Income Fund in Canada and the AGF sub-advised Eaton Vance Global Natural Resources Fund in the United States.

Consolidated Operating Results

The table below summarizes our consolidated operating results for the three and six months ended May 31, 2012 and 2011:


		Three months ended May 31,							Six months ended May 31,
($ millions, except per share data)			2012			2011		% change		2012			2011		% change

Revenue
	Investment Management Operations	$		131.4	$		157.1	(16.4%)	$		261.9	$		294.3	(11.0%)
	Share of profit of associated company			2.1			1.0	110.0%			3.5			1.8	94.4%
				133.5			158.1	(15.6%)			265.4			296.1	(10.4%)

Expenses
	Investment Management Operations			83.2			91.9	(9.5%)			162.7			176.0	(7.6%)
				83.2			91.9	(9.5%)			162.7			176.0	(7.6%)

EBITDA¹				50.3			66.2	(24.0%)			102.7			120.1	(14.5%)
	Amortization			25.1			25.2	(0.4%)			49.2			46.0	7.0%
	Interest expense			2.5			3.7	(32.4%)			5.8			5.5	5.5%
	Income taxes			5.9			9.8	(39.8%)			13.6			18.4	(26.1%)

Net income from continuing operations				16.8			27.5	(38.9%)			34.1			50.2	(32.1%)

Net income from discontinued operations				7.1			6.7	6.0%			15.9			13.5	17.8%

Net income attributable to non-controlling interest				0.1			0.3	(66.7%)			0.1			0.6	(83.3%)

Net income attributable to equity owners of the Company		$		23.8	$		33.9	(29.8%)	$		49.9	$		63.1	(20.9%)

Diluted earnings per share
	From continuing operations	$		0.17	$		0.28	(39.3%)	$		0.35	$		0.53	(34.0%)
	From discontinued operations			0.08			0.07	14.3%			0.17			0.14	21.4%
	From net income for the period	$		0.25	$		0.35	(28.6%)	$		0.52	$		0.67	(22.4%)

¹	For the definition of EBITDA, see the 'Key Performance Indicators and Non-IFRS Measures' section. The items required to reconcile EBITDA to net income from continuing operations, a defined term under IFRS, are detailed above

A summary of the results from continuing operations is as follows:
Revenue for the three and six months ended May 31, 2012, decreased by 15.6% and 10.4% from the corresponding periods in 2011. Revenue in the Investment Management Operations decreased 16.4% and 11.0% for the three and six months ended May 31, 2012. Revenue from share of profit of associated company, which represents the results of our 30.7% equity interest in S&WHL, increased to $2.1 million and $3.5 million for the three and six months ended May 31, 2012, compared to $1.0 million and $1.8 million for the same period in 2011.

Expenses for the three and six months ended May 31, 2012, decreased 9.5% and 7.6% compared to the same periods in 2011. Excluding one-time costs in 2011, expenses decreased 5.8% and 3.1%.

The impact of the above items resulted in a 24.0% and 14.5% decrease in EBITDA for the three and six months ended May 31, 2012, over the respective 2011 period. Excluding one-time costs in 2011, EBITDA decreased 27.9% and 19.9% for the three and six months ended May 31, 2012. Amortization expense for the three and six months ended May 31, 2012, decreased by 0.4% and increased 7.0% compared to the corresponding periods in 2011. Amortization of deferred selling commissions for the three and six months ended May 31, 2012, accounted for $16.8 million and $33.7 million (2011 - $18.4 million and $36.1 million) of the total amortization expense, while amortization related to definite life intangibles accounted for $7.4 million and $13.8 million of the total amortization expense (2011 - $6.1 million and $8.6 million). The increase in amortization from the prior year is related to the derecognition of certain customer contracts as a result of redemptions and the full year of amortization of intangible assets related to the Acuity acquisition. Interest expense increased due to higher debt levels and increased rates.

Income tax expense for the three and six months ended May 31, 2012, was $5.9 million and $13.6 million as compared to $9.8 million and $18.4 million in the corresponding periods in 2011. The effective tax rate for the first six months of 2012 was 28.6% compared to 26.8% in the same period of 2011 for continuing operations. The increase in the effective tax rate for the three and six months ended May 31, 2012, compared to the same periods in 2011, related to a number of items, including a change in earnings of foreign subsidiaries relative to the earnings of the consolidated group.

The impact of the above revenue and expense items resulted in net income from continuing operations of $16.8 million and $34.1 million for the three and six months ended May 31, 2012 as compared to $27.5 million and $50.2 million in the prior year. Diluted earnings per share from continuing operations were $0.17 and $0.35 for the three and six months ended May 31, 2012, as compared to $0.28 and $0.53 in the same periods of 2011. Excluding one-time costs in 2011, diluted earnings per share from continuing operations were $0.31 and $0.59 for the three and six months ended May 31, 2011. Diluted EBITDA per share from continuing operations for the three and six months ended May 31, 2012 was $0.52 and $1.06, compared to $0.68 and $1.27 in the same periods in 2011. Excluding one-time costs in 2011, diluted EBITDA per share from continuing operations was $0.72 and $1.36 for the three and six months ended May 31, 2011.

A further discussion of the results is as follows for the three and six months ended May 31, 2012, compared to May 31, 2011.

Results from Continuing Operations

Business and Industry Profile

We are an independent investment management operation servicing Canadian and international investors through our retail, institutional and high-net-worth businesses.

Our investment management teams provide a diverse range of investment strategies and philosophies and unique research-driven investment processes.

Our retail business delivers a wide range of products across a number of investment strategies including AGF mutual funds, the AGF Elements portfolios and the Harmony Private Investment Program. We compete with numerous domestic and foreign players serving the market. Our products are delivered through multiple channels, including advisors, financial planners, banks, life insurance companies and brokers. We have seven sales offices located across Canada serving regional advisors and their clients, while our strategic accounts team serves our corporate distribution partners.

Our institutional business offers a variety of investment mandates through pooled funds and segregated accounts. We compete domestically and globally as an institutional investment manager and have sales and client service offices in Canada, the United States, Europe and Asia serving pension funds, foundations, institutions, endowments and sovereign wealth funds.

Our high-net-worth business delivers investment management and counselling services in local markets in Canada. It includes the operations of Cypress Capital Management Limited in Vancouver; Highstreet Asset Management (Highstreet) in London, Ontario; and Doherty & Associates in Ottawa and Montreal.

We hold a 30.7% interest in Smith & Williamson Holdings Limited (S&WHL), a leading independent private client investment management, financial advisory and accounting group based in the U.K. This interest is accounted for using the equity method.

Strategy and Highlights

Building on our over 50-year tradition of being independent, fostering innovation and maintaining integrity, we work to provide excellent products and services across all client segments while building enduring relationships and delivering value to shareholders, clients and unitholders. Our goal is to deliver strong long-term investment performance and client service excellence to the retail mutual fund, institutional and high-net-worth markets. We continue to foster our relationships with advisors and strategic distribution partners and provide a diverse suite of investment solutions. We strive to build strong portfolio management teams to ensure continuity and strength in investment management and to leverage our in-house investment management expertise across multiple client channels.

To enhance our focus on our investment management operations, we have announced the sale of AGF Trust. The capital raised from this will allow AGF to focus exclusively on investment management, expand its global asset management business and provide a return of capital to shareholders in the form of share buybacks and dividends.

During the quarter, as a result of the departure of a senior portfolio manager, we transitioned the Emerging Markets and Global mandates under a new team. To date, performance continues to track to previous levels and the impact to AUM under these mandates has been minimal. On February 1, 2011, AGF completed the acquisition of Acuity, which managed approximately $7.5 billion in retail and institutional assets. By the end of 2011, AGF fully integrated the operations of Acuity. The acquisition strengthened AGF's commitment to diversification and providing excellence in wealth management to meet the needs of a diverse range of clients in both the retail and institutional markets.

Assets Under Management

The primary sources of revenue for AGF's Investment Management Operations are management and advisory fees. The amount of management and advisory fees depends on the level and composition of AUM, which in turn is dependent upon investment performance and net sales. Under the management and investment advisory contracts between AGF and each of the mutual funds, we are entitled to monthly fees. These fees are based on a specified percentage of the average daily net asset value of the respective fund. In addition, we earn fees on our institutional and sub-advisory accounts and high-net-worth client AUM. As a result, the level of AUM has a significant influence on financial results.

The following table illustrates the composition of the changes in total AUM during the three and six months ended May 31, 2012 and 2011:


		Three months ended May 31,
($ millions)			2012		2011	% change

Retail fund AUM (including retail pooled funds), beginning of period		$	22,975	$	26,842	(14.4%)

	Gross sales		514		712	(27.8%)
	Redemptions		(1,243)		(1,286)	(3.3%)
	Net sales (redemptions)		(729)		(574)	27.0%

	Market appreciation (depreciation) of fund portfolios		(1,400)		(42)	n/m

Retail fund AUM (including retail pooled funds), end of period		$	20,846	$	26,226	(20.5%)

Average daily retail fund AUM for the period		$	21,956	$	26,384	(16.8%)

Institutional and sub-advisory accounts AUM		$	19,039	$	22,115	(13.9%)

High-net-worth AUM		$	3,297	$	3,460	(4.7%)

Total AUM, end of period		$	43,182	$	51,801	(16.6%)



		Six months ended May 31,
($ millions)			2012		2011	% change

Retail fund AUM (including retail pooled funds), beginning of period		$	22,703	$	22,264	2.0%

	Acquisition of Acuity¹		-		3,768	n/m

	Gross sales		1,085		1,644	(34.0%)
	Redemptions		(2,494)		(2,620)	(4.8%)
	Net sales (redemptions)		(1,409)		(976)	44.4%

	Market appreciation (depreciation) of fund portfolios		(448)		1,170	(138.3%)

Retail fund AUM (including retail pooled funds), end of period		$	20,846	$	26,226	(20.5%)

Average daily retail fund AUM for the period		$	22,334	$	25,246	(11.5%)

Institutional and sub-advisory accounts AUM, beginning of period		$	20,119	$	17,585	14.4%

Acquisition of Acuity¹			-		3,754	n/m

Net change in institutional and sub-advisory accounts			(1,080)		776	(239.2%)
Total institutional and sub-advisory accounts AUM		$	19,039	$	22,115	(13.9%)
High-net-worth AUM		$	3,297	$	3,460	(4.7%)

Total AUM, end of period		$	43,182	$	51,801	(16.6%)

¹		Acuity was acquired on February 1, 2011

Global market volatility and redemptions resulted in a decrease in retail fund AUM, including retail pooled funds, of 20.5% to $20.8 billion at May 31, 2012, from $26.2 billion as at May 31, 2011. Retail fund net redemptions, including retail pooled funds, increased to $729.0 million from $574.0 million at May 31, 2011. The average daily retail fund AUM for the three months ended May 31, 2012, decreased 16.8% to $22.0 billion, compared to $26.4 billion for the same period in 2011. Our institutional and sub-advisory accounts AUM decreased 13.9% to $19.0 billion as at May 31, 2012, compared to $22.1 billion as at May 31, 2011. The decline in institutional AUM is primarily due to investment performance within certain institutional mandates. Our high-net-worth AUM declined 4.7% to $3.3 billion at May 31, 2012, compared to $3.5 billion in the same period in 2011.

Stock market performance influences our AUM levels. Returns for the three and six months ended May 31, 2012, are as follows:


Stock market performance	Three months ended May 31, 2012	Six months ended May 31, 2012
AGF Retail Fund Portfolios	(6.4%)	(2.0%)
S&P 500¹	1.1%	7.7%
NASDAQ¹	(0.2%)	9.4%
S&P/TSX Composite	(8.2%)	(4.3%)
MSCI	(4.0%)	2.5%

¹		Canadian dollar adjusted

The impact of the U.S. dollar depreciation relative to the Canadian dollar on the market value of AGF mutual funds for the three and six months ended May 31, 2012, has been a decrease in AUM of approximately $33.7 million and $109.2 million (2011 - $29.8 million and $324.0 million).

The impact of the euro depreciation relative to the Canadian dollar on the market value of AUM for the three and six months ended May 31, 2012, has been a decrease in AUM of approximately $63.9 million and $66.4 million. The impact of the euro appreciation relative to the Canadian dollar on the market value of AUM for the three and six months ended May 31, 2011, has been an increase in AUM of approximately $73.8 million and $82.5 million.

Financial and Operational Results

The table below highlights the results from continuing operations for the three and six months ended May 31, 2012 and 2011:


		Three months ended May 31,					Six months ended May 31,
($ millions)			2012		2011	% change		2012		2011	% change

Revenue
	Management and advisory fees	$	125.7	$	150.7	(16.6)%	$	253.1	$	283.3	(10.7)%
	Deferred sales charges		5.6		6.5	(13.8)%		11.3		12.4	(8.9)%
	Fair value adjustments and other income		0.1		(0.1)	(200.0)%		(2.5)		(1.4)	78.6%
	Share of profits of associated company		2.1		1.0	110.0%		3.5		1.8	94.4%
			133.5		158.1	(15.6)%		265.4		296.1	(10.4)%

Expenses
	Selling, general and administrative		47.0		43.9	7.1%		90.1		83.7	7.6%
	Business acquisition and integration		-		3.6	n/m		-		8.2	n/m
	Trailing commissions		34.2		41.8	(18.2)%		68.5		79.2	(13.5)%
	Investment advisory fees		2.0		2.6	(23.1)%		4.1		4.9	(16.3)%
			83.2		91.9	(9.5)%		162.7		176.0	(7.6)%

EBITDA¹			50.3		66.2	(24.0)%		102.7		120.1	(14.5)%
Amortization			25.1		25.2	(0.4)%		49.2		46.0	7.0%
Income before taxes and non-segmented items		$	25.2	$	41.0	(38.5)%	$	53.5	$	74.1	(27.8)%

¹		As previously defined, see the 'Key Performance Indicators and Non-IFRS Measures - EBITDA' section

Revenue

For the three and six months ended May 31, 2012, revenue decreased by 15.6% and 10.4% over the previous year, with changes in the categories as follows:

Management and Advisory Fees
Management and advisory fees are directly related to our AUM levels. The 16.8% and 11.5% decrease in average daily retail fund AUM for the three and six months ended May 31, 2012, combined with a 13.9% decrease in institutional and sub-advisory accounts AUM at May 31, 2012, contributed to a 16.6% and 10.7% decrease in management and advisory fee revenue compared to 2011.

Deferred Sales Charges (DSC)
We receive deferred sales charges upon redemption of securities sold on the contingent DSC or low-load commission basis for which we finance the selling commissions paid to the dealer. The DSC ranges from 2.5% to 5.0%, depending on the commission option of the original subscription price of the funds purchased if the funds are redeemed within the second two years and declines to zero after three or seven years. DSC revenue fluctuates based on the level of redemptions, the age of the assets being redeemed and the proportion of redemptions composed of back-end assets. DSC revenues decreased by 13.8% and 8.9% for the three and six months ended May 31, 2012 as compared to 2011, reflecting the redemption of a larger proportion of older, lower yielding DSC assets.

Fair Value Adjustments and Other Income
Fair value adjustments and other income increased by $0.2 million and decreased $1.1 million in the three and six months ended May 31, 2012, over the same period in 2011. The three and six months ended May 31, 2012, include a $2.3 million and nil fair market value gain on future contingently returnable consideration related to the Acuity acquisition (2011 - $0.8 million and $1.7 million loss), offset by a $1.5 million and $2.6 million loss (2011 - $0.7 million and $0.3 million gain) on put options related to non-controlling interest, and losses of $1.2 million and $0.6 million (2011 - $0.2 million and nil gain) related to the market to market on investments held for fair value through profit and loss.

Share of Profit of Associated Company
Share of profit of associated company increased to $2.1 million and $3.5 million for the three and six months ended May 31, 2012, compared to $1.0 million and $1.8 million during the same periods in 2011.

Expenses

For the three and six months ended May 31, 2012, expenses decreased 9.5% and 7.6% from the previous year. Changes in specific categories are described in the discussion that follows:

Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses increased by $3.1 million in the three months ended May 31, 2012, and increased by $6.4 million in the six months ended May 31, 2012, compared to the same periods in 2011. A breakdown of the increases is as follows:


	Three months ended			Six months ended
($ millions)	May 31, 2012			May 31, 2012

Decrease in compensation-related expenses		$	(3.9)		$	(4.4)
Increase in other expenses			3.0			8.1
Increase in fund absorption expenses			4.0			2.7
		$	3.1		$	6.4

The following explains expense changes in the three and six months ended May 31, 2012 compared to the same periods in the prior year:

Compensation-related expenses declined in the three and six months ended May 31, 2012, reflecting a decline in stock-based compensation due to a lower share price, combined with lower headcount levels.
Other expenses increased $3.0 million in the quarter due to costs associated with fund mergers. These costs, combined with higher IT costs and a full year of Acuity operations, resulted in an $8.1 million increase for the six months ended May 31, 2012, compared to the prior year.
Fund absorption expenses increased in the three and six months ended May 31, 2012, reflecting lower AUM levels and expense caps lowered on certain funds offset by a reduction in our revenue commitment with Citigroup fund services.

Trailing Commissions
Trailing commissions paid to distributors depend on total AUM, the proportion of mutual fund AUM sold on a front-end versus back-end commission basis and the proportion of equity fund AUM versus fixed-income fund AUM. Annualized trailing commissions as a percentage of average daily retail fund AUM were 0.62% and 0.61% for the three and six months ended May 31, 2012, compared to 0.63% and 0.63% in the same periods of 2011.

Investment Advisory Fees
External investment advisory fees decreased 23.1% and 16.3% for the three and six months ended May 31, 2012, as compared to the three and six months ended May 31, 2011, reflecting lower AUM levels.

