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Press release from CNW Group

Power Corporation of Canada Reports 2011 Second Quarter Financial Results and Dividends

Friday, August 05, 2011

Power Corporation of Canada Reports 2011 Second Quarter Financial Results and Dividends15:54 EDT Friday, August 05, 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 accordinglyWINNIPEG, MB, Aug. 5, 2011 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the six-month period ended June 30, 2011 were $594 million or $1.24 per share, compared with $481 million or $1.01 per share in the corresponding period of 2010. This represents a 23.7% increase on a per share basis.The increase in operating earnings reflects a higher contribution from Power Financial Corporation, a subsidiary of the Corporation, and higher income from investments.Subsidiaries contributed $587 million to Power Corporation's operating earnings for the six-month period ended June 30, 2011, compared with $530 million in the corresponding period of 2010. Results from corporate activities were a net contribution of $7 million in the six-month period ended June 30, 2011, compared with a charge of $49 million in the same period in 2010. This increase is mainly due to income from investments generated by the Corporation's interest in the Sagard 1 fund in Europe which is managed by Sagard SAS, a subsidiary of the Corporation.Other items represented a charge of $2 million in the six-month period ended June 30, 2011. In the corresponding period of 2010, other items were a charge of $131 million and consisted mainly of an impairment charge on the value of the Corporation's investment in CITIC Pacific, as required by IFRS.Net earnings attributable to participating shareholders (including other items and after dividends on non-participating shares) for the six-month period ended June 30, 2011 were $572 million or $1.24 per share, compared with $330 million or $0.72 per share in the corresponding period of 2010.SECOND QUARTER RESULTS Operating earnings for the three-month period ended June 30, 2011 were $366 million or $0.77 per share, compared with $262 million or $0.55 per share in the corresponding period in 2010. This represents an increase of 40.6% on a per share basis. The increase in operating earnings reflects a higher contribution from Power Financial Corporation and higher income from investments due principally to the income generated by Sagard 1 as mentioned above.Power Corporation's share of operating earnings from its subsidiaries was $339 million for the three-month period ended June 30, 2011, compared with $291 million for the same period in 2010. Corporate activities represented a net contribution of $27 million in the quarter ended June 30, 2011, compared with a net charge of $29 million in the corresponding period in 2010.Other items were nil in the three-month period ended June 30, 2011, compared with a charge of $87 million in the corresponding period of 2010 which consisted mainly of an impairment charge on the value of the Corporation's investment in CITIC Pacific, as required by IFRS.Net earnings attributable to participating shareholders (including other items and after dividends on non-participating shares) for the three-month period ended June 30, 2011 were $356 million or $0.77 per share, compared with $165 million or $0.36 per share in the corresponding period in 2010.RESULTS OF POWER FINANCIAL CORPORATIONPower Financial Corporation's operating earnings for the six-month period ended June 30, 2011 were $931 million or $1.24 per share, compared with $829 million or $1.11 per share in the corresponding period in 2010. This represents an increase of 11.9% on a per share basis.The increase in operating earnings reflects a higher contribution from Power Financial's subsidiaries, Great-West Lifeco Inc. (Lifeco), IGM Financial Inc. and from Pargesa Holding SA (Pargesa).Included in net earnings of Lifeco for the second quarter of 2011 was a release of a legal provision in Putnam Investments, LLC resulting from a settlement of a lawsuit pertaining to certain private equity investments with a net earnings impact of $55 million (Power Corporation's share: $26 million).Net earnings attributable to common shareholders of Power Financial (including other items and