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Press release from CNW Group

Power Corporation of Canada Reports 2011 Financial Results and Dividends

Wednesday, March 14, 2012

Power Corporation of Canada Reports 2011 Financial Results and Dividends15:01 EDT Wednesday, March 14, 2012Readers 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, March 14, 2012 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported operating earnings attributable to participating shareholders for the year ended December 31, 2011 of $1,152 million or $2.50 per share, compared with $957 million or $2.09 per share in 2010. This represents an increase of 19.9% on a per share basis.The increase in operating earnings reflects a higher contribution from Power Financial Corporation (Power Financial), a subsidiary of the Corporation, and an increase in income from investments.Subsidiaries contributed $1,150 million to Power Corporation's operating earnings for the year ended December 31, 2011, compared with $1,097 million in 2010. Results from corporate activities were a contribution of $43 million for the year ended December 31, 2011, compared with a net charge of $99 million 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 wholly owned subsidiary of the Corporation, and income from other investment funds.Other items, not included in operating earnings, represented a charge of $77 million for the year ended December 31, 2011, compared with a charge of $230 million in 2010.Other items in 2011 include the Corporation's share of non-operating earnings of Power Financial's subsidiaries Great-West Lifeco Inc. (Lifeco) for an amount of $58 million and IGM Financial Inc. (IGM) for an amount of $23 million, as follows:In the fourth quarter of 2011, Lifeco re-evaluated and reduced a litigation provision established in the third quarter of 2010. The re-evaluation positively impacted common shareholders' net earnings of Lifeco by $223 million. Additionally, Lifeco established a $99 million after-tax provision in respect of the settlement of litigation relating to its ownership in a U.S.-based private equity firm. The net impact to Power Corporation of these two unrelated matters was a positive contribution of $58 million.Other items at IGM represent the after-tax gain on the sale of M.R.S. Trust Company and M.R.S. Inc. by Mackenzie Financial Corporation as well as a one-time tax adjustment.Other items in 2011 also include the Corporation's $87 million share of an impairment of €650 million recorded by Groupe Bruxelles Lambert on its investment in Lafarge SA, and an impairment charge on the Corporation's investment in CITIC Pacific Limited for an amount of $72 million recorded in the third quarter.As a result, net earnings attributable to participating shareholders for the year ended December 31, 2011 were $1,075 million or $2.34 per share, compared with $727 million or $1.59 per share in 2010.FOURTH QUARTER RESULTSOperating earnings attributable to participating shareholders for the three-month period ended December 31, 2011 were $241 million or $0.52 per share, compared with $232 million or $0.51 per share in the corresponding period of 2010. This represents an increase of 3.4% on a per share basis.Power Corporation's share of operating earnings from its subsidiaries was $279 million for the three-month period ended December 31, 2011, compared with $274 million for the same period in 2010. Corporate activities represented a net charge of $28 million in the three-month period ended December 31, 2011, compared with a net charge of $32 million in the corresponding period of 2010.Other items were a contribution of $73 million in the three-month period ended December 31, 2011, as detailed above, compared with a charge of $3 million in the corresponding period of 2010.  As a result, net earnings attributable to participating shareholders for the three-month period ended December 31, 2011 were $314 million or $0.68 per share, compared with $229 million or $0.50 per share in the corresponding period of 2010.RESULTS OF POWER FINANCIAL CORPORATIONPower Financial reported operating earnings attributable to common shareholders for the year ended December 31, 2011 of $1,729 million or $2.44 per share, compared with $1,625 million or $2.30 per share in 2010. This represents an increase of 6.2% on a per share basis.The increase in operating earnings of Power Financial reflects primarily the increase in the contribution from Lifeco and IGM.For the year ended December 31, 2011, other items were a charge of $7 million and consisted mainly of Power Financial's share of an impairment charge recorded by Pargesa Holding SA (Pargesa) in the third quarter on its indirect investment in Lafarge SA, offset by its share of non-operating earnings of Lifeco and IGM, as discussed above. In 2010, other items were a charge of $157 million and consisted mainly of Power Financial's share of a litigation provision recorded in the third quarter by Lifeco.As a result, net earnings attributable to common shareholders of Power Financial for the year ended December 31, 2011 were $1,722 million or $2.43 per share, compared with $1,468 million or $2.08 per share in 2010.For the quarter ended December 31, 2011, Power Financial reported operating earnings attributable to common shareholders of $422 million or $0.60 per share, compared with $404 million or $0.57 per share in the corresponding quarter of 2010, an increase of 4.6% on a per share basis.Other items in the fourth quarter of 2011 were a contribution of $111 million, compared with a charge of $15 million for the same period in 2010.As a result, net earnings attributable to common shareholders of Power Financial for the quarter ended December 31, 2011 were $533 million or $0.75 per share, compared with $389 million or $0.55 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:SERIES - STOCK SYMBOLRECORD DATEPAYMENT DATEAMOUNT1986 Series - POW.PR.F 23-Mar-1215-Apr-12To be determined in accordancewith the articles of the CorporationSeries A - POW.PR.A23-Mar-1215-Apr-1235¢Series B - POW.PR.B23-Mar-1215-Apr-1233.4375¢Series C - POW.PR.C23-Mar-1215-Apr-1236.25¢Series D - POW.PR.D23-Mar-1215-Apr-1231.25¢Series G - POW.PR.G23-Mar-1215-Apr-1218.027¢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 March 30, 2012 to shareholders of record March 23, 2012.