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Press release from CNW Group

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

Friday, November 11, 2011

Power Corporation of Canada Reports 2011 Third Quarter Financial Results and Dividends16:17 EST Friday, November 11, 2011TORONTO, Nov. 11, 2011 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the nine-month period ended September 30, 2011 were $942 million or $1.98 per share, compared with $756 million or $1.58 per share in the corresponding period of 2010. This represents a 25.1% 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 $871 million to Power Corporation's operating earnings for the nine-month period ended September 30, 2011, compared with $823 million in the corresponding period of 2010. Results from corporate activities were a net contribution of $71 million in the nine-month period ended September 30, 2011, compared with a net charge of $67 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, and income from other investment funds.Other items in the nine-month period ended September 30, 2011 represented a charge of $150 million and include a write-down of the Corporation's investment in CITIC Pacific for an amount of $72 million recorded in the third quarter. Also included in other items is the Corporation's share (in the amount of $87 million) of Pargesa's impairment charge recorded in the third quarter on its indirect investment in Lafarge S.A. In the corresponding nine-month period of 2010, other items were a charge of $227 million and included an impairment charge on CITIC Pacific of $133 million and the Corporation's share (in the amount of $96 million) of a litigation provision recorded by Great-West Lifeco Inc. (Lifeco), a subsidiary of Power Financial.Net earnings attributable to participating shareholders (including other items and after dividends on non-participating shares) for the nine-month period ended September 30, 2011 were $761 million or $1.66 per share, compared with $498 million or $1.09 per share in the corresponding period of 2010.THIRD QUARTER RESULTSOperating earnings for the three-month period ended September 30, 2011 were $348 million or $0.73 per share, compared with $275 million or $0.58 per share in the corresponding period in 2010. This represents an increase of 27.6% on a per share basis.Power Corporation's share of operating earnings from its subsidiaries was $284 million for the three-month period ended September 30, 2011, compared with $293 million for the same period in 2010. Corporate activities represented a net contribution of $64 million in the quarter ended September 30, 2011, compared with a net charge of $18 million in the corresponding period in 2010, mainly due to income from investments generated by the Corporation's interest in the Sagard 1 fund in Europe and income from other investment funds.Other items were a charge of $148 million in the three-month period ended September 30, 2011, compared with a charge of $96 million in the corresponding period of 2010.Net earnings attributable to participating shareholders (including other items and after dividends on non-participating shares) for the three-month period ended September 30, 2011 were $190 million or $0.41 per share, compared with $169 million or $0.37 per share in the corresponding period in 2010.RESULTS OF POWER FINANCIAL CORPORATIONPower Financial Corporation's operating earnings for the nine-month period ended September 30, 2011 were $1,385 million or $1.84 per share, compared with $1,294 million or $1.73 per share in the corresponding period in 2010. This represents an increase of 6.8% on a per share basis.The increase in operating earnings reflects primarily the increase in the contribution from Power Financial's subsidiaries, Lifeco and IGM Financial Inc.For the nine-month period ended September 30, 2011, other items represented a charge of $118 million and consisted mainly of Power Financial's share (in the amount of $133 million) of Pargesa's impairment charge recorded in the third quarter on its indirect investment in Lafarge S.A. In the corresponding nine-month period of 2010, other items were a charge of $142 million and consisted mainly of Power Financial's share of a litigation provision recorded by Lifeco, established in the third quarter.Net earnings attributable to common shareholders of Power Financial (including other items and after dividends on perpetual preferred shares) for the nine-month period ended September 30, 2011 were $1,189 million or $1.68 per share, compared with $1,079 million or $1.53 per share in the corresponding period of 2010.For the three-month period ended September 30, 2011, Power Financial reported operating earnings of $454 million or $0.60 per share, compared with $465 million or $0.62 per share for the same period in 2010.Other items for the third quarter of 2011 were a charge of $116 million, compared with a charge of $144 million for the same quarter in 2010.Net earnings attributable to common shareholders of Power Financial (including other items and after dividends on perpetual preferred shares) for the three-month period ended September 30, 2011 were $312 million or $0.44 per share, compared with $294 million or $0.42 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 SeriesDecember 23, 2011 January 15, 2012 To be determined in accordance with the articles of the CorporationSeries ADecember 23, 2011January 15, 201235¢Series BDecember 23, 2011January 15, 201233.4375¢Series CDecember 23, 2011January 15, 201236.25¢Series DDecember 23, 2011January 15, 201231.25¢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 December 30, 2011 to shareholders of record December 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 analyzing 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. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)[in millions of Canadian dollars]September 30,2011 December 31,2010 January 1,2010Assets     Cash and cash equivalents3,568 4,016 5,383Investments      Bonds80,191 74,250 67,942 Mortgages and other loans20,947 20,209 20,613 Shares7,368 7,736 7,584 Investment properties3,238 2,959 2,615 111,744 105,154 98,754Loans to policyholders7,144 6,827 6,957Funds held by ceding insurers10,118 9,856 10,984Reinsurance assets2,220 2,533 2,800Investments in associates2,255 2,566 2,948Deferred tax assets1,291 1,272 1,332Other assets7,493 7,444 7,355Assets held for sale898 - -Intangible assets4,396 4,317 4,433Goodwill8,813 8,755 8,686Segregated funds for the risk of unit holders94,053 94,827 87,495Total assets253,993 247,567 237,127      Liabilities     Insurance contract liabilities114,070 107,367 104,988Investment contract liabilities784 791 841Deposits and certificates149 835 907Funds held under reinsurance contracts177 149 331Obligation to securitization entities3,554 3,505 3,310Debentures and other borrowings6,294 6,720 6,339Capital trust securities and debentures531 535 540Preferred shares of subsidiaries- - 499Deferred tax liabilities1,159 1,165 1,043Other liabilities7,950 7,784 7,122Liabilities held for sale659 - -Insurance and investment contracts on account of unit holders94,053 94,827 87,495Total liabilities229,380 223,678 213,415      Equity     Stated capital      Non-participating shares780 783 787 Participating shares571 549 526Retained earnings7,952 7,573 7,390Reserves328 541 894Total shareholders' equity9,631 9,446 9,597Non-controlling interests14,982 14,443 14,115Total equity24,613 23,889 23,712Total liabilities and equity253,993 247,567 237,127 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS  Three months ended September 30 Nine months ended September 30(unaudited)[in millions of Canadian dollars, except per share amounts]20112010 20112010Revenues         Premium income          Gross premiums written5,0594,956 14,98015,091 Ceded premiums(667)(643) (2,021)(1,953)Total net premiums4,3924,313 12,95913,138Net investment income          Regular net investment income1,3651,514 4,3124,173 Change in fair value2,0912,641 2,6155,387 3,4564,155 6,9279,560Fee and media income1,3981,345 4,3454,129Total revenues9,2469,813 24,23126,827          Expenses         Policyholder benefits3,7043,557 11,48411,305Policyholder dividends and experience refunds385382 1,1151,116Change in insurance and investment contract liabilities2,7373,418 4,1047,226 6,8267,357 16,70319,647Commissions564528 1,7421,622Operating expenses9771,326 2,9513,305Financing charges108116 334352Total expenses8,4759,327 21,73024,926 771486 2,5011,901Share of earnings (losses) of investment in associates(96)60 (32)117Earnings before income taxes675546 2,4692,018Income taxes11976 484421Net earnings before non-controlling interests      - continuing operations556470 1,9851,597Net earnings before non-controlling interests      - discontinued operations31- 33-Net earnings before non-controlling interests587470 2,0181,597Attributable to non-controlling interests(387)(291) (1,226)(1,068)Net earnings attributable to shareholders200179 792529Non-participating share dividends(10)(10) (31)(31)Net earnings attributable to participating shareholders190169 761498                    Earnings per participating share          Net earnings attributable to participating shareholders          - Basic0.410.37 1.661.09 - Diluted0.410.37 1.641.08           Net earnings from continuing operations to participating shareholders          - Basic0.380.37 1.631.09 - Diluted0.380.37 1.611.08 SEGMENTED INFORMATIONINFORMATION ON PROFIT MEASURE Three months ended September 30, 2011Lifeco IGM Parjointco Other TotalRevenues         Premium income4,392 - - - 4,392Net investment income          Regular net investment income1,330 34 - 1 1,365 Change in fair value2,080 11 - - 2,091 3,410 45 - 1 3,456Fee and media income704 628 - 66 1,398 8,506 673 - 67 9,246Expenses         Policyholder benefits, dividends and