Power Corporation of Canada Reports 2011 Third Quarter Financial Results and Dividends

TORONTO, Nov. 11, 2011 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the nine-month period ended September 30, 2011 were $942 million or $1.98 per share, compared with $756 million or $1.58 per share in the corresponding period of 2010. This represents a 25.1% increase on a per share basis.

The increase in operating earnings reflects a higher contribution from Power Financial Corporation, a subsidiary of the Corporation, and higher income from investments.

Subsidiaries contributed $871 million to Power Corporation's operating earnings for the nine-month period ended September 30, 2011, compared with $823 million in the corresponding period of 2010. Results from corporate activities were a net contribution of $71 million in the nine-month period ended September 30, 2011, compared with a net charge of $67 million in the same period in 2010. This increase is mainly due to income from investments generated by the Corporation's interest in the Sagard 1 fund in Europe which is managed by Sagard SAS, a subsidiary of the Corporation, and income from other investment funds.

Other items in the nine-month period ended September 30, 2011 represented a charge of $150 million and include a write-down of the Corporation's investment in CITIC Pacific for an amount of $72 million recorded in the third quarter. Also included in other items is the Corporation's share (in the amount of $87 million) of Pargesa's impairment charge recorded in the third quarter on its indirect investment in Lafarge S.A. In the corresponding nine-month period of 2010, other items were a charge of $227 million and included an impairment charge on CITIC Pacific of $133 million and the Corporation's share (in the amount of $96 million) of a litigation provision recorded by Great-West Lifeco Inc. (Lifeco), a subsidiary of Power Financial.

Net earnings attributable to participating shareholders (including other items and after dividends on non-participating shares) for the nine-month period ended September 30, 2011 were $761 million or $1.66 per share, compared with $498 million or $1.09 per share in the corresponding period of 2010.

THIRD QUARTER RESULTS

Operating earnings for the three-month period ended September 30, 2011 were $348 million or $0.73 per share, compared with $275 million or $0.58 per share in the corresponding period in 2010. This represents an increase of 27.6% on a per share basis.

Power Corporation's share of operating earnings from its subsidiaries was $284 million for the three-month period ended September 30, 2011, compared with $293 million for the same period in 2010. Corporate activities represented a net contribution of $64 million in the quarter ended September 30, 2011, compared with a net charge of $18 million in the corresponding period in 2010, mainly due to income from investments generated by the Corporation's interest in the Sagard 1 fund in Europe and income from other investment funds.

Other items were a charge of $148 million in the three-month period ended September 30, 2011, compared with a charge of $96 million in the corresponding period of 2010.

Net earnings attributable to participating shareholders (including other items and after dividends on non-participating shares) for the three-month period ended September 30, 2011 were $190 million or $0.41 per share, compared with $169 million or $0.37 per share in the corresponding period in 2010.

RESULTS OF POWER FINANCIAL CORPORATION

Power Financial Corporation's operating earnings for the nine-month period ended September 30, 2011 were $1,385 million or $1.84 per share, compared with $1,294 million or $1.73 per share in the corresponding period in 2010. This represents an increase of 6.8% on a per share basis.

The increase in operating earnings reflects primarily the increase in the contribution from Power Financial's subsidiaries, Lifeco and IGM Financial Inc.

For the nine-month period ended September 30, 2011, other items represented a charge of $118 million and consisted mainly of Power Financial's share (in the amount of $133 million) of Pargesa's impairment charge recorded in the third quarter on its indirect investment in Lafarge S.A. In the corresponding nine-month period of 2010, other items were a charge of $142 million and consisted mainly of Power Financial's share of a litigation provision recorded by Lifeco, established in the third quarter.

Net earnings attributable to common shareholders of Power Financial (including other items and after dividends on perpetual preferred shares) for the nine-month period ended September 30, 2011 were $1,189 million or $1.68 per share, compared with $1,079 million or $1.53 per share in the corresponding period of 2010.

For the three-month period ended September 30, 2011, Power Financial reported operating earnings of $454 million or $0.60 per share, compared with $465 million or $0.62 per share for the same period in 2010.

Other items for the third quarter of 2011 were a charge of $116 million, compared with a charge of $144 million for the same quarter in 2010.

Net earnings attributable to common shareholders of Power Financial (including other items and after dividends on perpetual preferred shares) for the three-month period ended September 30, 2011 were $312 million or $0.44 per share, compared with $294 million or $0.42 per share in the corresponding 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 December 23, 2011  January 15, 2012  To be determined in accordance with the articles of the Corporation
Series A December 23, 2011 January 15, 2012 35¢
Series B December 23, 2011 January 15, 2012 33.4375¢
Series C December 23, 2011 January 15, 2012 36.25¢
Series D December 23, 2011 January 15, 2012 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 December 30, 2011 to shareholders of record December 9, 2011.

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 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 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 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 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 this MD&A and its Annual Information Form filed with the securities regulatory authorities in Canada, available at www.sedar.com.

Non-IFRS Financial Measures

In analyzing 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.



