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Press release from CNW Group

Power Corporation of Canada - Six-month financial results and dividends

Friday, August 06, 2010

Power Corporation of Canada - Six-month financial results and dividends14:01 EDT Friday, August 06, 2010Readers are referred to the sections entitled "Forward-looking Statements" and "Non-GAAP Financial Measures" at the end of this release.WINNIPEG, Aug. 6 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the six-month period ended June 30, 2010 were $476 million or $0.99 per share, compared with $412 million or $0.86 per share in the corresponding period of 2009. This represents a 16.1% increase on a per share basis.Subsidiaries contributed $518 million to Power Corporation's operating earnings for the six-month period ended June 30, 2010, compared with $420 million in the corresponding period of 2009. Results from corporate activities represented a charge of $42 million in the six-month period ended June 30, 2010, compared with a charge of $8 million in the same period in 2009, mainly due to lower income from investments and income tax recoveries in 2009.Earnings from other items were $3 million or $0.01 per share in the six-month period ended June 30, 2010, compared with a charge of $34 million or $0.08 per share in the corresponding period of 2009, and consisted mainly of the Corporation's share of non-operating results recorded by Power Financial Corporation.As a result, net earnings for the six-month period ended June 30, 2010 were $479 million or $1.00 per share, compared with $378 million or $0.78 per share in the corresponding period of 2009. << SECOND QUARTER RESULTS ---------------------- >> For the quarter ended June 30, 2010, operating earnings of the Corporation were $257 million or $0.54 per share, compared with $223 million or $0.47 per share in the second quarter of 2009. This represents an increase of 15.5% on a per share basis.Subsidiaries contributed $279 million to Power Corporation's operating earnings in the second quarter of 2010, compared with $273 million in the second quarter of 2009. Results from corporate activities represented a charge of $22 million in the three-month period ended June 30, 2010, compared with a charge of $50 million in the same period in 2009, mainly due to higher income from investments.Other items for the second quarter in 2010 were a charge of $2 million or $0.01 per share, compared with a positive contribution of $4 million or $0.01 per share in the same quarter of 2009.Net earnings for the quarter were $255 million or $0.53 per share in 2010, compared with $227 million or $0.48 per share in 2009. << RESULTS OF POWER FINANCIAL CORPORATION -------------------------------------- >> Power Financial Corporation's operating earnings for the six-month period ended June 30, 2010 were $814 million or $1.09 per share, compared with $694 million or $0.92 per share in the corresponding period of 2009. The increase in operating earnings reflects primarily the increase in the contribution from Power Financial's subsidiaries, Great-West Lifeco and IGM Financial. For the six months ended June 30, 2010, the strengthening of the Canadian dollar against the U.S. dollar, the British pound and the euro had a negative currency impact of $64 million on Great-West Lifeco's net earnings. Power Financial's share of this currency effect is $45 million or $0.06 per share.Earnings from other items were $4 million or nil per share for the six-month period ended June 30, 2010. For the six-month period ended June 30, 2009, other items were a charge of $47 million or $0.06 per share and consisted of Power Financial's share of non-operating earnings recorded by Pargesa.Net earnings, including other items, for the six-month period ended June 30, 2010, were $818 million or $1.09 per share, compared with $647 million or $0.86 per share in 2009.For the quarter ended June 30, 2010, operating earnings of Power Financial were $433 million or $0.58 per share, compared with $442 million or $0.60 per share in the second quarter of 2009. For the three months ended June 30, 2010, the negative currency impact on net earnings of Lifeco was $33 million. Power Financial's share of this currency effect is $23 million or $0.03 per share.Other items for the second quarter of 2010 were a charge of $4 million or $0.01 per share, compared with earnings of $10 million or $0.01 per share for the same quarter in 2009.Net earnings of Power Financial for the quarter were $429 million or $0.57 per share in 2010, compared with $452 million or $0.61 per share in 2009. << DIVIDENDS ON PREFERRED SHARES ----------------------------- >> The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows: << ------------------------------------------------------------------------- Type of shares Record Date Payment Date Amount ------------------------------------------------------------------------- 1986 Series September 24, 2010 October 15, 2010 To be determined in accordance with the articles of the Corporation ------------------------------------------------------------------------- Series A September 24, 2010 October 15, 2010 35 cents ------------------------------------------------------------------------- Series B September 24, 2010 October 15, 2010 33.4375 cents ------------------------------------------------------------------------- Series C September 24, 2010 October 15, 2010 36.25 cents ------------------------------------------------------------------------- Series D September 24, 2010 October 15, 2010 31.25 cents ------------------------------------------------------------------------- DIVIDENDS ON PARTICIPATING SHARES --------------------------------- >> The Board of Directors also declared a quarterly dividend of 29 cents per share on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable September 30, 2010 to shareholders of record on September 9, 2010.For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred (including the Participating Preferred) and subordinate voting shares are eligible dividends. << Forward-looking