CI Financial reports second quarter results

TSX Symbol: CIX

TORONTO, Aug. 9, 2012 /CNW/ - CI Financial Corp. ("CI") today released unaudited financial results for the quarter ended June 30, 2012.

HIGHLIGHTS	Quarter ended June 30, 2012 (millions except per share amounts)	Quarter ended March 31, 2012 (millions except per share amounts)	% change	Quarter ended June 30, 2011 (millions except per share amounts)	% change
Assets Under Management	$ 71,559	$  73,361	(2)	$ 74,283	(4)
Average Assets Under Management	71,385	72,262	(1)	74,525	(4)
EBITDA Per Share^1	0.61	0.62	(2)	0.65	(6)
Pre-Tax Operating Earnings Per Share^1	0.55	0.56	(2)	0.59	(7)
Adjusted Earnings Per Share^2	0.32	0.33	(3)	0.34	(6)
Earnings Per Share	0.25	0.33	(24)	0.34	(26)
SG&A Expenses	39.8 bps	40.2 bps	(1)	40.4 bps	(1)
Net Debt ^3	614.2	646.7	(5)	707.1	(13)
Dividends Recorded Per Share	0.240	0.235	2	0.225	7

			^1	Pre-Tax Operating Earnings and EBITDA (earnings before interest, taxes, depreciation and amortization) are not standardized earnings measures prescribed by IFRS; however, management believes that most of its shareholders, creditors, other stakeholders and investment analysts prefer to include the use of these performance measures in analyzing CI's results. CI defines pre-tax operating earnings as income before income taxes less redemption fee revenue, non-recurring items, performance fees and investment gains, plus amortization of deferred sales commissions (DSC) and fund contracts. CI's method of calculating these measures may not be comparable to similar measures presented by other companies.
			^2	Adjusted for an $18.8 million income tax expense related to Ontario tax rate changes.
			^3	Net of cash and marketable securities not required for regulatory working capital.

For the quarter ended June 30, 2012, CI reported net income of $71.3 million ($0.25 per share) versus $94.6 million ($0.33 per share) for the quarter ended March 31, 2012 and $98.3 million ($0.34 per share) for the quarter ended June 30, 2011. The decline in earnings was largely attributable to a future income tax expense related to the Ontario government's decision to rescind tax cuts that had been scheduled for July 2012. The total amount of this non-recurring item was $18.8 million. Excluding this item, earnings per share would have been $0.32 for the quarter, down 3% or $0.01 per share from the prior quarter and 6% lower than the same quarter one year ago.

For the quarter ended June 30, 2012, EBITDA per share was $0.61, 2% lower than the prior quarter and 6% lower than the second quarter of 2011. Pre-tax operating earnings per share, which include adjustments for non-recurring items, were down 2% from the prior quarter and down 7% from the second quarter of 2011.

During the quarter, CI continued its record of cost containment, reducing expenses at a greater rate than the decline in assets under management. Selling, general and administrative ("SG&A") expenses declined 2% and 6% from the prior quarter and the second quarter of last year, respectively. As a percentage of average assets under management, SG&A expenses dropped to 39.8 basis points in the second quarter this year from 40.4 basis points in the same quarter a year ago.

CI generated $104.7 million in free cash flow during the quarter ended June 30, 2012 compared to $98.5 million in the first quarter of 2012. This facilitated a reduction in debt by $32.5 million, the payment of $68.1 million in dividends and the repurchase of $12.0 million worth of shares in the quarter.

"CI has performed very well in an incredibly challenging environment," said Stephen A. MacPhail, CI President and Chief Executive Officer. "Debt and slowing growth continue to impact the world's largest economies, leading to volatility for the major equity markets. While the S&P/TSX Composite Index declined 2% in the first six months of 2012, CI's assets grew 3%. CI's earnings were resilient, with a decline of just $0.01 per share excluding the punitive effect of the Ontario government's tax changes, which reduced CI's income by 22% in the quarter.

"In addition," Mr. MacPhail said, "the performance of our funds continues to be exceptional, with 81% of CI's assets under management ranked in the first or second quartiles for the year-to-date. We also have maintained a strong track record over the long term, with 84% of assets in the first or of second quartiles over the 10 years ending June 30, 2012. This performance puts us in an excellent position to continue to grow our business."

For the quarter ended June 30, 2012, average assets under management were $71.4 billion, a decrease of 1% from the previous quarter and a decrease of 4% from the second quarter of 2011. Gross sales of funds for the quarter ended June 30, 2012 were $2.0 billion compared with gross sales of $2.5 billion in the second quarter of 2011. Total redemptions were relatively steady at $2.3 billion in the second quarter of 2012 compared with $2.2 billion in the second quarter of 2011. The second quarter of 2012, however, included a $146.8 million redemption from one institutional client. Net redemptions were $269.7 million in the quarter ended June 30, 2012.

"If you factor out the one institutional redemption of legacy assets from the KBSH business and expected slowdown in segregated fund product sales, CI experienced positive retail fund sales across the majority of its sales channels; a trend that has continued in July," said Mr. MacPhail.

The Board of Directors declared monthly cash dividends of $0.08 per share payable on September 14, 2012, October 15, 2012 and November 15, 2012 to shareholders of record on August 31, 2012, September 30, 2012, and October 31, 2012, respectively. The monthly dividend represented a yield of 4.3% on CI's share price of $22.31 on July 31, 2012.

As of July 31, 2012, CI had 283,354,992 shares outstanding.

For detailed financial statements for the quarter ended June 30, 2012, including Management's Discussion and Analysis, please refer to CI's website at www.cifinancial.com under Reports, or contact [email protected].

Analysts' Conference Call
CI will hold a conference call with analysts today at 4 p.m. Eastern time. Speaking on the call will be Mr. MacPhail and Douglas Jamieson, Senior Vice-President and Chief Financial Officer of CI. The conference call and a slide presentation will be accessible through a webcast at www.ci.com/q2. Alternatively, investors may listen to the discussion by dialling 1-855-353-9183 (passcode: 62117).

The call will be available for playback until August 23, 2012 at 1-855-201-2300 (conference number: 854014, passcode: 62117). The webcast will be archived at www.ci.com/q2.

CI Financial Corp. (TSX: CIX) is an independent, Canadian-owned wealth management company. CI offers a broad range of investment products and services, including an industry-leading selection of investment funds, and is on the Web at www.ci.com/cix.

This press release contains forward-looking statements with respect to CI and its products and services, including its business operations and strategy and 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 actual results to differ materially from expectations 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.

 

 

 

SOURCE: CI Financial Corp.

Stephen A. MacPhail
President and Chief Executive Officer
CI Financial Corp.
[phone]