TORONTO, CANADA -- (Marketwire) -- 02/13/13 -- Canadian General Investment, Limited's (TSX: CGI)(TSX: CGI.PR.B)(TSX: CGI.PR.C)(LSE: CGI) net asset value at December 31, 2012 was $456,150,000, representing a 7.0% increase from the $426,413,000 at the end of 2011. CGI's net asset value per share (NAV) at December 31, 2012 was $21.87, up from $20.44 at year end 2011. The NAV return, with dividends reinvested, for the year ended December 31, 2012 was 10.8%, and the market value total return to shareholders was 3.4% compared with a 7.2% total return for the benchmark S&P/TSX Composite Index (S&P/TSX).
A degree of optimism spurred the S&P/TSX to a good start for the year and drove the Index to its 2012 daily peak in late February. This initial rally soon subsided and was replaced with an increasing amount of pessimism, causing markets to descend steadily in the following couple of months. This trend took its performance return numbers firmly into negative territory and established a bottom in May, followed by a choppy recovery by year end. Despite these ups and downs, the Index traded in a narrow range, which was indicative of the cautious mood permeating markets throughout the year. There were few, if any, dramatic catalysts that caused dynamic and permanent shifts in the market outlook during the year. Most of the global, macro issues of recent years are still outstanding and, as a result, investment decisions based entirely on fundamentals remained difficult. In 2012, as it turned out, investors were rewarded for their patience and commitment to stay the course. For example, the net price gain in the entire final quarter of the year of the S&P/TSX was decided on the final trading day of the year. A couple of CGI's portfolio disciplines were of benefit in this type of market - low relative turnover rates and full investment positioning.
Canadian markets were held back by returns in the resource sector in 2012. Uncertainty about global demand resulted in generally weakened pricing for most commodities and negatively influenced most related equities. The Energy and Materials sectors were the two worst performing groups in the Index with -3.6% and -6.9% price returns in the year, respectively, and combined with their mid-40s percentage weighting, had considerable influence on overall results. These groups also negatively impacted CGI's results as well in spite of actions taken to reduce the Energy weighting in the early part of the year and to make dispositions in Materials.
However, the bottom-up selection process produced some differentials with a few holdings in these areas producing large returns and helping to offset a portion of the general decline. Franco-Nevada Corporation, one of the Company's biggest holdings, was the largest dollar-value gainer for the year and its 40% return made a significant contribution to the portfolio's overall net gains. In the Energy group, Pacific Rubiales Energy Corp, the largest Energy holding, posted gains greater than 20% for the year, a clear outperformer amongst its peers. Long-term holdings TransCanada Corporation and Enbridge Inc. continue to grow in size and provided stability, income and capital appreciation once again. They also were positive differentiators for the Company in this area.
Many other individual holdings assisted in the Company's beating the benchmark. Catamaran Corporation (formerly named SXC Health Solutions Corp.) had another spectacular year. Since CGI's initial purchase in early 2009, exceptional growth in the company's operations has been reflected in its stock price appreciation, resulting in its current status as second largest position in the portfolio. A one-year return in excess of 60% would be difficult to repeat in 2013, but its outlook remains extremely positive. Transportation stocks Canadian Pacific Railway Limited and TransForce Inc. each provided gains greater than 45%, unique retailer Dollarama Inc. returned 32%, technology behemoth Apple Inc. 31%, premier quality REIT Brookfield Canada Office Properties 20% plus and recent up-and-coming financial Element Financial Corp. at 48%. Expectations are high that these companies will be able to add to their records in the future. Conversely, Poseidon Concepts Corp., BMTC Group Inc., and Labrador Iron Ore Royalty Corp., with returns of -88%, -22%, and -7%, respectively, all contributed negatively to the 2012 performance, after being noted good performers in past years. Tempur-Pedic International Inc., added to the portfolio in early 2012, also negatively impacted CGI's overall performance with its return of -70%.
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 $0.52 per common share on December 28, 2012. Based on the year-end common share price of $15.75, total dividend payments during 2012 represented a yield of 4.8%.
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.
FINANCIAL HIGHLIGHTS (in thousands of dollars, except per share amounts) For the Year Ended December 31, December 31, 2012 2011 ------------------------------- Net investment income (loss) 192 (1,899) Net gain/(loss) on investments 44,907 (58,631) ------------------------------- Increase/(decrease) in net assets resulting from operations 45,099 (60,530) Increase/(decrease) in net assets resulting from operations per share 2.16 (2.90) As at December 31, December 31, 2012 2011 ------------------------------- Selected data(1) Net asset value 456,150 426,413 Net asset value per share 21.87 20.44 Selected data according to GAAP(1) Net assets 454,782 424,875 Net assets per share 21.80 20.37 (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 are available from the National Storage Mechanism (http://www.hemscott.com/nsm.do). PDF versions are also available at www.mmainvestments.com and at www.sedar.com.
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