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Press release from CNW Group

Power Financial Corporation reports 2011 Second Quarter Financial Results and Dividends

Friday, August 05, 2011

Power Financial Corporation reports 2011 Second Quarter Financial Results and Dividends10:47 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 accordingly.WINNIPEG, MB, Aug. 5, 2011 /CNW Telbec/ - Power 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.Other items were a charge of $2 million for the six months ended June 30, 2011, compared with a positive contribution of $2 million in the corresponding period of 2010, and consisted, for both periods, of Power Financial's share of non-operating earnings recorded by Pargesa Holding SA (Pargesa).Net earnings attributable to common shareholders (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.SECOND QUARTER RESULTSFor the quarter ended June 30, 2011, operating earnings of the Corporation were $533 million or $0.72 per share, compared with $449 million or $0.61 per share in the second quarter of 2010. This represents an increase of 18.7% on a per share basis.For the three-month period ended June 30, 2011, other items were nil, compared with a charge of $4 million for the same period in 2010.Net earnings attributable to common shareholders (including other items and after dividends on perpetual preferred shares) for the quarter ended June 30, 2011 were $507 million or $0.72 per share, compared with $422 million or $0.60 per share in the corresponding period of 2010.RESULTS OF SUBSIDIARIES AND PARJOINTCOGREAT-WEST LIFECO INC. Great-West Lifeco Inc. (Lifeco) reported net and operating earnings attributable to common shareholders of $941 million or $0.991 per share for the six-month period ended June 30, 2011, compared with $883 million or $0.932 per share in the corresponding period of 2010. This represents an increase of 6.3% on a per share basis.For the three-month period ended June 30, 2011, Lifeco reported net and operating earnings attributable to common shareholders of $526 million or $0.553 per share, compared with $455 million or $0.480 per share in the corresponding period of 2010, an increase of 15.2% on a per share basis.Included in net earnings 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 Financial's share: $39 million).Lifeco's contribution to Power Financial's operating earnings was $644 million for the six-month period ended June 30, 2011, compared with $607 million in the corresponding period in 2010. For the three-month period ended June 30, 2011, Lifeco's contribution to Power Financial's operating earnings was $360 million, compared with $312 million in the same period in 2010.IGM FINANCIAL INC.IGM Financial Inc. (IGM) reported net and operating earnings available to common shareholders of $429 million or $1.65 per share for the six-month period ended June 30, 2011, compared with $370 million or $1.40 per share in the same period in 2010, an increase of 17.9% on a per share basis.For the three-month period ended June 30, 2011, IGM reported net and operating earnings available to common shareholders of $217 million or $0.84 per share, compared with $178 million or $0.68 per share in the same period in 2010, an increase of 23.5% on a per share basis.IGM's contribution to Power Financial's operating earnings was $246 million for the six-month period ended June 30, 2011, compared with $209 million in the same period in 2010. For the three-month period ended June 30, 2011, IGM's contribution to Power Financial's operating earnings was $125 million, compared with $101 million in the corresponding period in 2010.PARJOINTCO N.V.Power Financial holds a 50% interest in Parjointco N.V., which in turn held a 56.5% interest in Pargesa as at June 30, 2011. Pargesa reported operating earnings for the six-month period ended June 30, 2011 of SF210 million, compared with SF221 million in the corresponding period in 2010. For the three-month period ended June 30, 2011, operating earnings were SF196 million, compared with SF229 million in the corresponding period of 2010.Expressed in Canadian dollars, the contribution from Pargesa to Power Financial's operating earnings was $67 million for the six-month period ended June 30, 2011, compared with $55 million for the corresponding period in 2010. The strength of the Swiss franc and the euro against the Canadian dollar when compared to 2010 had a positive effect on the Corporation's share of Pargesa's earnings in the second quarter of 2011. For the three-month period ended June 30, 2011, the contribution from Pargesa to Power Financial's operating earnings was $63 million, compared with $57 million in the second quarter of 2010.DIVIDENDS ON PREFERRED SHARESThe Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:TYPE OF SHARESRECORD DATEPAYMENT DATEAMOUNTSeries AOctober 25, 2011   November 15, 2011  To be determined in accordance with the articles of the CorporationSeries DOctober 10, 2011October 31, 201134.375¢Series EOctober 10, 2011October 31, 201132.8125¢Series FOctober 10, 2011October 31, 201136.875¢Series HOctober 10, 2011October 31, 201135.9375¢Series IOctober 10, 2011October 31, 201137.50¢Series KOctober 10, 2011October 31, 201130.9375¢Series LOctober 10, 2011October 31, 201131.875¢Series MOctober 10, 2011October 31, 201137.50¢Series OOctober 10, 2011October 31, 201136.25¢Series POctober 10, 2011October 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 November 1, 2011 to shareholders of record September 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 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 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 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. POWER FINANCIAL CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)[in millions of Canadian dollars]June 30, 2011December 31,2010January 1,2010Assets   Cash and cash equivalents2,8743,6564,855Investments    Bonds73,29373,58267,388 Mortgages and other