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Press release from CNW Group

POWER CORPORATION OF CANADA - 2010 FINANCIAL RESULTS AND DIVIDENDS

Thursday, March 10, 2011

POWER CORPORATION OF CANADA - 2010 FINANCIAL RESULTS AND DIVIDENDS14:32 EST Thursday, March 10, 2011Readers are referred to the sections entitled "Forward-looking Statements" and "Non-GAAP Financial Measures" at the end of this release.MONTREAL, March 10 /CNW Telbec/ - Power Corporation of Canada reported today operating earnings of $1,006 million or $2.11 per participating share for the year ended December 31, 2010, compared with $867 million or $1.81 per share in 2009. This represents an increase of 16.6% on a per share basis.Subsidiaries contributed $1,100 million to Power Corporation's operating earnings for the twelve-month period ended December 31, 2010, compared with $946 million in the corresponding period in 2009, an increase of 16.3%. Results from corporate activities represented a net charge of $94 million in the twelve-month period ended December 31, 2010, compared with a net charge of $79 million in the same period in 2009.Other items, not included in operating earnings, were a charge of $99 million in 2010 and consisted mainly of Power Corporation's share of a litigation provision established by Great-West Lifeco Inc. (Lifeco) in the third quarter. Other items in the corresponding period in 2009 were a charge of $185 million and include the Corporation's share of other items recorded by Power Financial Corporation (a subsidiary of the Corporation), as well as a non-cash impairment charge of $110 million related to the Corporation's investment in CITIC Pacific.As a result, net earnings were $907 million or $1.89 per share for the twelve-month period ended December 31, 2010, compared with $682 million or $1.40 per share in the corresponding period in 2009. << FOURTH QUARTER RESULTS ---------------------- >>The Corporation's operating earnings for the three-month period ended December 31, 2010 were $256 million or $0.54 per share, compared with $203 million or $0.42 per share in the same period in 2009, an increase of 27.3% on a per share basis.For the three-month period ended December 31, 2010, subsidiaries contributed $289 million to the Corporation's operating earnings, compared with $238 million in the same period of 2009. Results from corporate activities represented a net charge of $33 million in the three-month period ended December 31, 2010, compared with a net charge of $35 million in the same period in 2009.Other items in the fourth quarter of 2010 were a charge of $6 million, compared with a charge of $149 million in the same period in 2009, which included the non-cash impairment charge on CITIC Pacific mentioned above.As a result, net earnings for the fourth quarter of 2010 were $250 million or $0.52 per share, compared with $54 million or $0.10 per share for the same period in 2009. << RESULTS OF POWER FINANCIAL CORPORATION -------------------------------------- >>Power Financial Corporation's operating earnings for the year ended December 31, 2010 were $1,733 million or $2.31 per share, compared with $1,533 million or $2.05 per share in the corresponding period in 2009. This represents an increase of 12.8% on a per share basis. The increase in operating earnings reflects primarily the contribution from Power Financial's subsidiaries Lifeco and IGM Financial Inc. (IGM).Other items were a charge of $149 million for the twelve-month period ended December 31, 2010, and consisted mainly of Power Financial's share of a litigation provision established by Lifeco in the third quarter. In the corresponding period of 2009, other items were a charge of $94 million which essentially consisted of the Corporation's share of non-recurring amounts recorded by IGM and Pargesa Holding SA (Pargesa).Including other items, net earnings of Power Financial were $1,584 million or $2.10 per share for the year ended December 31, 2010, compared with $1,439 million or $1.92 per share in the corresponding period of 2009.Power Financial's operating earnings for the three-month period ended December 31, 2010 were $452 million or $0.60 per share, compared with $384 million or $0.51 per share in the same period in 2009.Other items for the fourth quarter of 2010 were a charge of $9 million, compared with a charge of $44 million in the same period in 2009. The 2009 charge consisted mainly of non-operating items of IGM.Including other items, Power Financial's net earnings for the fourth quarter of 2010 were $443 million or $0.59 per share, compared with net earnings of $340 million or $0.45 per share for the same period in 2009.For the twelve months ended December 31, 2010, the strengthening of the Canadian dollar against the U.S. dollar, the British pound and the euro had a negative currency impact on Lifeco's net earnings of $103 million. For the three months ended December 31, 2010, negative currency impact on net earnings of Lifeco was $17 million. Power Corporation's share of this currency effect is $48 million or $0.11 per share for the twelve-month period ended December 31, 2010, and $8 million or $0.02 per share for the three-month period ended December 31, 2010. << 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 ------------------------------------------------------------------------- To be determined in accordance with the 1986 Series March 25, 2011 April 15, 2011 articles of the Corporation ------------------------------------------------------------------------- Series