Power Financial Corporation Reports First Quarter 2014 Financial Results and Dividends

Readers are referred to the sections entitled "Non-IFRS Financial Measures" and "Forward-Looking Statements" at the end of this release.

MONTREAL, May 14, 2014 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the three months ended March 31, 2014.

FIRST QUARTER RESULTS

Operating earnings attributable to common shareholders (a non-IFRS financial measure) for the quarter ended March 31, 2014 were $440 million or $0.62 per share, compared with $407 million or $0.57 per share in 2013.

Other items, not included in operating earnings, were a contribution of $27 million, representing the Corporation's share of the gain realized by Groupe Bruxelles Lambert (GBL) on the sale of a part of its interest in Total SA (Total). In 2013, other items represented a net charge of $13 million. Additional details on other items can be found in the table entitled "Other Items" below.

Net earnings attributable to common shareholders were $467 million or $0.66 per share, compared with $394 million or $0.55 per share in 2013.

RESULTS OF GREAT-WEST LIFECO, IGM FINANCIAL AND PARGESA HOLDING

GREAT-WEST LIFECO INC.
For the quarter ended March 31, 2014, Great-West Lifeco Inc. (Lifeco) reported operating and net earnings attributable to common shareholders of $587 million or $0.587 per share, compared with $517 million or $0.544 per share in 2013.

Irish Life contributed $47 million, after restructuring costs of $5 million, to Lifeco's earnings in the first quarter of 2014 (nil in 2013).

As at March 31, 2014, Power Financial and IGM Financial Inc. (IGM) held 67.0% and 4.0%, respectively, of Lifeco's common shares. Lifeco's contribution to Power Financial's operating earnings was $393 million for the quarter ended March 31, 2014, compared with $353 million in 2013.

IGM FINANCIAL INC.
For the quarter ended March 31, 2014, IGM reported operating and net earnings available to common shareholders of $194 million or $0.77 per share, compared with $181 million or $0.72 per share in 2013.

As at March 31, 2014, Power Financial and The Great-West Life Assurance Company, a subsidiary of Lifeco, held 58.6% and 3.6%, respectively, of IGM's common shares. IGM contributed $116 million to Power Financial's operating earnings for the quarter ended March 31, 2014, compared with $107 million in 2013.

PARGESA HOLDING SA
For the quarter ended March 31, 2014, Pargesa Holding SA (Pargesa) reported an operating loss of SF50 million, compared with an operating loss of SF17 million in 2013. The operating loss in the quarter included Pargesa's share of a charge recorded by GBL, a subsidiary of Pargesa, in the amount of SF103 million (SF4 million in the first quarter of 2013), related to call options embedded in bonds exchangeable in Suez Environnement shares (issued in 2012) and GDF Suez shares (issued in 2013) and on bonds issued by GBL in 2013 convertible into GBL shares, as previously disclosed. The loss results from the rise in the price of the respective underlying shares. In accordance with IFRS, the change in value of such derivative instruments is recognized in the statement of earnings, whereas the change in value of the corresponding Suez Environnement and GDF Suez shares held by GBL are recognized as other comprehensive income.

Other items, not included in the operating loss, were a contribution of SF98 million, which mainly consisted of Pargesa's share of the gain on GBL's sale of a part of its investment in Total, compared with a net charge of SF44 million in 2013.

Net earnings were SF48 million, compared with a net loss of SF61 million in the first quarter of 2013.

Power Financial holds a 50% interest in Parjointco N.V., which in turn held a 55.5% equity interest in Pargesa at March 31, 2014. Pargesa's contribution to Power Financial's operating earnings, expressed in Canadian dollars, was a loss of $17 million for the three-month period ended March 31, 2014, compared with a loss of $5 million in 2013.