Statements -------------------------- >> Certain statements in this press release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's and its subsidiaries' current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial position and results of operations as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Corporation and its subsidiaries, as well as the outlook for North American and international economies, for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Corporation's and its subsidiaries' control, affect the operations, performance and results of the Corporation and its subsidiaries and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates) the effect of applying future accounting changes (including adoption of International Financial Reporting Standards), business competition, operational and reputational risks, technological change, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors.The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the foregoing list of factors, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable base on information currently available to management, they may prove to be incorrect.Other than as specifically required by law, the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.Additional information about the risks and uncertainties of the Corporation's business is provided in its disclosure materials, including its most recent Management's Discussion and Analysis and Annual Information Form, filed with the securities regulatory authorities in Canada, available at www.sedar.com. << Non-GAAP Financial Measures --------------------------- >> In analysing the financial results of the Corporation and consistent with the presentation in previous years, net earnings are subdivided into the following components: << - operating earnings; and - other items, which include the after-tax impact of any item that management considers to be of a non-recurring nature or that could make the period-over-period comparison of results from operations less meaningful, and also include the Corporation's share of any such item presented in a comparable item manner by its subsidiaries. >> Management has used these financial measures for many years in its presentation and analysis of the financial performance of Power Corporation, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation.Operating earnings and operating earnings per share are non-GAAP financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.Attachments: Financial Information << POWER CORPORATION OF CANADA CONSOLIDATED BALANCE SHEETS ------------------------------------------------------------------------- June 30, 2010 December 31, (in millions of Canadian dollars) (unaudited) 2009 ------------------------------------------------------------------------- Assets Cash and cash equivalents 5,528 5,385 ------------------------------------------------------------------------- Investments Shares 7,346 7,463 Bonds 71,427 67,942 Mortgages and other loans 17,362 17,356 Loans to policyholders 7,052 6,957 Real estate 3,110 3,101 ------------------------------------------------------------------------- 106,297 102,819 Funds held by ceding insurers 10,345 10,839 Investments at equity 2,088 2,677 Intangible assets 4,488 4,502 Goodwill 8,776 8,760 Future income taxes 1,265 1,281 Other assets 6,768 6,744 ------------------------------------------------------------------------- 145,555 143,007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Policy liabilities Actuarial liabilities 100,072 98,059 Other 4,610 4,592 Deposits and certificates 863 907 Funds held under reinsurance contracts 359 186 Debentures and other borrowings 6,515 6,375 Preferred shares of subsidiaries 300 503 Capital trust securities and debentures 535 540 Future income taxes 1,338 1,136 Other liabilities 6,621 6,402 ------------------------------------------------------------------------- 121,213 118,700 ------------------------------------------------------------------------- Non-controlling interests 14,915 14,478 ------------------------------------------------------------------------- Shareholders' Equity Stated capital Non-participating shares 785 787 Participating shares 538 526 Contributed surplus 124 117 Retained earnings 8,929 8,742 Accumulated other comprehensive income (loss) (949) (343) ------------------------------------------------------------------------- 9,427 9,829 ------------------------------------------------------------------------- 145,555 143,007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF EARNINGS ------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 ------------------------------------------------------------------------- (unaudited) (in millions of Canadian dollars, except per share amounts) 2010 2009 2010 2009 ------------------------------------------------------------------------- Revenues Premium income 4,215 4,664 8,825 9,373 Net investment income Regular net investment income 1,349 1,654 2,807 3,261 Change in fair value on held-for-trading assets 1,101 2,250 2,603 276 ------------------------------------------------------------------------- 2,450 3,904 5,410 3,537 Fee and media income 1,416 1,301 2,841 2,570 ------------------------------------------------------------------------- 8,081 9,869 17,076 15,480 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 5,622 7,473 12,193 10,839 Commissions 554 528 1,107 1,007 Operating expenses 1,010 1,034 2,029 2,081 Financing charges 118 156 231 268 ------------------------------------------------------------------------- 7,304 9,191 15,560 14,195 ------------------------------------------------------------------------- 777 678 1,516 1,285 Share of earnings of investments at equity 57 83 54 62 Other income (charges), net (4) 8 4 (49) ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 830 769 1,574 1,298 Income taxes 173 172 327 290 Non-controlling interests 402 370 768 630 ------------------------------------------------------------------------- Net earnings 255 227 479 378 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per participating