EBITDA and EBITDA Margin

EBITDA from continuing operations were $50.3 million and $102.7 million for the three and six months ended May 31, 2012, a 24.0% and 14.5% decrease from $66.2 million and $120.1 million for the same periods of the previous year. Excluding one-time acquisition and integration costs related to Acuity in 2011, EBITDA decreased 27.9% and 19.9%. EBITDA margin was 37.7% and 38.7% in the three and six months ended May 31, 2012, compared to 41.9% and 40.6% in the same periods in 2011. Adjusted EBITDA margin was 44.1% and 43.3% for the three and six months ended May 31, 2011.

Amortization

The category represents amortization of deferred selling commissions, customer contracts, other intangible assets, property, equipment and computer software. Deferred selling commission amortization represents the most significant category of amortization. We internally finance all selling commissions paid. These selling commissions are capitalized and amortized on a straight-line basis over a period that corresponds with their applicable DSC schedule. Unamortized deferred selling commissions related to units redeemed prior to the end of the schedule are immediately expensed. Amortization expense related to deferred selling commissions was $16.8 million and $33.7 million for the three and six months ended May 31, 2012, compared to $18.4 million and $36.1 million for the same periods of 2011.

During the three and six months ended May 31, 2012, we paid $11.2 million and $21.3 million in selling commissions, compared to $15.9 million and $30.4 million in the same periods of 2011, reflecting lower sales in the quarter. As at May 31, 2012, the unamortized balance of deferred selling commissions financed was $155.6 million (November 30, 2011 - $217.6 million).

Amortization related to intangible assets acquired as a result of the Acuity acquisition was approximately $6.2 million and $11.8 million for the three and six months ended May 31, 2012 (2011 - $5.1 million and $6.7 million). Customer contracts related to the Acuity acquisition are amortized over seven years and other intangible assets are amortized over periods of three and 10 years. Unamortized customer contracts related to AUM redeemed are immediately expensed.

Pre-tax Profit Margin

Pre-tax profit margin decreased to 17.0% and 18.0% for the three and six months ended May 31, 2012, compared to 23.6% and 23.2% for 2011, reflecting the impact of lower revenues as a result of lower AUM.

Results from Discontinued Operations

On June 6, 2012, AGF Management Limited (AGF) announced the sale of AGF Trust to B2B Trust, a subsidiary of Laurentian Bank. AGF expects the transaction to close by August 1, 2012, subject to regulatory approvals and financing. As a result, AGF Trust has been reported as a discontinued operation. Results from discontinued operations also include other revenue attributable to discontinued operations and transaction costs related to the sale.

Financial and Operational Results

The Trust Company Operations segment results for the three and six months ended May 31, 2012 and 2011 are as follows:


		Three months ended May 31,					Six months ended May 31,
($ millions)			2012		2011	% change		2012		2011	% change

Interest income
	Loan interest	$	38.1	$	39.6	(3.8)%	$	75.7	$	79.7	(5.0)%
	Investment interest		4.0		3.3	21.2%		7.8		7.5	4.0%
			42.1		42.9	(1.9)%		83.5		87.2	(4.2)%
Interest expense
	Deposit interest		19.1		25.3	(24.5)%		38.9		51.2	(24.0)%
	Hedging interest income		(2.1)		(5.7)	63.2%		(4.8)		(12.4)	61.3%
	Other interest expense		6.4		4.3	48.8%		11.8		8.6	37.2%
			23.4		23.9	(2.1)%		45.9		47.4	(3.2)%
Net interest income			18.7		19.0	(1.6)%		37.6		39.8	(5.5)%
Other revenue			1.1		1.4	(21.4)%		2.9		2.6	11.5%
RSP loan securitization income (loss), net of impairment			-		0.7	n/m		1.3		1.3	-
Total revenue			19.8		21.1	(6.2)%		41.8		43.7	(4.3)%

Expenses
	Selling, general and administrative		9.3		9.7	(4.1)%		19.0		20.5	(7.3)%
	Provision for loan losses		1.0		2.9	(65.5)%		2.8		6.2	(54.8)%
			10.3		12.6	(18.3)%		21.8		26.7	(18.4)%

EBITDA¹			9.5		8.5	11.8%		20.0		17.0	17.6%
Amortization			0.2		0.3	(33.3)%		0.4		0.7	(42.9)%
Income before taxes and non-segmented items		$	9.3	$	8.2	13.4%	$	19.6	$	16.3	20.2%

¹	For the definition of EBITDA, see the 'Key Performance Indicators and Non-IFRS Measures' section.

Revenue, Net Interest Income and Net Interest Margin
Net interest income, which is expressed net of interest on deposits and other interest expenses, was lower by 1.6% and 5.5% compared to the same periods in 2011. The decrease is primarily related to a decrease in investment loans and HELOC receivable balances of 8.2% and 23.4%, respectively. The average net interest margin on lending products was 2.4% and 2.5% for the three and six months ended May 31, 2012 (2011 - 2.5% and 2.6%). AGF Trust manages its interest rate risk through the use of interest rate swaps. Interest expense includes hedging interest income of $2.1 million and $4.8 million for the three and six months ended May 31, 2012 (2011 - $5.7 million and $12.4 million). Other revenue decreased 21.4% and increased 11.5% in the three and six months ended May 31, 2012. The decrease in the three months ended May 31, 2012, is primarily due to a $0.4 million decrease in fees and other income partially offset by a $0.1 million increase in hedge ineffectiveness. The increase in the six months ended May 31, 2012, is primarily due to a $0.9 million gain on sale of investments and a $0.3 million increase in hedge ineffectiveness, offset by a $0.9 million decrease related to lower fees and other income. During the six months ended May 31, 2012, AGF Trust had $1.0 million in securitization income (2011 - $1.3 million). These factors resulted in an overall revenue decrease of 6.2% and 4.3% in the three and six months ended May 31, 2012 as compared to the same periods in 2011.

Selling, General and Administrative Expenses
SG&A expenses decreased $0.4 million and $1.5 million to $9.3 million and $19.0 million for the three and six months ended May 31, 2012, compared to $9.7 million and $20.5 million in the same periods in 2011. The decrease reflects lower compensation costs combined with lower deposit insurance and capital tax expense for the three and six months ended May 31, 2012, compared to the same periods in 2011.

Provision for Loan Losses
The total provision for loan losses decreased $1.9 million and $3.4 million to $1.0 million and $2.8 million in the three and six months ended May 31, 2012, compared to $2.9 million and $6.2 million in 2011, reflecting improved credit quality of the loan book in 2012.

EBITDA and EBITDA Margin
As a result of the above factors, EBITDA increased 11.8% and 17.6% to $9.5 million and $20.0 million for the three and six months ended May 31, 2012, compared to the same periods in 2011. EBITDA margin for the three and six months ended May 31, 2012, increased to 48.0% and 47.8% from 40.3% and 38.9% over the same periods in 2011.

Pre-tax Profit Margin
As a result of the factors outlined above, pre-tax margin was 47.0% and 46.9% in the three and six months ended May 31, 2012, compared to 38.9% and 37.3% in 2011.

Operational Performance

The table below highlights our key operational measures for the segment for the three and six months ended May 31, 2012 and 2011:


								May 31,		May 31,
($ millions)								2012		2011	% change

Real estate secured loans¹
	Insured mortgage loans						$	610.3	$	404.9	50.7%
	Conventional mortgage loans							560.3		428.3	30.8%
	HELOCs							176.5		230.5	(23.4)%
								1,347.1		1,063.7	26.6%
Investment loans¹
	Secured investment loans							1,381.6		1,540.6	(10.3)%
	RSP loans							361.1		356.3	1.3%
	Other loans							0.2		1.1	(81.8)%
								1,742.9		1,898.0	(8.2)%
Total loan assets								3,090.0		2,961.7	4.3%

Other assets								839.8		762.8	10.1%
Total assets							$	3,929.8	$	3,724.5	5.5%

		Three months ended May 31,					Six months ended May 31,
			2012		2011	% change		2012		2011	% change

Net interest income		$	18.7	$	19.0	(1.6)%	$	37.6	$	39.8	(5.5)%
RSP loan securitization income (loss), net of impairment			-		0.7	n/m		1.3		1.3	-
Other revenue			1.1		1.4	(21.4)%		2.9		2.6	11.5%
Non-interest expenses²			(9.5)		(10.0)	(5.0)%		(19.4)		(21.2)	(8.5)%
Provision for loan losses			(1.0)		(2.9)	(65.5)%		(2.8)		(6.2)	(54.8)%
Income before taxes and non-segmented items		$	9.3	$	8.2	13.4%	$	19.6	$	16.3	20.2%

Efficiency ratio³			48.0%		47.4%			46.4%		48.5%
Assets-to-capital multiple³			9.3		8.8			9.3		8.8

¹		Includes loan provision and deferred sales commission
²		Includes SG&A and amortization expenses
³		For the definition of efficiency ratio and assets-to-capital multiple, see the 'Key Performance Indicators and Non-IFRS Measures' section

Loan Assets
Real estate secured loan assets increased by 26.6% year-over-year primarily due to expansion of the business in the loan origination channels. Secured investment loans decreased to $1.4 billion as at May 31, 2012, compared to the same period in 2011, while RSP loan balances and other loans increased $3.9 million or 1.1%.

Efficiency Ratio
The efficiency ratio is defined as non-interest expenses divided by the total of net interest income and non-interest income. It is a key industry performance indicator used to ensure expenses are contained as the Trust business grows. During the three months ended May 31, 2012, the efficiency ratio experienced an unfavourable change to 48.0% from 47.4% in the second quarter of 2011. The efficiency ratio for the six-month period ended May 31, 2012, was 46.4%, compared to 48.5% for the six-month period ended May 31, 2011. The decrease was due to lower interest income and other revenue offset by lower non-interest expenses.

Balance Sheet
Total assets increased 5.5% to $3.9 billion as at May 31, 2012, compared to the same period in the previous year, and increased 5.4% compared to November 30, 2011. As at May 31, 2012, our assets-to-capital multiple stood at 9.3 times, compared to 8.8 times at the same time last year and 8.7 times at November 30, 2011. AGF Trust's total capital ratio was 26.2% as at May 31, 2012, compared to 26.9% at November 30, 2011. Liquid assets remained high, with $808.2 million in cash and cash equivalents as well as investments available for sale as at May 31, 2012 (2011 - $685.5 million).

Loan Portfolio Credit
The credit risk factors considered when assessing the collectability of the various loan portfolios are primarily based on the individual's ability and willingness to make future loan payments, coupled with the underlying collateral security held for each of the loan categories. The key risk factors considered include:

Employment rates: higher unemployment rates will likely result in higher default rates as individuals' ability to pay deteriorates.
Residential property prices and sales volume: declining residential property prices and reduced volumes of residential property sales may result in lower resale prices and longer disposal times, thereby increasing losses incurred on the disposition of the property.
Equity market performance: declines in collateral values present increased risk on the secured investment loan portfolio. The Trust Company has recourse to the personal assets of clients with respect to investment loans.

The collective allowance for real estate secured loan losses decreased to $5.1 million as compared to $7.2 million a year ago. Approximately 52.1% of real estate secured loan assets, excluding HELOCs, are insured. The collective allowance for investment loan losses decreased to $13.3 million from $13.5 million in 2011. We have security for non-RSP investment loans, consisting of mutual funds and other investments. The value of this collateral fluctuates with the changes in the underlying investments. The amount of RSP loans written off, net of recoveries (excluding securitized RSP loans), was $1.7 million and $3.9 million for the three and six months ended May 31, 2012 (2011 - $1.9 million and $3.9 million). For the balance of our loan products, the amount written off net of recoveries for the three and six months ended May 31, 2012, was $2.2 million and $4.5 million (2011 - $2.6 million and $5.1 million).

Liquidity and Capital Resources

Cash flow generated from continuing operating activities, before net change in non-cash balances related to operations, was $44.4 million and $85.8 million for the three and six months ended May 31, 2012, compared to $58.3 million and $100.4 million in the prior year. The primary uses of cash for the three and six months ended May 31, 2012 were as follows:

We paid $11.2 million and $21.3 million in selling commissions for the three and six months ended May 31, 2012, which were capitalized and are being amortized for accounting purposes, compared to $15.9 million and $30.4 million in 2011.
We paid $25.3 million and $50.4 million in dividends for the three and six months ended May 31, 2012, compared to $24.3 million and $46.9 million in 2011.
Consolidated cash and cash equivalents of $31.5 million decreased by $30.6 million from the November 30, 2011 level of $62.1 million (2011 - decreased by $1.9 million).
During the six months ended May 31, 2012, we repurchased 262,240 shares for $4.1 million.
For the six months ended May 31, 2012, AGF Trust paid a $20 million dividend to AGF Management Limited.

On January 28, 2011, we arranged a four-year non-amortizing acquisition facility with two Canadian chartered banks. The facility allowed for a one-time drawdown of $185.0 million.

We also have a four-year prime rate-based revolving term loan facility to a maximum of $300.0 million, of which $294.9 million was available to be drawn as at May 31, 2012. The loan facility will be available to meet future operational and investment needs. We anticipate that cash flow from operations, together with the available loan facility, will be sufficient in the foreseeable future to implement our business plan, finance selling commissions, satisfy regulatory requirements, service debt repayment obligations, meet capital spending needs, pay quarterly dividends and fund any future share buybacks.

Upon the sale of AGF Trust, the revolving term loan facility is expected to reduce to a maximum of $200.0 million from the current level of $300.0 million.

Capital Management Activities from Continuing Operations

We actively manage our capital to maintain a strong and efficient capital base to maximize risk-adjusted returns to shareholders, to invest in future growth opportunities, including acquisitions, and to ensure that the regulatory capital requirements are met for each of our subsidiary companies.

AGF capital consists of shareholders' equity. On an annual basis, AGF prepares a five-year plan detailing projected operating budgets and capital requirements. Each of AGF's operating segments are required to prepare and submit a five-year operating plan and budget to AGF's Finance Committee for approval prior to seeking Board approval. AGF's Finance Committee consists of the Chairman and CEO, the Vice-Chairman, Executive Vice-President and CFO, and the Executive Vice-President and Chief Operating Officer. Once approved by the Finance Committee, the five-year plans are reviewed and approved by AGF's Board of Directors. These plans become the basis for the payment of dividends to shareholders, the repurchase of Class B Non-Voting shares and, combined with the reasonable use of leverage, the source of funds for acquisitions.

Investment Management Operations - Regulatory Capital
A significant objective of the Capital Management program is to ensure regulatory requirements are met for capital. Our Investment Management businesses, in general, are not subject to significant regulatory capital requirements in each of the jurisdictions in which they are registered and operate. The cumulative amount of minimum regulatory capital across all of our Investment Management Operations is approximately $6.0 million.

Normal Course Issuer Bid
In January 2012, the Company's Board of Directors authorized the renewal of AGF's normal course issuer bid for the purchase of up to 7,435,369 Class B Non-Voting shares, or 10% of the public float for such shares. The Company received approval from the Toronto Stock Exchange on January 25, 2012, for the renewal of its normal course issuer bid. This allows AGF to purchase up to 7,435,369 Class B Non-Voting shares through the facilities of the Toronto Stock Exchange (or as otherwise permitted by the Toronto Stock Exchange) between January 27, 2012 and January 26, 2013. The Class B Non-Voting shares may be repurchased from time to time at prevailing market prices or such other price as may be permitted by the Toronto Stock Exchange.

During the three months ended May 31, 2012, under the current normal course issuer bid, no Class B Non-Voting shares were repurchased.

During the three months ended February 29, 2012, under the previous normal course issuer bid, 262,240 Class B Non-Voting shares were repurchased for a total consideration of $4.1 million at an average price of $15.73.

Capital Management Activities from Discontinued Operations

AGF Trust - Capital Management Framework
AGF Trust's regulatory capital consists primarily of common shareholders' equity, preferred shares and subordinated debentures. Regulatory capital is a factor that allows the AGF Trust Board of Directors (Trust Board) to assess the stability and security in relation to the overall risks inherent in AGF Trust's activities.

AGF Trust actively manages regulatory capital levels in conjunction with management's internal assessment of capital. Consideration is given to many factors including regulatory guidance, strategic planning, shareholder interests, interests of depositors and internally generated target capital ratios. Minimum regulatory capital requirements are set by the Trust and Loan Companies Act and the Office of the Superintendent of Financial Institutions (OSFI). AGF Trust adopted the Standardized Approach for credit risk and the Basic Indicator Approach for operational risk.

A key component of AGF Trust's capital framework is its internal capital adequacy assessment process (ICAAP). This process attributes capital for identified risks in proportion to the assessed risk. Risks are assessed using both qualitative and quantitative factors. The process also incorporates a variety of stress-testing approaches to evaluate the income and capital impacts of potential stress events.

Dividends

For the three months ended May 31, 2012, we declared a 27 cent per share dividend on Class A Voting common and Class B Non-Voting shares. This dividend will be payable on July 20, 2012, to shareholders of record on July 9, 2012.

The holders of Class B Non-Voting and Class A Voting common shares are entitled to receive cash dividends. Dividends are paid in equal amounts per share on all the Class B Non-Voting shares and all the Class A Voting common shares at the time outstanding without preference or priority of one share over another. No dividends may be declared in the event that there is a default of a condition of our revolving loan or acquisition facilities or where such payment of dividends would create a default.

Our Board of Directors may determine that Class B Non-Voting shareholders shall have the right to elect to receive part or all of such dividend in the form of a stock dividend. They also determine whether a dividend in Class B Non-Voting shares is substantially equal to a cash dividend. This determination is based on the weighted average price at which the Class B Non-Voting shares traded on the Toronto Stock Exchange during the 10 trading days immediately preceding the record date applicable to such dividend.