experience refunds, and change in insurance and investment contract liabilities6,826 - - - 6,826Commissions372 219 - (27) 564Operating expenses693 156 - 128 977Financing charges72 24 - 12 108 7,963 399 - 113 8,475 543 274 - (46) 771Share of operating earnings of investment in associates- - 36 1 37Share of non-operating earnings of investment in associates- - (133) - (133)Earnings before income taxes543 274 (97) (45) 675Income taxes54 62 - 3 119Contribution to net earnings before non-controlling interests - continuing operations489212(97)(48)556Contribution to net earnings before non-controlling interests - discontinued operations-31-- 31Contribution to net earnings before non-controlling interests489 243 (97) (48) 587Attributable to non-controlling interests(282) (152) 33 14 (387)Contribution to net earnings attributable to participating shareholders207 91 (64) (34) 200                    Three months ended September 30, 2010Lifeco IGM Parjointco Other TotalRevenues         Premium income4,313 - - - 4,313Net investment income          Regular net investment income1,493 16 - 5 1,514 Change in fair value2,629 12 - - 2,641 4,122 28 - 5 4,155Fee and media income681 604 - 60 1,345 9,116 632 - 65 9,813Expenses         Policyholder benefits, dividends and experience refunds, and change in insurance and investment contract liabilities7,357 - - - 7,357Commissions346 207 - (25) 528Operating expenses1,057 149 - 120 1,326Financing charges71 28 - 17 116 8,831 384 - 112 9,327 285 248 - (47) 486Share of operating earnings of investment in associates- - 55 1 56Share of non-operating earnings of investment in associates- - 4 - 4Earnings before income taxes285 248 59 (46) 546Income taxes- 73 - 3 76Contribution to net earnings before non-controlling interests - continuing operations28517559(49)470Contribution to net earnings before non-controlling interests - discontinued operations---- -Contribution to net earnings before non-controlling interests285 175 59 (49) 470Attributable to non-controlling interests(164) (110) (20) 3 (291)Contribution to net earnings attributable to participating shareholders121 65 39 (46) 179                    Nine months ended September 30, 2011Lifeco IGM Parjointco Other TotalRevenues         Premium income12,959 - - - 12,959Net investment income          Regular net investment income4,173 106 - 33 4,312 Change in fair value2,600 15 - - 2,615 6,773 121 - 33 6,927Fee and media income2,163 1,963 - 219 4,345 21,895 2,084 - 252 24,231Expenses         Policyholder benefits, dividends and experience refunds, and change in insurance and investment contract liabilities16,703 - - - 16,703Commissions1,139 682 - (79) 1,742Operating expenses2,068 482 - 401 2,951Financing charges216 80 - 38 334 20,126 1,244 - 360 21,730 1,769 840 - (108) 2,501Share of operating earnings of investment in associates- - 103 - 103Share of non-operating earnings of investment in associates- - (135) - (135)Earnings before income taxes1,769 840 (32) (108) 2,469Income taxes284 197 - 3 484Contribution to net earnings before non-controlling interests - continuing operations1,485643(32)(111)1,985Contribution to net earnings before non-controlling interests - discontinued operations-33--33Contribution to net earnings before non-controlling interests1,485 676 (32) (111) 2,018Attributable to non-controlling interests(852) (422) 11 37 (1,226)Contribution to net earnings attributable to participating shareholders633 254 (21) (74) 792                    Nine months ended September 30, 2010Lifeco IGM Parjointco Other TotalRevenues         Premium income13,138 - - - 13,138Net investment income          Regular net investment income4,245 75 - (147) 4,173 Change in fair value5,365 22 - - 5,387 9,610 97 - (147) 9,560Fee and media income2,108 1,820 - 201 4,129 24,856 1,917 - 54 26,827Expenses         Policyholder benefits, dividends and experience refunds, and change in insurance and investment contract liabilities19,647 - - - 19,647Commissions1,064 633 - (75) 1,622Operating expenses2,480 452 - 373 3,305Financing charges215 83 - 54 352 23,406 1,168 - 352 24,926 1,450 749 - (298) 1,901Share of operating earnings of investment in associates- - 114 1 115Share of non-operating earnings of investment in associates- - 2 - 2Earnings before income taxes1,450 749 116 (297) 2,018Income taxes215 198 - 8 421Contribution to net earnings before non-controlling interests - continuing operations1,235551116(305)1,597Contribution to net earnings before non-controlling interests - discontinued operations---- -Contribution to net earnings before non-controlling interests1,235 551 116 (305) 1,597Attributable to non-controlling interests(712) (347) (40) 31 (1,068)Contribution to net earnings attributable to participating shareholders523 204 76 (274) 529   For further information: Attachments:   For further information, please contact: FINANCIAL  INFORMATION   Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400