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 and 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 or non-operating earnings, 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. CONSOLIDATED BALANCE SHEETS December 31, December 31, January 1,[in millions of Canadian dollars]2011 2010 2010Assets     Cash and cash equivalents3,741 4,016 5,383Investments      Bonds79,186 74,250 67,942 Mortgages and other loans21,541 20,209 20,613 Shares7,876 7,737 7,584 Investment properties3,201 2,957 2,615 Loans to policyholders7,162 6,827 6,957 118,966 111,980 105,711Funds held by ceding insurers9,923 9,856 10,984Reinsurance assets2,061 2,533 2,800Investments in associates2,341 2,565 2,948Owner-occupied properties565 511 502Capital assets340 320 305Derivative financial instruments1,056 1,030 782Other assets4,759 4,774 4,920Deferred tax assets1,227 1,244 1,294Intangible assets5,107 5,111 5,279Goodwill8,828 8,759 8,686Segregated funds for the risk of unit holders96,582 94,827 87,495Total assets255,496 247,526 237,089      Liabilities     Insurance contract liabilities114,730 107,405 105,028Investment contract liabilities782 791 841Deposits and certificates151 835 907Funds held under reinsurance contracts169 149 331Obligation to securitization entities3,827 3,505 3,310Debentures and other borrowings6,296 6,720 6,339Capital trust securities533 535 540Derivative financial instruments430 244 359Preferred shares of subsidiaries- - 499Other liabilities5,668 7,530 6,763Deferred tax liabilities1,293 1,134 1,003Insurance and investment contracts on account of unit holders96,582 94,827 87,495Total liabilities230,461 223,675 213,415      Equity     Stated capital      Non-participating shares779 783 787 Participating shares571 549 526Retained earnings8,119 7,557 7,374Reserves356 541 894Total shareholders' equity9,825 9,430 9,581Non-controlling interests15,210 14,421 14,093Total equity25,035 23,851 23,674Total liabilities and equity255,496 247,526 237,089CONSOLIDATED STATEMENTS OF EARNINGSFor the years ended December 31  [in millions of Canadian dollars, except per share amounts]20112010Revenues  Premium income   Gross premiums written20,01320,404 Ceded premiums(2,720)(2,656)Total net premiums17,29317,748Net investment income   Regular net investment income5,7205,723 Change in fair value4,1543,785 9,8749,508Fee and media income5,7455,564Total revenues32,91232,820   Expenses  Policyholder benefits   Insurance and investment contracts    Gross16,59117,550  Ceded(1,217)(2,208) 15,37415,342Policyholder dividends and experience refunds1,4241,466Change in insurance and investment contract liabilities6,2456,417Total paid or credited to policyholders23,04323,225Commissions2,3122,216Operating and administrative expenses3,5014,299Financing charges443465Total expenses29,29930,205 3,6132,615Share of earnings (losses) of investments in associates(20)124Earnings before income taxes - continuing operations3,5932,739Income taxes711532Net earnings - continuing operations2,8822,207Net earnings - discontinued operations632Net earnings2,9452,209   Attributable to   Non-controlling interests1,8291,441 Non-participating shareholders4141 Participating shareholders1,075727 2,9452,209   Earnings per participating share   Net earnings attributable to participating shareholders    - Basic2.341.59  - Diluted2.321.57    Net earnings from continuing operations attributable to participating shareholders    - Basic2.291.59  - Diluted2.271.57SEGMENTED INFORMATION          INFORMATION ON PROFIT MEASUREFor the year ended December 31, 2011Lifeco IGM Parjointco Other TotalRevenues         Premium income, net17,293 - - - 17,293Investment income, net9,702 161 - 11 9,874Fee and media income2,903 2,571 - 271 5,745 29,898 2,732 - 282 32,912Expenses         Total paid or credited to policyholders23,043 - - - 23,043Commissions1,548 895 - (131) 2,312Operating and administrative expenses2,314 638 - 549 3,501Financing charges289 103 - 51 443 27,194 1,636 - 469 29,299 2,704 1,096 - (187) 3,613Share of earnings (losses) of investments in associates - - (20) - (20)Earnings before income taxes - continuing operations2,704 1,096 (20) (187) 3,593Income taxes465 250 - (4) 711Contribution to net earnings - continuing operations2,239 846 (20) (183) 2,882Contribution to net earnings - discontinued operations- 63 - - 63Contribution to net earnings2,239 909 (20) (183) 2,945          Attributable to          Non-controlling interests1,324 566 (7) (54) 1,829 Non-participating shareholders- - - 41 41 Participating shareholders915 343 (13) (170) 1,075 2,239 909 (20) (183) 2,945          For the year ended December 31, 2010Lifeco IGM Parjointco Other TotalRevenues         Premium income, net17,748 - - - 17,748Investment income, net9,534 146 - (172) 9,508Fee and media income2,821 2,468 - 275 5,564 30,103 2,614 - 103 32,820Expenses         Total paid or credited to policyholders23,225 - - - 23,225Commissions1,477 854 - (115) 2,216Operating and administrative expenses3,150 636 - 513 4,299Financing charges288 111 - 66 465 28,140 1,601 - 464 30,205 1,963 1,013 - (361) 2,615Share of earnings (losses) of investments in associates - - 121 3 124Earnings before income taxes - continuing operations1,963 1,013 121 (358) 2,739Income taxes254 270 - 8 532Contribution to net earnings - continuing operations1,709 743 121 (366) 2,207Contribution to net earnings - discontinued operations- 2 - - 2Contribution to net earnings1,709 745 121 (366) 2,209          Attributable to          Non-controlling interests976 470 41 (46) 1,441 Non-participating shareholders- - - 41 41 Participating shareholders733 275 80 (361) 727 1,709 745 121 (366) 2,209   For further information: Attachments:  FINANCIAL  INFORMATION For further information, please contact: Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400