The following table sets forth the dividends paid by AGF on Class B Non-Voting shares and Class A Voting common shares for the years indicated:


Years ended November 30		2012¹		2011		2010		2009		2008

Per share	$	0.81	$	1.07	$	1.04	$	1.00	$	0.95
Percentage increase		-		3%		4%		5%		22%

¹		Represents the total dividends paid in January 2012 and April 2012, and to be paid in July 2012

We review our dividend distribution policy on a quarterly basis, taking into account our financial position, profitability, cash flow and other factors considered relevant by our Board of Directors. The quarterly dividend paid on April 20, 2012, was $0.27 per share.

Outstanding Share Data
Set out below is our outstanding share data as at May 31, 2012 and 2011. For additional detail, see Note 7 to the Q2 2012 Consolidated Financial Statements.


	As at May 31,
	2012	2011

Shares
Class A Voting common shares	57,600	57,600
Class B Non-Voting shares	96,121,066	95,561,092

Stock Options
Outstanding options (including discontinued operations)	5,184,226	5,695,679
Exercisable options (including discontinued operations)	3,316,060	3,152,147

Key Performance Indicators and Non-IFRS Measures

We measure the success of our business strategies using a number of key performance indicators (KPIs), which are outlined below. With the exception of revenue, the following KPIs are non-IFRS measures, which are not defined under IFRS. They should not be considered as an alternative to net income attributable to equity owners of the Company or any other measure of performance under IFRS. Segment discussions include a review of KPIs that are relevant to each segment.

a) Consolidated Continuing Operations

Revenue
Revenue is a measurement defined by IFRS and is recorded net of fee rebates, sales taxes and distribution fees paid to limited partnerships. Revenue is indicative of our potential to deliver cash flow.

We derive our revenue principally from a combination of:

management and advisory fees based on AUM
deferred sales charges (DSC) earned from investors when mutual fund securities sold on a DSC basis are redeemed

EBITDA
We define EBITDA as earnings before interest, taxes, depreciation, amortization and non-controlling interest. EBITDA is a standard measure used in the mutual fund industry by management, investors and investment analysts to understand and compare results. We believe this is an important measure as it allows us to assess our investment management businesses without the impact of non-operational items.

Please see the Consolidated Operating Results section on page 6 of this MD&A for a schedule showing how EBITDA reconciles to our IFRS financial statements.

Cash Flow from Continuing Operations
We report cash flow from continuing operations before net changes in non-cash balances related to continuing operations and other items as outlined below. Cash flow from continuing operations helps to assess the ability of the business to generate cash, which is used to pay dividends, repurchase shares, pay sales commissions, pay down debt and fund other needs.


		Three months ended May 31,				Six months ended May 31,
($ millions)			2012		2011		2012		2011

Net cash provided by continuing operating activities		$	31.2	$	44.7	$	36.5	$	49.9
Adjusted for:
	Net changes in non-cash working capital balances related to continuing operations		0.6		8.4		22.5		29.5
	Interest expense		(2.5)		(3.6)		(5.8)		(5.6)
	Deferred selling commissions paid		11.2		15.9		21.3		30.4
	Current income tax expense, net of payment		3.9		(7.1)		11.3		(3.8)
Cash flow from continuing operations		$	44.4	$	58.3	$	85.8	$	100.4

Free Cash Flow from Continuing Operations
We define free cash flow from continuing operations as cash flow from operations before net changes in non-cash balances related to operations less selling commissions paid. This is a relevant measure in the investment management business since a substantial amount of cash is spent on upfront commission payments. Free cash flow from continuing operations represents cash available for distribution to our shareholders and for general corporate purposes.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

Cash flow from continuing operations (defined above)	$	44.4	$	58.3	$	85.8	$	100.4
Less:
Deferred selling commissions paid		(11.2)		(15.9)		(21.3)		(30.4)
Free cash flow from continuing operations	$	33.2	$	42.4	$	64.5	$	70.0

EBITDA Margin
EBITDA margin provides useful information to management and investors as an indicator of our overall operating performance. We believe EBITDA margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

EBITDA	$	50.3	$	66.2	$	102.7	$	120.1
Divided by revenue		133.5		158.1		265.4		296.1
EBITDA margin		37.7%		41.9%		38.7%		40.6%

Pre-tax Profit Margin
Pre-tax profit margin provides useful information to management and investors as an indicator of our overall operating performance. We believe pre-tax profit margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes to revenue.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

Net income from continuing operations	$	16.8	$	27.5	$	34.1	$	50.2
Add: income taxes		5.9		9.8		13.6		18.4
Income before taxes	$	22.7	$	37.3	$	47.7	$	68.6
Divided by revenue		133.5		158.1		265.4		296.1
Pre-tax profit margin		17.0%		23.6%		18.0%		23.2%

Return on Equity (ROE)
We monitor ROE to assess the profitability of the consolidated Company on an annual basis. We calculate ROE by dividing net income attributable to equity owners of the Company by average shareholders' equity.


	Three months ended May 31,
($ millions)		2012		2011

Net income from continuing operations (annualized)	$	67.2	$	110.0
Divided by average shareholders' equity		1,195.8		1,199.4
Return on equity		5.6%		9.2%

Long-term Debt to EBITDA Ratio
Long-term debt to EBITDA ratio provides useful information to management and investors as an indicator of our ability to service our long-term debt. We define long-term debt to EBITDA ratio as long-term debt at the end of the year divided by EBITDA for the year.


	Three months ended May 31,
($ millions)	2012			2011

Long-term debt¹	$	312.1	$	315.5
Divided by EBITDA (annualized)		201.2		264.8
Long-term debt to EBITDA		155.1%		119.1%

¹		Includes deferred cash consideration related to the Acuity acquisition

Assets Under Management (AUM)
The amount of AUM is critical to our business since these assets generate fees from our mutual fund, institutional and sub-advisory accounts and high-net-worth relationships. AUM will fluctuate in value as a result of investment performance, sales and redemptions. Mutual fund sales and AUM determines a significant portion of our expenses because we pay upfront commissions on gross sales and trailing commissions to financial advisors as well as investment advisory fees based on the value of AUM.

Investment Performance
Investment performance, which represents market appreciation (depreciation) of fund portfolios and is shown net of management fees received, is a key driver of the level of AUM and is central to the value proposition that we offer advisors and unitholders. Growth in AUM resulting from investment performance increases the wealth of our unitholders, and, in turn, we benefit from higher revenues. Alternatively, poor investment performance will reduce our AUM levels and result in lower management fee revenues. Strong relative investment performance may also contribute to growth in gross sales or reduced levels of redemptions. Conversely, poor relative investment performance may result in lower gross sales and higher levels of redemptions. Refer to the 'Risk Factors and Management of Risk' section of this report for further information.

Net Sales (Redemptions)
Gross sales and redemptions are monitored separately and the sum of these two amounts comprises net sales (redemptions). Net sales (redemptions), together with investment performance and fund expenses, determine the level of average daily retail fund AUM, which is the basis on which management fees are charged. The average daily retail fund AUM is equal to the aggregate average daily net asset value of the AGF retail funds. We monitor AUM in our institutional, sub-advisory and high-net-worth businesses separately. We do not compute an average daily retail fund AUM figure for them.

EBITDA Margin - Investment Management Operations
EBITDA margin provides useful information to management and investors as an indicator of our operating performance in our Investment Management Operations, excluding share of profit of associated company. We believe EBITDA margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

EBITDA	$	48.2	$	65.2	$	99.2	$	118.3
Divided by revenue		131.4		157.1		261.9		294.3
EBITDA margin		36.7%		41.5%		37.9%		40.2%

Pre-tax Profit Margin - Investment Management Operations
Pre-tax profit margin provides useful information to management and investors as an indicator of our operating performance in our Investment Management Operations, excluding share of profit of associated company. We believe pre-tax profit margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes and non-segmented items to revenue.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

Income before taxes and non-segmented items	$	23.1	$	40.0	$	50.0	$	72.3
Divided by revenue		131.4		157.1		261.9		294.3
Pre-tax profit margin		17.6%		25.5%		19.1%		24.6%

b) Discontinued Operations - Trust Company

Loan Assets
In the Trust Company Operations segment, new originations, net of repayments, drive the outstanding balance of loans on which we charge interest. Loan asset growth contributes to increases in our revenue. Conversely, a decline in loan assets will negatively impact our revenue.

Net Interest Income
Net interest income is a common lending industry performance indicator. We monitor this figure to evaluate the growth of the financial contribution of AGF Trust. The figure is calculated by subtracting interest expense from interest income earned from AGF Trust loan assets.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

Interest income	$	42.1	$	42.9	$	83.5	$	87.2
Less: interest expense		23.4		23.9		45.9		47.4
Net interest income	$	18.7	$	19.0	$	37.6	$	39.8

Net Interest Margin
Net interest margin is equal to annualized net interest income for the year divided by the average total loan balance.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

Annualized net interest income	$	74.8	$	76.0	$	75.2	$	79.6
Divided by average total loan balance		3,077.5		2,997.7		3,048.5		3,031.2
Net interest margin		2.4%		2.5%		2.5%		2.6%

Efficiency Ratio
The efficiency ratio is a financial services industry KPI that measures the efficiency of the organization. We use this ratio to monitor expenses, excluding loan loss provisions. The ratio is calculated from AGF Trust results by dividing non-interest expenses by the total of net interest income and non-interest income.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

Selling, general and administrative expenses	$	9.3	$	9.7	$	19.0	$	20.5
Add: amortization expense		0.2		0.3		0.4		0.7
Non-interest expense		9.5		10.0		19.4		21.2

Other revenue	$	1.1	$	1.4	$	2.9	$	2.6
RSP loan securitization income, net of impairment		-		0.7		1.3		1.3
Non-interest income		1.1		2.1		4.2		3.9

Net interest income	$	18.7	$	19.0	$	37.6	$	39.8
Add: non-interest income		1.1		2.1		4.2		3.9
Total of net interest income and non-interest income		19.8		21.1		41.8		43.7
Efficiency ratio		48.0%		47.4%		46.4%		48.5%

EBITDA Margin - Trust
EBITDA margin provides useful information to management and investors as an indicator of AGF Trust's operating performance. We believe EBITDA margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

EBITDA	$	9.5	$	8.5	$	20.0	$	17.0
Divided by revenue		19.8		21.1		41.8		43.7
EBITDA margin		48.0%		40.3%		47.8%		38.9%

Pre-tax Profit Margin - Trust
Pre-tax profit margin provides useful information to management and investors as an indicator of AGF Trust's operating performance. We believe pre-tax profit margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes and non-segmented items to total revenue.


	Three months ended May 31,				Six months ended May 31,
($ millions)		2012		2011		2012		2011

Income before taxes and non-segmented items	$	9.3	$	8.2	$	19.6	$	16.3
Divided by revenue		19.8		21.1		41.8		43.7
Pre-tax profit margin		47.0%		38.9%		46.9%		37.3%

Assets-to-Capital Multiple
Federally regulated deposit-taking institutions (DTIs) are expected to meet an assets-to-capital multiple test. The assets-to-capital multiple is determined by dividing the DTI's total assets by its total regulatory capital, and expresses the extent by which capital is leveraged into the assets of the DTI.


		May 31,		November 30,
($ millions)		2012		2011

Total assets per OSFI¹ guidelines	$	3,943.3	$	3,731.3
Divided by adjusted Tier 1 and Tier 2 capital		425.3		429.7
Assets-to-capital multiple		9.3		8.7

¹		OSFI is the Office of the Superintendent of Financial Institutions

Impaired Loans as a Percentage of Loans Outstanding
Impaired loans as a percentage of loans outstanding is calculated by dividing total impaired loans by total loans outstanding.


		May 31,		November 30,
($ millions)		2012		2011

Impaired loans	$	16.2	$	25.9
Divided by total loans outstanding¹		3,090.1		2,951.6
Impaired loans as a percentage of loans outstanding		0.5%		0.9%

¹		Includes loan provision and deferred sales commission of $17.4 million as at May 31, 2012, and $22.7 million as at November 30, 2011

Significant Accounting Policies

A summary of AGF's significant accounting policies can be found in Note 3 of our Q1 2012 Consolidated Interim Financial Statements.

Adoption of International Financial Reporting Standards
AGF adopted IFRS effective December 1, 2011, with a transition date of December 1, 2010. The adoption of IFRS has not had a material impact on AGF's operations, strategic decisions and cash flow. AGF's IFRS accounting policies are provided in Note 3 of the Q1 2012 Consolidated Financial Statements. In addition, Note 21 of the Q1 2012 Consolidated Financial Statements presents reconciliations between AGF's GAAP results and IFRS results and explanations of the adjustments on transition to IFRS. The reconciliation includes the Consolidated Statement of Financial Position for the transition date of December 1, 2010 and the year ended November 30, 2011. Note 16 of our Q2 2012 Consolidated Financial Statements includes reconciliations of the Consolidated Statements of Income, Comprehensive Income and Cash Flows for the quarter ended May 31, 2011.

Managing Risk

AGF is subject to a number of company and non-company specific risk factors that may impact our operating and financial performance. These risks and the management of those risks are detailed in our 2011 Annual MD&A in the section entitled 'Risk Factors and Management of Risk.' The Company has not identified any material changes to the risk factors affecting its business or in the management of those risks.

Internal Controls Over Financial Reporting

The Chief Executive Officer and the Chief Financial Officer have designed or caused the design of the Internal Controls Over Financial Reporting (ICFR) and Disclosure Controls and Procedures. There have been no changes to AGF's internal controls for the quarter ended May 31, 2012 that have materially affected or are reasonably likely to materially affect the internal controls over financial reporting. On February 1, 2011, the Company completed its acquisition of Acuity. During the second quarter of 2011, certain internal controls over financial reporting were impacted and interim controls were relied upon. The financial reporting processes were fully integrated with AGF in the second quarter of 2011.

Selected Quarterly Information


			IFRS		IFRS		IFRS		IFRS
($ millions, except per share amounts) For the three-month period ended			May 31, 2012		Feb. 29, 2012		Nov. 30, 2011		Aug. 31, 2011

Revenue (continuing operations)		$	133.5	$	131.9	$	138.1	$	151.4
Cash flow from continuing operations¹			44.4		41.4		39.2		45.2
EBITDA (continuing operations)²			50.3		52.4		56.2		61.6
Pre-tax income (continuing operations)			22.7		25.0		28.1		18.0
Net income attributable to equity owners of the Company			23.8		26.1		25.1		15.4

EBITDA per share (continuing operations)
	Basic	$	0.52	$	0.55	$	0.59	$	0.64
	Diluted	$	0.52	$	0.54	$	0.59	$	0.64

Earnings per share attributable to equity owners of the Company
	Basic (continuing operations)	$	0.17	$	0.18	$	0.19	$	0.09
	Diluted (continuing operations)	$	0.17	$	0.18	$	0.19	$	0.09
	Basic	$	0.25	$	0.27	$	0.26	$	0.16
	Diluted	$	0.25	$	0.27	$	0.26	$	0.16

Weighted average basic shares			96,143,964		95,662,657		95,230,703		95,518,051
Weighted average fully diluted shares			96,735,309		96,372,419		95,932,850		96,446,821
			IFRS		IFRS		GAAP		GAAP
($ millions, except per share amounts) For the three-month period ended			May 31, 2011		Feb. 28, 2011		Nov. 30, 2010		Aug. 31, 2010

Revenue (continuing operations)		$	158.1	$	138.0	$	131.5	$	122.9
Cash flow from continuing operations¹			58.3		42.1		38.3		39.1
EBITDA (continuing operations)²			66.2		53.9		55.3		48.9
Pre-tax income (continuing operations)			37.3		31.3		33.2		27.4
Net income attributable to equity owners of the Company			33.9		29.2		31.0		27.7

EBITDA per share (continuing operations)
	Basic	$	0.69	$	0.59	$	0.62	$	0.55
	Diluted	$	0.68	$	0.59	$	0.62	$	0.54

Earnings per share attributable to equity owners of the Company
	Basic (continuing operations)	$	0.28	$	0.25	$	0.27	$	0.22
	Diluted (continuing operations)	$	0.28	$	0.25	$	0.27	$	0.22
	Basic	$	0.35	$	0.33	$	0.35	$	0.31
	Diluted	$	0.35	$	0.32	$	0.35	$	0.31

Weighted average basic shares			95,568,899		90,799,935		88,616,451		89,286,335
Weighted average fully diluted shares			96,794,115		92,010,135		89,665,401		90,232,708

¹	Cash flow from continuing operations as previously defined, see 'Key Performance Indicators and Non-IFRS Measures - Cash flow from continuing operations' section
²	As previously defined, see 'Key Performance Indicators and Non-IFRS Measures - EBITDA' section

Additional Information

Additional information relating to the Company can be found in our Consolidated Financial Statements and accompanying notes for the three and six months ended May 31, 2012, our 2011 Annual MD&A and Consolidated Financial Statements, our 2011 Annual Information Form (AIF) and other documents filed with applicable securities regulators in Canada. They may be accessed at www.sedar.com.

