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Press release from CNW Group

Power Financial Corporation Reports 2012 First Quarter Financial Results and Dividends

Monday, May 14, 2012

Power Financial Corporation Reports 2012 First Quarter Financial Results and Dividends11:04 EDT Monday, May 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).MONTREAL, May 14, 2012 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported operating earnings attributable to common shareholders for the three-month period ended March 31, 2012 of $372 million or $0.52 per share, the same as in the corresponding period in 2011.Other items represented a contribution of $83 million, compared with a charge of $2 million in the first quarter of 2011. Other items in the first quarter of 2012 were mainly composed of the Corporation's share of the gains realized by Groupe Bruxelles Lambert (GBL) on the partial disposal of Pernod Ricard (a producer of wines and spirits) shares ($46 million) and the disposal of Arkema (a French chemicals producer) shares ($43 million).As a result, net earnings attributable to common shareholders for the three-month period ended March 31, 2012 were $455 million or $0.64 per share, compared with $370 million or $0.52 per share in the corresponding period in 2011.RESULTS OF SUBSIDIARIES AND PARJOINTCOGREAT-WEST LIFECO INC.For the three-month period ended March 31, 2012, Great-West Lifeco Inc. (Lifeco) reported operating earnings and net earnings attributable to common shareholders of $451 million or $0.475 per share, compared with $415 million or $0.438 per share in the corresponding period in 2011. This represents an increase of 8.4% on a per share basis.Included in operating earnings for the first quarter of 2011 was the establishment of catastrophe provisions relating to earthquake events in Japan and New Zealand with an after-tax impact of $75 million. Power Financial's share of these provisions was $53 million.Lifeco's contribution to Power Financial's operating earnings was $306 million for the three-month period ended March 31, 2012, compared with $284 million for the corresponding period in 2011.IGM FINANCIAL INC.For the three-month period ended March 31, 2012, IGM Financial Inc. (IGM) reported operating earnings and net earnings available to common shareholders of $200 million or $0.78 per share, compared with operating earnings available to common shareholders of $211 million or $0.81 per share in the same period in 2011, a decrease of 3.7% on a per share basis. Net earnings available to common shareholders in the first quarter of 2011 were $212 million.IGM's contribution to Power Financial's operating earnings was $114 million for the three-month period ended March 31, 2012, compared with $121 million for the corresponding period in 2011.PARJOINTCO N.V.Power Financial held a 50% interest in Parjointco N.V., which in turn held a 56.5% equity interest in Pargesa SA (Pargesa) at March 31, 2012.For the three-month period ended March 31, 2012, Pargesa reported an operating loss of SF6 million, compared with operating earnings of SF14 million in the corresponding period in 2011. These results reflect that, although the results of Imerys were 9.8% higher than in the corresponding period in 2011, the contribution from Imerys to Pargesa's earnings decreased by 26.8% in the first quarter of 2012, due to a smaller percentage of ownership as Pargesa's direct interest in Imerys was sold to GBL in April 2011 as previously disclosed.Including the gains realized by GBL as referred to above, Pargesa's net earnings for the three-month period ended March 31, 2012 were SF266 million, compared with SF6 million in the corresponding period in 2011.Expressed in Canadian dollars, Pargesa's contribution to Power Financial's operating earnings was a charge of $2 million for the three-month period ended March 31, 2012, compared with earnings of $4 million in the corresponding period in 2011.DIVIDENDS ON PREFERRED SHARESThe Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:SERIES - STOCK SYMBOLRECORD DATEPAYMENT DATEAMOUNTSeries A - PWF.PR.AJuly 25, 2012August 15, 2012To be determined in accordance with the articles of the CorporationSeries D - PWF.PR.EJuly 10, 2012July 31, 201234.375¢Series E - PWF.PR.FJuly 10, 2012July 31, 201232.8125¢Series F - PWF.PR.GJuly 10, 2012July 31, 201236.875¢Series H - PWF.PR.HJuly 10, 2012July 31, 201235.9375¢Series I - PWF.PR.IJuly 10, 2012July 31, 201237.50¢Series K - PWF.PR.KJuly 10, 2012July 31, 201230.9375¢Series L - PWF.PR.LJuly 10, 2012July 31, 201231.875¢Series M - PWF.PR.MJuly 10, 2012July 31, 201237.50¢Series O - PWF.PR.OJuly 10, 2012July 31, 201236.25¢Series P - PWF.PR.PJuly 10, 2012July 31, 201227.50¢Series R - PWF.PR.RJuly 10, 2012July 31, 201234.375¢DIVIDEND ON COMMON SHARESThe Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's common shares payable August 1, 2012 to shareholders of record June 29, 2012.