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Press release from CNW Group

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

Friday, August 03, 2012

Power Corporation of Canada Reports 2012 Second Quarter Financial Results and Dividends14:39 EDT Friday, August 03, 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).WINNIPEG, Aug. 3, 2012 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported operating earnings attributable to participating shareholders for the six-month period ended June 30, 2012 of $501 million or $1.09 per share, compared with $574 million or $1.24 per share in the corresponding period in 2011. This represents a 12.6% decrease on a per share basis.Subsidiaries contributed $540 million to Power Corporation's operating earnings, compared with $587 million for the six-month period ended June 30, 2011, a decrease of 8.0%. Results from corporate activities were a charge of $14 million in the six-month period ended June 30, 2012, compared with a contribution of $7 million in the corresponding period in 2011.For the six-month period ended June 30, 2012, other items represented a contribution of $45 million mainly composed of the Corporation's share of the gains realized by Groupe Bruxelles Lambert (GBL) in the first quarter on the partial disposal of its interest in Pernod Ricard ($30 million) and the disposal of its interest in Arkema ($28 million), as previously disclosed. These gains were partially offset in the second quarter by the Corporation's share ($3 million) of a non-cash income tax charge recorded by IGM Financial Inc. (IGM) resulting from increases in Ontario corporate income tax rates and the Corporation's share of non-operating earnings of Pargesa SA (Pargesa) ($7 million), mainly composed of a charge for goodwill impairment and restructuring charges recorded by Lafarge SA (Lafarge). Other items in the corresponding period in 2011 were a charge of $2 million.As a result, net earnings attributable to participating shareholders for the six-month period ended June 30, 2012 were $546 million or $1.19 per share, compared with $572 million or $1.24 per share in the corresponding period in 2011.SECOND QUARTER RESULTSOperating earnings attributable to participating shareholders for the quarter ended June 30, 2012 were $292 million or $0.64 per share, compared with $356 million or $0.77 per share in the corresponding period in 2011. This represents a decrease of 17.8% on a per share basis.Power Corporation's share of operating earnings from its subsidiaries was $296 million for the three-month period ended June 30, 2012, compared with $339 million for the same period in 2011, a decrease of 12.7%. Corporate activities represented a contribution of $9 million in the quarter ended June 30, 2012, compared with a contribution of $27 million in the corresponding period in 2011.Other items represented a charge of $10 million in the three-month period ended June 30, 2012, as described above, compared with nil in the corresponding period of 2011.As a result, net earnings attributable to participating shareholders for the quarter ended June 30, 2012 were $282 million or $0.62 per share, compared with $356 million or $0.77 per share in the corresponding period in 2011.RESULTS OF POWER FINANCIAL CORPORATIONPower Financial Corporation reported operating earnings attributable to common shareholders for the six-month period ended June 30, 2012 of $820 million or $1.15 per share, compared with $879 million or $1.24 per share in the corresponding period in 2011, a decrease of 6.7% on a per share basis.For the six-month period ended June 30, 2012, other items represented a contribution of $68 million mainly composed of Power Financial's share of the gains realized by GBL in the first quarter on the partial disposal of its interest in Pernod Ricard ($46 million) and the disposal of its interest in Arkema ($43 million). These gains were partially offset in the second quarter by Power Financial's share ($4 million) of a non-cash income tax charge recorded by IGM resulting from increases in Ontario corporate income tax rates and Power Financial's share of non-operating earnings of Pargesa ($11 million), mainly composed of a charge for goodwill impairment and restructuring charges recorded by Lafarge. Other items in the corresponding period in 2011 were a charge of $2 million.As a result, net earnings attributable to common shareholders for the six-month period ended June 30, 2012 were $888 million or $1.25 per share, compared with $877 million or $1.24 per share in the corresponding period in 2011.For the quarter ended June 30, 2012, Power Financial reported operating earnings of $448 million or $0.63 per share, compared with $507 million or $0.72 per share in the second quarter of 