AGF Management Limited
CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and six months ended May 31, 2012


AGF Management Limited Consolidated Interim Statement of Financial Position


(unaudited)					May 31,		November 30,
(in thousands of Canadian dollars)			Note		2012		2011

Assets
	Current Assets
		Cash and cash equivalents		$	31,548	$	246,634
		Investments	3		31,715		517,486
		Accounts receivable, prepaid expenses and other assets			57,141		71,805
		Derivative financial instruments	4		-		10,038
		Current portion of retained interest from securitization	4		-		38,939
		Real estate secured and investment loans due within one year	4		-		465,489
		Assets classified as discontinued operations	4		3,932,997		-
					4,053,401		1,350,391

	Real estate secured and investment loans		4		-		2,486,128
	Investment in associated company				76,443		76,616
	Management contracts				715,769		715,769
	Customer contracts, net of accumulated amortization				26,903		35,971
	Goodwill				254,588		254,588
	Other intangibles, net of accumulated amortization				17,229		21,959
	Deferred selling commissions, net of accumulated amortization				155,641		167,950
	Property, equipment and computer software, net of accumulated amortization				8,536		11,027
	Deferred income tax assets				13,160		13,339
	Derivative financial instruments		4		-		14,271
	Other assets				5,818		7,310
Total assets				$	5,327,488	$	5,155,319

Liabilities
	Current Liabilities
		Accounts payable and accrued liabilities		$	71,025	$	101,934
		Income tax liability	12		21,905		23,104
		Provision for Elements Advantage			2,711		4,137
		Secured financing	4		-		41,998
		Acquisition consideration payable	5		3,688		31,663
		Derivative financial instrument			1,621		1,747
		Deposits due within one year	4		-		1,769,709
		Liabilities associated with assets classified as discontinued operations	4		3,513,247		-
					3,614,197		1,974,292

	Deposits		4		-		1,260,090
	Long-term debt		6		308,417		308,269
	Secured financing		4		-		196,626
	Acquisition consideration payable		5		5,148		10,717
	Deferred income tax liabilities				193,674		198,822
	Derivative financial instrument				3,369		3,302
	Provision for Elements Advantage				1,804		2,506
	Other long-term liabilities				5,662		10,924
Total liabilities					4,132,271		3,965,548

Equity
	Equity attributable to owners of the Company
		Capital stock	7		574,516		560,838
		Contributed surplus			25,919		24,797
		Retained earnings			588,061		594,804
		Accumulated other comprehensive income	8		6,252		8,860
					1,194,748		1,189,299

	Non-controlling interest				469		472

Total equity					1,195,217		1,189,771
Total liabilities and equity				$	5,327,488	$	5,155,319

(The accompanying notes are an integral part of these consolidated interim financial statements.)


AGF Management Limited Consolidated Interim Statement of Income


(unaudited)		Three months ended
			May 31,		May 31,
(in thousands of Canadian dollars, except per share data)	Note		2012		2011

Revenue
Management and advisory fees		$	125,716	$	150,716
Deferred sales charges			5,593		6,454
Share of profit of associated company			2,071		962
Fair value adjustments and other income	9		71		(63)
Total revenue			133,451		158,069

Expenses
Selling, general and administrative	10		46,929		43,976
Business acquisition and integration	5, 10		-		3,584
Trailing commissions			34,229		41,789
Investment advisory fees			2,012		2,587
Amortization of deferred selling commissions			16,792		18,433
Amortization of customer contracts			5,281		3,974
Amortization of other intangibles			2,141		2,096
Amortization of property, equipment and computer software			905		740
Interest expense			2,483		3,640
			110,772		120,819

Income before income taxes			22,679		37,250

Income tax expense (benefit)
Current	12		6,321		11,977
Deferred	12		(421)		(2,205)
			5,900		9,772

Income from continuing operations, net of tax			16,779		27,478

Income from discontinued operations, net of tax	4		7,050		6,668

Net income for the period		$	23,829	$	34,146

Net income attributable to:
Equity owners of the Company		$	23,772	$	33,891
Non-controlling interest			57		255
		$	23,829	$	34,146

Earnings per share for the period attributable to the equity owners of the Company
Basic earnings per share
Continuing operations	13	$	0.17	$	0.28
Discontinued operations	13		0.08		0.07
	13	$	0.25	$	0.35

Diluted earnings per share
Continuing operations	13	$	0.17	$	0.28
Discontinued operations	13		0.08		0.07
	13	$	0.25	$	0.35

(The accompanying notes are an integral part of these consolidated interim financial statements.)


AGF Management Limited Consolidated Interim Statement of Income


(unaudited)		Six months ended
			May 31,		May 31,
(in thousands of Canadian dollars, except per share data)	Note		2012		2011

Revenue
Management and advisory fees		$	253,066	$	283,257
Deferred sales charges			11,271		12,384
Share of profit of associated company			3,474		1,807
Fair value adjustments and other income	9		(2,409)		(1,338)
Total revenue			265,402		296,110

Expenses
Selling, general and administrative	10		90,096		83,720
Business acquisition and integration	5, 10		-		8,152
Trailing commissions			68,484		79,204
Investment advisory fees			4,072		4,877
Amortization of deferred selling commissions			33,658		36,086
Amortization of customer contracts			9,067		5,773
Amortization of other intangibles			4,730		2,794
Amortization of property, equipment and computer software			1,758		1,381
Interest expense			5,814		5,569
			217,679		227,556

Income before income taxes			47,723		68,554

Income tax expense (benefit)
Current	12		16,190		22,369
Deferred	12		(2,558)		(3,992)
			13,632		18,377

Net income from continuing operations			34,091		50,177

Net income from discontinued operations, net of taxes	4		15,919		13,479

Net income for the period		$	50,010	$	63,656

Net income attributable to:
Equity owners of the Company		$	49,906	$	63,123
Non-controlling interest			104		533
		$	50,010	$	63,656

Earnings per share for the period attributable to the equity owners of the Company
Basic earnings per share
Continuing operations	13	$	0.35	$	0.53
Discontinued operations	13		0.17		0.15
	13	$	0.52	$	0.68

Diluted earnings per share
Continuing operations	13	$	0.35	$	0.53
Discontinued operations	13		0.17		0.14
	13	$	0.52	$	0.67

(The accompanying notes are an integral part of these consolidated interim financial statements.)


AGF Management Limited Consolidated Interim Statement of Comprehensive Income


(unaudited)		Three months ended May 31,				Six months ended May 31,
(in thousands of Canadian dollars)			2012		2011		2012		2011

Net income for the period		$	23,829	$	34,146	$	50,010	$	63,656
Other comprehensive income (losses), net of tax
	Cumulative translation adjustment
	Foreign currency translation adjustments related to net
	investments in foreign operations		1,304		404		114		(298)
			1,304		404		114		(298)
	Net unrealized gains (losses) on
	available for sale securities
	Unrealized gains (losses)		(655)		(208)		19		(145)
	Reclassification of realized gain to earnings		-		(1)		-		-
			(655)		(209)		19		(145)
	Net unrealized gains (losses) on cash flow hedge
	Unrealized losses		(701)		-		(483)		-
	Reclassification of realized loss to earnings		256		-		523		-
			(445)		-		40		-
Total other comprehensive income (loss)
from continuing operations, net of tax		$	204	$	195	$	173	$	(443)

Total other comprehensive income (loss)
from discontinued operations, net of tax		$	(498)	$	2,450	$	(2,781)	$	(6,905)

Comprehensive income		$	23,535	$	36,791	$	47,402	$	56,308

Comprehensive income attributable to:
	Equity holders of the Company	$	23,478	$	36,536	$	47,298	$	55,775
	Non-controlling interest		57		255		104		533
		$	23,535	$	36,791	$	47,402	$	56,308

(The accompanying notes are an integral part of these consolidated interim financial statements.)


AGF Management Limited Consolidated Interim Statement of Changes in Equity


(unaudited)
(in thousands of Canadian dollars)		Capital stock	Contributed surplus		Retained earnings		Accumulated other comprehensive income (loss)		Attributable to equity owners of the Company		Non- controlling interest			Total equity

Balance, December 1, 2010	$	439,216	$	22,580	$	599,667	$	16,010	$	1,077,473	$	497	$	1,077,970
Net income for the period		-		-		63,123		-		63,123		533		63,656
Other comprehensive loss
(net of tax)		-		-		-		(7,348)		(7,348)		-		(7,348)
Comprehensive income (loss)
for the period		-		-		63,123		(7,348)		55,775		533		56,308
Issued through dividend
reinvestment plan		1,011		-		-		-		1,011		-		1,011
Stock options		5,103		1,129		-		-		6,232		-		6,232
AGF Class B Non-Voting
shares repurchased for cancellation		-		-		-		-		-		-		-
Issued on acquisition of
Acuity		114,679		-		-		-		114,679		-		114,679
Dividends on AGF Class A
Voting common shares and
AGF Class B Non-Voting shares		-		-		(47,918)		-		(47,918)		-		(47,918)
Increase in ownership interest
in Highstreet Partners Limited		-		-		(1,596)		-		(1,596)		-		(1,596)
Dividends to non-controlling
interest		-		-		-		-		-		(432)		(432)
Balance, May 31, 2011	$	560,009	$	23,709	$	613,276	$	8,662	$	1,205,656	$	598	$	1,206,254

Balance, December 1, 2011	$	560,838	$	24,797	$	594,804	$	8,860	$	1,189,299	$	472	$	1,189,771
Net income for the period		-		-		49,906		-		49,906		104		50,010
Other comprehensive loss
(net of tax)		-		-		-		(2,608)		(2,608)		-		(2,608)
Comprehensive income (loss)
for the period		-		-		49,906		(2,608)		47,298		104		47,402
Issued through dividend
reinvestment plan		1,361		-		-		-		1,361		-		1,361
Stock options		538		1,122		-		-		1,660		-		1,660
AGF Class B Non-Voting
shares repurchased for
cancellation		(1,543)		-		(2,581)		-		(4,124)		-		(4,124)
Issued on acquisition of
Acuity		13,322		-		-		-		13,322		-		13,322
Dividends on AGF Class A
Voting common shares and
AGF Class B Non-Voting
shares, including tax		-		-		(53,484)		-		(53,484)		-		(53,484)
Increase in ownership interest
in Highstreet Partners
Limited		-		-		(584)		-		(584)		-		(584)
Dividends to non-controlling
interest		-		-		-		-		-		(107)		(107)
Balance, May 31, 2012	$	574,516	$	25,919	$	588,061	$	6,252	$	1,194,748	$	469	$	1,195,217

(The accompanying notes are an integral part of these consolidated interim financial statements.)


AGF Management Limited Consolidated Interim Statement of Cash Flow


(unaudited)			Six months ended
				May 31,		May 31,
(in thousands of Canadian dollars)		Note		2012		2011

Operating Activities
	Net income for the period		$	50,010	$	63,656

	Adjustments for
	Net income from discontinued operations			(15,919)		(13,479)
	Amortization			49,213		46,034
	Interest expense			5,814		5,569
	Income tax expense, net of payments			(13,839)		(149)
	Stock-based compensation			503		5,345
	Share of profit of associated company			(3,474)		(1,807)
	Dividends from associated company			4,151		1,247
	Deferred selling commissions paid			(21,349)		(30,421)
	Other			3,828		3,429
				58,938		79,424

	Net change in non-cash working capital balances related to operations
	Accounts receivable			14,592		(1,459)
	Other assets			(1,803)		(2,038)
	Accounts payable and accrued liabilities			(25,592)		(25,765)
	Other liabilities			(9,667)		(221)
				(22,470)		(29,483)

	Net cash provided by continuing operating activities			36,468		49,941
	Net cash used in discontinued operating activities	4		(96,614)		(143,733)
	Net cash used in operating activities			(60,146)		(93,792)

Financing Activities
	Repurchase of Class B Non-Voting shares for cancellation			(4,124)		-
	Issue of Class B Non-Voting shares			503		4,251
	Dividends paid			(50,367)		(46,907)
	Decrease in long-term debt related to Facility 1	6		-		(19,000)
	Increase in long-term debt related to Facility 2 and Acquisition facility	6		-		185,000
	Investment Management interest paid			(5,677)		(5,231)
	Net cash provided by (used in) continuing financing activities			(59,665)		118,113
	Net cash provided by discontinued financing activities	4		330,475		-
	Net cash provided by financing activities			270,810		118,113

Investing Activities
	Increase in ownership interest in Highstreet Partners Limited	5		(584)		(1,596)
	Acquisition of Acuity Funds Ltd. and Acuity Investment Management,
	net of cash acquired	5		(20,976)		(173,415)
	Purchase of property, equipment and computer software			(2,330)		(845)
	Purchase of Investment Management investments	3		(14,784)		(1,945)
	Proceeds from sale of Investment Management investments	3		3,588		9,327
	Net cash used in continuing investing activities			(35,086)		(168,474)
	Net cash used in discontinued investing activities	4		(164)		(74)
	Net cash used in investing activities			(35,250)		(168,548)
Increase (decrease) in cash and cash equivalents during the period				175,414		(144,227)
Balance of cash and cash equivalents, beginning of period				246,634		456,921
Balance of cash and cash equivalents, end of period			$	422,048	$	312,694
Represented by:
	Cash and cash equivalents per the balance sheet		$	31,548	$	33,368
	Cash and cash equivalents included in assets classified as discontinued operations			390,500		279,326
			$	422,048	$	312,694

Supplemental disclosure of cash flow information:
	Income taxes paid - Investment Management		$	27,471	$	18,526

(The accompanying notes are an integral part of these consolidated interim financial statements.)

Notes to Consolidated Interim Financial Statements

For the three and six months ended May 31, 2012 (unaudited)

Note 1: General Information

AGF Management Limited (AGF or the Company) is a limited liability company incorporated and domiciled in Canada under the Business Corporations Act (Ontario). The address of its registered office and principal place of business is Toronto-Dominion Bank Tower, 66 Wellington Street West, Toronto, Ontario.

The Company is an integrated, global wealth management corporation whose principal subsidiaries provide investment management for mutual funds, institutions and corporations, as well as high-net-worth clients; and trust products and services as detailed in Note 4. The Company conducts the management and distribution of mutual funds in Canada under the brand names AGF, Acuity, Elements and Harmony (collectively, AGF Investments). The Company conducts its trust business under the name AGF Trust Company (AGF Trust). On June 6, 2012, the Company signed a definitive agreement under which B2B Trust, a subsidiary of Laurentian Bank, will acquire 100% of AGF Trust in a share purchase transaction. Refer to Note 4 for further details.

These consolidated interim financial statements were authorized for issue by the Board of Directors on June 26, 2012.

Note 2: Basis of Preparation and Adoption of IFRS

The Company prepares its consolidated financial statements in accordance with Canadian generally accepted accounting principles (GAAP) as set out in the Handbook of the Canadian Institute of Chartered Accountants (CICA Handbook). In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards (IFRS), and require publicly accountable enterprises to apply such standards effective for years beginning on or after January 1, 2011. Accordingly, the Company has commenced reporting on this basis in its 2012 consolidated interim financial statements. In these consolidated financial statements, the term 'Canadian GAAP' refers to Canadian GAAP before the adoption of IFRS.

These consolidated interim financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34 and IFRS 1. The accounting policies followed in these consolidated interim financial statements are the same as those applied in the Company's consolidated interim financial statements for the period ended February 29, 2012. The Company has consistently applied the same accounting policies throughout all periods presented, as if these policies had always been in effect. Note 16 discloses the impact of the transition to IFRS on the Company's reported financial position as at May 31, 2011, financial performance for the three and six months ended May 31, 2011 and cash flows for the six months ended May 31, 2011.

The accounting policies applied in these consolidated interim financial statements are based on IFRS effective for the year ending November 30, 2012, as issued and outstanding as of the date the Board of Directors authorized the statements for issue. Any subsequent changes to IFRS that are given effect in the Company's annual consolidated financial statements for the year ending November 30, 2012, could result in restatement of these consolidated interim financial statements, including the transition adjustments recognized on changeover to IFRS.

These consolidated interim financial statements should be read in conjunction with the Company's Canadian GAAP annual consolidated financial statements for the year ended November 30, 2011, and the Company's consolidated interim financial statements for the quarter ended February 29, 2012 prepared in accordance with IFRS applicable to interim financial statements.

Note 3: Investments


			May 31,		November 30,
(in thousands of Canadian dollars)			2012		2011
Investment Management
	Canadian government debt - Federal	$	1,246	$	299
	AGF mutual funds and other		25,878		15,673
	Equity securities		4,591		5,040
			31,715		21,012
Investments related to discontinued operations (Note 4)			-		496,474
		$	31,715	$	517,486

Investment Management's investment in Canadian government debt is composed of fixed-rate treasury bonds with maturity dates within one year and credit ratings of AAA. During the three and six months ended May 31, 2012 and 2011, no impairment charges were required.

Note 4: Discontinued Operations

On June 6, 2012, the Company signed a definitive agreement under which B2B Trust, a subsidiary of Laurentian Bank, will acquire 100% of AGF Trust in a share purchase transaction. B2B Trust will acquire AGF Trust for a consideration corresponding to the net book value of AGF Trust at closing and will also cause AGF Trust to repay subordinated indebtedness owed to AGF and redeem preferred shares held by AGF for a consideration of $173.5 million. Based on the March 31, 2012, net book value of AGF Trust of $242.0 million, total consideration of approximately $415.5 million will be received in cash. At May 31, 2012, the net book value of AGF Trust was $246.3 million. The agreement also includes a contingent consideration of a maximum of $20.0 million over five years if credit quality reaches certain criteria. The transaction is expected to close on August 1, 2012, subject to applicable regulatory notifications and approvals.

