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Press release from CNW Group

Power Corporation of Canada reports 2011 First Quarter Financial Results and Dividends

Friday, May 13, 2011

Power Corporation of Canada reports 2011 First Quarter Financial Results and Dividends11:26 EDT Friday, May 13, 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 13 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the three-month period ended March 31, 2011 were $228 million or $0.47 per share, compared with $219 million or $0.46 per share in the corresponding period in 2010.The increase in operating earnings reflects a higher contribution from Power Financial Corporation.Power Corporation's share of operating earnings for the period from its subsidiaries was $248 million, compared with $239 million in the corresponding period of 2010.For the first quarter of 2011, other items were a charge of $2 million. In the corresponding period of 2010, other items were a charge of $44 million and consisted mainly of an impairment charge on the value of the Corporation's investment in CITIC Pacific, as required by IFRS.As a result, net earnings attributable to participating shareholders for the three-month period ended March 31, 2011 were $216 million or $0.47 per share, compared with $165 million or $0.36 per share in the first quarter of 2010.RESULTS OF POWER FINANCIAL CORPORATIONPower 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 of $75 million recorded by Lifeco relating to earthquake events in Japan and New Zealand, which negatively impacted Power Financial's operating earnings by $53 million. Power Corporation's share of these provisions represented $35 million.Other items in the first quarter of 2011 were a charge of $2 million, compared with a positive contribution of $6 million in the first quarter of 2010, and consisted of Power Financial's share of non-operating earnings recorded by Pargesa Holding SA.Consequently, net earnings attributable to common shareholders of Power Financial 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.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  Amount1986 SeriesJune 23, 2011July 15, 2011To be determined in accordance with the articles of the CorporationSeries AJune 23, 2011July 15, 201135¢Series BJune 23, 2011July 15, 201133.4375¢Series CJune 23, 2011July 15, 201136.25¢Series DJune 23, 2011July 15, 201131.25¢DIVIDENDS ON PARTICIPATING SHARES The Board of Directors also declared a dividend of 29 cents per share on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable June 30, 2011 to shareholders of record June 9, 2011.For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends of the Corporation's preferred shares (including the participating preferred shares) and subordinate voting 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 www.sedar.com.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 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-IFRS financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.Attachments:  Financial InformationPOWER CORPORATION OF CANADACONSOLIDATED BALANCE SHEETS(unaudited)[in millions of Canadian dollars]March 31,2011 December 31,2010 January 1,2010 Assets      Cash and cash equivalents4,415 4,016 5,383 Investments       Bonds72,813 74,250 67,942  Mortgages and other loans20,607 20,209 20,613  Shares8,144 7,736 7,584  Investment properties3,102 2,959 2,615  104,666 105,154 98,754 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 Investments in associates2,747 2,566 2,948 Deferred tax assets1,210 1,237 1,332 Other assets7,191 7,475 7,355 Intangible assets4,287 4,317 4,433 Goodwill8,783 8,755 8,686 Segregated funds for the risk of unit holders97,280 94,827 87,495 Total Assets249,664 247,563 237,127        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 borrowings6,802 6,720 6,339 Capital trust securities and debentures535 535 540 Preferred shares of subsidiaries- - 499 Deferred tax liabilities1,103 1,165 1,043 Other liabilities7,145 7,632 7,027 Insurance and investment contracts on account of unit holders97,280 94,827 87,495 Total Liabilities225,385 223,526 213,320        Equity      Stated capital       Non-participating shares782 783 787  Participating shares569 549 526 Retained earnings7,663 7,575 7,392 Reserves648 557 908 Total shareholders' equity9,662 9,464 9,613 Non-controlling interests14,617 14,573 14,194 Total Equity24,279 24,037 23,807 Total Liabilities and Equity249,664 247,563 237,127  CONSOLIDATED STATEMENTS OF EARNINGSThree 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 income1,466 1,420  Change in fair value on held-for-trading assets(191) 1,576  1,275 2,996 Fee and media income1,471 1,404 Total revenues7,041 9,010      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 expenses1,031 1,006 Financing charges115 118 Total expenses6,310 8,308  731 702 Share of earnings of investments in associates1 4 Earnings before income taxes732 706 Income taxes135 164 Net earnings before non-controlling interests597 542 Attributable to non-controlling interests(371) (367) Net earnings attributable to shareholders226 175 Non-participating share dividends(10) (10) Net earnings attributable to participating shareholders216 165      Earnings per participating share     - Basic0.47 0.36  - Diluted0.47 0.36  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 - (10) 1,466  Change in fair value(187) (4) - - (191)  1,240 45 - (10) 1,275 Fee and media income720 675 - 76 1,471  6,255 720 - 66 7,041 Expenses          Policyholder benefits, dividends and experience refunds,and change in insurance and investment contract liabilities4,579 - - - 4,579 Commissions377 234 - (26) 585 Operating expenses724 169 - 138 1,031 Financing charges72 30 - 13 115  5,752 433 - 125 6,310  503 287 - (59) 731 Share of earnings of investments in associates- - 2 (1) 1 Earnings before income taxes503 287 2 (60) 732 Income taxes69 73 - (7) 135 Contribution to net earnings before non-controlling interests434 214 2 (53) 597 Attributable to non-controlling interests(246) (134) (1) 10 (371) Contribution to net earnings attributable to shareholders188 80 1 (43) 226            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 - (50) 1,420  Change in fair value1,576 - - -  1,576  2,993 53 - (50) 2,996 Fee and media income724 611 - 69 1,404  8,327 664 - 19 9,010 Expenses          Policyholder benefits, dividends and experience refunds, andchange in insurance and investment contract liabilities6,632 - - - 6,632 Commissions363 214 - (25) 552 Operating expenses718 159 - 129 1,006 Financing charges74 27 - 17 118  7,787 400 - 121 8,308  540 264 - (102) 702 Share of earnings (losses) of investments in associates- - 4 - 4 Earnings before income taxes540 264 4 (102) 706 Income taxes90 70 -  4 164 Contribution to net earnings before non-controlling interests450 194 4 (106) 542 Attributable to non-controlling interests(255) (122) (2) 12 (367) Contribution to net earnings attributable to shareholders195 72 2 (94) 175   For further information: Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400