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 and available at 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 attributable to common shareholders; 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 Financial, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation.Operating earnings attributable to common shareholders 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[in millions of Canadian dollars]March  31, 2012(unaudited) December 31,2011(audited)Assets   Cash and cash equivalents2,829 3,385Investments    Bonds80,196 78,759 Mortgages and other loans21,740 21,518 Shares6,612 6,402 Investment properties3,263 3,201 Loans to policyholders7,013 7,162 118,824 117,042Funds held by ceding insurers10,127 9,923Reinsurance assets1,983 2,061Investment in associates2,294 2,222Owner-occupied properties551 541Capital assets201 197Derivative financial instruments997 1,056Other assets4,858 4,653Deferred tax assets1,179 1,207Intangible assets4,993 5,023Goodwill8,798 8,786Segregated funds for the risk of unit holders100,474 96,582Total assets258,108 252,678Liabilities   Insurance contract liabilities114,798 114,730Investment contract liabilities763 782Deposits and certificates147 151Funds held under reinsurance contracts169 169Obligation to securitization entities4,018 3,827Debentures and other borrowings6,001 5,888Capital trust securities534 533Derivative financial instruments370 427Other liabilities6,157 5,516Deferred tax liabilities1,228 1,258Insurance and investment contracts on account of unit holders100,474 96,582Total liabilities234,659 229,863Equity   Stated capital    Perpetual preferred shares2,255 2,005 Common shares639 639Retained earnings10,943 10,743Reserves64 134Total shareholders' equity13,901 13,521Non-controlling interests9,548 9,294Total equity23,449 22,815Total liabilities and equity258,108 252,678            CONDENSED CONSOLIDATED STATEMENTS OF EARNINGSThree months ended March 31(unaudited) [in millions of Canadian dollars, except per share amounts]2012 2011Revenues   Premium income    Gross premiums written5,198 4,941 Ceded premiums(669) (646)Total net premiums4,529 4,295Net investment income    Regular net investment income1,460 1,456 Change in fair value(197) (198) 1,263 1,258Fee income1,318 1,366Total revenues7,110 6,919    Expenses   Policyholder benefits    Insurance and investment contracts     Gross4,606 4,423  Ceded(387) (333) 4,219 4,090Policyholder dividends and experience refunds364 353Change in insurance and investment contract liabilities160 136Total paid or credited to policyholders4,743 4,579Commissions598 585Operating and administrative expenses924 899Financing charges99 107Total expenses6,364 6,170 746 749Share of earnings of investment in associates81 2Earnings before income taxes - continuing operations827 751Income taxes115 136Net earnings - continuing operations712 615Net earnings - discontinued operations- 1Net earnings712 616    Attributable to    Non-controlling interests228 220 Perpetual preferred shareholders29 26 Common shareholders455 370 712 616    Earnings per common share    Net earnings attributable to common shareholders     - Basic0.64 0.52  - Diluted0.64 0.52     Net earnings from continuing operations attributable to common shareholders     - Basic0.64 0.52  - Diluted0.64 0.52SEGMENTED INFORMATIONINFORMATION ON PROFIT MEASURE          Three months ended March 31, 2012Lifeco IGM Parjointco Other TotalRevenues         Premium income, net4,529 - - - 4,529Investment income, net1,243 46 - (26) 1,263Fee income724 627 - (33) 1,318 6,496 673 - (59) 7,110Expenses         Total paid or credited to policyholders4,743 - - - 4,743Commissions410 222 - (34) 598Operating and administrative expenses738 171 - 15 924Financing charges72 23 - 4 99 5,963 416 - (15) 6,364 533 257 - (44) 746Share of earnings of investment in associates- - 81 - 81Earnings before income taxes - continuing operations533 257 81 (44) 827Income taxes57 56 - 2 115Contribution to net earnings - continuing operations476 201 81 (46) 712Contribution to net earnings - discontinued operations- - - - -Contribution to net earnings476 201 81 (46) 712Attributable to          Non-controlling interests170 87 - (29) 228 Perpetual preferred shareholders- - - 29 29 Common shareholders306 114 81 (46) 455 476 201 81 (46) 712                    Three months ended March 31, 2011Lifeco IGM Parjointco Other TotalRevenues         Premium income, net4,295 - - - 4,295Investment income, net1,240 39 - (21) 1,258Fee income720 672 - (26) 1,366 6,255 711 - (47) 6,919Expenses         Total paid or credited to policyholders4,579 - - - 4,579Commissions377 234 - (26) 585Operating and administrative expenses724 162 - 13 899Financing charges72 30 - 5 107 5,752 426 - (8) 6,170 503 285 - (39) 749Share of earnings of investment in associates- - 2 - 2Earnings before income taxes - continuing operations503 285 2 (39) 751Income taxes69 72 - (5) 136Contribution to net earnings - continuing operations434 213 2 (34) 615Contribution to net earnings - discontinued operations- 1 - - 1Contribution to net earnings434 214 2 (34) 616Attributable to          Non-controlling interests150 93 - (23) 220 Perpetual preferred shareholders- - - 26 26 Common shareholders284 121 2 (37) 370 434 214 2 (34) 616  For further information: Attachments: Financial Information For further information, please contact:  Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400