2011. This represents a decrease of 11.6% on a per share basis.For the three-month period ended June 30, 2012, other items represented a charge of $15 million, compared to nil in the corresponding period in 2011.As a result, net earnings attributable to common shareholders of Power Financial for the quarter ended June 30, 2012 were $433 million or $0.61 per share, compared with $507 million or $0.72 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 SYMBOLRECORD DATEPAYMENT DATEAMOUNT1986 Series - POW.PR.F September 24, 2012October 15, 2012At a floating rate equal to one quarter of 70% of the average prime rate of two major Canadian chartered banks, in accordance with the articles of the Corporation.Series A - POW.PR.ASeptember 24, 2012October 15, 201235¢Series B - POW.PR.BSeptember 24, 2012October 15, 201233.4375¢Series C - POW.PR.CSeptember 24, 2012October 15, 201236.25¢Series D - POW.PR.DSeptember 24, 2012October 15, 201231.25¢Series G - POW.PR.GSeptember 24, 2012October 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 September 28, 2012 to shareholders of record September 7, 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, reflect 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 list of factors in the prior paragraph, 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 www.sedar.com.Non-IFRS Financial MeasuresIn analyzing the financial results of the Corporation and consistent with the presentation in previous years, net earnings attributable to participating shareholders 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.POWER CORPORATION OF CANADA CONSOLIDATED BALANCE SHEETS  [in millions of Canadian dollars] June 30,2012(unaudited) December 31,2011(audited     Assets    Cash and cash equivalents 3,263 3,741Investments     Bonds 83,681 79,186 Mortgages and other loans 21,870 21,541 Shares 7,869 7,876 Investment properties 3,298 3,201 Loans to policyholders 7,153 7,162  123,871 118,966Funds held by ceding insurers 10,121 9,923Reinsurance assets 1,946 2,061Investments in associates 2,275 2,341Owner-occupied properties 583 565Capital assets 348 340Derivative financial instruments 1,003 1,056Other assets 5,171 4,759Deferred tax assets 1,206 1,227Intangible assets 5,079 5,107Goodwill 8,856 8,828Segregated funds for the risk of unit holders 99,208 96,582Total assets 262,930 255,496     Liabilities    Insurance contract liabilities 116,985 114,730Investment contract liabilities 762 782Deposits and certificates 154 151Funds held under reinsurance contracts 167 169Obligations to securitization entities 4,345 3,827Debentures and other borrowings 6,380 6,296Capital trust securities 353 533Derivative financial instruments 498 430Other liabilities 6,725 5,668Deferred tax liabilities 1,331 1,293Insurance and investment contracts on account of unit holders 99,208 96,582Total liabilities 236,908 230,461     Equity    Stated capital     Non-participating shares 978 779 Participating shares 572 571Retained earnings 8,383 8,119Reserves 215 356Total shareholders' equity 10,148 9,825Non-controlling interests 15,874 15,210Total equity 26,022 25,035Total liabilities and equity 262,930 255,496CONSOLIDATED STATEMENTS OF EARNINGS   Three months ended June 30 Six months ended June 30(unaudited) [in millions of Canadian dollars, except per share amounts] 2012 2011 2012 2011         Revenues        Premium income         Gross premiums written 5,233 4,980 10,431 9,921 Ceded premiums (709) (708) (1,378) (1,354)Total net premiums 4,524 4,272 9,053 8,567Net investment income         Regular net investment income 1,477 1,494 2,949 2,961 Change in fair value 1,109 708 912 510  2,586 2,202 3,861 3,471Fee and media income 1,413 1,479 2,833 2,947Total revenues 8,523 7,953 15,747 14,985         Expenses        Policyholder benefits         Insurance and investment contracts          Gross 4,311 4,006 8,917 8,429  Ceded (367) (316) (754) (649)  3,944 3,690 8,163 7,780Policyholder dividends and experience refunds 367 377 731 730Change in insurance and investment contract liabilities 1,668 1,231 1,828 1,367Total paid or credited to policyholders 5,979 5,298 10,722 9,877Commissions 594 593 1,192 1,178Operating and administrative expenses 1,053 950 2,108 1,974Financing charges 108 111 216 226Total expenses 7,734 6,952 14,238 13,255  789 1,001 1,509 1,730Share of earnings of investments in associates 45 63 127 64Earnings before income taxes - continuing operations 834 1,064 1,636 1,794Income taxes 131 231 246 365Net earnings - continuing operations 703 833 1,390 1,429Net earnings - discontinued operations - 1 - 2Net earnings 703 834 1,390 1,431         Attributable to         Non-controlling interests 408 468 819 839 Non-participating shareholders 13 10 25 20 Participating shareholders 282 356 546 572  703 834 