As at May 31, 2012, the assets and liabilities related to AGF Trust have been presented as held for sale on the consolidated statement of financial position and are composed of the following:


				May 31,
(in thousands of Canadian dollars)				2012

	Current Assets
		Cash and cash equivalents	$	390,500
		Investments		417,727
		Accounts receivable, prepaid expenses and other assets		5,382
		Income tax receivable		7,329
		Derivative financial instruments		4,979
		Real estate secured and investment loans due within one year		491,025
				1,316,942

	Real estate secured and investment loans			2,599,041
	Property, equipment and computer software, net of amortization			2,804
	Deferred income tax assets			642
	Derivative financial instruments			8,679
	Other assets			4,889
Assets classified as discontinued operations			$	3,932,997

	Current Liabilities
		Accounts payable and accrued liabilities	$	3,921
		Secured financing		106,208
		Deposits due within one year		1,724,469
				1,834,598

	Deposits			1,215,449
	Secured financing			462,889
	Deferred income tax liabilities			235
	Other long-term liabilities			76
Liabilities associated with assets classified as discontinued operations			$	3,513,247

For the three and six months ended May 31, 2012 and 2011, the operating performance of AGF Trust has been included in the Company's consolidated statement of income as discontinued operations and is composed of the following:


		Three months ended
			May 31,		May 31,
(in thousands of Canadian dollars)			2012		2011

Revenue
	RSP loan securitization income, net of impairment	$	-	$	676
	Other income		1,065		1,414
	AGF Trust net interest income		18,756		19,015
	Interest income on subordinated debt classified as discontinued operations		1,580		1,587
Total revenue			21,401		22,692

Expenses
	Selling, general and administrative		9,295		9,752
	Amortization of property, equipment and computer software		209		329
	Provision for AGF Trust loan losses		970		2,863
	Expenses related to the sale of AGF Trust		970		-
			11,444		12,944

Income before income taxes			9,957		9,748

Income tax expense (benefit)
	Current		5,499		2,758
	Deferred		(2,592)		322
			2,907		3,080

Net income from discontinued operations		$	7,050	$	6,668

Net income attributable to:
	Equity owners of the Company	$	7,050	$	6,668
	Non-controlling interest		-		-
		$	7,050	$	6,668


		Six months ended
			May 31,		May 31,
(in thousands of Canadian dollars)			2012		2011

Revenue
	RSP loan securitization income, net of impairment	$	1,263	$	1,295
	Other income		2,971		2,646
	AGF Trust net interest income		37,566		39,796
	Interest income on subordinated debt classified as discontinued operations		3,150		3,140
Total revenue			44,950		46,877

Expenses
	Selling, general and administrative		19,001		20,444
	Amortization of property, equipment and computer software		423		719
	Provision for AGF Trust loan losses		2,768		6,238
	Expenses related to the sale of AGF Trust		970		-
			23,162		27,401

Income before income taxes			21,788		19,476

Income tax expense (benefit)
	Current		8,226		6,437
	Deferred		(2,357)		(440)
			5,869		5,997

Net income from discontinued operations		$	15,919	$	13,479

Net income attributable to:
	Equity owners of the Company	$	15,919	$	13,479
	Non-controlling interest		-		-
		$	15,919	$	13,479

i) Investments

The following table presents a breakdown of AGF Trust's investments by maturity, excluding retained interest from securitization:


May 31, 2012		Credit		1 year				Greater than
(in thousands of Canadian dollars)		rating		or less		1 to 5 years		5 years		Total

AGF Trust
	Canadian government debt - Provincial	A to AAA	$	61,218	$	334,956	$	-	$	396,174
	Mortgage-backed securities	AAA		-		21,553		-		21,553
			$	61,218	$	356,509	$	-	$	417,727


November 30, 2011		Credit		1 year				Greater than
(in thousands of Canadian dollars)		rating		or less		1 to 5 years		5 years		Total

AGF Trust
	Canadian government debt - Federal	AAA	$	-	$	-	$	31,753	$	31,753
	Canadian government debt - Provincial	A to AAA		102,042		340,530		-		442,572
	Mortgage-backed securities	AAA		-		10,496		11,653		22,149
			$	102,042	$	351,026	$	43,406	$	496,474

AGF Trust's investments include federal and provincial guaranteed bonds, mortgage-backed securities (MBSs) and floating-rate notes (FRNs) with original terms to maturity greater than three months. As at May 31, 2012, $30.0 million of AGF Trust's investments were FRNs subject to repricing (November 30, 2011 - $56.8 million) and $387.7 million were fixed-rate securities (November 30, 2011 - $439.7 million). During the three and six months ended May 31, 2012 and 2011, no impairment charges were required.

ii) Securitization of AGF Trust Loans

AGF Trust's financing activities include the securitization of certain RSP loans, insured real estate secured loans and uninsured real estate secured loans under agreements that assign the underlying RSP loans and real estate secured loans to a securitization trust. In these securitizations, the Company retains certain risks of ownership and obligations to pay future cash flows to the transferee. There are no expected credit losses on securitized insured real estate secured loans as they are insured against default, and the Company maintains collective and individual loan allowances for its securitized RSP loans and uninsured real estate secured loans. In all securitizations, the transferee has no recourse to other assets of the Company in the event of failure of debtors to pay their securitized loans when due.

As at May 31, 2012, the carrying amount of retained interests related to securitized RSP loans was nil (November 30, 2011 - $38.9 million). The Company securitized $111.7 million of insured real estate secured loans in December 2011 and $130.5 million of non-insured real estate secured loans in February 2012. In addition, in April 2012, the Company securitized $163.8 million of insured and non-insured real estate secured loans and exercised its right to repurchase $55.4 million of insured and non-insured real estate secured loans. As at May 31, 2012, the total carrying amount of the securitized real estate secured assets was $575.5 million (November 30, 2011 - $236.0 million), and consists of $402.5 million of insured real estate secured loans (November 30, 2011 - $236.0 million) and $173.0 million of uninsured real estate secured loans (November 30, 2011 - nil).

(a) RSP Loan Securitization

In January 2012, the Company exercised its right under the securitization agreement to reacquire all securitized RSP loans. The Company made a cash payment of $2.7 million to the securitization trust, which consists of $17.3 million in payment obligations, partly offset by the receipt of cash collateral of $14.6 million. On reacquisition, RSP loans totaling $39.6 million were recorded on the consolidated statement of financial position, retained interests of $38.5 million related to the securitization were removed from the consolidated statement of financial position, and the Company recorded a gain on repurchase of $1.1 million.

(b) Assets Pledged as Collateral

Real estate secured loans used in securitization activities are pledged against secured financing. In addition, cash collateral equal in value to 0.25% of the notional amount of the securitized insured real estate secured loans, and 2.0% of the notional value of uninsured real estate secured loans was pledged as part of the secured financing transaction. The pledged cash collateral was $4.5 million at May 31, 2012 (November 30, 2011 - $0.6 million).

(c) Secured Financing

Secured financing represents the funding received through securitization of the Company's real estate secured loans. As at May 31, 2012, the Company's secured financing totaled $569.1 million (November 30, 2011 - $238.6 million) and consists of insured real estate secured loan financing of $402.9 million (November 30, 2011 - $238.6 million) and uninsured real estate secured loan financing of $166.2 million (November 30, 2011 - nil).

iii) AGF Trust Operations

AGF Trust's principal business activities are originating real estate secured loans and investment loans and deposit taking. Details relating to these activities are as follows:


	Term to contractual repricing
		Variable		1 year or		1 to 5		May 31,		November 30,
(in thousands of Canadian dollars)		rate		less		years		2012		2011

Mortgage loans	$	114,183	$	371,711	$	685,745	$	1,171,639	$	987,246
Home equity lines of credit (HELOCs)		177,393		-		-		177,393		196,065
Total real estate secured loans		291,576		371,711		685,745		1,349,032		1,183,311
Investment loans		1,758,195		221		16		1,758,432		1,793,022
		2,049,771		371,932		685,761		3,107,464		2,976,333
Less: allowance for loan losses								(24,776)		(30,422)
Add: net deferred sales commissions and commitment fees								7,378		5,706
								3,090,066		2,951,617
Less: current portion								(491,025)		(465,489)
							$	2,599,041	$	2,486,128

(a) Real Estate Secured and Investment Loans

The table above represents the period of contractual repricing of interest rates on outstanding amounts. Principal repayments due on real estate and investment loans due within one year as at May 31, 2012, were $491.0 million (November 30, 2011 - $465.5 million).

As at May 31, 2012, AGF Trust's mortgage portfolio consists of a combination of fixed rate and variable rate residential mortgages with a weighted average term to repricing of 1.8 years (November 30, 2011 - 1.5 years) and a weighted average yield of 4.6% (November 30, 2011 - 5.2%). Insured mortgage loans, excluding loan loss allowance, deferred commissions and pending representment, were $606.4 million as at May 31, 2012 (November 30, 2011 - $529.3 million). HELOCs, which totaled $177.4 million as at May 31, 2012 (November 30, 2011 - $196.1 million), had an average interest rate of 4.9% (November 30, 2011 - 4.9%). Investment loans, excluding RSP loans, totaled $1.4 billion as at May 31, 2012 (November 30, 2011 - $1.5 billion), and had an average interest rate (based on the prime interest rate) of 4.8% (November 30, 2011 - 4.8%). RSP loans totaled $367.1 million as at May 31, 2012 (November 30, 2011 - $324.6 million), and had an average interest rate of 6.0% (November 30, 2011 - 6.1%). The average interest rate on all investment loans as at May 31, 2012, was 5.0% (November 30, 2011 - 5.0%). Mortgage and HELOC loans are secured primarily by residential real estate. Secured investment loans of $1.4 billion (November 30, 2011 - $1.5 billion) are secured primarily by the investment made using the initial loan proceeds. The market value of this investment loan collateral is approximately $1.0 billion (November 30, 2011 - $1.2 billion).

(b) Loans by Province and by Type

The following tables are a breakdown of the total value and total number of loans by province and by type:


May 31, 2012 (in millions of Canadian dollars)		Insured mortgage loans		Conventional mortgage loans		Secured investment loans		RSP loans		HELOC receivables		Finance loans		Total

British Columbia	$	58.1	$	79.6	$	257.6	$	30.7	$	9.3	$	-	$	435.3
Alberta		118.6		113.9		149.4		38.8		142.2		-		562.9
Ontario		294.9		263.5		680.5		109.8		9.5		-		1,358.2
Quebec		104.5		75.5		107.1		155.0		0.2		-		442.3
Other		30.3		32.8		196.6		32.8		16.2		0.1		308.8
Total value of loans	$	606.4	$	565.3	$	1,391.2	$	367.1	$	177.4	$	0.1	$	3,107.5

May 31, 2012 (number of loans)		Insured mortgage loans		Conventional mortgage loans		Secured investment loans		RSP loans		HELOC receivables		Finance loans		Total

British Columbia		194		269		3,930		3,542		47		13		7,995
Alberta		488		538		2,610		3,502		594		43		7,775
Ontario		1,667		1,271		11,090		12,589		61		43		26,721
Quebec		626		517		1,979		17,473		3		41		20,639
Other		147		194		2,850		3,262		120		115		6,688
Total number of loans		3,122		2,789		22,459		40,368		825		255		69,818

November 30, 2011 (in millions of Canadian dollars)		Insured mortgage loans		Conventional mortgage loans		Secured investment loans		RSP loans		HELOC receivables		Finance loans		Total

British Columbia	$	34.1	$	49.5	$	272.7	$	27.7	$	10.6	$	-	$	394.6
Alberta		97.3		107.0		161.2		33.6		155.8		0.1		555.0
Ontario		270.8		210.5		716.9		97.9		10.7		0.1		1,306.9
Quebec		111.2		67.7		111.0		135.9		0.2		0.1		426.1
Other		15.9		23.3		206.0		29.5		18.8		0.2		293.7
Total value of loans	$	529.3	$	458.0	$	1,467.8	$	324.6	$	196.1	$	0.5	$	2,976.3

November 30, 2011 (number of loans)		Insured mortgage loans		Conventional mortgage loans		Secured investment loans		RSP loans		HELOC receivables		Finance loans		Total

British Columbia		129		175		4,133		3,238		54		21		7,750
Alberta		423		508		2,830		2,956		652		87		7,456
Ontario		1,632		1,099		11,696		11,144		71		65		25,707
Quebec		663		489		2,051		14,386		3		86		17,678
Other		86		136		2,987		2,736		136		188		6,269
Total number of loans		2,933		2,407		23,697		34,460		916		447		64,860

(c) Impaired Loans

As at May 31, 2012, impaired loans were $16.2 million (November 30, 2011 - $25.9 million) and $9.9 million (November 30, 2011 - $14.0 million), net of the specific allowance for loan losses.


			May 31,		November 30,
(in thousands of Canadian dollars)			2012		2011

Impaired Loans
	Insured mortgage loans	$	2,171	$	4,345
	Conventional mortgage loans		11,118		16,541
	Secured investment loans		677		1,404
	RSP loans		558		2,306
	HELOC receivables		1,685		1,257
		$	16,209	$	25,853

The following tables provide an aging of loans:


May 31, 2012
(in thousands of Canadian dollars)		Current		1 to 29 days		30 to 60 days		61 to 90 days		Over 90 days		Total

Insured mortgage loans	$	585,471	$	8,523	$	1,756	$	685	$	9,973	$	606,408
Conventional mortgage loans		543,873		6,568		2,688		984		11,118		565,231
Secured investment loans		1,378,184		10,559		1,802		564		31		1,391,140
RSP loans		364,106		1,796		709		196		247		367,054
HELOC receivables		171,356		2,537		991		289		2,220		177,393
Finance loans		238		-		-		-		-		238
	$	3,043,228	$	29,983	$	7,946	$	2,718	$	23,589	$	3,107,464

November 30, 2011
(in thousands of Canadian dollars)		Current		1 to 29 days		30 to 60 days		61 to 90 days		Over 90 days		Total

Insured mortgage loans	$	496,132	$	14,818	$	2,098	$	1,792	$	14,478	$	529,318
Conventional mortgage loans		429,270		10,006		1,590		898		16,164		457,928
Secured investment loans		1,451,403		13,390		1,826		704		536		1,467,859
RSP loans		319,590		2,323		622		314		1,775		324,624
HELOC receivables		191,518		1,737		610		325		1,875		196,065
Finance loans		539		-		-		-		-		539
	$	2,888,452	$	42,274	$	6,746	$	4,033	$	34,828	$	2,976,333

(d) Mortgages in Legal Action

As at May 31, 2012, there are $10.9 million (2011 - $20.1 million) of insured mortgages in legal action. In addition, the following table provides a summary of conventional mortgages in legal action, which includes demand for payment, power of sale and foreclosures. The table details opening mortgages in legal action for the period and related changes to the pool, being additions, discharged mortgages other than sold, proceeds on foreclosed mortgages discharged and related losses, to arrive at the ending balance of mortgages in legal action.


		Six months ended May 31,
(in thousands of Canadian dollars)			2012		2011

Balance outstanding, beginning of the period		$	15,455	$	28,297
	Additions		8,949		11,221
	Discharged mortgages other than sold		(8,013)		(5,554)
	Proceeds on foreclosed mortgages discharged		(3,557)		(7,341)
	Loss on foreclosed mortgages discharged		(1,590)		(2,045)
Balance outstanding, end of the period		$	11,244	$	24,578

(e) Allowance for Credit Losses

The continuity in the allowance for loan losses is as follows:


			Six months ended May 31, 2012
				Individual		Collective		Total
(in thousands of Canadian dollars)				allowances		allowances		allowances


	Balance, beginning of the period		$	9,972	$	20,450	$	30,422
	Amounts written off			(9,824)		-		(9,824)
	Recoveries			1,410		-		1,410
	Provision for (recovery of) loan losses			4,773		(2,005)		2,768
	Balance, end of the period		$	6,331	$	18,445	$	24,776

	Breakdown by category:
		Insured mortgage loans	$	-	$	300	$	300
		Conventional mortgage loans		3,581		4,432		8,013
		Secured investment loans		784		8,818		9,602
		RSP loans		1,464		4,487		5,951
		HELOC receivables		502		408		910
			$	6,331	$	18,445	$	24,776


			Six months ended May 31, 2011
				Individual		Collective		Total
(in thousands of Canadian dollars)				allowances		allowances		allowances

	Balance, beginning of the period		$	12,509	$	22,197	$	34,706
	Amounts written off			(10,444)		-		(10,444)
	Recoveries			1,482		-		1,482
	Provision for (recovery of) loan losses			7,711		(1,472)		6,239
	Balance, end of the period		$	11,258	$	20,725	$	31,983

	Breakdown by category:
		Insured mortgage loans	$	-	$	2,400	$	2,400
		Conventional mortgage loans		6,101		4,254		10,355
		Secured investment loans		1,329		5,544		6,873
		RSP loans		3,475		8,000		11,475
		HELOC receivables		353		527		880
			$	11,258	$	20,725	$	31,983

(f) AGF Trust Deposits


	Term to maturity
				1 year or		1 to 5		May 31,		November 30,
(in thousands of Canadian dollars)		Demand		less		years		2012		2011

Deposits	$	4,493	$	1,719,975	$	1,221,978	$	2,946,446	$	3,036,998
Less: deferred sales commissions								(6,528)		(7,199)
Less: current portion								(1,724,469)		(1,769,709)
Long-term deposits							$	1,215,449	$	1,260,090

As at May 31, 2012, deposits generally consists of GICs with a weighted average term to maturity of 1.1 years (November 30, 2011 - 1.2 years) and a weighted average interest rate of 2.6% (November 30, 2011 - 2.7%). Approximately 13.5% (November 30, 2011 - 10.3%) of deposits mature within 90 days.

(g) Interest Rate Swaps

To hedge its exposure to fluctuating interest rates, AGF Trust has entered into interest rate swap transactions with four Canadian chartered banks, as noted below. The swap transactions expire between March 2012 and March 2015. They involve the exchange of either the one-month bankers' acceptance (BA) rate or the three-month BA rate to receive fixed interest rates. The swap contracts designated as fair value hedging instruments for deposits are used by AGF Trust for balance sheet matching purposes and to manage interest expense volatility. As at May 31, 2012, the aggregate notional amount of the swap transactions was $1.8 billion (November 30, 2011 - $2.0 billion). The aggregate fair value of the swap transactions, which represents the amount that would be received by AGF Trust if the transactions were terminated at May 31, 2012, was $13.7 million (November 30, 2011 - $24.3 million). During the three and six months ended May 31, 2012, the ineffective portion of accumulated changes in fair value of hedging relationships recognized in the consolidated statement of income amounted to a loss of less than $0.1 million and $0.1 million (2011 - $0.1 million loss and $0.4 million loss), as it relates to fair value hedging relationships.


