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Morgan Meighen & Associates
Toronto, Canada, July 19, 2006 -- Canadian General Investments, Limited's (CGI's) diluted net asset value per share (NAV) returns, with dividends reinvested, for the six and twelve month periods ended June 30, 2006 were 5.9% and 26.4%, respectively. By comparison, the returns of the benchmark S&P/TSX Composite Total Return Index (S&P/TSX) for the same periods were 4.2% and 19.6%. CGI's market return to common shareholders was 6.1% year-to-date and 39.7% over the twelve months to June 30, 2006.
At June 30, 2006, net assets were $557,394,000, down 5.2% from the 2005 year-end value of $588,146,000. Aggregate net assets were impacted by a payout of $67,012,000 related to a substantial issuer bid for warrants of the Company, details of which are described below. For the first six months of 2006, CGI had an increase in net assets resulting from operations of $47,651,000, or $2.29 per common share on a diluted basis. For the same period in 2005, the corresponding increase was $47,610,000 or $2.09 per share.
The net gain on investments for the first six months of 2006 was $50,465,000, comprised of a net realized gain of $51,427,000 and a change in unrealized gain on investments of ($962,000). There was a net gain on investments of $47,116,000 during the comparable period in 2005.
CGI increased the leverage provided by its preference shares with the completion of a $75 million public offering of 3,000,000, 3.90% cumulative, redeemable Class A preference shares, Series 3 on March 3, 2006. Net tangible assets were approximately 3.7 times the $210 million in preference shares outstanding at June 30, 2006.
On May 23, 2006, the Company announced a substantial issuer bid to purchase all of its outstanding warrants. The primary reason for the issuer bid was to enable the Company to maintain its beneficial investment corporation status by permitting holders of warrants who were "specified shareholders" to dispose of their warrants by a means other than having to exercise. As a result of changes to tax legislation implemented subsequent to the issuance of the warrants, exercise of warrants by such shareholders could have caused CGI to lose this special status.
On June 30, 2006, the expiry date of the offer, the Company confirmed that it would purchase for cancellation 2,979,109 warrants, representing 90.6% of the 3,288,484 warrants outstanding prior to the offer. Warrants not tendered will continue to trade until the final exercise date on June 30, 2007. The warrants will expire without value after the final exercise date.
During each of the first two quarters of both 2006 and 2005, CGI paid regular income dividends of $0.06 per share to its common shareholders. Under its special tax status, CGI may elect to pay capital gains dividends, which has generally been done at year-end.
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 and appropriate income generating instruments.
FINANCIAL HIGHLIGHTS
(in thousands of dollars, except per share amounts)
Six Months Ended
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June 30, June 30,
2006 2005
Net investment income (loss) for the period (2,814) 494
Net gain on investments 50,465 47,116
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Increase in net assets resulting from
operations 47,651 47,610
Increase in net assets resulting from
operations
per common share - basic 2.32 2.32
Increase in net assets resulting from
operations
per common share - diluted 2.29 2.09
As at
------
June 30, December 31,
2006 2005
Net assets 557,394 588,146
Net asset value per share -- basic 27.07 28.59
Net asset value per share -- diluted 26.75 25.37
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