Power Financial Corporation Reports 2014 Second Quarter and Six-Month Financial Results and Dividends

All figures are in Canadian dollars unless otherwise noted. Readers are referred to the sections entitled "Non-IFRS Financial Measures" and "Forward-Looking Statements" at the end of this release.

WINNIPEG, Aug. 8, 2014 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the second quarter and six months ended June 30, 2014.

SECOND QUARTER RESULTS
Operating earnings attributable to common shareholders (a non-IFRS financial measure) for the quarter ended June 30, 2014 were $545 million or $0.77 per share, compared with $464 million or $0.65 per share in 2013.  

Other items, not included in operating earnings, were a contribution of $23 million representing the Corporation's share of the gains realized by Groupe Bruxelles Lambert (GBL) on the sale of a part of its interest in Total SA (Total) and on the exchange of Suez Environnement Company (Suez Environnement) shares at the time of the exercise of exchangeable bonds as further described below, partially offset by restructuring and other charges at IGM Financial Inc. (IGM). In 2013, other items represented a contribution of $11 million. Additional details on other items can be found in the table entitled "Other Items" below.

Net earnings attributable to common shareholders were $568 million or $0.80 per share, compared with $475 million or $0.67 per share in 2013.

SIX-MONTH RESULTS
Operating earnings attributable to common shareholders for the six months ended June 30, 2014 were $985 million or $1.39 per share, compared with $871 million or $1.22 per share in 2013. 

Other items, not included in operating earnings, resulted in a contribution of $50 million, compared with a net charge of $2 million in 2013.

Net earnings attributable to common shareholders were $1,035 million or $1.46 per share, compared with $869 million or $1.22 per share in 2013.

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

GREAT-WEST LIFECO INC.
For the quarter ended June 30, 2014, Great-West Lifeco Inc. (Lifeco) reported operating and net earnings attributable to common shareholders of $615 million or $0.616 per share, compared with $521 million or $0.548 per share in 2013. Irish Life contributed $49 million, net of restructuring costs of $8 million (after tax) associated with the ongoing integration.

For the six-month period ended June 30, 2014, Lifeco reported operating and net earnings attributable to common shareholders of $1,202 million or $1.203 per share, compared with $1,038 million or $1.092 per share in the corresponding period in 2013. Irish Life contributed $96 million, net of restructuring costs of $13 million (after tax).

As at June 30, 2014, Power Financial and IGM held 67.0% and 4.0%, respectively, of Lifeco's common shares. Lifeco's contribution to Power Financial's operating earnings was $413 million for the quarter ended June 30, 2014, compared with $355 million in the same period in 2013. For the six months ended June 30, 2014, Lifeco's contribution to Power Financial's operating earnings was $806 million, compared with $708 million in the corresponding period in 2013.

IGM FINANCIAL INC.
For the quarter ended June 30, 2014, IGM reported operating earnings available to common shareholders of $203.9 million or $0.81 per share, compared with $190.9 million or $0.76 per share in 2013.

For the six-month period ended June 30, 2014, IGM reported operating earnings available to common shareholders of $398.3 million or $1.57 per share, compared with $371.4 million or $1.47 per share in the corresponding period in 2013.

For the quarter and six months ended June 30, 2014, other items, not included in operating earnings, consisted of an after-tax charge of $13.6 million related to restructuring and other charges. There were no other items in the corresponding periods of 2013.

Net earnings available to common shareholders for the quarter ended June 30, 2014 were $190.3 million or $0.75 per share, compared with $190.9 million or $0.76 per share in the corresponding period in 2013.

For the six-month period ended June 30, 2014, net earnings available to common shareholders were $384.7 million or $1.52 per share, compared with $371.4 million or $1.47 per share in 2013.

As at June 30, 2014, Power Financial and The Great-West Life Assurance Company, a subsidiary of Lifeco, held 58.7% and 3.6%, respectively, of IGM's common shares. IGM contributed $120 million to Power Financial's operating earnings for the quarter ended June 30, 2014, compared with $112 million for the corresponding period in 2013. For the six months ended June 30, 2014, IGM's contribution to Power Financial's operating earnings was $236 million, compared with $219 million in the corresponding period in 2013.