 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(unaudited)
[in millions of Canadian dollars]
September 30,
2011
  December 31,
2010
  January 1,
2010
Assets          
Cash and cash equivalents 3,568   4,016   5,383
Investments          
  Bonds 80,191   74,250   67,942
  Mortgages and other loans 20,947   20,209   20,613
  Shares 7,368   7,736   7,584
  Investment properties 3,238   2,959   2,615
  111,744   105,154   98,754
Loans to policyholders 7,144   6,827   6,957
Funds held by ceding insurers 10,118   9,856   10,984
Reinsurance assets 2,220   2,533   2,800
Investments in associates 2,255   2,566   2,948
Deferred tax assets 1,291   1,272   1,332
Other assets 7,493   7,444   7,355
Assets held for sale 898   -   -
Intangible assets 4,396   4,317   4,433
Goodwill 8,813   8,755   8,686
Segregated funds for the risk of unit holders 94,053   94,827   87,495
Total assets 253,993   247,567   237,127
           
Liabilities          
Insurance contract liabilities 114,070   107,367   104,988
Investment contract liabilities 784   791   841
Deposits and certificates 149   835   907
Funds held under reinsurance contracts 177   149   331
Obligation to securitization entities 3,554   3,505   3,310
Debentures and other borrowings 6,294   6,720   6,339
Capital trust securities and debentures 531   535   540
Preferred shares of subsidiaries -   -   499
Deferred tax liabilities 1,159   1,165   1,043
Other liabilities 7,950   7,784   7,122
Liabilities held for sale 659   -   -
Insurance and investment contracts on account of unit holders 94,053   94,827   87,495
Total liabilities 229,380   223,678   213,415
           
Equity          
Stated capital          
  Non-participating shares 780   783   787
  Participating shares 571   549   526
Retained earnings 7,952   7,573   7,390
Reserves 328   541   894
Total shareholders' equity 9,631   9,446   9,597
Non-controlling interests 14,982   14,443   14,115
Total equity 24,613   23,889   23,712
Total liabilities and equity 253,993   247,567   237,127

 
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
 
  Three months ended September 30   Nine months ended September 30
(unaudited)
[in millions of Canadian dollars, except per share amounts]
2011 2010   2011 2010
Revenues              
Premium income              
  Gross premiums written 5,059 4,956   14,980 15,091
  Ceded premiums (667) (643)   (2,021) (1,953)
Total net premiums 4,392 4,313   12,959 13,138
Net investment income              
  Regular net investment income 1,365 1,514   4,312 4,173
  Change in fair value 2,091 2,641   2,615 5,387
  3,456 4,155   6,927 9,560
Fee and media income 1,398 1,345   4,345 4,129
Total revenues 9,246 9,813   24,231 26,827
               
Expenses              
Policyholder benefits 3,704 3,557   11,484 11,305
Policyholder dividends and experience refunds 385 382   1,115 1,116
Change in insurance and investment contract liabilities 2,737 3,418   4,104 7,226
  6,826 7,357   16,703 19,647
Commissions 564 528   1,742 1,622
Operating expenses 977 1,326   2,951 3,305
Financing charges 108 116   334 352
Total expenses 8,475 9,327   21,730 24,926
  771 486   2,501 1,901
Share of earnings (losses) of investment in associates (96) 60   (32) 117
Earnings before income taxes 675 546   2,469 2,018
Income taxes 119 76   484 421
Net earnings before non-controlling interests          
  - continuing operations 556 470   1,985 1,597
Net earnings before non-controlling interests          
  - discontinued operations 31 -   33 -
Net earnings before non-controlling interests 587 470   2,018 1,597
Attributable to non-controlling interests (387) (291)   (1,226) (1,068)
Net earnings attributable to shareholders 200 179   792 529
Non-participating share dividends (10) (10)   (31) (31)
Net earnings attributable to participating shareholders 190 169   761 498
               
               
Earnings per participating share              
  Net earnings attributable to participating shareholders              
  - Basic 0.41 0.37   1.66 1.09
  - Diluted 0.41 0.37   1.64 1.08
               
  Net earnings from continuing operations to participating shareholders              
  - Basic 0.38 0.37   1.63 1.09
  - Diluted 0.38 0.37   1.61 1.08

 
SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
 
Three months ended September 30, 2011 Lifeco   IGM   Parjointco   Other   Total
Revenues                  
Premium income 4,392   -   -   -   4,392
Net investment income                  
  Regular net investment income 1,330   34   -   1   1,365
  Change in fair value 2,080   11   -   -   2,091
  3,410   45   -   1   3,456
Fee and media income 704   628   -   66   1,398
  8,506   673   -   67   9,246
Expenses                  
Policyholder benefits, dividends and experience refunds, and change in insurance and investment contract liabilities 6,826   -   -   -   6,826
Commissions 372   219   -   (27)   564
Operating expenses 693   156   -   128   977
Financing charges 72   24   -   12   108
  7,963   399   -   113   8,475
  543   274   -   (46)   771
Share of operating earnings of investment in associates -   -   36   1   37
Share of non-operating earnings of investment in associates -   -   (133)   -   (133)
Earnings before income taxes 543   274   (97)   (45)   675
Income taxes 54   62   -   3   119
Contribution to net earnings before non-controlling interests - continuing operations 489
212
(97)
(48)
556
Contribution to net earnings before non-controlling interests - discontinued operations -
31
-
-   31
Contribution to net earnings before non-controlling interests 489   243   (97)   (48)   587
Attributable to non-controlling interests (282)   (152)   33   14   (387)
Contribution to net earnings attributable to participating shareholders 207   91   (64)   (34)   200
                   