A March 25, 2011 April 15, 2011 35 cents ------------------------------------------------------------------------- Series B March 25, 2011 April 15, 2011 33.4375 cents ------------------------------------------------------------------------- Series C March 25, 2011 April 15, 2011 36.25 cents ------------------------------------------------------------------------- Series D March 25, 2011 April 15, 2011 31.25 cents ------------------------------------------------------------------------- DIVIDENDS ON PARTICIPATING SHARES --------------------------------- >>The Board of Directors also declared a quarterly dividend of 29 cents on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable March 31, 2011 to shareholders of record March 23, 2011.For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred shares (including the participating preferred shares) 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 ------------------------------------------------------------------------- As at December 31 (in millions of Canadian dollars) 2010 2009 ------------------------------------------------------------------------- Assets Cash and cash equivalents 4,016 5,385 ------------------------------------------------------------------------- Investments Shares 7,596 7,463 Bonds 74,303 67,942 Mortgages and other loans 16,736 17,356 Real estate 3,275 3,101 ------------------------------------------------------------------------- 101,910 95,862 Loans to policyholders 6,827 6,957 Funds held by ceding insurers 9,860 10,839 Investments at equity 2,290 2,677 Intangible assets 4,372 4,502 Goodwill 8,827 8,760 Future income taxes 1,178 1,281 Other assets 6,786 6,744 ------------------------------------------------------------------------- 146,066 143,007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Policy liabilities Actuarial liabilities 100,394 98,059 Other 4,723 4,592 Deposits and certificates 835 907 Funds held under reinsurance contracts 152 186 Debentures and other borrowings 6,755 6,375 Capital trust securities and debentures 535 540 Preferred shares of subsidiaries - 503 Future income taxes 1,204 1,136 Other liabilities 6,962 6,402 ------------------------------------------------------------------------- 121,560 118,700 ------------------------------------------------------------------------- Non-controlling interests 14,858 14,478 ------------------------------------------------------------------------- Shareholders' Equity Stated capital Non-participating shares 783 787 Participating shares 549 526 Contributed surplus 128 117 Retained earnings 9,067 8,742 Accumulated other comprehensive income (loss) (879) (343) ------------------------------------------------------------------------- 9,648 9,829 ------------------------------------------------------------------------- 146,066 143,007 For additional information, refer to the 2010 Audited Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF EARNINGS ------------------------------------------------------------------------- Three months ended For the years December 31 ended (unaudited) December 31 ------------------------------------------------------------------------- (in millions of Canadian dollars, except per share amounts) 2010 2009 2010 2009 ------------------------------------------------------------------------- Revenues Premium income 4,610 4,324 17,748 18,033 Net investment income Regular net investment income 1,499 1,388 5,829 6,254 Change in fair value on held-for-trading assets (1,564) (566) 3,646 3,453 ------------------------------------------------------------------------- (65) 822 9,475 9,707 Fee and media income 1,463 1,467 5,673 5,412 ------------------------------------------------------------------------- 6,008 6,613 32,896 33,152 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 3,553 4,283 23,063 23,809 Commissions 617 579 2,277 2,088 Operating expenses 964 1,069 4,340 4,153 Financing charges 112 112 461 523 ------------------------------------------------------------------------- 5,246 6,043 30,141 30,573 ------------------------------------------------------------------------- 762 570 2,755 2,579 Share of earnings of investments at equity 7 1 120 136 Other income (charges), net (9) (128) (5) (180) ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 760 443 2,870 2,535 Income taxes 115 76 501 531 Non-controlling interests 395 313 1,462 1,322 ------------------------------------------------------------------------- Net earnings 250 54 907 682 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per participating share - Basic 0.52 0.10 1.89 1.40 ------------------------------------------------------------------------- - Diluted 0.52 0.10 1.89 1.40 ------------------------------------------------------------------------- SEGMENTED INFORMATION INFORMATION ON PROFIT MEASURE ------------------------------------------------------------------------- For the three months ended December 31, 2010 (unaudited)(in millions Par- of Canadian dollars) Lifeco IGM jointco Other Total ------------------------------------------------------------------------- Revenues Premium income 4,610 - - - 4,610 Net investment income Regular net investment income 1,475 48 - (24) 1,499 Change in fair value on held-for-trading assets (1,555) (9) - - (1,564) ------------------------------------------------------------------------- (80) 39 - (24) (65) Fee and media income 729 654 - 80 1,463 ------------------------------------------------------------------------- 5,259 693 - 56 