after dividends on perpetual preferred shares) for the six-month period ended June 30, 2011 were $877 million or $1.24 per share, compared with $785 million or $1.11 per share in the corresponding period of 2010.For the three-month period ended June 30, 2011, Power Financial reported operating earnings of $533 million or $0.72 per share, compared with $449 million or $0.61 per share for the same period in 2010. This represents an increase of 18.7% on a per share basis.Net earnings attributable to common shareholders of Power Financial (including other items and dividends on perpetual preferred shares) for the three-month period ended June 30, 2011 were $507 million or $0.72 per share, compared with $422 million or $0.60 per share in the corresponding quarter of 2010.DIVIDENDS ON PREFERRED SHARESThe Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:Type of Shares  Record DatePayment DateAmount1986 SeriesSeptember 23, 2011  October 15, 2011   To be determined in accordance with the articles of the CorporationSeries ASeptember 23, 2011October 15, 201135¢Series BSeptember 23, 2011October 15, 201133.4375¢Series CSeptember 23, 2011October 15, 201136.25¢Series DSeptember 23, 2011October 15, 201131.25¢DIVIDENDS ON PARTICIPATING SHARESThe Board of Directors also declared a dividend of 29 cents per share on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable September 30, 2011 to shareholders of record September 9, 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 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 and 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 applicable Canadian 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 and material factors or assumptions on which information contained in forward-looking statements is based is provided in its disclosure materials, including this MD&A and its 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.POWER CORPORATION OF CANADA CONDENSED CONSOLIDATED BALANCE SHEETS(unaudited)[in millions of Canadian dollars]June 30,2011 December 31,2010 January 1,2010Assets Cash and cash equivalents3,3424,0165,383Investments      Bonds73,83174,25067,942 Mortgages and other loans20,94020,20920,613 Shares8,0027,7367,584 Investment properties3,2062,9592,615 105,979105,15498,754Loans to policyholders6,7656,8276,957Funds held by ceding insurers9,6599,85610,984Reinsurance assets2,6422,5332,800Investments in associates2,6172,5662,948Deferred tax assets1,1841,2721,332Other assets7,4017,4447,355Intangible assets4,2694,3174,433Goodwill8,7928,7558,686Segregated funds for the risk of unit holders96,77694,82787,495Total assets249,426247,567237,127 Liabilities Insurance contract liabilities108,225107,367104,988Investment contract liabilities775791841Deposits and certificates778835907Funds held under reinsurance contracts160149331Obligation to securitization entities3,5073,5053,310Debentures and other borrowings6,3116,7206,339Capital trust securities and debentures534535540Preferred shares of subsidiaries--499Deferred tax liabilities1,1581,1651,043Other liabilities6,8927,7727,110Insurance and investment contracts on account of unit holders96,77694,82787,495Total liabilities225,116223,666213,403 Equity Stated capital  Non-participating shares781783787 Participating shares570549526Retained earnings7,8937,5787,395Reserves425541894Total shareholders' equity9,6699,4519,602Non-controlling interests14,64114,45014,122Total equity24,31023,90123,724Total liabilities and equity249,426247,567237,127 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Three months ended June 30 Six months ended June 30(unaudited)[in millions of Canadian dollars, except per share amounts]2011201020112010Revenues Premium income  Gross premiums written4,9804,8879,92110,135 Ceded premiums(708)(672)(1,354)(1,310)Total net premiums4,2724,2158,5678,825Net investment income     Regular net investment income1,4921,2452,9582,665 Change in fair value7151,1705242,746 2,2072,4153,4825,411Fee and media income1,4841,3922,9552,796Total revenues7,9638,02215,00417,032 Expenses Policyholder benefits3,6903,8607,7807,748Policyholder dividends and experience refunds377351730734Change in insurance and investment contract liabilities1,2311,4471,3673,808 5,2985,6589,87712,290Commissions5935421,1781,094Operating expenses9589891,9891,995Financing