1,390 1,431         Earnings per participating share         Net earnings attributable to participating shareholders          - Basic 0.62 0.77 1.19 1.24  - Diluted 0.62 0.77 1.18 1.23          Net earnings from continuing operations attributable to participating shareholders          - Basic 0.62 0.77 1.19 1.24  - Diluted 0.62 0.77 1.18 1.23SEGMENTED INFORMATION INFORMATION ON PROFIT MEASURE Three months ended June 30, 2012 Lifeco IGM Parjointco Other Total           Revenues          Premium income, net 4,524 - - - 4,524Investment income, net 2,534 30 - 22 2,586Fee and media income 734 608 - 71 1,413  7,792 638 - 93 8,523           Expenses          Total paid or credited to policyholders 5,979 - - - 5,979Commissions 415 213 - (34) 594Operating and administrative expenses 737 172 - 144 1,053Financing charges 72 23 - 13 108  7,203 408 - 123 7,734  589 230 - (30) 789Share of earnings (losses) of investments in associates - - 45 - 45Earnings before income taxes - continuing operations 589 230 45 (30) 834Income taxes 72 56 - 3 131Contribution to net earnings - continuing operations 517 174 45 (33) 703Contribution to net earnings - discontinued operations - - - - -Contribution to net earnings 517 174 45 (33) 703           Attributable to           Non-controlling interests 295 108 15 (10) 408 Non-participating shareholders - - - 13 13 Participating shareholders 222 66 30 (36) 282  517 174 45 (33) 703                      Three months ended June 30, 2011 Lifeco IGM Parjointco Other Total           Revenues          Premium income, net 4,272 - - - 4,272Investment income, net 2,123 37 - 42 2,202Fee and media income 739 663 - 77 1,479  7,134 700 - 119 7,953           Expenses          Total paid or credited to policyholders 5,298 - - - 5,298Commissions 390 229 - (26) 593Operating and administrative expenses 651 164 - 135 950Financing charges 72 26 - 13 111  6,411 419 - 122 6,952  723 281 - (3) 1,001Share of earnings (losses) of investments in associates - - 63 - 63Earnings before income taxes - continuing operations 723 281 63 (3) 1,064Income taxes 161 63 - 7 231Contribution to net earnings - continuing operations 562 218 63 (10) 833Contribution to net earnings - discontinued operations - 1 - - 1Contribution to net earnings 562 219 63 (10) 834           Attributable to           Non-controlling interests 324 136 21 (13) 468 Non-participating shareholders - - - 10 10 Participating shareholders 238 83 42 (7) 356  562 219 63 (10) 834                      Six months ended June 30, 2012 Lifeco IGM Parjointco Other Total           Revenues          Premium income, net 9,053 - - - 9,053Investment income, net 3,777 76 - 8 3,861Fee and media income 1,458 1,235 - 140 2,833  14,288 1,311 - 148 15,747           Expenses          Total paid or credited to policyholders 10,722 - - - 10,722Commissions 825 435 - (68) 1,192Operating and administrative expenses 1,475 343 - 290 2,108Financing charges 144 46 - 26 216  13,166 824 - 248 14,238  1,122 487 - (100) 1,509Share of earnings (losses) of investments in associates - - 126 1 127Earnings before income taxes - continuing operations 1,122 487 126 (99) 1,636Income taxes 129 112 - 5 246Contribution to net earnings - continuing operations 993 375 126 (104) 1,390Contribution to net earnings - discontinued operations - - - - -Contribution to net earnings 993 375 126 (104) 1,390           Attributable to           Non-controlling interests 569 234 42 (26) 819 Non-participating shareholders - - - 25 25 Participating shareholders 424 141 84 (103) 546  993 375 126 (104) 1,390                      Six months ended June 30, 2011 Lifeco IGM Parjointco Other Total           Revenues          Premium income, net 8,567 - - - 8,567Investment income, net 3,363 76 - 32 3,471Fee and media income 1,459 1,335 - 153 2,947  13,389 1,411 - 185 14,985           Expenses          Total paid or credited to policyholders 9,877 - - - 9,877Commissions 767 463 - (52) 1,178Operating and administrative expenses 1,375 326 - 273 1,974Financing charges 144 56 - 26 226  12,163 845 - 247 13,255  1,226 566 - (62) 1,730Share of earnings (losses) of investments in associates - - 65 (1) 64Earnings before income taxes - continuing operations 1,226 566 65 (63) 1,794Income taxes 230 135 - - 365Contribution to net earnings - continuing operations 996 431 65 (63) 1,429Contribution to net earnings - discontinued operations - 2 - - 2Contribution to net earnings 996 433 65 (63) 1,431           Attributable to           Non-controlling interests 570 270 22 (23) 839 Non-participating shareholders - - - 20 20 Participating shareholders 426 163 43 (60) 572  996 433 65 (63) 1,431    SOURCE: POWER CORPORATION OF CANADAFor further information: Attachments: FINANCIAL INFORMATION Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400