May 31, 2012		Notional		Fair	Maturity	Fixed interest
(in thousands of Canadian dollars)		amount of swap		value	date	rate received
	$	905,000	$	1,985	2012	0.92% - 5.01%
		570,000		5,076	2013	0.90% - 2.71%
		280,000		2,809	2014	1.09% - 2.82%
		85,000		3,788	2015	1.52% - 2.93%
	$	1,840,000	$	13,658

November 30, 2011		Notional		Fair	Maturity	Fixed interest
(in thousands of Canadian dollars)		amount of swap		value	date	rate received
	$	60,000	$	55	2011	1.30% - 4.17%
		1,280,000		10,847	2012	0.92% - 5.01%
		510,000		7,068	2013	0.90% - 2.71%
		80,000		2,850	2014	2.09% - 2.82%
		50,000		3,489	2015	2.48% - 2.93%
	$	1,980,000	$	24,309

iv) AGF Trust Net Interest Income


		Three months ended May 31,
(in thousands of Canadian dollars)				2012		2011

AGF Trust interest income
	Loan interest		$	38,160	$	39,592
	Investment interest			3,938		3,345
				42,098		42,937

AGF Trust interest expense
	Deposit interest			19,042		25,293
	Hedging interest income			(2,098)		(5,682)
	Other interest expense			6,398		4,311
				23,342		23,922

AGF Trust net interest income			$	18,756	$	19,015

		Six months ended May 31,
(in thousands of Canadian dollars)				2012		2011

AGF Trust interest income
	Loan interest		$	75,742	$	79,670
	Investment interest			7,710		7,552
				83,452		87,222

AGF Trust interest expense
	Deposit interest			38,852		51,233
	Hedging interest income			(4,806)		(12,448)
	Other interest expense			11,840		8,641
				45,886		47,426

AGF Trust net interest income			$	37,566	$	39,796

v) Stock-based Compensation and Other Stock-based Payments

(a) Stock Option Plans

Refer to Note 11 for further details on the Company's stock option plans. The change in stock options related to AGF Trust during the six months ended May 31, 2012 and 2011 is summarized as follows:


Six months ended		May 31, 2012				May 31, 2011
			Options		Weighted average exercise price		Options		Weighted average exercise price

Class B Non-Voting share options related to AGF Trust
	Balance, beginning of the period		456,750	$	17.93		507,300	$	16.28
	Options granted		31,505		15.87		48,400		19.03
	Options expired		(10,000)		17.12		-		-
	Options exercised		(2,850)		8.24		(98,000)		10.05
	Balance, end of the period		475,405	$	17.87		457,700	$	17.91

During the three months ended May 31, 2012, no stock options were granted to AGF Trust employees (2011 - nil) and compensation expense and contributed surplus of less than $0.1 million (2011 - less than $0.1 million) were recorded. During the six months ended May 31, 2012, 31,505 stock options were granted to AGF Trust employees (2011 - 48,400) and compensation expense and contributed surplus of less than $0.1 million (2011 - $0.1 million) were recorded. The fair value of options granted during the six months ended May 31, 2012, has been estimated at $3.10 per share (2011 - $4.43 per share) using the Black-Scholes option-pricing model. The following assumptions were used to determine the fair value of the options granted during the six months ended May 31, 2012:

					Risk-free interest rate						1.3%
					Expected dividend yield						6.8%
					Expected share price volatility						41.8%
					Option term						5.0 years

(b) Restricted Share Unit (RSU)

The change in share units related to AGF Trust during the six months ended May 31, 2012 and 2011 is as follows:


Six months ended		May 31, 2012	May 31, 2011
		Number of share units	Number of share units

Outstanding, beginning of the period
	Non-vested	18,369	51,378
Issued
	Initial grant	17,458	10,824
	In lieu of dividends	920	1,522
Forfeited and cancelled		(2,881)	(2,468)
Outstanding, end of the period		33,866	61,256

Compensation expense for the three months ended May 31, 2012, related to these share units was nil (2011 - $0.1 million), and for the six months ended May 31, 2012, was $0.1 million (2011 - $0.3 million).

vi) Capital Management

AGF Trust's objective when managing capital is to ensure that AGF Trust maintains the level of capital to adequately protect depositors and to meet the requirements of its principal regulator, the Office of the Superintendent of Financial Institutions Canada (OSFI).

AGF Trust's regulatory capital requirements are determined in accordance with guidelines issued by OSFI, which are based on a framework of risk-based capital standards developed by the Bank for International Settlements (BIS).

AGF Trust's regulatory capital consists of Tier 1 capital and Tier 2 capital, less certain deductions. Tier 1 capital consists of common shares, retained earnings, non-cumulative preference shares and contributed surplus. Gains on the sale of securitized assets and retained interests from securitized assets are deducted from capital. Tier 2 capital consists of subordinated debt and eligible collective allowances.

Regulatory capital ratios are reported monthly to management and quarterly to AGF Trust's Board of Directors. As at May 31, 2012, AGF Trust continues to be in compliance with its regulatory capital requirements. The regulatory capital ratios and assets-to-capital multiple for AGF Trust are as follows:


(in thousands of Canadian dollars)		May 31, 2012		November 30, 2011

Tier 1 capital	$	303,232	$	308,025
Total regulatory capital		425,282		429,716
Risk-weighted assets		1,624,491		1,599,973
Tier 1 capital ratio		18.7%		19.3%
Total capital ratio		26.2%		26.9%
Assets-to-capital multiple		9.3		8.7

Note 5: Acquisitions

(a) Acquisition of Acuity Funds Ltd. and Acuity Investment Management Inc.

On February 1, 2011, the Company completed its acquisition of 100% of the shares of Acuity Funds Ltd. and Acuity Investment Management Inc. (Acuity) for a purchase price of $335.5 million. Acuity manages retail and institutional assets. Goodwill of $118.3 million was recognized as the fair value of consideration paid in excess of the fair value of separately recognized tangible and intangible assets acquired, net of liabilities assumed.

The fair values of net assets acquired and consideration paid are summarized in the table below:



(in thousands of Canadian dollars)

Net assets acquired
	Cash	$	4,842
	Other assets		10,646
	Management contracts		211,500
	Customer contracts		39,278
	Non-competition agreement		21,900
	Finite-life management contracts		5,500
	Trademark		1,600
	Goodwill		118,325
	Liabilities		(14,028)
	Future income taxes		(64,014)
		$	335,549

Consideration paid
	Cash	$	178,257
	Cash payments due February 1, 2012		18,391
	Cash payments due February 1, 2013		3,644
	Cash payments due February 1, 2014		3,579
	Issuance of Class B Non-Voting shares		55,683
	Issuance of Class B Non-Voting shares held in escrow		58,996
	Issuance of Class B exchangeable preferred shares, redeemable February 1, 2012		9,756
	Issuance of Class C exchangeable preferred shares, redeemable February 1, 2012		2,517
	Issuance of Class D exchangeable preferred shares, redeemable February 1, 2013		2,400
	Issuance of Class E exchangeable preferred shares, redeemable February 1, 2014		2,326
		$	335,549

The non-competition agreement, finite-life management contracts, and trademarks are stated at cost (being the fair value at the date of acquisition), net of accumulated amortization and impairment, if any, on the consolidated statement of financial position under other intangibles. Amortization is computed on a straight-line basis over three to 10 years based on the estimated useful lives of these assets.

The deferred cash payments and Class B, C, D and E exchangeable preferred shares are subject to an adjustment based on Acuity's net sales of institutional AUM between the date of acquisition and the payment or redemption date of these preferred shares. As at May 31, 2012, the maximum adjustment to the acquisition consideration payable related to Acuity's net sales of institutional AUM is an increase of $6.7 million and a decrease of nil. The Class B, C, D and E exchangeable preferred shares are to be settled by the issuance of a variable number of AGF Class B Non-Voting shares, the number of which is determined by reference to a fixed exchange ratio. The deferred cash payments and Class B, C, D and E exchangeable preferred shares are accounted for as contingently returnable consideration carried at fair value and have been classified on the consolidated statement of financial position as acquisition consideration payable.

The Class B Non-Voting shares held in escrow, as part of the consideration paid outlined in the above table, are released to the Acuity vendors between August 1, 2011, and February 1, 2014. Dividends declared on the Class B Non-Voting shares are paid to the vendors during the escrow period. During the three months ended May 31, 2012, no Class B Non-Voting shares were released from escrow. During the six months ended May 31, 2012, 3,105,516 Class B Non-Voting shares were released from escrow. As at May 31, 2012, 370,236 Class B Non-Voting shares continue to be held in escrow. Prior to the acquisition, the Company also advanced $14.0 million to Acuity, which was converted into common shares of Acuity upon closing and has been reflected above as cash consideration paid.

On February 1, 2012, $34.3 million was paid to the Acuity vendors, consisting of $21.0 million in cash and a settlement of the Class B and C exchangeable preferred shares through the issuance of 828,452 Class B Non-Voting shares valued at $13.3 million.

The following is a summary of the fair values of contingently returnable consideration as at May 31, 2012, and November 30, 2011:


(in thousands of Canadian dollars)		May 31, 2012		November 30, 2011

Cash payments due February 1, 2012	$	-	$	19,693
Cash payments due February 1, 2013		2,585		3,563
Cash payments due February 1, 2014		3,718		3,306
Issuance of Class B exchangeable preferred shares, redeemable February 1, 2012		-		9,515
Issuance of Class C exchangeable preferred shares, redeemable February 1, 2012		-		2,455
Issuance of Class D exchangeable preferred shares, redeemable February 1, 2013		1,103		1,984
Issuance of Class E exchangeable preferred shares, redeemable February 1, 2014		1,430		1,864
	$	8,836	$	42,380
Less: current portion		3,688		31,663
	$	5,148	$	10,717

The following is a summary of post-acquisition amounts included in the Company's consolidated statement of income for the three and six months ended May 31, 2011:


	Three months ended May 31,			Six months ended May 31,
(in thousands of Canadian dollars)			2011			2011

Revenue		$	22,869		$	30,272
Net income¹			7,153			9,641

¹ Excluding integration costs and fair value adjustments related to the acquisition consideration payable

During the three and six months ended May 31, 2012, the Company recognized nil (2011 - $3.6 million and $8.2 million) in expenses related to the acquisition and integration of Acuity and a $2.0 million gain and $0.8 million in charges (2011 - $0.8 million and $2.6 million in charges) related to the fair value adjustment on the acquisition consideration payable.

(b) Acquisition of Highstreet Partners Ltd.

In the first quarter of 2012, the Company increased its ownership interest in Highstreet Partners Ltd. to 84.7% for cash consideration of $0.6 million. The payment was recorded as an adjustment to retained earnings.

Note 6: Long-term Debt


(in thousands of Canadian dollars)			May 31, 2012		November 30, 2011

Revolving term loans¹
	Facility 1	$	-	$	-
	Facility 2		124,323		124,269
Acquisition facility¹			184,094		184,000
		$	308,417	$	308,269

¹ Net of transaction costs and discount

(a) Revolving Term Loans

On August 31, 2011, the Company amended and restated its revolving committed term loan (Facility 1). Facility 1 is a syndicated revolving term loan with two Canadian chartered banks and with a maximum aggregate principal of $300.0 million (November 30, 2011 - $300.0 million). Advances under Facility 1 are made available by prime-rate loans in U.S. or Canadian dollars, under BAs or by issuance of letters of credit. Facility 1, if not renewed, is due in full on January 28, 2015. As at May 31, 2012 and November 30, 2011, AGF had not drawn against Facility 1.

On August 31, 2011, the Company arranged an additional syndicated revolving committed term loan with two major Canadian chartered banks (Facility 2). Facility 2 is a five-year revolving term loan with a maximum aggregate principal of $125.0 million. Advances under Facility 2 are made available by prime-rate loans in U.S. or Canadian dollars, under BAs or by issuance of letters of credit. Facility 2, if not renewed, is due in full on August 31, 2016. As at May 31, 2012, AGF had drawn down $125.0 million (November 30, 2011 - $125.0 million) against Facility 2 in the form of a one-month BA at an effective average interest rate of 2.7% per annum (November 30, 2011 - 2.7%).

Facility 1 and Facility 2 are guaranteed by AGF Management Limited and certain subsidiaries, including 20/20 Financial Corporation.

To hedge the Company's exposure to fluctuating interest rates on its long-term debt, AGF has entered into an interest rate swap transaction with a Canadian chartered bank. The swap transaction expires in July 2016 and involves the exchange of the one-month BA rate to receive a fixed interest rate of 3.8%. The swap contract is designated as a cash flow hedging instrument and is used to mitigate interest expense volatility on Facility 2. As at May 31, 2012, the notional amount of the swap transaction was $125.0 million (November 30, 2011 - $125.0 million).

As part of the sale of AGF Trust, the Company expects to reduce the maximum aggregate principal of Facility 1 to $200.0 million from $300.0 million.

(b) Acquisition Facility

On August 31, 2011, the Company amended its syndicated four-year non-amortizing term loan credit facility with two Canadian chartered banks (acquisition facility). The acquisition facility was originally arranged on January 28, 2011, to partially fund the acquisition of Acuity, and consists of a one-time drawdown of $185.0 million. The facility must be fully repaid by January 28, 2015, and is not renewable. Advances under the facility are made available by way of Canadian-dollar prime-rate loans or Canadian-dollar BAs. As at May 31, 2012, AGF had drawn $185.0 million (November 30, 2011 - $185.0 million) against the facility in the form of a one-month BA at an effective average interest rate of 2.7% per annum (November 30, 2011 - 2.7%).

The acquisition facility is guaranteed by AGF Management Limited and certain subsidiaries, including 20/20 Financial Corporation. Refer to Note 5 for further details of the Company's acquisition of Acuity.

Note 7: Capital Stock

(a) Authorized Capital

The authorized capital of AGF consists of an unlimited number of AGF Class B Non-Voting shares and an unlimited number of AGF Class A Voting common shares. The Class B Non-Voting shares are listed for trading on the Toronto Stock Exchange (TSX).

(b) Changes During the Period

The change in capital stock is summarized as follows:


Six months ended		May 31, 2012				May 31, 2011
(in thousands of Canadian dollars, except share amounts)			Shares		Stated value		Shares		Stated value

Class A Voting common shares			57,600	$	-		57,600	$	-

Class B Non-Voting shares
	Balance, beginning of the period		95,406,796	$	560,838		88,606,196	$	439,216
	Issued through dividend reinvestment plan		87,008		1,361		52,043		1,011
	Stock options exercised		61,050		538		415,650		5,103
	Issued on acquisition of Acuity		828,452		13,322		6,487,203		114,679
	Repurchased for cancellation		(262,240)		(1,543)		-		-
	Balance, end of the period		96,121,066	$	574,516		95,561,092	$	560,009

(c) Class B Non-Voting Shares Purchased for Cancellation

AGF has obtained applicable regulatory approval to purchase for cancellation, from time to time, certain of its Class B Non-Voting shares through the facilities of the TSX (or as otherwise permitted by the TSX). Under its normal course issuer bid, AGF may purchase up to 10% of the public float outstanding on the date of the receipt of regulatory approval or up to 7,435,369 shares through to January 26, 2013. No shares were repurchased during the three months ended May 31, 2012. During the six months ended May 31, 2012, 262,240 Class B Non-Voting shares were repurchased at a cost of $4.1 million and the excess paid of $2.6 million over the recorded capital stock value of the shares repurchased for cancellation was charged to retained earnings.

Note 8: Accumulated Other Comprehensive Income


(in thousands of Canadian dollars)			Foreign currency translation		Available for sale securities		Cash flow hedge		Discontinued operations		Total

Opening Balance
	Other comprehensive income	$	-	$	3,309	$	-	$	19,098	$	22,407
	Income tax expense		-		(477)		-		(5,920)		(6,397)
Balance, November 30, 2010			-		2,832		-		13,178		16,010
Transactions during the year ended November 30, 2011
	Other comprehensive income (loss)		50		(6)		(4,772)		(5,463)		(10,191)
	Income tax recovery (expense)		(6)		(5)		1,193		1,859		3,041
Balance, November 30, 2011			44		2,821		(3,579)		9,574		8,860
Transactions during the six months ended May 31, 2012
	Other comprehensive income (loss)		130		19		53		(3,936)		(3,734)
	Income tax recovery (expense)		(16)		-		(13)		1,155		1,126
Balance, May 31, 2012		$	158	$	2,840	$	(3,539)	$	6,793	$	6,252

Note 9: Fair Value Adjustments and Other Income


	Three months ended May 31,
(in thousands of Canadian dollars)		2012		2011

Fair value adjustment related to investment in AGF mutual funds (Note 3)	$	(1,249)	$	220
Fair value adjustment related to acquisition consideration payable (Note 5)		2,251		(751)
Fair value adjustment related to put agreement with non-controlling shareholders (Note 11(e))		(1,528)		654
Other		597		(186)
	$	71	$	(63)

	Six months ended May 31,
(in thousands of Canadian dollars)		2012		2011

Fair value adjustment related to investment in AGF mutual funds (Note 3)	$	(573)	$	35
Fair value adjustment related to acquisition consideration payable (Note 5)		(25)		(1,681)
Fair value adjustment related to put agreement with non-controlling shareholders (Note 11(e))		(2,624)		287
Other		813		21
	$	(2,409)	$	(1,338)

Note 10: Expenses by Nature


		Three months ended May 31,
(in thousands of Canadian dollars)			2012		2011

Selling, general and administrative
	Employee benefit expense	$	25,396	$	29,203
	Sales and marketing		3,358		2,641
	Information technology and facilities		6,654		5,439
	Professional fees		4,438		5,045
	Fund absorption		3,320		664
	Other		3,763		984
		$	46,929	$	43,976

Business acquisition and integration
	Professional fees	$	-	$	3,534
	Other		-		50
		$	-	$	3,584

		Six months ended May 31,
(in thousands of Canadian dollars)			2012		2011

Selling, general and administrative
	Employee benefit expense	$	51,314	$	55,687
	Sales and marketing		5,745		5,246
	Information technology and facilities		11,666		9,599
	Professional fees		9,495		8,117
	Fund absorption		4,525		1,784
	Other		7,351		3,287
		$	90,096	$	83,720

Business acquisition and integration
	Employee benefit expense	$	-	$	1,718
	Professional fees		-		6,384
	Other		-		50
		$	-	$	8,152

Note 11: Stock-based Compensation and Other Stock-based Payments

(a) Stock Option Plans

AGF has established stock option plans for senior employees under which stock options to purchase an aggregate maximum of 4,345,524 Class B Non-Voting shares could have been granted as at May 31, 2012 (2011 - 4,179,421). The stock options are issued at a price not less than the market price of the Class B Non-Voting shares immediately prior to the grant date. Stock options are vested to the extent of 25% to 33% of the individual's entitlement per annum, or in some instances, vest at the end of the term of the option.