loans20,94020,20920,613 Shares6,6536,4156,392 Investment properties3,2062,9592,615 104,092103,16597,008Loans to policyholders6,7656,8276,957Funds held by ceding insurers9,6599,85610,984Reinsurance assets2,6422,5332,800Investment in associates2,4982,4482,829Deferred tax assets1,1601,2491,300Other assets7,1027,1797,065Intangible assets4,1844,2314,359Goodwill8,7518,7138,655Segregated funds for the risk of unit holders96,77694,82787,495Total assets246,503244,684234,307    Liabilities   Insurance contract liabilities108,225107,367104,988Investment contract liabilities775791841Deposits and certificates778835907Funds held under reinsurance contracts160149331Obligation to securitization entities3,5073,5053,310Debentures and other borrowings5,9036,3135,931Capital trust securities and debentures534535540Preferred shares of the Corporation--300Preferred shares of subsidiaries--199Deferred tax liabilities1,1251,1361,018Other liabilities6,7337,6246,955Insurance and investment contracts on account of unit holders96,77694,82787,495Total liabilities224,516223,082212,815    Equity   Stated capital    Perpetual preferred shares2,0052,0051,725 Common shares636636605Retained earnings10,41010,0129,553Reserves77188969Total shareholders' equity13,12812,84112,852Non-controlling interests8,8598,7618,640Total equity21,98721,60221,492Total liabilities and equity246,503244,684234,307CONDENSED 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 income1,4261,3262,8812,775 Change in fair value7151,1705242,746 2,1412,4963,4055,521Fee income1,3811,2942,7502,605Total revenues7,7948,00514,72216,951     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 expenses8358781,7411,768Financing charges102109209218Total expenses6,8287,18713,00515,370 9668181,7171,581Share of earnings of investment in associates63536557Earnings before income taxes1,0298711,7821,638Income taxes226182363341Net earnings before non-controlling interests8036891,4191,297Attributable to non-controlling interests(270)(244)(490)(466)Net earnings attributable to shareholders533445929831Perpetual preferred share dividends(26)(23)(52)(46)Net earnings attributable to common shareholders507422877785     Earnings per common share     - Basic0.720.601.241.11 - Diluted0.710.591.231.10SEGMENTED INFORMATIONINFORMATION ON PROFIT MEASURE Three months ended June 30, 2011LifecoIGMParjointcoOtherTotalRevenues     Premium income4,272---4,272Net investment income      Regular net investment income1,41634-(24)1,426 Change in fair value7078--715 2,12342-(24)2,141Fee income739668-(26)1,381 7,134710-(50)7,794Expenses     Policyholder benefits, dividends and experiencerefunds, and change in insurance andinvestment contract liabilities5,298---5,298Commissions390229-(26)593Operating expenses651172-12835Financing charges7226-4102 6,411427-(10)6,828 723283-(40)966Share of earnings of investment in associates--63-63Earnings before income taxes72328363(40)1,029Income taxes16164-1226Contribution to net earnings beforenon-controlling interests56221963(41)803Attributable to non-controlling interests(202)(94)-26(270)Contribution to net earnings attributable to shareholders36012563(15)533      Three months ended June 30, 2010LifecoIGMParjointcoOtherTotalRevenues     Premium income4,215---4,215Net investment income      Regular net investment income1,33512-(21)1,326 Change in fair value1,16010--1,170 2,49522-(21)2,496Fee income703617-(26)1,294 7,413639-(47)8,005Expenses     Policyholder benefits, dividends and experiencerefunds, and change in insurance andinvestment contract liabilities5,658---5,658Commissions355212-(25)542Operating expenses705160-13878Financing charges7028-11109 6,788400-(1)7,187 625239-(46)818Share of earnings of investment in associates--53-53Earnings before income taxes62523953(46)871Income taxes12657-(1)182Contribution to net earnings before non-controlling interests49918253(45)689Attributable to non-controlling interests(187)(81)-24(244)Contribution to net earnings attributableto shareholders31210153(21)445 SEGMENTED INFORMATION (CONTINUED)INFORMATION ON PROFIT MEASURE (continued) Six months ended June 30, 2011LifecoIGMParjointcoOtherTotalRevenues     Premium income8,567---8,567Net investment income      Regular net investment income2,84383-(45)2,881 Change in fair value5204--524 3,36387-(45)3,405Fee income1,4591,343-(52)2,750 13,3891,430-(97)14,722Expenses     Policyholder benefits, dividends and experiencerefunds, and change in insurance andinvestment contract liabilities9,877---9,877Commissions767463-(52)1,178Operating expenses1,375341-251,741Financing charges14456-9209 12,163860-(18)13,005 1,226570-(79)1,717Share of earnings of investment in associates--65-65Earnings before income taxes1,22657065(79)1,782Income taxes230137-(4)363Contribution to net earnings beforenon-controlling interests99643365(75)1,419Attributable to non-controlling interests(352)(187)-49(490)Contribution to net earnings attributableto shareholders64424665(26)929      Six months ended June 30, 2010LifecoIGMParjointcoOtherTotalRevenues     Premium income8,825---8,825Net investment income      Regular net investment income2,75265-(42)2,775 Change in fair value2,73610--2,746 5,48875-(42)5,521Fee income1,4271,228-(50)2,605 15,7401,303-(92)16,951Expenses     Policyholder benefits, dividends and experiencerefunds, and change in insurance andinvestment contract liabilities12,290---12,290Commissions718426-(50)1,094Operating expenses1,423319-261,768Financing charges14455-19218 14,575800-(5)15,370 1,165503-(87)1,581Share of earnings of investment in associates--57-57Earnings before income taxes1,16550357(87)1,638Income taxes215127-(1)341Contribution to net earnings beforenon-controlling interests95037657(86)1,297Attributable to non-controlling interests(343)(167)-44(466)Contributionto net earnings attributable to shareholders60720957(42)831For further information: Attachments:  Financial Information     For further information, please contact:  Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400