PARGESA HOLDING SA
For the quarter ended June 30, 2014, Pargesa Holding SA (Pargesa) reported operating earnings of SF198 million, compared with SF135 million in 2013.

For the six months ended June 30, 2014, Pargesa reported operating earnings of SF148 million, compared with SF118 million in the same period in 2013.

During the second quarter of 2014, holders of Suez Environnement exchangeable bonds exercised their right to exchange approximately 85% of the bonds outstanding for shares of Suez Environnement. Pargesa's share of the gain recorded by GBL on this exchange was SF129 million, of which SF55 million was recorded as operating earnings. The remaining portion of SF74 million, which essentially represents the economic gain measured at the exchange price set at the time of the issuance of the exchangeable bonds in 2012, has been recognized as non-operating earnings. Other items also include Pargesa's share of gains recorded by GBL on the partial disposal of Total shares in the first and second quarters of 2014, for an amount of SF169 million.

Net earnings for the second quarter of 2014 were SF330 million, compared with SF171 million in the corresponding quarter in 2013. For the six-month period ended June 30, 2014, net earnings were SF378 million, compared with SF110 million in the corresponding period in 2013.

Power Financial holds a 50% interest in Parjointco N.V., which in turn held a 55.5% equity interest in Pargesa at June 30, 2014. Pargesa's contribution to Power Financial's operating earnings was $67 million for the three-month period ended June 30, 2014, compared with $40 million in the corresponding period in 2013. For the six-month period ended June 30, 2014, Pargesa's contribution to Power Financial's operating earnings was $50 million, compared with $35 million in the same period 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

October 24, 2014

November 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

October 10, 2014

October 31, 2014

34.375¢

Series E – PWF.PR.F

October 10, 2014

October 31, 2014

32.8125¢

Series F – PWF.PR.G

October 10, 2014

October 31, 2014

36.875¢

Series H – PWF.PR.H

October 10, 2014

October 31, 2014

35.9375¢

Series I – PWF.PR.I

October 10, 2014

October 31, 2014

37.50¢

Series K – PWF.PR.K

October 10, 2014

October 31, 2014

30.9375¢

Series L – PWF.PR.L

October 10, 2014

October 31, 2014

31.875¢

Series O – PWF.PR.O

October 10, 2014

October 31, 2014

36.25¢

Series P – PWF.PR.P

October 10, 2014

October 31, 2014

27.50¢

Series R – PWF.PR.R

October 10, 2014

October 31, 2014

34.375¢

Series S – PWF.PR.S

October 10, 2014

October 31, 2014

30¢

Series T – PWF.PR.T

October 10, 2014

October 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 October 31, 2014 to shareholders of record September 30, 2014.

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 diversified investments in industrial companies based in Europe. 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

Six months ended


June 30,
2014

June 30,
2013

June 30,
2014

June 30,
2013

Contribution to operating earnings from






Lifeco

413

355

806

708


IGM

120

112

236

219


Pargesa

67

40

50

35


600

507

1,092

962

Results from corporate activities

(22)

(10)

(40)

(26)

Dividends on perpetual preferred shares

(33)

(33)

(67)

(65)

Operating earnings attributable to common shareholders

545

464

985

871

Other items (see below)

23

11

50

(2)

Net earnings attributable to common shareholders

568

475

1,035

869

Earnings per share (attributable to common shareholders)






– operating earnings

0.77

0.65

1.39

1.22


– non-operating earnings

0.03

0.02

0.07


– net earnings

0.80

0.67

1.46

1.22











OTHER ITEMS






(unaudited)
(in millions of Canadian dollars)

Three months ended

Six months ended


June 30,
2014

June 30,
2013

June 30,
2014

June 30,
2013

Share of IGM's other items






Restructuring and other charges

(8)


(8)


Share of Pargesa's other items






Gain on partial disposal of Total

17


43



Gain on partial exchange of Suez Environnement

17


17



Gain on partial disposal of GDF Suez


15


15


Impairment charges on GDF Suez




(13)


Other (charge) income

(3)

(4)

(2)

(4)


23

11

50

(2)

 

Eligible Dividends

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.

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