share - Basic 0.53 0.48 1.00 0.78 ------------------------------------------------------------------------- - Diluted 0.53 0.48 1.00 0.78 ------------------------------------------------------------------------- SEGMENTED INFORMATION INFORMATION ON PROFIT MEASURE ------------------------------------------------------------------------- Three months ended Par- June 30, 2010 Lifeco IGM jointco Other Total ------------------------------------------------------------------------- Revenues Premium income 4,215 - - - 4,215 Net investment income Regular net investment income 1,342 17 - (10) 1,349 Change in fair value on held-for-trading assets 1,091 10 - - 1,101 ------------------------------------------------------------------------- 2,433 27 - (10) 2,450 Fee and media income 718 617 - 81 1,416 ------------------------------------------------------------------------- 7,366 644 - 71 8,081 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 5,622 - - - 5,622 Commissions 364 215 - (25) 554 Operating expenses 714 161 - 135 1,010 Financing charges 70 28 - 20 118 ------------------------------------------------------------------------- 6,770 404 - 130 7,304 ------------------------------------------------------------------------- 596 240 - (59) 777 Share of earnings (losses) of investments at equity - - 57 - 57 Other income (charges), net - - (4) - (4) ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 596 240 53 (59) 830 Income taxes 115 57 - 1 173 Non-controlling interests 284 116 18 (16) 402 ------------------------------------------------------------------------- Contribution to consolidated net earnings 197 67 35 (44) 255 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended Par- June 30, 2009 Lifeco IGM jointco Other Total ------------------------------------------------------------------------- Revenues Premium income 4,664 - - - 4,664 Net investment income Regular net investment income 1,616 63 - (25) 1,654 Change in fair value on held-for-trading assets 2,272 (20) - (2) 2,250 ------------------------------------------------------------------------- 3,888 43 - (27) 3,904 Fee and media income 666 549 - 86 1,301 ------------------------------------------------------------------------- 9,218 592 - 59 9,869 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 7,473 - - - 7,473 Commissions 353 198 - (23) 528 Operating expenses 721 158 - 155 1,034 Financing charges 106 32 - 18 156 ------------------------------------------------------------------------- 8,653 388 - 150 9,191 ------------------------------------------------------------------------- 565 204 - (91) 678 Share of earnings (losses) of investments at equity - - 87 (4) 83 Other income (charges), net - - (2) 10 8 ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 565 204 85 (85) 769 Income taxes 122 59 - (9) 172 Non-controlling interests 255 89 29 (3) 370 ------------------------------------------------------------------------- Contribution to consolidated net earnings 188 56 56 (73) 227 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Six months ended Par- June 30, 2010 Lifeco IGM jointco Other Total ------------------------------------------------------------------------- Revenues Premium income 8,825 - - - 8,825 Net investment income Regular net investment income 2,764 55 - (12) 2,807 Change in fair value on held-for-trading assets 2,593 10 - - 2,603 ------------------------------------------------------------------------- 5,357 65 - (12) 5,410 Fee and media income 1,454 1,228 - 159 2,841 ------------------------------------------------------------------------- 15,636 1,293 - 147 17,076 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 12,193 - - - 12,193 Commissions 727 430 - (50) 1,107 Operating expenses 1,432 322 - 275 2,029 Financing charges 139 55 - 37 231 ------------------------------------------------------------------------- 14,491 807 - 262 15,560 ------------------------------------------------------------------------- 1,145 486 - (115) 1,516 Share of earnings (losses) of investments at equity - - 54 - 54 Other income (charges), net - - 4 - 4 ------------------------------------------------------------------------- Earnings before income taxes and non-control- ling interests 1,145 486 58 (115) 1,574 Income taxes 201 122 - 4 327 Non-controlling interests 546 230 20 (28) 768 ------------------------------------------------------------------------- Contribution to consolidated net earnings 398 134 38 (91) 479 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Six months ended Par- June 30, 2009 Lifeco IGM jointco Other Total ------------------------------------------------------------------------- Revenues Premium income 9,373 - - - 9,373 Net investment income Regular net investment income 3,127 125 - 9 3,261 Change in fair value on held-for-trading assets 305 (29) - - 276 ------------------------------------------------------------------------- 3,432 96 - 9 3,537 Fee and media income 1,346 1,059 - 165 2,570 ------------------------------------------------------------------------- 14,151 1,155 - 174 15,480 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 10,839 - - - 10,839 Commissions 660 390 - (43) 1,007 Operating expenses 1,461 317 - 303 2,081 Financing charges 181 59 - 28 268 ------------------------------------------------------------------------- 13,141 766 - 288 14,195 ------------------------------------------------------------------------- 1,010 389 - (114) 1,285 Share of earnings (losses) of investments at equity - - 67 (5) 62 Other income (charges), net - - (59) 10 (49) ------------------------------------------------------------------------- Earnings before income taxes and non-control- ling interests 1,010 389 8 (109) 1,298 Income taxes 200 111 - (21) 290 Non-controlling interests 473 177 3 (23) 630 ------------------------------------------------------------------------- Contribution to consolidated net earnings 337 101 5 (65) 378 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> For further information: Mr. Edward Johnson, Senior Vice-President, General Counsel and Secretary, 514-286-7400