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Press release from CNW Group

Power Financial Corporation reports 2011 First Quarter Financial Results and Dividends

Thursday, May 12, 2011

Power Financial Corporation reports 2011 First Quarter Financial Results and Dividends11:31 EDT Thursday, May 12, 2011Readers are referred to the sections entitled "Forward-looking Statements" and "Non-IFRS Financial Measures" at the end of this release. The Corporation's financial results are reported under International Financial Reporting Standards (IFRS) and all comparative figures have been restated accordingly.MONTREAL, May 12 /CNW Telbec/ - Power Financial Corporation's operating earnings for the three-month period ended March 31, 2011 were $398 million or $0.52 per share, compared with $380 million or $0.50 per share in the corresponding period in 2010. Included in operating earnings for the first quarter of 2011 was the establishment of provisions, as previously disclosed by Great-West Lifeco Inc. (Lifeco), relating to earthquake events in Japan and New Zealand, which negatively impacted Lifeco's net earnings by $75 million. Power Financial's share of these provisions represented $53 million or $0.07 per share.For the first quarter of 2011, other items were a charge of $2 million, compared with a positive contribution of $6 million in the first quarter of 2010, and consisted, for both periods, of Power Financial's share of non-operating earnings recorded by Pargesa Holding SA (Pargesa).As a result, net earnings attributable to common shareholders including other items for the three-month period ended March 31, 2011 were $370 million or $0.52 per share, compared with $363 million or $0.51 per share in the first quarter of 2010.RESULTS OF SUBSIDIARIES AND PARJOINTCOGreat-West Lifeco Inc. Lifeco reported net and operating earnings attributable to common shareholders of $415 million (which include the provisions of $75 million as mentioned above) or $0.438 per share for the three months ended March 31, 2011, compared with $428 million or $0.452 per share in the corresponding period of 2010.Lifeco's contribution to Power Financial's operating earnings was $284 million for the three-month period ended March 31, 2011, compared with $295 million in the same period in 2010.IGM Financial Inc.IGM Financial Inc. (IGM) reported net and operating earnings available to common shareholders for the three-month period ended March 31, 2011 of $212 million or $0.81 per share, compared with $192 million or $0.73 per share in the corresponding period of 2010.For the three months ended March 31, 2011, the contribution from IGM to Power Financial's operating earnings was $121 million, compared with $108 million in the same period in 2010.Parjointco N.V.Power Financial holds a 50% interest in Parjointco N.V., which in turn holds a 54.1% interest in Pargesa. Pargesa reported operating earnings of SF14 million in the three-month period ended March 31, 2011, compared with an operating loss of SF8 million in the corresponding period of 2010. Expressed in Canadian dollars, the contribution from Pargesa to Power Financial's operating earnings was $4 million for the three-month period ended March 31, 2011, compared with a charge of $2 million in the same period in 2010.DIVIDENDS ON PREFERRED SHARES The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:Type of sharesRecord DatePayment DateAmountSeries AJuly 25, 2011August 15, 2011To be determined in accordancewith the articles of the CorporationSeries DJuly 8, 2011July 31, 201134.375¢Series EJuly 8, 2011July 31, 201132.8125¢Series FJuly 8, 2011July 31, 201136.875¢Series HJuly 8, 2011July 31, 201135.9375¢Series IJuly 8, 2011July 31, 201137.50¢Series KJuly 8, 2011July 31, 201130.9375¢Series LJuly 8, 2011July 31, 201131.875¢Series MJuly 8, 2011July 31, 201137.50¢Series OJuly 8, 2011July 31, 201136.25¢Series PJuly 8, 2011July 31, 201127.50¢DIVIDEND ON COMMON SHARESThe Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's common shares payable August 1, 2011 to shareholders of record June 30, 2011.For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred and common shares are eligible dividends.Forward-Looking StatementsCertain statements in this News Release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's current expectations, or with respect to disclosure regarding the Corporation's public subsidiaries, reflects such subsidiaries' disclosed current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial performance, financial position or cash flows 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, 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 and Annual Information Form, filed with the securities regulatory authorities in Canada, available at Non-IFRS Financial MeasuresIn 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; andother 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-IFRS financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.Attachments:       