charges111118226236Total expenses6,9607,30713,27015,615 1,0037151,7341,417Share of earnings of investment in associates63536457Earnings before income taxes1,0667681,7981,474Income taxes232184367347Net earnings before non-controlling interests8345841,4311,127Attributable to non-controlling interests(468)(409)(839)(777)Net earnings attributable to shareholders366175592350Non-participating share dividends(10)(10)(20)(20)Net earnings attributable to participating shareholders356165572330 Earnings per participating share  - Basic0.770.361.240.72 - Diluted0.770.351.230.71SEGMENTED INFORMATION INFORMATION ON PROFIT MEASUREThree months ended June 30, 2011LifecoIGM Parjointco Other TotalRevenues  Premium income4,272--- 4,272Net investment income  Regular net investment income1,41634-421,492 Change in fair value7078--715 2,12342-422,207Fee and media income739668-771,484 7,134710-1197,963Expenses Policyholder benefits, dividends and experiencerefunds, and change in insurance andinvestment contract liabilities5,298---5,298Commissions390229-(26)593Operating expenses651172-135958Financing charges7226-13111 6,411427-122 6,960 723283-(3)1,003Share of earnings of investment in associates--63-63Earnings before income taxes72328363(3)1,066Income taxes16164-7232Contribution to net earnings before non-controlling interests56221963(10)834Attributable to non-controlling interests(324) (136)(21)13(468)Contribution to net earnings attributable to shareholders23883423366 Three months ended June 30, 2010LifecoIGM Parjointco OtherTotalRevenues     Premium income4,215---4,215Net investment income      Regular net investment income1,33512-(102)1,245 Change in fair value1,16010--1,170 2,49522-(102)2,415Fee and media income703617-721,392 7,413639-(30)8,022Expenses     Policyholder benefits, dividends and experiencerefunds, and change in insurance andinvestment contract liabilities5,658---5,658Commissions355212-(25)542Operating expenses705160-124989Financing charges7028-20118 6,788400-1197,307 625239- (149)715Share of earnings (losses) of investment in associates--53-53Earnings before income taxes62523953(149)768Income taxes12657-1184Contribution to net earnings before non-controlling interests49918253(150)584Attributable to non-controlling interests(292) (115)(18)16(409)Contribution to net earnings attributableto shareholders2076735(134)175 Six months ended June 30, 2011LifecoIGM Parjointco OtherTotalRevenues     Premium income8,567---8,567Net investment income      Regular net investment income2,84383-322,958 Change in fair value5204--524 3,36387-323,482Fee and media income1,459 1,343-1532,955 13,3891,430-18515,004Expenses     Policyholder benefits, dividends and experiencerefunds, and change in insurance andinvestment contract liabilities9,877---9,877Commissions767463-(52)1,178Operating expenses1,375341-2731,989Financing charges14456-26226 12,163860-247 13,270 1,226570-(62)1,734Share of earnings of investment in associates--65(1)64Earnings before income taxes1,22657065(63)1,798Income taxes230137--367Contribution to net earnings before non-controlling interests99643365(63)1,431Attributable to non-controlling interests(570)(270)(2223(839)Contribution to net earnings attributableto shareholders42616343(40)592 Six months ended June 30, 2010LifecoIGM Parjointco OtherTotalRevenues     Premium income8,825--- 8,825Net investment income      Regular net investment income2,75265- (152)2,665 Change in fair value2,73610--2,746 5,48875-(152)5,411Fee and media income1,427 1,228-1412,796 15,7401,303-(11)17,032Expenses     Policyholder benefits, dividends and experiencerefunds, and change in insuranceand investment contract liabilities12,290---12,290Commissions718426-(50)1,094Operating expenses1,423319-2531,995Financing charges14455-37236 14,575800-240 15,615 1,165503-(251)1,417Share of earnings (losses) of investment in associates--57-57Earnings before income taxes1,16550357(251)1,474Income taxes215127-5347Contribution to net earnings before non-controlling interests95037657(256)1,127Attributable to non-controlling interests(548)(237)(20)28(777)Contribution to net earnings attributableto shareholders40213937(228)350 For further information: Attachments:For further information, please contact: Financial  Information   Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400