Canadian General Investments, Limited

Canadian General Investments, Limited

February 15, 2012 15:41 ET

Canadian General Investments, Limited Reports Audited 2011 Financial Results

TORONTO, CANADA--(Marketwire - Feb. 15, 2012) - Canadian General Investment, Limited's (CGI) (TSX:CGI)(TSX:CGI.PR.B)(TSX:CGI.PR.C)(LSE:CGI) net asset value at December 31, 2011 was $426,413,000, representing a 15.0% decrease from the $501,548,000 at the end of 2010. CGI's net asset value per share (NAV) at December 31, 2011 was $20.44, down from $24.04 at year end 2010. The NAV return, with dividends reinvested, for the year ended December 31, 2011 was -11.7%, compared with a -8.7% total return for the benchmark S&P/TSX Composite Index.

Equity markets had shown promise in the early stages of 2011 by building on their gains of the prior year, but they reversed course in April and remained firmly in a downtrend for the remainder of the year. Macroeconomic issues seemed to carry the greatest influence on the markets and the effects of these were magnified as all of news, speculation and rumour had a heightened sway on investors' behaviour in a very nervous market. The Eurozone debt crisis dominated the headlines as the consequences of various possible outcomes were debated and analyzed. As well, a slowdown in some of the emerging economies such as China and Brazil became evident and provided unwelcome news as these areas had been a source of global economic growth during the most recent period when developed economies such as the United States had softened.

A loss of confidence in equities was apparent as almost all global market indices had double digit losses for the year, the major exception being the U.S. where the S&P500 was flat and the Dow Jones Industrial Average was up about six percent. This anomaly could have been partly due to the desire of obtaining relative safety in U.S. dollar denominated assets. Although the S&P/TSX fared slightly better than the indices of most other global markets, the high correlation between markets around the world was a significant influence on the downside.

A bias to perceived lower-risk assets was illustrated not only by the general downtrend experienced by the S&P/TSX, but also by the dispersion of returns in the sub-sectors. Four of the ten groups in the index, including Energy, Consumer Discretionary, Information Technology and Materials underperformed the average, and they would be considered to have the highest sensitivity to deteriorating economic conditions. Outperformers tended to have stable, often regulated businesses, with good cash flows and supportive dividend yields. Many of these companies were in the Telecommunication Services, Consumer Staples and Utilities sectors.

CGI's portfolio diversity has always been maintained to provide investors with a broad exposure to all of the sectors in the Canadian market and so relative returns result from the overall mix. The leverage provided by CGI's preference shares served to magnify negative portfolio returns.

In addition to the payment of four regular quarterly dividends of $0.06 per common share, CGI paid a year-end special capital gains distribution of $0.56 per common share on December 28, 2011. Based on the year-end common share price of $16.00, total dividend payments during 2011 represented a yield of 5.0%.

CGI is a closed-end equity fund, focused on medium to long-term investments in primarily Canadian corporations. Its objective is to provide better than average returns to investors through prudent security selection, timely recognition of capital gains/losses and appropriate income generating instruments.


(in thousands of dollars, except per share amounts)

For the Year Ended
December 31, December 31,
2011 2010
Net investment loss (1,899 ) (1,415 )
Net gain/(loss) on investments (58,631 ) 121,801
Increase/(decrease) in net assets resulting from operations (60,530 ) 120,386
Increase/(decrease) in net assets resulting from operations per share (2.90 ) 5.77

As at
December 31, December 31,
2011 2010
Selected data(1)
Net asset value 426,413 501,548
Net asset value per share 20.44 24.04
Selected data according to GAAP(1)
Net assets 424,875 500,049
Net assets per share 20.37 23.97

(1) The Company calculates the net asset value and net asset value per share on the basis of the valuation principles set out in its annual information form. These valuation principles differ from the requirements of Canadian generally accepted accounting principles (GAAP), with the main difference relating to securities that are listed on a public stock exchange. While the Company values such securities based on the latest sale price, GAAP requires the use of the closing bid price. Accordingly, bid prices are used in determining net assets and net assets per share for purposes of the interim and annual financial statements.

In the United Kingdom, copies of the Company's financial reports will be made available at the U.K. branch transfer agent, Computershare Investor Services PLC, P.O. Box 82, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY. Phone 0870-702-0000.

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