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Press release from CNW Group

Power Financial Corporation - Six-month financial results and dividends

Friday, August 06, 2010

Power Financial Corporation - Six-month financial results and dividends10:44 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, MB, Aug. 6 /CNW Telbec/ - 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. This represents an increase of 17.9% on a per share basis.The increase in operating earnings reflects primarily the increase in the contribution from the Corporation's subsidiaries.Earnings from other items were $4 million or nil per share for the six-month period ended June 30, 2010, compared with a charge of $47 million or $0.06 per share in the corresponding period of 2009, and consisted mainly of Power Financial's share of non-operating results recorded by Pargesa, as discussed in the Parjointco N.V. section below.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. << SECOND QUARTER RESULTS ---------------------- >> For the quarter ended June 30, 2010, operating earnings of the Corporation were $433 million or $0.58 per share, compared with $442 million or $0.60 per share in the second quarter of 2009.Other items for the second quarter of 2010 represented 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 for the quarter were $429 million or $0.57 per share in 2010, compared with $452 million or $0.61 per share in 2009. << RESULTS OF SUBSIDIARIES AND PARJOINTCO -------------------------------------- >> Great-West Lifeco Inc.Great-West Lifeco reported net earnings attributable to common shareholders of $874 million or $0.923 per share for the six-month period ended June 30, 2010, compared with $739 million or $0.783 per share in the corresponding period of 2009, an increase of 18% on a per share basis. For the three-month period ended June 30, 2010, Lifeco reported net earnings attributable to common shareholders of $433 million or $0.457 per share, compared with $413 million or $0.437 per share in the same period in 2009.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 Lifeco's net earnings. 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 $45 million or $0.06 per share for the six-month period ended June 30, 2010, and $23 million or $0.03 per share for the three-month period ended June 30, 2010.Lifeco's contribution to Power Financial's operating earnings was $601 million for the six month period ended June 30, 2010, compared with $508 million for the corresponding period in 2009. For the three-month period ended June 30, 2010, Lifeco's contribution to Power Financial's operating earnings was $297 million, compared with $284 million in 2009.IGM Financial Inc.IGM Financial reported net earnings available to common shareholders for the six months ended June 30, 2010 of $358 million or $1.36 per share on a diluted basis, compared with $278 million or $1.05 per share in the same period in 2009, an increase of 29.5% on a per share basis.For the three months ended June 30, 2010, IGM reported net earnings available to common shareholders of $179 million or $0.68 per share on a diluted basis, compared with $145 million or $0.55 per share in 2009, an increase of 23.6% on a per share basis.For the six-month and three-month periods ended June 30, 2010, IGM contributed $202 million and $101 million to Power Financial's operating earnings, compared with $153 million and $85 million in 2009.Parjointco N.V.Power Financial holds a 50% interest in Parjointco N.V., which in turn holds a 54.1% interest in Pargesa Holding SA. Pargesa reported operating earnings of SF220 million in the six month period ended June 30, 2010, compared with SF243 million for the corresponding period in 2009. For the three-month period ended June 30, 2010, Pargesa's operating earnings were SF228 million, compared with SF312 million in the corresponding period of 2009. The Pargesa results for the second quarter of 2009 included Pargesa's SF73 million share of a special one-time dividend paid by GDF Suez.Expressed in Canadian dollars, the contribution from this investment at equity to Power Financial's operating earnings was $54 million for the six-month period ended June 30, 2010, compared with $68 million for the corresponding period in 2009. For the second quarter of 2010, the contribution from Pargesa to Power Financial's operating earnings was $57 million, compared with $88 million in the second quarter of 2009.Pargesa's non-operating results were earnings of SF8 million in the six-month period ended June 30, 2010. This compared with non-operating charges of SF195 million in 2009, which essentially consisted of the charge resulting from the adjustment of the carrying value of Pernod Ricard and Iberdrola recorded in the first quarter of 2009. As a result, net earnings reported by Pargesa were SF228 million in the six-month period ended June 30, 2010, compared with SF47 million in the same period of 2009. For the second quarter of 2010, Pargesa reported net earnings of SF214 million, compared with SF313 million in the second quarter of 2009. << PREFERRED SHARE DIVIDENDS ------------------------- >> The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows: << ------------------------------------------------------------------------- Type