Financial InformationCONSOLIDATED BALANCE SHEETS       (unaudited)[in millions of Canadian dollars]March 31,2011 December 31,2010 January 1,2010 Assets      Cash and cash equivalents3,940 3,656 4,855 Investments       Bonds72,284 73,582 67,388  Mortgages and other loans20,607 20,209 20,613  Shares6,743 6,415 6,392  Investment properties3,102 2,959 2,615  102,736 103,165 97,008 Loans to policyholders6,734 6,827 6,957 Funds held by ceding insurers9,776 9,856 10,984 Reinsurance assets2,575 2,533 2,800 Investment in associates2,628 2,448 2,829 Deferred tax assets1,186 1,214 1,300 Other assets6,888 7,210 7,065 Intangible assets4,201 4,231 4,359 Goodwill8,741 8,713 8,655 Segregated funds for the risk of unit holders97,280 94,827 87,495 Total Assets246,685 244,680 234,307        Liabilities      Insurance contract liabilities107,281 107,367 104,988 Investment contract liabilities747 791 841 Deposits and certificates818 835 907 Funds held under reinsurance contracts146 149 331 Obligation to securitization entities3,528 3,505 3,310 Debentures and other borrowings6,396 6,313 5,931 Capital trust securities and debentures535 535 540 Preferred shares of the Corporation- - 300 Preferred shares of subsidiaries- - 199 Deferred tax liabilities1,075 1,136 1,018 Other liabilities6,958 7,484 6,872 Insurance and investment contracts on account of unit holders97,280 94,827 87,495 Total Liabilities224,764 222,942 212,732        Equity      Stated capital       Perpetual preferred shares2,005 2,005 1,725  Common shares636 636 605 Retained earnings10,139 10,007 9,547 Reserves290 211 990 Total shareholders' equity13,070 12,859 12,867 Non-controlling interests8,851 8,879 8,708 Total Equity21,921 21,738 21,575 Total Liabilities and Equity246,685 244,680 234,307 CONSOLIDATED STATEMENTS OF EARNINGS         Three months ended March 31(unaudited) [in millions of Canadian dollars, except per share amounts]2011 2010      Revenues    Premium income     Gross premiums written4,941 5,248  Ceded premiums(646) (638) Total net premiums4,295 4,610 Net investment income     Regular net investment income1,455 1,449  Change in fair value(191) 1,576  1,264 3,025 Fee income1,369 1,311 Total revenues6,928 8,946      Expenses    Policyholder benefits4,090 3,888 Policyholder dividends and experience refunds353 383 Change in insurance and investment contract liabilities136 2,361  4,579 6,632 Commissions585 552 Operating expenses906 890 Financing charges107 109 Total expenses6,177 8,183  751 763 Share of earnings of investment in associates2 4 Earnings before income taxes753 767 Income taxes137 160 Net earnings before non-controlling interests616 607 Attributable to non-controlling interests(220) (221) Net earnings attributable to shareholders396 386 Perpetual preferred share dividends(26) (23) Net earnings attributable to common shareholders370 363      Earnings per common share     - Basic0.52 0.51  - Diluted0.52 0.51 SEGMENTED INFORMATIONINFORMATION ON PROFIT MEASUREThree months ended March 31, 2011Lifeco IGM Parjointco Other Total Revenues            Premium income4,295 - - - 4,295 Net investment income             Regular net investment income1,427 49 - (21) 1,455  Change in fair value(187) (4) - - (191)  1,240 45 - (21) 1,264 Fee income720 675 - (26) 1,369  6,255 720   (47) 6,928 Expenses            Policyholder benefits, dividends andexperience refunds, and change ininsurance and investment contract liabilities4,579 - - - 4,579 Commissions377 234 - (26) 585 Operating expenses724 169 - 13 906 Financing charges72 30 - 5 107  5,752 433 - (8) 6,177  503 287 - (39) 751 Share of earnings of investment in associates- - 2 - 2 Earnings before income taxes503 287 2 (39) 753 Income taxes69 73 - (5) 137 Contribution to net earningsbefore non-controlling interests434 214 2 (34) 616 Attributable to non-controlling interests(150) (93) - 23 (220) Contribution to net earnings attributable to shareholders284 121 2 (11) 396  Three months ended March 31, 2010Lifeco IGM Parjointco Other Total Revenues          Premium income4,610 - - - 4,610 Net investment income           Regular net investment income1,417 53 - (21) 1,449  Change in fair value1,576 - - - 1,576  2,993 53 - (21) 3,025 Fee income724 611 - (24) 1,311  8,327 664 - (45) 8,946 Expenses          Policyholder benefits, dividends andexperience refunds, and change ininsurance and investment contract liabilities6,632 - - - 6,632 Commissions363 214 - (25) 552 Operating expenses718 159 - 13 890 Financing charges74 27 - 8 109  7,787 400 - (4) 8,183  540 264 - (41) 763 Share of earnings of investment in associates- - 4 - 4 Earnings before income taxes540 264 4 (41) 767 Income taxes90 70 - - 160 Contribution to net earningsbefore non-controlling interests450 194 4 (41) 607 Attributable to non-controlling interests(155) (86) - 20 (221) Contribution to net earnings attributable to shareholders295 108 4 (21) 386 For further information: Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400