The change in stock options, excluding those related to AGF Trust, during the six months ended May 31, 2012 and 2011 is summarized as follows:


Six months ended		May 31, 2012				May 31, 2011
			Options		Weighted average exercise price		Options		Weighted average exercise price

Class B Non-Voting share options, excluding AGF Trust
	Balance, beginning of the period		4,942,679	$	17.47		5,033,099	$	16.35
	Options granted		469,750		15.87		630,380		19.03
	Options forfeited		(189,508)		19.28		(107,850)		17.19
	Options expired		(455,900)		17.05		-		-
	Options exercised		(58,200)		8.24		(317,650)		11.04
	Balance, end of the period		4,708,821	$	17.39		5,237,979	$	16.98

During the three months ended May 31, 2012, no stock options were granted (2011 - nil) and compensation expense and contributed surplus of $0.3 million (2011 - $0.7 million) were recorded. During the six months ended May 31, 2012, 469,750 stock options were granted (2011 - 630,380) and compensation expense and contributed surplus of $0.6 million (2011 - $1.0 million) were recorded. The fair value of options granted during the six months ended May 31, 2012, has been estimated at $3.10 per share (2011 - $4.43 per share) using the Black-Scholes option-pricing model. The following assumptions were used to determine the fair value of the options granted during the six months ended May 31, 2012:

					Risk-free interest rate						1.3%
					Expected dividend yield						6.8%
					Expected share price volatility						41.8%
					Option term						5.0 years

(b) Restricted Share Unit (RSU) and Performance Share Unit (PSU) Plans

The change in share units, excluding those related to AGF Trust, during the six months ended May 31, 2012 and 2011 is as follows:


Six months ended		May 31, 2012		May 31, 2011
		Number of share units		Number of share units
Outstanding, beginning of the period
	Non-vested		319,799		436,383
Issued
	Initial grant		589,056		305,053
	In lieu of dividends		21,973		15,612
Settled in cash			(406)		(6,440)
Forfeited and cancelled			(118,930)		(9,967)
Outstanding, end of the period			811,492		740,641

Compensation recovery for the three months ended May 31, 2012, related to these share units was $0.9 million (2011 - $1.1 million recovery), and for the six months ended May 31, 2012, was $1.6 million expense (2011 - $3.7 million expense).

(c) Deferred Share Unit (DSU)

As at May 31, 2012, 152,283 (2011 - 61,126) DSUs were outstanding. Compensation recovery related to these DSUs for the three months ended May 31, 2012, was $0.1 million (2011 - less than $0.1 million recovery), and for the six months ended May 31, 2012, was $0.2 million expense (2011 - $0.3 million expense).

(d) Partners Incentive Plan (PIP)

Compensation expense related to this incentive plan was recorded in payroll costs and amounted to $0.5 million for the three months ended May 31, 2012 (2011 - $0.3 million), and $1.0 million for the six months ended May 31, 2012 (2011 - $0.9 million).

(e) Put Agreement with Non-controlling Shareholders

As at May 31, 2012, the Company has recorded an $8.1 million (November 30, 2011 - $5.5 million) liability related to the put agreement with non-controlling shareholders of one of its subsidiaries. In the three months ended May 31, 2012, the Company recorded a loss of $1.5 million (2011 - gain of $0.7 million) related to the change in the fair value of the put agreement. In the six months ended May 31, 2012, the Company recorded a loss of $2.6 million (2011 - gain of $0.3 million) related to the change in the fair value of the put agreement.

Note 12: Income Taxes

Income tax expense is recognized based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated effective tax rate for the six months ended May 31, 2012, was 28.6% (2011 - 26.8%). The income tax expense related to income from discontinued operations for the six months ended May 31, 2012, was $5.9 million (2011 - $6.0 million).

Note 13: Earnings per Share


		Three months ended May 31,					Six months ended May 31,
(in thousands of Canadian dollars, except per share amounts)				2012		2011			2012		2011

Numerator
	Net income for the period from continuing operations attributable to the equity holders of the Company		$	16,722	$	27,223		$	33,987	$	49,644
	Net income for the period from discontinued operations attributable to the equity holders of the Company			7,050		6,668			15,919		13,479
	Net income for the period attributable to the equity holders of the Company			23,772		33,891			49,906		63,123

Denominator
	Weighted average number of shares - basic			96,143,964		95,568,899			95,904,625		93,210,619
	Dilutive effect of employee stock options			591,345		1,225,216			639,597		1,189,990
	Weighted average number of shares - diluted			96,735,309		96,794,115			96,544,222		94,400,609

Basic earnings per share
	Continuing operations		$	0.17	$	0.28		$	0.35	$	0.53
	Discontinued operations			0.08		0.07			0.17		0.15
			$	0.25	$	0.35		$	0.52	$	0.68

Diluted earnings per share
	Continuing operations		$	0.17	$	0.28		$	0.35	$	0.53
	Discontinued operations			0.08		0.07			0.17		0.14
			$	0.25	$	0.35		$	0.52	$	0.67

Note 14: Dividends

The dividends paid, including dividends reinvested, in the three and six months ended May 31, 2012, were $26.0 million and $51.8 million, compared to $24.8 million and $47.9 million in 2011. On June 26, 2012, the Board of Directors of AGF declared a quarterly dividend on both the Class A Voting common shares and Class B Non-Voting shares of the Company of $0.27 per share in respect of the three months ended May 31, 2012, amounting to a total dividend of approximately $26.0 million. These consolidated financial statements do not reflect this dividend payable.

Note 15: Related Party Transactions

The Company is controlled by Blake C. Goldring, Chairman and Chief Executive Officer of AGF, through his indirect ownership of all the voting shares of Goldring Capital Corporation, which owns 80% of the Company's Class A Voting common shares. The remaining 20% of the Class A Voting common shares are held by the Vice-Chairman of AGF, who is also a Director.

The remuneration of Directors and other key management personnel of AGF are as follows:


	Three months ended May 31,				Six months ended May 31,
(in thousands of Canadian dollars)		2012		2011		2012		2011

Salaries and other short-term employee benefits	$	1,466	$	1,633	$	2,867	$	3,113
Share-based payments		456		431		1,014		858
	$	1,922	$	2,064	$	3,881	$	3,971

Note 16: Transition to IFRS

First-time Application of IFRS

Until December 1, 2011, AGF prepared its consolidated financial statements in accordance with Canadian GAAP. The Company followed the provisions of IFRS 1 in preparing its opening IFRS consolidated statement of financial position as of the date of transition, December 1, 2010. Certain of the Company's IFRS accounting policies used for this opening consolidated statement of financial position differed from its Canadian GAAP policies applied at the same date. The resulting adjustments arose from events and transactions before the date of transition to IFRS. IFRS 1 generally requires that an entity apply all IFRS effective at the end of its first IFRS reporting period retrospectively. Therefore, as required by IFRS 1, those adjustments were recognized directly through retained earnings (or another category of equity where appropriate) as of December 1, 2010. There are some exceptions required and some exceptions permitted by IFRS 1. AGF's first-time adoption decisions regarding these exemptions are detailed below. Other options available under IFRS 1, which are not discussed here, are not material to the Company's consolidated financial statements.

Business Combinations
IFRS 1 provides the option to apply IFRS 3, "Business Combinations," prospectively from the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply IFRS 3 prospectively to business combinations occurring after its transition date. Business combinations prior to the transition date have not been restated.
Cumulative Translation Differences
IFRS permits cumulative translation gains and losses to be reset to zero at the transition date. This provides relief from determining cumulative currency translation differences in accordance with IAS 21, "The effects of changes in foreign exchange rates," from the date a subsidiary or equity method investee was formed or acquired. The Company elected to reset to zero all cumulative translation gains and losses at the transition date related to investments in foreign operations through an adjustment to retained earnings.
Securitization
In November 2010, the IASB approved amendments to IFRS 1 with regard to the derecognition exemption, which provides the option to grandfather certain securitization transactions occurring prior to an entity's transition date instead of the fixed mandatory date of January 1, 2004. The Company elected to apply the derecognition requirements in IAS 39 prospectively for transactions occurring on or after the transition date.

Effect of the Transition to IFRS
Until December 1, 2011, AGF prepared its consolidated financial statements in accordance with Canadian GAAP. The following sets out, by accounting topic, the main differences between the Company's Canadian GAAP accounting policies applied at that date and the IFRS accounting policies adopted.

(A) Finite-life intangibles
Under both IFRS and Canadian GAAP, customer contracts are amortized on a straight-line basis over the period that the economic benefit is expected to arise. Under IFRS, the unamortized customer contracts for which client attrition occurs is immediately charged to net income and included in the amortization of customer contracts. Under Canadian GAAP, the amortization of customer contracts was not adjusted for client attrition.

(B) Deferred selling commissions
Under Canadian GAAP, sales commissions paid to brokers on mutual fund securities sold on a DSC basis were recorded at cost and amortized on a straight-line basis over the applicable DSC schedule (which ranges from three to seven years). No adjustment was recognized to the cost on redemption of mutual funds and the DSC asset was tested annually for impairment. Under IFRS, sales commissions continue to be recorded at cost and amortized similar to Canadian GAAP; however, upon redemption, the asset is derecognized and the unamortized amount is charged to income through amortization.

(C) Investments in AGF mutual funds and investments available for sale
Under Canadian GAAP, investments in AGF mutual funds were designated as available for sale (AFS). These assets were initially recorded at fair value on the settlement date in the consolidated statement of financial position and remeasured at fair value with unrealized gains and losses recognized in OCI until the financial asset was disposed of or became impaired. Under IFRS, investments in AGF mutual funds are designated as fair value through profit and loss.

(D) Goodwill
Under Canadian GAAP, goodwill is tested at the reporting unit level. Under IFRS, goodwill must be tested annually at the lowest identifiable cash generating unit (CGU) level at which management monitors internally. Management has reviewed its CGUs and has identified its Highstreet business as a separate CGU. As a result, the Company determined that the carrying amount of the Highstreet CGU exceeded its recoverable amount, indicating an impairment of goodwill at December 1, 2010 and subsequently at August 31, 2011. Under Canadian GAAP, goodwill associated with Highstreet was tested under the Investment Management reporting segment.

(E) Written put options on non-controlling interests
Under Canadian GAAP, put options written by the Company on non-controlling interests were accounted for as cash-settled share-based payments and carried at the intrinsic value of the vested options. Under IFRS, to the extent that such options are associated with the shareholder's employment, they are treated as cash-settled share-based payments and are recorded based on the fair value of the vested portion of the options, determined using graded vesting.

(F) Termination fees
Under Canadian GAAP, termination fees associated with contracts with referral agents, where the agent continues to have a relationship with the client, are recognized as an expense upon termination. Under IFRS, this cost is recognized over the service period or the contractual period.

(G) OCI tax changes
Under Canadian GAAP, changes in tax rates or laws relating to items previously recognized in OCI have been recognized in the consolidated statement of income. Under IFRS, the effect of these changes should be recognized in OCI or equity and charged directly to those items.

(H) Transaction costs
Under Canadian GAAP, entities could elect an accounting policy to account for transaction costs incremental to the acquisition of financial instruments either by capitalizing them on the consolidated statement of financial position or by recognizing them immediately on the consolidated statement of income. Under IFRS, transactions costs must be accounted for as an expense for financial instruments at fair value through profit or loss and capitalized to the initial carrying amount for all other financial instruments.

(I) Presentation reclassifications
Certain amounts have been reclassified to conform to IFRS, including deferred income tax assets and liabilities and accrued interest. Under IFRS, deferred income tax assets and liabilities must be classified as non-current whereas under Canadian GAAP, deferred income tax assets and liabilities were classified as current or non-current as appropriate. In addition, under IFRS, accrued interest is included in the financial statement line related to the financial assets and liabilities it is associated with. Previously, accrued interest on loans and GICs was recorded in accounts receivable or accounts payable as appropriate.

Reconciliation of the Company's consolidated statement of financial position prepared under Canadian GAAP and IFRS, including the impacts on shareholders' equity, as of May 31, 2011, is as follows:


(in thousands of Canadian dollars)
May 31, 2011				Canadian GAAP		IFRS 1 election		Finite-life intangibles		Deferred selling commissions		Investments		Goodwill		NCI put		Termination fees		OCI tax		Transaction costs		Presentation reclassification		IFRS
								(A)		(B)		(C)		(D)		(E)		(F)		(G)		(H)		(I)

Assets
	Current Assets
		Cash and cash equivalents	$	312,376	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	318	$	312,694
		Investments		424,801		-		-		-		-		-		-		-		-		-		-		424,801
		Accounts receivable and prepaid expenses and other assets		85,068		-		-		-		-		-		-		-		-		-		(21,418)		63,650
		Derivative financial instruments		4,823		-		-		-		-		-		-		-		-		-		10,891		15,714
		Current portion of retained interest from securitization		38,557		-		-		-		-		-		-		-		-		-		-		38,557
		Real estate secured and investment loans due within one year		417,216		-		-		-		-		-		-		-		-		-		3,518		420,734
				1,282,841		-		-		-		-		-		-		-		-		-		(6,691)		1,276,150

	Real estate secured and investment loans			2,537,436		-		-		-		-		-		-		-		-		-		3,466		2,540,902
	Investment in associated company			77,348		-		-		-		-		-		-		-		-		-		-		77,348
	Management contracts			715,769		-		-		-		-		-		-		-		-		-		-		715,769
	Customer contracts, net of accumulated amortization			45,277		-		(1,446)		-		-		-		-		-		-		-		-		43,831
	Goodwill			289,705		-		-		-		-		(24,019)		-		-		-		-		-		265,686
	Other intangibles, net of accumulated amortization			26,205		-		-		-		-		-		-		-		-		-		-		26,205
	Deferred selling commissions net of accumulated amortization			237,471		-		-		(50,562)		-		-		-		-		-		-		-		186,909
	Property, equipment and computer software, net of accumulated depreciation			12,247		-		-		-		-		-		-		-		-		-		-		12,247
	Deferred income tax assets			-		-		-		-		-		-		-		-		-		-		13,855		13,855
	Derivative financial instruments			6,765		-		-		-		-		-		-		-		-		-		3,225		9,990
	Other assets			8,137		-		-		-		-		-		-		-		-		-		-		8,137
Total assets			$	5,239,201	$	-	$	(1,446)	$	(50,562)	$	-	$	(24,019)	$	-	$	-	$	-	$	-	$	13,855	$	5,177,029

Liabilities
	Current Liabilities
		Accounts payable and accrued liabilities	$	206,078	$	-	$	-	$	-	$	-	$	-	$	7,977	$	770	$	-	$	-	$	(126,552)	$	88,273
		Income tax liability		11,699		-		-		-		-		-		-		-		-		-		-		11,699
		Provision for Elements Advantage		3,542		-		-		-		-		-		-		-		-		-		-		3,542
		Acquisition consideration payable		32,548		-		-		-		-		-		-		-		-		-		-		32,548
		Deferred income tax liabilities		25,538		-		-		-		-		-		-		-		-		-		(25,538)		-
		Deposits due within one year		1,552,918		-		-		-		-		-		-		-		-		-		84,101		1,637,019
				1,832,323		-		-		-		-		-		7,977		770		-		-		(67,989)		1,773,081

	Deposits			1,613,404		-		-		-		-		-		-		-		-		-		42,451		1,655,855
	Long-term debt			308,763		-		-		-		-		-		-		-		-		(716)		-		308,047
	Acquisition consideration payable			12,643		-		-		-		-		-		-		-		-		-		-		12,643
	Deferred income tax liabilities			181,225		-		(341)		(13,376)		-		-		-		(348)		-		-		39,393		206,553
	Provision for Elements Advantage			2,868		-		-		-		-		-		-		-		-		-		-		2,868
	Other long-term liabilities			11,196		-		-		-		-		-		-		532		-		-		-		11,728
Total liabilities				3,962,422		-		(341)		(13,376)		-		-		7,977		954		-		(716)		13,855		3,970,775

Equity
	Equity attributable to owners of the Company
		Capital stock		560,009		-		-		-		-		-		-		-		-		-		-		560,009
		Contributed surplus		23,709		-		-		-		-		-		-		-		-		-		-		23,709
		Retained earnings		712,900		(29,936)		(1,105)		(37,186)		909		(24,019)		(7,977)		(954)		(72)		716		-		613,276
		Accumulated other comprehensive income		(20,437)		29,936		-		-		(909)		-		-		-		72		-		-		8,662
				1,276,181		-		(1,105)		(37,186)		-		(24,019)		(7,977)		(954)		-		716		-		1,205,656