                   
Three months ended September 30, 2010 Lifeco   IGM   Parjointco   Other   Total
Revenues                  
Premium income 4,313   -   -   -   4,313
Net investment income                  
  Regular net investment income 1,493   16   -   5   1,514
  Change in fair value 2,629   12   -   -   2,641
  4,122   28   -   5   4,155
Fee and media income 681   604   -   60   1,345
  9,116   632   -   65   9,813
Expenses                  
Policyholder benefits, dividends and experience refunds, and change in insurance and investment contract liabilities 7,357   -   -   -   7,357
Commissions 346   207   -   (25)   528
Operating expenses 1,057   149   -   120   1,326
Financing charges 71   28   -   17   116
  8,831   384   -   112   9,327
  285   248   -   (47)   486
Share of operating earnings of investment in associates -   -   55   1   56
Share of non-operating earnings of investment in associates -   -   4   -   4
Earnings before income taxes 285   248   59   (46)   546
Income taxes -   73   -   3   76
Contribution to net earnings before non-controlling interests - continuing operations 285
175
59
(49)
470
Contribution to net earnings before non-controlling interests - discontinued operations -
-
-
-  
-
Contribution to net earnings before non-controlling interests 285   175   59   (49)   470
Attributable to non-controlling interests (164)   (110)   (20)   3   (291)
Contribution to net earnings attributable to participating shareholders 121   65   39   (46)   179
                   
                   
Nine months ended September 30, 2011 Lifeco   IGM   Parjointco   Other   Total
Revenues                  
Premium income 12,959   -   -   -   12,959
Net investment income                  
  Regular net investment income 4,173   106   -   33   4,312
  Change in fair value 2,600   15   -   -   2,615
  6,773   121   -   33   6,927
Fee and media income 2,163   1,963   -   219   4,345
  21,895   2,084   -   252   24,231
Expenses                  
Policyholder benefits, dividends and experience refunds, and change in insurance and investment contract liabilities 16,703   -   -   -   16,703
Commissions 1,139   682   -   (79)   1,742
Operating expenses 2,068   482   -   401   2,951
Financing charges 216   80   -   38   334
  20,126   1,244   -   360   21,730
  1,769   840   -   (108)   2,501
Share of operating earnings of investment in associates -   -   103   -   103
Share of non-operating earnings of investment in associates -   -   (135)   -   (135)
Earnings before income taxes 1,769   840   (32)   (108)   2,469
Income taxes 284   197   -   3   484
Contribution to net earnings before non-controlling interests - continuing operations 1,485
643
(32)
(111)
1,985
Contribution to net earnings before non-controlling interests - discontinued operations -
33
-
-
33
Contribution to net earnings before non-controlling interests 1,485   676   (32)   (111)   2,018
Attributable to non-controlling interests (852)   (422)   11   37   (1,226)
Contribution to net earnings attributable to participating shareholders 633   254   (21)   (74)   792
                   
                   
Nine months ended September 30, 2010 Lifeco   IGM   Parjointco   Other   Total
Revenues                  
Premium income 13,138   -   -   -   13,138
Net investment income                  
  Regular net investment income 4,245   75   -   (147)   4,173
  Change in fair value 5,365   22   -   -   5,387
  9,610   97   -   (147)   9,560
Fee and media income 2,108   1,820   -   201   4,129
  24,856   1,917   -   54   26,827
Expenses                  
Policyholder benefits, dividends and experience refunds, and change in insurance and investment contract liabilities 19,647   -   -   -   19,647
Commissions 1,064   633   -   (75)   1,622
Operating expenses 2,480   452   -   373   3,305
Financing charges 215   83   -   54   352
  23,406   1,168   -   352   24,926
  1,450   749   -   (298)   1,901
Share of operating earnings of investment in associates -   -   114   1   115
Share of non-operating earnings of investment in associates -   -   2   -   2
Earnings before income taxes 1,450   749   116   (297)   2,018
Income taxes 215   198   -   8   421
Contribution to net earnings before non-controlling interests - continuing operations 1,235
551
116
(305)
1,597
Contribution to net earnings before non-controlling interests - discontinued operations -
-
-
-  
-
Contribution to net earnings before non-controlling interests 1,235   551   116   (305)   1,597
Attributable to non-controlling interests (712)   (347)   (40)   31   (1,068)
Contribution to net earnings attributable to participating shareholders 523   204   76   (274)   529

 

 

 

SOURCE POWER CORPORATION OF CANADA

For further information:

Attachments:   For further information, please contact:
FINANCIAL  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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