Cdn$30.05 Price: Cdn$30.05 StockRating: Sector Perform T Headline: Potential deadline moved up to June 30

May 18, 2006 The NBF Daily Bulletin
Diversified Financials
CI Financial
CIX (T) Cdn$30.05
Stock Rating: Sector Perform
(Unchanged)
Target: Cdn$32.00
(Unchanged)
Risk Rating: Low

Income Trust Conversion Update
Potential deadline moved up to June 30

HIGHLIGHTS Stock Data:
52-weekLow-High $16.67 - $33.39
Shares Outstanding (millions) 285.7
Market Float (est) 54%
S&P/TSX Composite Weighting 0.44%
(Year-End May
31) 2005A 2006E 2007E
EPS $1.09 $1.08 $1.41
EBITDA $1.81 $2.08 $2.62
FCF $0.80 $1.10 $1.68
P/E 27.7x 27.7x 21.3x
EV/EBITDA 17.2x 14.9x 11.8x
P/FCF 37.6x 27.4x 17.9x
ROE 20.7% 20.7% 24.9%
Mutual Fund Margin 1.12% 1.12% 1.14%
Financial Data:
Market Capitalization (millions) $8,585
Market Float (millions) $4,593
Assets Under Management (billions) $56.0
Net Debt (millions) $275.2
Book Value per share $5.29
Price/BV 5.7x
Quarterly Dividend $0.18
Dividend Yield 2.40%
Industry Rating: Market Weight
(NBF Economics & Strategy Group)

CI announced additional terms on proposed conversion
Late yesterday afternoon, CI announced additional terms of
its proposed conversion to an income trust. Most notably,
investors will have the option of taking the tradable units or
what will essentially amount to exchangeable units, with
certain restrictions. The main benefit of the exchangeable
units is the deferral of capital gains, which, in turn, will attract
taxes, offset by certain restrictions, including the fact that the
units will not be exchangeable until Jan. 1, 2007. While there
is a maximum number of exchangeable units that can be
issued, Sun Life Financial’s 35% ownership will be given
exchangeable units in priority of other shareholders.
􀂄 Potential conversion date moved up to July 1
CI announced that its timeline includes a shareholders’
meeting on June 22 and a potential conversion date of June
30. If all goes well, unitholders could potentially receive their
first distributions by July 15. While we do not see any material
impediments to a conversion at this point, we do note that CI
has yet to receive an advance tax ruling from the Canada
Revenue Agency.

􀂄 Our opinion: Favourable, but really no new information
Although Sun Life is receiving quasi-preferential treatment,
we note that the conversion would not be successful without
its buy-in. While we view the release favourably, we note that
there is no information that compels us to alter our
assumptions (any changes will most likely to be driven by the
mailing of the information circular on May 31). While we are
maintaining our arguably conservative conversion target of
$32, with CI’s share price trading down recently, we believe
that value now exists on the conversion at current levels.

Company Profile:
CI Financial is an independent wealth management
company with a very broad selection of investment funds.
With $71.7 billion in fee-earning assets as of December
2005, CI is the second largest publicly traded fund company.
CI has its headquarters in Toronto, sales offices across
Canada, and portfolio management teams in Toronto, San
Francisco, Orlando, Florida and Old Greenwich,
Connecticut.
John Aiken, CA, CFA - (416) 869-7491
john.aiken@nbfinancial.com
Associate:
Phil Hardie, P.Eng, MBA – (416) 869-8045
philip.hardie@nbfinancial.com
Source: BigCharts.com