	Non-controlling interest			598		-		-		-		-		-		-		-		-		-		-		598

Total equity				1,276,779		-		(1,105)		(37,186)		-		(24,019)		(7,977)		(954)		-		716		-		1,206,254
Total liabilities and equity			$	5,239,201	$	-	$	(1,446)	$	(50,562)	$	-	$	(24,019)	$	-	$	-	$	-	$	-	$	13,855	$	5,177,029

Reconciliations of the Company's consolidated statement of income for the three and six months ended May 31, 2011, prepared in accordance with Canadian GAAP and IFRS, are as follows:


(in thousands of Canadian dollars)
Three months ended May 31, 2011			Canadian GAAP		Finite- life intangibles		Deferred selling commissions		Investments		NCI put		Termination fees		Transaction costs		Presentation reclassification		Discontinued operations		IFRS
					(A)		(B)		(C)		(E)		(F)		(H)		(I)		Note 5

Revenue
	Management and advisory fees	$	150,716	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	150,716
	Deferred sales charges		6,454		-		-		-		-		-		-		-		-		6,454
	RSP loan securitization income (loss), net of impairment		676		-		-		-		-		-		-		-		(676)		-
	Share of profit of associated company		962		-		-		-		-		-		-		-		-		962
	Fair value adjustments and other income		2,064		-		-		220		654		-		-		-		(3,001)		(63)
	AGF Trust net interest income		19,249		-		-		-		-		-		-		(234)		(19,015)		-
Total revenue			180,121		-		-		220		654		-		-		(234)		(22,692)		158,069

Expenses
	Selling, general and administrative		53,679		-		-		-		-		-		49		-		(9,752)		43,976
	Business acquisition and integration		3,584		-		-		-		-		-		-		-		-		3,584
	Trailing commissions		41,780		-		-		-		-		9		-		-		-		41,789
	Investment advisory fees		2,587		-		-		-		-		-		-		-		-		2,587
	Amortization of deferred selling commissions		19,174		-		(741)		-		-		-		-		-		-		18,433
	Amortization of customer contracts		3,730		244		-		-		-		-		-		-		-		3,974
	Amortization of other intangibles		2,096		-		-		-		-		-		-		-		-		2,096
	Amortization of property, equipment and computer software		1,069		-		-		-		-		-		-		-		(329)		740
	Provision for Trust Company loan losses		3,097		-		-		-		-		-		-		(234)		(2,863)		-
	Interest expense		3,640		-		-		-		-		-		-		-		-		3,640
			134,436		244		(741)		-		-		9		49		(234)		(12,944)		120,819

Income before income taxes			45,685		(244)		741		220		654		(9)		(49)		-		(9,748)		37,250

Income tax expense (benefit)
	Current		14,735		-		-		-		-		-		-		-		(2,758)		11,977
	Deferred		(1,997)		(72)		156		28		-		2		-		-		(322)		(2,205)
			12,738		(72)		156		28		-		2		-		-		(3,080)		9,772

Net income from continuing operations			32,947		(172)		585		192		654		(11)		(49)		-		(6,668)		27,478

Net income from discontinued operations, net of taxes			-		-		-		-		-		-		-		-		6,668		6,668

Net income for the period		$	32,947	$	(172)	$	585	$	192	$	654	$	(11)	$	(49)	$	-	$	-	$	34,146

Net income attributable to:
	Equity owners of the Company	$	32,692	$	(172)	$	585	$	192	$	654	$	(11)	$	(49)	$	-	$	-	$	33,891
	Non-controlling interest		255		-		-		-		-		-		-		-		-		255
		$	32,947	$	(172)	$	585	$	192	$	654	$	(11)	$	(49)	$	-	$	-	$	34,146


(in thousands of Canadian dollars)
Six months ended May 31, 2011			Canadian GAAP		Finite- life intangibles		Deferred selling commissions		Investments		NCI put		Termination fees		Transaction costs		Presentation reclassification		Discontinued operations		IFRS
					(A)		(B)		(C)		(E)		(F)		(H)		(I)		Note 5

Revenue
	Management and advisory fees	$	283,257	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	283,257
	Deferred sales charges		12,384		-		-		-		-		-		-		-		-		12,384
	RSP loan securitization income (loss), net of impairment		1,295		-		-		-		-		-		-		-		(1,295)		-
	Share of profit of associated company		1,807		-		-		-		-		-		-		-		-		1,807
	Fair value adjustments and other income		4,126		-		-		35		287		-		-		-		(5,786)		(1,338)
	AGF Trust net interest income		40,146		-		-		-		-		-		-		(350)		(39,796)		-
Total revenue			343,015		-		-		35		287		-		-		(350)		(46,877)		296,110

Expenses
	Selling, general and administrative		104,097		-		-		-		-		-		67		-		(20,444)		83,720
	Business acquisition and integration		8,935		-		-		-		-		-		(783)		-		-		8,152
	Trailing commissions		79,155		-		-		-		-		49		-		-		-		79,204
	Investment advisory fees		4,877		-		-		-		-		-		-		-		-		4,877
	Amortization of deferred selling commissions		38,418		-		(2,332)		-		-		-		-		-		-		36,086
	Amortization of customer contracts		5,384		389		-		-		-		-		-		-		-		5,773
	Amortization of other intangibles		2,794		-		-		-		-		-		-		-		-		2,794
	Amortization of property, equipment and computer software		2,100		-		-		-		-		-		-		-		(719)		1,381
	Provision for Trust Company loan losses		6,588		-		-		-		-		-		-		(350)		(6,238)		-
	Interest expense		5,569		-		-		-		-		-		-		-		-		5,569
			257,917		389		(2,332)		-		-		49		(716)		(350)		(27,401)		227,556

Income before income taxes			85,098		(389)		2,332		35		287		(49)		716		-		(19,476)		68,554

Income tax expense (benefit)
	Current		28,806		-		-		-		-		-		-		-		(6,437)		22,369
	Deferred		(4,638)		(105)		309		5		-		(3)		-		-		440		(3,992)
			24,168		(105)		309		5		-		(3)		-		-		(5,997)		18,377

Net income from continuing operations			60,930		(284)		2,023		30		287		(46)		716		-		(13,479)		50,177

Net income from discontinued operations, net of taxes			-		-		-		-		-		-		-		-		13,479		13,479

Net income for the period		$	60,930	$	(284)	$	2,023	$	30	$	287	$	(46)	$	716	$	-	$	-	$	63,656

Net income attributable to:
	Equity owners of the Company	$	60,397	$	(284)	$	2,023	$	30	$	287	$	(46)	$	716	$	-	$	-	$	63,123
	Non-controlling interest		533		-		-		-		-		-		-		-		-		533
		$	60,930	$	(284)	$	2,023	$	30	$	287	$	(46)	$	716	$	-	$	-	$	63,656

Reconciliations of the Company's consolidated statement of comprehensive income for the three and six months ended May 31, 2011, prepared in accordance with Canadian GAAP and IFRS, are as follows:


(in thousands of Canadian dollars)
Three months ended May 31, 2011				Canadian GAAP		Finite- life intangibles		Deferred selling commissions		Investments		NCI put		Termination fees		Transaction costs		Discontinued operations		IFRS
						(A)		(B)		(C)		(E)		(F)		(H)		Note 5

Net income for the period			$	32,947	$	(172)	$	585	$	192	$	654	$	(11)	$	(49)	$	-	$	34,146

Other comprehensive income (losses), net of tax

	Cumulative translation adjustment
		Foreign currency translation adjustments related to net investments in foreign operations		404		-		-		-		-		-		-		-		404
				404		-		-		-		-		-		-		-		404

	Net unrealized gains (losses) on available for sale securities
		Unrealized gains (losses)		2,200		-		-		40		-		-		-		(2,448)		(208)
		Reclassification of realized loss or impairment to earnings		233		-		-		(232)		-		-		-		(2)		(1)
				2,433		-		-		(192)		-		-		-		(2,450)		(209)

	Total other comprehensive income (loss) from continuing operations, net of tax		$	2,837	$	-	$	-	$	(192)	$	-	$	-	$	-	$	(2,450)	$	195

	Total other comprehensive income (loss) from discontinued operations, net of tax		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	2,450	$	2,450

Comprehensive income			$	35,784	$	(172)	$	585	$	-	$	654	$	(11)	$	(49)	$	-	$	36,791

Comprehensive income attributable to:
	Equity owners of the Company		$	35,529	$	(172)	$	585	$	-	$	654	$	(11)	$	(49)	$	-	$	36,536
	Non-controlling interest			255		-		-		-		-		-		-		-		255
			$	35,784	$	(172)	$	585	$	-	$	654	$	(11)	$	(49)	$	-	$	36,791


(in thousands of Canadian dollars)
Six months ended May 31, 2011				Canadian GAAP		Finite- life intangibles		Deferred selling commissions		Investments		NCI put		Termination fees		Transaction costs		Discontinued operations		IFRS
						(A)		(B)		(C)		(E)		(F)		(H)		Note 5

Net income for the period			$	60,930	$	(284)	$	2,023	$	30	$	287	$	(46)	$	716	$	-	$	63,656

Other comprehensive income (losses), net of tax

	Cumulative translation adjustment
		Foreign currency translation adjustments related to net investments in foreign operations		(298)		-		-		-		-		-		-		-		(298)
				(298)		-		-		-		-		-		-		-		(298)

	Net unrealized gains (losses) on available for sale securities
		Unrealized gains (losses)		(7,317)		-		-		291		-		-		-		6,881		(145)
		Reclassification of realized loss or impairment to earnings		297		-		-		(321)		-		-		-		24		-
				(7,020)		-		-		(30)		-		-		-		6,905		(145)

	Total other comprehensive income (loss) from continuing operations, net of tax		$	(7,318)	$	-	$	-	$	(30)	$	-	$	-	$	-	$	6,905	$	(443)

	Total other comprehensive income (loss) from discontinued operations, net of tax		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	(6,905)	$	(6,905)

Comprehensive income			$	53,612	$	(284)	$	2,023	$	-	$	287	$	(46)	$	716	$	-	$	56,308

Comprehensive income attributable to:
	Equity owners of the Company		$	53,079	$	(284)	$	2,023	$	-	$	287	$	(46)	$	716	$	-	$	55,775
	Non-controlling interest			533																533
			$	53,612	$	(284)	$	2,023	$	-	$	287	$	(46)	$	716	$	-	$	56,308

Reconciliation of the Company's consolidated statement of cash flows for the six months ended May 31, 2011, prepared in accordance with Canadian GAAP and IFRS, is as follows:


(in thousands of Canadian dollars)
Six months ended May 31, 2011				Canadian GAAP		IFRS adjustments		AGF Trust reclass		DSC reclass		Investments reclass		Interest reclass		Tax reclass		Discontinued operations		IFRS
						(A) to (I)												Note 5

Operating Activities
	Net income for the period		$	60,930	$	2,726	$	-	$	-	$	-	$	-	$	-	$	-	$	63,656
	Adjustments for
		Net income from discontinued operations		-		-		-		-		-		-		-		(13,479)		(13,479)
		Amortization		48,696		(1,943)		-		-		-		-		-		(719)		46,034
		Interest expense		-		-		-		-		-		5,569		-		-		5,569
		AGF Trust interest expense, net of payments		-		-		(14,669)		-		-		-		-		14,669		-
		Income tax expense, net of payments		(4,638)		206		-		-		-		-		(334)		4,617		(149)
		RSP loan securitization income, net of impairment		(1,295)		-		-		-		-		-		-		1,295		-
		Provision for AGF Trust loan losses		6,588		(350)		-		-		-		-		-		(6,238)		-
		Stock-based compensation		5,727		-		-		-		-		-		-		(382)		5,345
		Share of profit (loss) of associated company		(1,807)		-		-		-		-		-		-		-		(1,807)
		Dividends from associated company		1,247		-		-		-		-		-		-		-		1,247
		Deferred selling commissions paid		-		-		-		(30,421)		-		-		-		-		(30,421)
		Purchase of AGF Trust investments available for sale		-		-		-		-		(39,580)		-		-		39,580		-
		Proceeds from sale of AGF Trust investments available for sale		-		-		-		-		104,336		-		-		(104,336)		-
		Other		4,297		-		-		-		-		-		-		(868)		3,429
				119,745		639		(14,669)		(30,421)		64,756		5,569		(334)		(65,861)		79,424
	Net change in non-cash working capital balances related to operations
		Accounts receivable		13,938		(2,979)		(9,760)		-		-		-		-		(2,658)		(1,459)
		Other assets		(5,428)		1,925		-		-		(150)		-		-		1,615		(2,038)
		Accounts payable and accrued liabilities		(57,424)		18,783		24,429		-		-		(338)		334		(11,549)		(25,765)
		Other liabilities		2,755		(19,021)		-		-		-		(1,631)		-		17,676		(221)
		Net change in balances related to AGF Trust deposits and loans		-		1,316		(205,826)		-		-		-		-		204,510		-
				(46,159)		24		(191,157)		-		(150)		(1,969)		334		209,594		(29,483)

	Net cash provided by (used in) continuing operating activities			73,586		663		(205,826)		(30,421)		64,606		3,600		-		143,733		49,941
	Net cash provided by (used in) discontinued operating activities			-		-		-		-		-		-		-		(143,733)		(143,733)
	Net cash provided by (used in) operating activities			73,586		663		(205,826)		(30,421)		64,606		3,600		-		-		(93,792)

Financing Activities
	Issue of Class B Non-Voting shares			4,251		-		-		-		-		-		-		-		4,251
	Dividends paid			(46,907)		-		-		-		-		-		-		-		(46,907)
	Increase in long-term debt related to Facility 1			(18,943)		-		-		-		-		(57)		-		-		(19,000)
	Increase in long-term debt related to Facility 2 and Acquisition facility			184,028		(716)		-		-		-		1,688		-		-		185,000
	Investment Management interest paid			-		-		-		-		-		(5,231)		-		-		(5,231)
	Net decrease in AGF Trust deposits			(366,724)		-		366,724		-		-		-		-		-		-
	Net cash provided by (used in) continuing financing activities			(244,295)		(716)		366,724		-		-		(3,600)		-		-		118,113
	Net cash provided by (used in) discontinued financing activities			-		-		-		-		-		-		-		-		-
	Net cash provided by (used in) financing activities			(244,295)		(716)		366,724		-		-		(3,600)		-		-		118,113

Investing Activities
	Deferred selling commissions paid			(30,421)		-		-		30,421		-		-		-		-		-
	Acquistion of Highstreet Partners Limited			(1,596)		-		-		-		-		-		-		-		(1,596)
	Acquisition of Acuity Funds Ltd. and Acuity Investment Management, net of cash acquired			(173,415)		-		-		-		-		-		-		-		(173,415)
	Purchase of property, equipment and computer software			(919)		-		-		-		-		-		-		74		(845)
	Purchase of Investment Management investments available for sale			-		-		-		-		(1,945)		-		-		-		(1,945)
	Proceeds from sale of Investment Management investments available for sale			-		-		-		-		9,327		-		-		-		9,327
	Net proceeds from sale (purchase) of investments available for sale			71,988		-		-		-		(71,988)		-		-		-		-
	Net decrease in AGF Trust real estate secured and investment loans			160,898		-		(160,898)		-		-		-		-		-		-
	Net cash provided by (used in) continuing investing activities			26,535		-		(160,898)		30,421		(64,606)		-		-		74		(168,474)
	Net cash provided by (used in) discontinued investing activities			-		-		-		-		-		-		-		(74)		(74)
	Net cash provided by (used in) investing activities			26,535		-		(160,898)		30,421		(64,606)		-		-		-		(168,548)

Decrease in cash and cash equivalents, during the period				(144,174)		(53)		-		-		-		-		-		-		(144,227)

Balance of cash and cash equivalents, beginning of period				456,550		371		-		-		-		-		-		-		456,921

Balance of cash and cash equivalents, end of period			$	312,376	$	318	$	-	$	-	$	-	$	-	$	-	$	-	$	312,694

This report contains forward-looking statements with respect to AGF, including its business operations, strategy, financial performance and condition. Although management believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially include, among other things, general economic and market factors including interest rates, business competition, changes in government regulations or in tax laws, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time.

Conference Call

AGF will host a conference call to review its earnings results today at 11 a.m. ET. The live audio webcast with supporting materials will be available in the Investor Relations section of AGF's website at www.agf.com or at http://www.media-server.com/m/p/932qc2j7. Alternatively, the call can be accessed toll-free in North America by dialling 1-800-215-2410 (Passcode #: 93807877). A complete archive of this discussion along with supporting materials will be available at the same webcast address within 24 hours of the end of the conference call.

About AGF Management Limited

AGF Management Limited is one of Canada's premier independent investment management firms with offices across Canada and subsidiaries around the world. AGF's products include a diversified family of award-winning mutual funds, mutual fund wrap programs and pooled funds. AGF also manages assets on behalf of institutional investors including pension plans, foundations and endowments as well as for private clients. In addition, AGF Trust is a complementary business that offers GICs, loans and mortgages through the financial advisor and mortgage broker channels. With over $43 billion in total assets under management, AGF serves more than one million investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.

AGF Management Limited shareholders, analysts and media, please contact:

Robert J. Bogart, CPA
Executive Vice-President and Chief Financial Officer
416-865-4264, [email protected]

Michael Clabby
Vice-President, Investor Relations and Corporate Development
416-815-6275, [email protected]

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AGF Management Limited - Second Quarter Report to Shareholders for the three and six months ended May 31, 2012

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