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Press release from CNW Group

Power Financial Corporation Reports 2012 Second Quarter Financial Results and Dividends

Friday, August 03, 2012

Power Financial Corporation Reports 2012 Second Quarter Financial Results and Dividends10:25 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, MB, Aug. 3, 2012 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today 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 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 ($46 million) and the disposal of its interest in Arkema ($43 million), as previously disclosed. These gains were partially offset in the second quarter by the Corporation's share ($4 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) ($11 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 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.SECOND QUARTER RESULTS For the quarter ended June 30, 2012, operating earnings were $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, as described above, compared to nil in the corresponding period in 2011.As a result, net earnings attributable to common shareholders 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.RESULTS OF SUBSIDIARIES AND PARJOINTCOGREAT-WEST LIFECO INC.For the six-month period ended June 30, 2012, Great-West Lifeco Inc. (Lifeco) reported operating earnings attributable to common shareholders of $942 million or $0.992 per share, compared with $941 million or $0.991 per share in the corresponding period in 2011.For the quarter ended June 30, 2012, Lifeco reported operating earnings attributable to common shareholders of $491 million or $0.517 per share, compared with $526 million or $0.553 per share in the corresponding period of 2011, a decrease of 6.5% on a per share basis.Lifeco's contribution to Power Financial's operating earnings was $642 million for the six-month period ended June 30, 2012, compared with $644 million for the corresponding period in 2011. For the quarter ended June 30, 2012, Lifeco's contribution to Power Financial's operating earnings was $336 million, compared with $360 million in the same period in 2011.IGM FINANCIAL INC.For the six-month period ended June 30, 2012, IGM reported operating earnings available to common shareholders of $379 million or $1.47 per share, compared with $424 million or $1.63 per share in the same period in 2011, a decrease of 9.8% on a per share basis.For the quarter ended June 30, 2012, IGM reported operating earnings available to common shareholders of $179 million or $0.70 per share, compared with $213 million or $0.82 per share in the same period in 2011, a decrease of 14.6% on a per share basis.IGM's contribution to Power Financial's operating earnings was $218 million for the six-month period ended June 30, 2012, compared with $246 million for the corresponding period in 2011. For the quarter ended June 30, 2012, IGM's contribution to Power Financial's operating earnings was $104 million, compared with $125 million in the same 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 at June 30, 2012.For the six-month period ended June 30, 2012, Pargesa reported operating earnings of SF178 million, compared with operating earnings of SF210 million in the corresponding period in 2011. For the quarter ended June 30, 2012, operating earnings were SF184 million, compared with SF196 million in the corresponding period of 2011. The Pargesa results of 2011 included an additional quarterly dividend of SF30 million received from Total as a result of Total paying its dividend quarterly beginning in the second quarter in 2011.Pargesa's contribution to Power Financial's operating earnings expressed in Canadian dollars was $54 million for the six-month period ended June 30, 2012, compared with a contribution of $67 million in the corresponding period in 2011. For the quarter ended June 30, 2012, Pargesa's contribution to Power Financial's operating earnings was $56 million, compared with a contribution of $63 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 - STOCKRECORD DATEPAYMENT DATEAMOUNTSeries A - PWF.PR.AOctober 25, 2012November 15, 2012At a floating rate equal to one quarter of 70%of the average