Power Corporation of Canada reports 2011 First Quarter Financial Results and Dividends

Readers 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) and all comparative figures have been restated accordingly.

MONTREAL, May 13 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the three-month period ended March 31, 2011 were $228 million or $0.47 per share, compared with $219 million or $0.46 per share in the corresponding period in 2010.

The increase in operating earnings reflects a higher contribution from Power Financial Corporation.

Power Corporation's share of operating earnings for the period from its subsidiaries was $248 million, compared with $239 million in the corresponding period of 2010.

For the first quarter of 2011, other items were a charge of $2 million. In the corresponding period of 2010, other items were a charge of $44 million and consisted mainly of an impairment charge on the value of the Corporation's investment in CITIC Pacific, as required by IFRS.

As a result, net earnings attributable to participating shareholders for the three-month period ended March 31, 2011 were $216 million or $0.47 per share, compared with $165 million or $0.36 per share in the first quarter of 2010.

RESULTS OF POWER FINANCIAL CORPORATION
Power Financial Corporation's operating earnings for the three-month period ended March 31, 2011 were $398 million or $0.52 per share, compared with $380 million or $0.50 per share in the corresponding period in 2010. Included in operating earnings for the first quarter of 2011 was the establishment of provisions of $75 million recorded by Lifeco relating to earthquake events in Japan and New Zealand, which negatively impacted Power Financial's operating earnings by $53 million. Power Corporation's share of these provisions represented $35 million.

Other items in the first quarter of 2011 were a charge of $2 million, compared with a positive contribution of $6 million in the first quarter of 2010, and consisted of Power Financial's share of non-operating earnings recorded by Pargesa Holding SA.

Consequently, net earnings attributable to common shareholders of Power Financial including other items for the three-month period ended March 31, 2011 were $370 million or $0.52 per share, compared with $363 million or $0.51 per share in the first quarter of 2010.

DIVIDENDS ON PREFERRED SHARES

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

Type of Shares   Record Date    Payment Date   Amount
1986 Series June 23, 2011 July 15, 2011 To be determined in accordance with the articles of the Corporation
Series A June 23, 2011 July 15, 2011 35¢
Series B June 23, 2011 July 15, 2011 33.4375¢
Series C June 23, 2011 July 15, 2011 36.25¢
Series D June 23, 2011 July 15, 2011 31.25¢

DIVIDENDS ON PARTICIPATING SHARES
The 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 30, 2011 to shareholders of record June 9, 2011.

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends of the Corporation's preferred shares (including the participating preferred shares) and subordinate voting shares are eligible dividends.

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, 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 or 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 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 about the Corporation's business 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, available at www.sedar.com.

Non-IFRS Financial Measures

In analysing the financial results of the Corporation and consistent with the presentation in previous years, net earnings are subdivided into the following components:

  • operating earnings; and
  • other items, 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 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 Information

POWER CORPORATION OF CANADA
CONSOLIDATED BALANCE SHEETS
(unaudited)
[in millions of Canadian dollars]
March 31,
2011
  December 31,
2010
  January 1,
2010
 
Assets            
Cash and cash equivalents 4,415   4,016   5,383  
Investments            
  Bonds 72,813   74,250   67,942  
  Mortgages and other loans 20,607   20,209   20,613  
  Shares 8,144   7,736   7,584  
  Investment properties 3,102   2,959   2,615  
  104,666   105,154   98,754  
Loans to policyholders 6,734   6,827   6,957  
Funds held by ceding insurers 9,776   9,856   10,984  
Reinsurance assets 2,575   2,533   2,800  
Investments in associates 2,747   2,566   2,948  
Deferred tax assets 1,210   1,237   1,332  
Other assets 7,191   7,475   7,355  
Intangible assets 4,287   4,317   4,433  
Goodwill 8,783   8,755   8,686  
Segregated funds for the risk of unit holders 97,280   94,827   87,495  
Total Assets 249,664   247,563   237,127  
             
Liabilities            
Insurance contract liabilities 107,281   107,367   104,988  
Investment contract liabilities 747   791   841  
Deposits and certificates 818   835   907  
Funds held under reinsurance contracts 146   149   331  
Obligation to securitization entities 3,528   3,505   3,310  
Debentures and other borrowings 6,802   6,720   6,339  
Capital trust securities and debentures 535   535   540  
Preferred shares of subsidiaries -   -   499  
Deferred tax liabilities 1,103   1,165   1,043  
Other liabilities 7,145   7,632   7,027  
Insurance and investment contracts on account of unit holders 97,280   94,827   87,495  
Total Liabilities 225,385   223,526   213,320  
             