of Shares Record Date Payment Date Amount ------------------------------------------------------------------------- Series A October 25, 2010 November 15, 2010 To be determined in accordance with the articles of the Corporation ------------------------------------------------------------------------- Series C October 8, 2010 October 31, 2010 32.50 cents ------------------------------------------------------------------------- Series D October 8, 2010 October 31, 2010 34.375 cents ------------------------------------------------------------------------- Series E October 8, 2010 October 31, 2010 32.8125 cents ------------------------------------------------------------------------- Series F October 8, 2010 October 31, 2010 36.875 cents ------------------------------------------------------------------------- Series H October 8, 2010 October 31, 2010 35.9375 cents ------------------------------------------------------------------------- Series I October 8, 2010 October 31, 2010 37.50 cents ------------------------------------------------------------------------- Series K October 8, 2010 October 31, 2010 30.9375 cents ------------------------------------------------------------------------- Series L October 8, 2010 October 31, 2010 31.875 cents ------------------------------------------------------------------------- Series M October 8, 2010 October 31, 2010 37.50 cents ------------------------------------------------------------------------- Series O October 8, 2010 October 31, 2010 36.25 cents ------------------------------------------------------------------------- Series P October 8, 2010 October 31, 2010 37.37 cents (initial dividend) ------------------------------------------------------------------------- COMMON SHARE DIVIDEND --------------------- >> The Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's common shares payable November 1, 2010 to shareholders of record on September 30, 2010.For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends of the Corporation's preferred and common shares are eligible dividends. << Forward-looking Statements -------------------------- >> Certain statements in this News 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 based 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 about the Corporation's business is provided in its disclosure materials, including its most recent Management's Discussion and Analysis of Operating Results 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 manner by Lifeco or IGM. >> Management has used these financial measures for many years in its presentation and analysis of the financial performance of Power Financial, 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 FINANCIAL CORPORATION CONSOLIDATED BALANCE SHEETS ------------------------------------------------------------------------- June 30, 2010 December 31, (in millions of Canadian dollars) (unaudited) 2009 ------------------------------------------------------------------------- Assets Cash and cash equivalents 4,799 4,855 ------------------------------------------------------------------------- Investments Shares 6,286 6,392 Bonds 71,186 67,388 Mortgages and other loans 17,362 17,356 Loans to policyholders 7,052 6,957 Real estate 3,110 3,101 ------------------------------------------------------------------------- 104,996 101,194 Funds held by ceding insurers 10,345 10,839 Investment at equity 2,086 2,675 Intangible assets 4,355 4,366 Goodwill 8,672 8,655 Future income taxes 1,256 1,268 Other assets 6,396 6,379 ------------------------------------------------------------------------- 142,905 140,231 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 6,107 5,967 Preferred shares of the Corporation 300 300 Preferred shares of subsidiaries - 203 Capital trust securities and debentures 535 540 Future income taxes 1,301 1,098 Other liabilities 6,532 6,294 ------------------------------------------------------------------------- 120,679 118,146 ------------------------------------------------------------------------- Non-controlling interests 9,152 8,878 ------------------------------------------------------------------------- Shareholders' Equity Stated capital Perpetual preferred shares 2,005 1,725 Common shares 636 605 Contributed surplus 103 102 Retained earnings 11,432 11,165 Accumulated other comprehensive income (loss) (1,102) (390) ------------------------------------------------------------------------- 13,074 13,207 ------------------------------------------------------------------------- 142,905 140,231 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 1,338 1,669 2,777 3,214 Change in fair value on held-for-trading assets 1,101 2,252 2,603 276 ------------------------------------------------------------------------- 2,439 3,921 5,380 3,490 Fee income 1,309 1,192 2,632 2,362 ------------------------------------------------------------------------- 7,963 9,777 16,837 15,225 ------------------------------------------------------------------------- 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 889 889 1,781 1,801 Financing charges 109 147 213 257 ------------------------------------------------------------------------- 7,174 9,037 15,294 13,904 ------------------------------------------------------------------------- 789 740 1,543 1,321 Share of earnings of investment at equity 57 87 54 67 Other income (charges), net (4) 10 4 (47) ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 842 837 1,601 1,341 Income taxes 171 181 322 311 Non-controlling interests 242 204 461 383 ------------------------------------------------------------------------- Net earnings 429 452 818 647 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per common share - Basic 0.57 0.61 1.09 0.86 ------------------------------------------------------------------------- - Diluted 0.57 0.61 1.09 0.86 ------------------------------------------------------------------------- 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 - (21) 1,338 Change in fair value on held-for-trading assets 1,091 10 - - 1,101 ------------------------------------------------------------------------- 2,433 27 - (21) 2,439 Fee income 718 617 - (26) 1,309 ------------------------------------------------------------------------- 7,366 644 - (47) 7,963 ------------------------------------------------------------------------- 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 - 14 889 Financing charges 70 28 - 11 109 ------------------------------------------------------------------------- 6,770 404 - - 7,174 ------------------------------------------------------------------------- 596 240 - (47) 789 Share of earnings of investment at equity - - 57 - 57 Other income (charges), net - - (4) - (4) ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 596 240 53 (47) 842 Income taxes 115 57 - (1) 171 Non-controlling interests 184 82 - (24) 242 ------------------------------------------------------------------------- Contribution to consolidated net earnings 297 101 53 (22) 429 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 - (10) 1,669 Change in fair value on held-for-trading assets 2,272 (20) - - 2,252 ------------------------------------------------------------------------- 3,888 43 - (10) 3,921 Fee income 666 549 - (23) 1,192 ------------------------------------------------------------------------- 9,218 592 - (33) 9,777 ------------------------------------------------------------------------- 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 - 10 889 Financing charges 106 32 - 9 147 ------------------------------------------------------------------------- 8,653 388 - (4) 9,037 ------------------------------------------------------------------------- 565 204 - (29) 740 Share of earnings of investment at equity - - 87 - 87 Other income (charges), net - - (2) 12 10 ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 565 204 85 (17) 837 Income taxes 122 59 - - 181 Non-controlling interests 159 60 - (15) 204 ------------------------------------------------------------------------- Contribution to consolidated net earnings 284 85 85 (2) 452 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 - (42) 2,777 Change in fair value on held-for-trading assets 2,593 10 - - 2,603 ------------------------------------------------------------------------- 5,357 65 - (42) 5,380 Fee income 1,454 1,228 - (50) 2,632 ------------------------------------------------------------------------- 15,636 1,293 - (92) 16,837 ------------------------------------------------------------------------- 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 - 27 1,781 Financing charges 139 55 - 19 213 ------------------------------------------------------------------------- 14,491 807 - (4) 15,294 ------------------------------------------------------------------------- 1,145 486 - (88) 1,543 Share of earnings of investment at equity - - 54 - 54 Other income (charges), net - - 4 - 4 ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 1,145 486 58 (88) 1,601 Income taxes 201 122 - (1) 322 Non-controlling interests 343 162 - (44) 461 ------------------------------------------------------------------------- Contribution to consolidated net earnings 601 202 58 (43) 818 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 - (38) 3,214 Change in fair value on held-for-trading assets 305 (29) - - 276 ------------------------------------------------------------------------- 3,432 96 - (38) 3,490 Fee income 1,346 1,059 - (43) 2,362 ------------------------------------------------------------------------- 14,151 1,155 - (81) 15,225 ------------------------------------------------------------------------- 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 - 23 1,801 Financing charges 181 59 - 17 257 ------------------------------------------------------------------------- 13,141 766 - (3) 13,904 ------------------------------------------------------------------------- 1,010 389 - (78) 1,321 Share of earnings of investment at equity - - 67 - 67 Other income (charges), net - - (59) 12 (47) ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 1,010 389 8 (66) 1,341 Income taxes 200 111 - - 311 Non-controlling interests 302 125 - (44) 383 ------------------------------------------------------------------------- Contribution to consolidated net earnings 508 153 8 (22) 647 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> For further information: Mr. Edward Johnson, Senior Vice-President, General Counsel and Secretary, 514-286-7400