prime rate of two majorCanadian chartered banks, in accordance withthe articles of the Corporation.Series D - PWF.PR.EOctober 10, 2012October 31, 201234.375¢Series E - PWF.PR.FOctober 10, 2012October 31, 201232.8125¢Series F - PWF.PR.GOctober 10, 2012October 31, 201236.875¢Series H - PWF.PR.HOctober 10, 2012October 31, 201235.9375¢Series I - PWF.PR.IOctober 10, 2012October 31, 201237.50¢Series K - PWF.PR.KOctober 10, 2012October 31, 201230.9375¢Series L - PWF.PR.LOctober 10, 2012October 31, 201231.875¢Series M - PWF.PR.MOctober 10, 2012October 31, 201237.50¢Series O - PWF.PR.OOctober 10, 2012October 31, 201236.25¢Series P - PWF.PR.POctober 10, 2012October 31, 201227.50¢Series R - PWF.PR.ROctober 10, 2012October 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 November 1, 2012 to shareholders of record September 28, 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, 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 common shareholders 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 CORPORATIONCONSOLIDATED BALANCE SHEETS    [in millions of Canadian dollars]June 30,2012(unaudited) December 31,2011(audited)Assets   Cash and cash equivalents3,000 3,385Investments    Bonds83,050 78,759 Mortgages and other loans21,847 21,518 Shares6,362 6,402 Investment properties3,298 3,201 Loans to policyholders7,153 7,162 121,710 117,042Funds held by ceding insurers10,121 9,923Reinsurance assets1,946 2,061Investment in associate2,139 2,222Owner-occupied properties559 541Capital assets211 197Derivative financial instruments1,003 1,056Other assets5,057 4,653Deferred tax assets1,184 1,207Intangible assets4,997 5,023Goodwill8,814 8,786Segregated funds for the risk of unit holders99,208 96,582Total assets259,949 252,678    Liabilities   Insurance contract liabilities116,985 114,730Investment contract liabilities762 782Deposits and certificates154 151Funds held under reinsurance contracts167 169Obligations to securitization entities4,345 3,827Debentures and other borrowings5,973 5,888Capital trust securities353 533Derivative financial instruments497 427Other liabilities6,586 5,516Deferred tax liabilities1,288 1,258Insurance and investment contracts on account of unit holders99,208 96,582Total liabilities236,318 229,863    Equity   Stated capital    Perpetual preferred shares2,255 2,005 Common shares639 639Retained earnings11,121 10,743Reserves(14) 134Total shareholders' equity14,001 13,521Non-controlling interests9,630 9,294Total equity23,631 22,815Total liabilities and equity259,949 252,678CONSOLIDATED 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 2011Revenues       Premium income        Gross premiums written5,233 4,980 10,431 9,921 Ceded premiums(709) (708) (1,378) (1,354)Total net premiums4,524 4,272 9,053 8,567Net investment income        Regular net investment income1,434 1,428 2,894 2,884 Change in fair value1,109 708 912 510 2,543 2,136 3,806 3,394Fee income1,307 1,376 2,625 2,742Total revenues8,374 7,784 15,484 14,703        Expenses       Policyholder benefits        Insurance and investment contracts         Gross4,311 4,006 8,917 8,429  Ceded(367) (316) (754) (649) 3,944 3,690 8,163 7,780Policyholder dividends and experience refunds367 377 731 730Change in insurance and investment contract liabilities1,668 1,231 1,828 1,367Total paid or credited to policyholders5,979 5,298 10,722 9,877Commissions594 593 1,192 1,178Operating and administrative expenses923 827 1,847 1,726Financing charges99 102 198 209Total expenses7,595 6,820 13,959 12,990 779 964 1,525 1,713Share of earnings of investment in associate45 63 126 65Earnings before income taxes - continuing operations824 1,027 1,651 1,778Income taxes129 225 244 361Net earnings - continuing operations695 802 1,407 1,417Net earnings - discontinued operations- 1 - 2Net earnings695 803 1,407 1,419        Attributable to        Non-controlling interests233 270 461 490 Perpetual preferred shareholders29 26 58 52 Common shareholders433 507 888 877 695 803 1,407 1,419        Earnings per common share        Net earnings attributable to common shareholders         - Basic0.61 0.72 1.25 1.24  - Diluted0.61 0.71 1.25 1.23         Net earnings from continuing operations attributable to common