Equity            
Stated capital            
  Non-participating shares 782   783   787  
  Participating shares 569   549   526  
Retained earnings 7,663   7,575   7,392  
Reserves 648   557   908  
Total shareholders' equity 9,662   9,464   9,613  
Non-controlling interests 14,617   14,573   14,194  
Total Equity 24,279   24,037   23,807  
Total Liabilities and Equity 249,664   247,563   237,127  

 
CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended March 31
(unaudited) [in millions of Canadian dollars, except per share amounts]
   2011   2010  
         
Revenues        
Premium income        
  Gross premiums written 4,941    5,248  
  Ceded premiums (646)   (638)  
Total net premiums 4,295   4,610  
Net investment income        
  Regular net investment income 1,466   1,420  
  Change in fair value on held-for-trading assets (191)   1,576  
  1,275   2,996  
Fee and media income 1,471   1,404  
Total revenues 7,041   9,010  
         
Expenses        
Policyholder benefits 4,090   3,888  
Policyholder dividends and experience refunds 353   383  
Change in insurance and investment contract liabilities 136   2,361  
  4,579   6,632  
Commissions 585   552  
Operating expenses 1,031   1,006  
Financing charges 115   118  
Total expenses 6,310   8,308  
  731   702  
Share of earnings of investments in associates 1   4  
Earnings before income taxes 732   706  
Income taxes 135   164  
Net earnings before non-controlling interests 597   542  
Attributable to non-controlling interests (371)   (367)  
Net earnings attributable to shareholders 226   175  
Non-participating share dividends (10)   (10)  
Net earnings attributable to participating shareholders 216   165  
         
Earnings per participating share        
  - Basic 0.47   0.36  
  - Diluted 0.47   0.36  

 
SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
Three months ended March 31, 2011 Lifeco   IGM   Parjointco   Other   Total  
Revenues                    
Premium income 4,295   -   -   -   4,295  
Net investment income                    
  Regular net investment income 1,427   49   -   (10)   1,466  
  Change in fair value (187)   (4)   -   -   (191)  
  1,240   45   -   (10)   1,275  
Fee and media income 720   675   -   76   1,471  
  6,255   720   -   66   7,041  
Expenses                    
Policyholder benefits, dividends and experience refunds,
and change in insurance and investment contract liabilities
4,579   -   -   -   4,579  
Commissions 377   234   -   (26)   585  
Operating expenses 724   169   -   138   1,031  
Financing charges 72   30   -   13   115  
  5,752   433   -   125   6,310  
  503   287   -   (59)   731  
Share of earnings of investments in associates -   -   2   (1)   1  
Earnings before income taxes 503   287   2   (60)   732  
Income taxes 69   73   -   (7)   135  
Contribution to net earnings before non-controlling interests 434   214   2   (53)   597  
Attributable to non-controlling interests (246)   (134)   (1)   10   (371)  
Contribution to net earnings attributable to shareholders 188   80   1   (43)   226  
                     
Three months ended March 31, 2010 Lifeco   IGM   Parjointco   Other   Total  
Revenues                    
Premium income 4,610   -   -   -   4,610  
Net investment income                    
  Regular net investment income 1,417   53   -   (50)   1,420  
  Change in fair value 1,576   -   -     1,576  
  2,993   53   -   (50)   2,996  
Fee and media income 724   611   -   69   1,404  
  8,327   664   -   19   9,010  
Expenses                    
Policyholder benefits, dividends and experience refunds, and
change in insurance and investment contract liabilities
6,632   -   -   -   6,632  
Commissions 363   214   -   (25)   552  
Operating expenses 718   159   -   129   1,006  
Financing charges 74   27   -   17   118  
  7,787   400   -   121   8,308  
  540   264   -   (102)   702  
Share of earnings (losses) of investments in associates -   -   4   -   4  
Earnings before income taxes 540   264   4   (102)   706  
Income taxes 90   70     4   164  
Contribution to net earnings before non-controlling interests 450   194   4   (106)   542  
Attributable to non-controlling interests (255)   (122)   (2)   12   (367)  
Contribution to net earnings attributable to shareholders 195   72   2   (94)   175  

 

 

SOURCE POWER CORPORATION OF CANADA

For further information:

Mr. Edward Johnson
Senior Vice-President, General Counsel and Secretary
514-286-7400

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POWER CORPORATION OF CANADA

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