6,008 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 3,553 - - - 3,553 Commissions 430 227 - (40) 617 Operating expenses 650 159 - 155 964 Financing charges 71 28 - 13 112 ------------------------------------------------------------------------- 4,704 414 - 128 5,246 ------------------------------------------------------------------------- 555 279 - (72) 762 Share of earnings of investments at equity - - 7 - 7 Other income (charges), net - - (9) - (9) ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 555 279 (2) (72) 760 Income taxes 41 78 - (4) 115 Non-controlling interests 284 127 (1) (15) 395 ------------------------------------------------------------------------- Contribution to consolidated net earnings 230 74 (1) (53) 250 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- For the three months ended December 31, 2009 (unaudited)(in millions Par- of Canadian dollars) Lifeco IGM jointco Other Total ------------------------------------------------------------------------- Revenues Premium income 4,324 - - - 4,324 Net investment income Regular net investment income 1,461 (55) - (18) 1,388 Change in fair value on held-for-trading assets (549) (7) - (10) (566) ------------------------------------------------------------------------- 912 (62) - (28) 822 Fee and media income 765 609 - 93 1,467 ------------------------------------------------------------------------- 6,001 547 - 65 6,613 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 4,283 - - - 4,283 Commissions 391 213 - (25) 579 Operating expenses 759 149 - 161 1,069 Financing charges 62 33 - 17 112 ------------------------------------------------------------------------- 5,495 395 - 153 6,043 ------------------------------------------------------------------------- 506 152 - (88) 570 Share of earnings of investments at equity - - 1 - 1 Other income (charges), net - - (8) (120) (128) ------------------------------------------------------------------------- Earnings before income taxes and non-controlling interests 506 152 (7) (208) 443 Income taxes 47 38 - (9) 76 Non-controlling interests 259 71 (2) (15) 313 ------------------------------------------------------------------------- Contribution to consolidated net earnings 200 43 (5) (184) 54 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- For the year ended December 31, 2010 (in millions of Par- Canadian dollars) Lifeco IGM jointco Other Total ------------------------------------------------------------------------- Revenues Premium income 17,748 - - - 17,748 Net investment income Regular net investment income 5,743 119 - (33) 5,829 Change in fair value on held-for-trading assets 3,633 13 - - 3,646 ------------------------------------------------------------------------- 9,376 132 - (33) 9,475 Fee and media income 2,874 2,491 - 308 5,673 ------------------------------------------------------------------------- 29,998 2,623 - 275 32,896 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 23,063 - - - 23,063 Commissions 1,523 869 - (115) 2,277 Operating expenses 3,145 636 - 559 4,340 Financing charges 283 111 - 67 461 ------------------------------------------------------------------------- 28,014 1,616 - 511 30,141 ------------------------------------------------------------------------- 1,984 1,007 - (236) 2,755 Share of earnings of investments at equity - - 120 - 120 Other income (charges), net - - (5) - (5) ------------------------------------------------------------------------- Earnings before income taxes and non- controlling interests 1,984 1,007 115 (236) 2,870 Income taxes 227 271 - 3 501 Non-controlling interests 1,005 464 39 (46) 1,462 ------------------------------------------------------------------------- Contribution to consolidated net earnings 752 272 76 (193) 907 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- For the year ended December 31, 2009 (in millions of Par- Canadian dollars) Lifeco IGM jointco Other Total ------------------------------------------------------------------------- Revenues Premium income 18,033 - - - 18,033 Net investment income Regular net investment income 6,179 105 - (30) 6,254 Change in fair value on held-for-trading assets 3,490 (27) - (10) 3,453 ------------------------------------------------------------------------- 9,669 78 - (40) 9,707 Fee and media income 2,839 2,250 - 323 5,412 ------------------------------------------------------------------------- 30,541 2,328 - 283 33,152 ------------------------------------------------------------------------- Expenses Policyholder benefits, dividends and experience refunds, and change in actuarial liabilities 23,809 - - - 23,809 Commissions 1,370 808 - (90) 2,088 Operating expenses 2,946 614 - 593 4,153 Financing charges 336 126 - 61 523 ------------------------------------------------------------------------- 28,461 1,548 - 564 30,573 ------------------------------------------------------------------------- 2,080 780 - (281) 2,579 Share of earnings (losses) of investments at equity - - 141 (5) 136 Other income (charges), net - - (70) (110) (180) ------------------------------------------------------------------------- Earnings before income taxes and non- controlling interests 2,080 780 71 (396) 2,535 Income taxes 345 221 - (35) 531 Non-controlling interests 994 353 25 (50) 1,322 Contribution to consolidated net earnings 741 206 46 (311) 682 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>For further information: Mr. Edward Johnson, Senior Vice-President, General Counsel and Secretary, (514) 286-7400