shareholders         - Basic0.61 0.72 1.25 1.24  - Diluted0.61 0.71 1.25 1.23SEGMENTED INFORMATION INFORMATION ON PROFIT MEASURE          Three months ended June 30, 2012Lifeco IGM Parjointco Other TotalRevenues         Premium income, net4,524 - - - 4,524Investment income, net2,534 30 - (21) 2,543Fee income734 608 - (35) 1,307 7,792 638 - (56) 8,374Expenses         Total paid or credited to policyholders5,979 - - - 5,979Commissions415 213 - (34) 594Operating and administrative expenses737 172 - 14 923Financing charges72 23 - 4 99 7,203 408 - (16) 7,595 589 230 - (40) 779Share of earnings of investment in associate- - 45 - 45Earnings before income taxes - continuing operations589 230 45 (40) 824Income taxes72 56 - 1 129Contribution to net earnings - continuing operations517 174 45 (41) 695Contribution to net earnings - discontinued operations- - - - -Contribution to net earnings517 174 45 (41) 695Attributable to          Non-controlling interests181 74 - (22) 233 Perpetual preferred shareholders- - - 29 29 Common shareholders336 100 45 (48) 433 517 174 45 (41) 695                    Three months ended June 30, 2011Lifeco IGM Parjointco Other TotalRevenues         Premium income, net4,272 - - - 4,272Investment income, net2,123 37 - (24) 2,136Fee income739 663 - (26) 1,376 7,134 700 - (50) 7,784Expenses         Total paid or credited to policyholders5,298 - - - 5,298Commissions390 229 - (26) 593Operating and administrative expenses651 164 - 12 827Financing charges72 26 - 4 102 6,411 419 - (10) 6,820 723 281 - (40) 964Share of earnings of investment in associate- - 63 - 63Earnings before income taxes - continuing operations723 281 63 (40) 1,027Income taxes161 63 - 1 225Contribution to net earnings - continuing operations562 218 63 (41) 802Contribution to net earnings - discontinued operations- 1 - - 1Contribution to net earnings562 219 63 (41) 803Attributable to          Non-controlling interests202 94 - (26) 270 Perpetual preferred shareholders- - - 26 26 Common shareholders360 125 63 (41) 507 562 219 63 (41) 803                    Six months ended June 30, 2012Lifeco IGM Parjointco Other TotalRevenues         Premium income, net9,053 - - - 9,053Investment income, net3,777 76 - (47) 3,806Fee income1,458 1,235 - (68) 2,625 14,288 1,311 - (115) 15,484Expenses         Total paid or credited to policyholders10,722 - - - 10,722Commissions825 435 - (68) 1,192Operating and administrative expenses1,475 343 - 29 1,847Financing charges144 46 - 8 198 13,166 824 - (31) 13,959 1,122 487 - (84) 1,525Share of earnings of investment in associate- - 126 - 126Earnings before income taxes - continuing operations1,122 487 126 (84) 1,651Income taxes129 112 - 3 244Contribution to net earnings - continuing operations993 375 126 (87) 1,407Contribution to net earnings - discontinued operations- - - - -Contribution to net earnings993 375 126 (87) 1,407Attributable to          Non-controlling interests351 161 - (51) 461 Perpetual preferred shareholders- - - 58 58 Common shareholders642 214 126 (94) 888 993 375 126 (87) 1,407                    Six months ended June 30, 2011Lifeco IGM Parjointco Other TotalRevenues         Premium income, net8,567 - - - 8,567Investment income, net3,363 76 - (45) 3,394Fee income1,459 1,335 - (52) 2,742 13,389 1,411 - (97) 14,703Expenses         Total paid or credited to policyholders9,877 - - - 9,877Commissions767 463 - (52) 1,178Operating and administrative expenses1,375 326 - 25 1,726Financing charges144 56 - 9 209 12,163 845 - (18) 12,990 1,226 566 - (79) 1,713Share of earnings of investment in associate- - 65 - 65Earnings before income taxes - continuing operations1,226 566 65 (79) 1,778Income taxes230 135 - (4) 361Contribution to net earnings - continuing operations996 431 65 (75) 1,417Contribution to net earnings - discontinued operations- 2 - - 2Contribution to net earnings996 433 65 (75) 1,419Attributable to          Non-controlling interests352 187 - (49) 490 Perpetual preferred shareholders- - - 52 52 Common shareholders644 246 65 (78) 877 996 433 65 (75) 1,419 SOURCE: POWER FINANCIAL CORPORATIONFor further information: Attachments:  Financial Information Mr. Edward Johnson Senior Vice-President, General Counsel and Secretary 514-286-7400