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Press release from CNW Group

Power Corporation of Canada Reports 2012 First Quarter Financial Results and Dividends

Tuesday, May 15, 2012

Power Corporation of Canada Reports 2012 First Quarter Financial Results and Dividends10:16 EDT Tuesday, May 15, 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 15, 2012 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported operating earnings attributable to participating shareholders for the three-month period ended March 31, 2012 of $209 million or $0.45 per share, compared with $218 million or $0.47 per share in the corresponding period in 2011.Subsidiaries contributed $244 million to Power Corporation's operating earnings, compared with $248 million for the first quarter of 2011, a decrease of 1.6%. Results from corporate activities were a net charge of $23 million in the three-month period ended March 31, 2012, compared with a net charge of $20 million in the corresponding period in 2011.Other items not included in operating earnings in the three-month period ended March 31, 2012 were $55 million, compared with a net charge of $2 million in the corresponding period in 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 ($30 million) and the disposal of Arkema (a French chemicals producer) shares ($28 million).As a result, net earnings attributable to participating shareholders for the three-month period ended March 31, 2012 were $264 million or $0.57 per share, compared with $216 million or $0.47 per share in the corresponding period in 2011.RESULTS OF POWER FINANCIAL CORPORATIONPower Financial reported operating earnings attributable to common shareholders of $372 million or $0.52 per share for the three-month period ended March 31, 2012, 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 GBL on the partial disposal of Pernod Ricard shares ($46 million) and the disposal of Arkema shares ($43 million).Included in operating earnings for the first quarter of 2011 was the establishment of catastrophe provisions recorded by Great-West Lifeco Inc., a subsidiary of Power Financial, relating to earthquake events in Japan and New Zealand with an after-tax impact of $75 million which negatively impacted Power Financial's operating earnings by $53 million. Power Corporation's share of these provisions was $35 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.DIVIDENDS ON NON-PARTICIPATING PREFERRED SHARESThe Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:SERIES - STOCK SYMBOL  RECORD DATE   PAYMENT DATE   AMOUNT1986 Series - POW.PR.F June 22, 2012July 15, 2012To be determined in accordance with the articles of the CorporationSeries A - POW.PR.AJune 22, 2012July 15, 201235¢Series B - POW.PR.BJune 22, 2012July 15, 201233.4375¢Series C - POW.PR.CJune 22, 2012July 15, 201236.25¢Series D - POW.PR.DJune 22, 2012July 15, 201231.25¢Series G - POW.PR.GJune 22, 2012July 15, 201235¢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 June 29, 2012 to shareholders of record June 8, 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 attributable to participating 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 Corporation, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation.Operating earnings attributable to participating 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.Attachments:FINANCIAL  INFORMATIONPOWER CORPORATION OF CANADACONDENSED CONSOLIDATED BALANCE SHEETS[in millions of Canadian dollars]March 31, 2012(unaudited) December 31,2011(audited)Assets   Cash and cash equivalents3,163 3,741Investments    Bonds80,767 79,186 Mortgages and other loans21,763 21,541 Shares8,141 7,876 Investment properties3,263 3,201 Loans to policyholders7,013 7,162 120,947 118,966Funds held by ceding insurers10,127 9,923Reinsurance assets1,983 2,061Investments in associates2,422 2,341Owner-occupied properties575 565Capital assets339 340Derivative financial instruments997 1,056Other assets4,973 4,759Deferred tax assets1,201 1,227Intangible assets5,076 5,107Goodwill8,839 8,828Segregated funds for the risk of unit holders100,474 96,582Total assets261,116 255,496Liabilities   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 borrowings6,409 6,296Capital trust securities534 533Derivative financial instruments372 430Other liabilities6,309 5,668Deferred tax liabilities1,269 1,293Insurance and investment contracts on account of unit holders100,474 96,582Total liabilities235,262 230,461Equity   Stated capital    Non-participating shares979 779 Participating shares571 571Retained earnings8,239 8,119Reserves306 356Total shareholders' equity10,095 9,825Non-controlling interests15,759 15,210Total equity25,854 25,035Total liabilities and equity261,116 255,496        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 income1,472 1,467 Change in fair value(197) (198) 1,275 1,269Fee and media income1,420 1,468Total revenues7,224 7,032    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 expenses1,055 1,024Financing charges108 115Total expenses6,504 6,303 720 729Share of earnings of investments in associates82 1Earnings before income taxes - continuing operations802 730Income taxes115 134Net earnings - continuing operations687 596Net earnings - discontinued operations- 1Net earnings687 597    Attributable to    Non-controlling interests411 371 Non-participating shareholders12 10 Participating shareholders264 216 687 597    Earnings per participating share    Net earnings attributable to participating shareholders     Basic0.57 0.47  Diluted0.57 0.47     Net earnings from continuing operations attributable to participating shareholders     Basic0.57 0.47  Diluted0.57 0.47SEGMENTED INFORMATIONINFORMATION ON PROFIT MEASUREThree months ended March 31, 2012Lifeco IGM Parjointco Other TotalRevenues         Premium income, net4,529 - - - 4,529Investment income, net1,243 46 - (14) 1,275Fee and media income724 627 - 69 1,420 6,496 673 - 55 7,224Expenses         Total paid or credited to policyholders4,743 - - - 4,743Commissions410 222 - (34) 598Operating and administrative expenses738 171 - 146 1,055Financing charges72 23 - 13 108 5,963 416 - 125 6,504 533 257 - (70) 720Share of earnings (losses) of investments in associates- - 81 1 82Earnings before income taxes - continuing operations533 257 81 (69) 802Income taxes57 56 - 2 115Contribution to net earnings - continuing operations476 201 81 (71) 687Contribution to net earnings - discontinued operations- - - - -Contribution to net earnings476 201 81 (71) 687Attributable to          Non-controlling interests274 126 27 (16) 411 Non-participating shareholders- - - 12 12 Participating shareholders202 75 54 (67) 264 476 201 81 (71) 687                    Three months ended March 31, 2011Lifeco IGM Parjointco Other TotalRevenues         Premium income, net4,295 - - - 4,295Investment income, net1,240 39 - (10) 1,269Fee and media income720 672 - 76 1,468 6,255 711 - 66 7,032Expenses         Total paid or credited to policyholders4,579 - - - 4,579Commissions377 234 - (26) 585Operating and administrative expenses724 162 - 138 1,024Financing charges72 30 - 13 115 5,752 426 - 125 6,303 503 285 - (59) 729Share of earnings (losses) of investments in associates- - 2 (1) 1Earnings before income taxes - continuing operations503 285 2 (60) 730Income taxes69 72 - (7) 134Contribution to net earnings - continuing operations434 213 2 (53) 596Contribution to net earnings - discontinued operations- 1 - - 1Contribution to net earnings434 214 2 (53) 597Attributable to          Non-controlling interests246 134 1 (10) 371 Non-participating shareholders- - - 10 10 Participating shareholders188 80 1 (53) 216 434 214 2 (53) 597    For further information: Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400