DIVIDENDS ON PREFERRED SHARES

The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:

SERIES - STOCK SYMBOL RECORD DATE PAYMENT DATE AMOUNT
Series A - PWF.PR.A July 25, 2014 August 15, 2014 At a floating rate equal to one quarter of 70% of the average prime rate of two major Canadian chartered banks [1]
Series D - PWF.PR.E July 10, 2014 July 31, 2014 34.375¢
Series E - PWF.PR.F July 10, 2014 July 31, 2014 32.8125¢
Series F - PWF.PR.G July 10, 2014 July 31, 2014 36.875¢
Series H - PWF.PR.H July 10, 2014 July 31, 2014 35.9375¢
Series I - PWF.PR.I July 10, 2014 July 31, 2014 37.50¢
Series K - PWF.PR.K July 10, 2014 July 31, 2014 30.9375¢
Series L - PWF.PR.L July 10, 2014 July 31, 2014 31.875¢
Series O - PWF.PR.O July 10, 2014 July 31, 2014 36.25¢
Series P - PWF.PR.P July 10, 2014 July 31, 2014 27.50¢
Series R - PWF.PR.R July 10, 2014 July 31, 2014 34.375¢
Series S - PWF.PR.S July 10, 2014 July 31, 2014 30¢
Series T - PWF.PR.T July 10, 2014 July 31, 2014 26.25¢
[1] In accordance with the articles of the Corporation


DIVIDEND ON COMMON SHARES

The Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's common shares payable August 1, 2014 to shareholders of record June 30, 2014.

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.

ABOUT POWER FINANCIAL

Power Financial Corporation is a diversified management and holding company that has interests, directly or indirectly, in companies in the financial services sector in Canada, the United States, Europe and Asia. It also has substantial holdings in a diversified industrial group. Power Financial Corporation is a member of the Power Corporation Group of Companies. To learn more, visit www.powerfinancial.com.

EARNINGS SUMMARY  
(unaudited)
(in millions of Canadian dollars, except per share amounts) 
Three months ended
  March 31,
2014
  March 31,
2013
Contribution to operating earnings from:      
  Lifeco 393   353
  IGM 116   107
  Pargesa (1) (17)   (5)
  492   455
Results from corporate activities (18)   (16)
Dividends on perpetual preferred shares (34)   (32)
Operating earnings attributable to common shareholders 440   407
Other items (see below)      
  Pargesa 27   (13)
  27   (13)
Net earnings attributable to common shareholders 467   394
Earnings per share (attributable to common shareholders)      
  - operating earnings 0.62   0.57
  - non-operating earnings 0.04   (0.02)
  - net earnings 0.66   0.55
   
OTHER ITEMS  
(unaudited)
(in millions of Canadian dollars) 
Three months ended
  March 31,
2014
  March 31,
2013
Pargesa      
  Gain on partial disposal of Total 26   -
  Impairment charges on GDF Suez -   (13)
  Other income 1   -
  27   (13)
(1) Power Financial has a 50% interest in Parjointco N.V., which in turn held a 55.5% equity interest in Pargesa at March 31, 2014.


Non-IFRS Financial Measures
In analyzing the financial results of the Corporation and consistent with the presentation in previous years, net earnings attributable to common shareholders are classified as follows:

  • operating earnings attributable to common shareholders; and
  • other 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 and its jointly controlled corporations and associate.

Management uses these financial measures 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, as defined by the Corporation, assist the reader in comparing the current period's results to those of previous periods as items of a non-recurring nature are not included in this non-IFRS measure.

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.

The Corporation also uses a non-consolidated basis of presentation to present and explain its results, financial position and cash flows. This non-consolidated basis, which is a non-IFRS presentation, is useful as it isolates the parent's corporate activities from those of operating subsidiaries, reflecting their respective contributions.

Forward-Looking Statements
Certain 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 previous 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

SOURCE POWER FINANCIAL CORPORATION

For further information:

Mr. Stéphane Lemay
Vice-President,
General Counsel and Secretary
514-286-7400