Power Corporation of Canada - Six-month financial results and dividends

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

WINNIPEG, Aug. 6 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the six-month period ended June 30, 2010 were $476 million or $0.99 per share, compared with $412 million or $0.86 per share in the corresponding period of 2009. This represents a 16.1% increase on a per share basis.

Subsidiaries contributed $518 million to Power Corporation's operating earnings for the six-month period ended June 30, 2010, compared with $420 million in the corresponding period of 2009. Results from corporate activities represented a charge of $42 million in the six-month period ended June 30, 2010, compared with a charge of $8 million in the same period in 2009, mainly due to lower income from investments and income tax recoveries in 2009.

Earnings from other items were $3 million or $0.01 per share in the six-month period ended June 30, 2010, compared with a charge of $34 million or $0.08 per share in the corresponding period of 2009, and consisted mainly of the Corporation's share of non-operating results recorded by Power Financial Corporation.

As a result, net earnings for the six-month period ended June 30, 2010 were $479 million or $1.00 per share, compared with $378 million or $0.78 per share in the corresponding period of 2009.

    
    SECOND QUARTER RESULTS
    ----------------------
    

For the quarter ended June 30, 2010, operating earnings of the Corporation were $257 million or $0.54 per share, compared with $223 million or $0.47 per share in the second quarter of 2009. This represents an increase of 15.5% on a per share basis.

Subsidiaries contributed $279 million to Power Corporation's operating earnings in the second quarter of 2010, compared with $273 million in the second quarter of 2009. Results from corporate activities represented a charge of $22 million in the three-month period ended June 30, 2010, compared with a charge of $50 million in the same period in 2009, mainly due to higher income from investments.

Other items for the second quarter in 2010 were a charge of $2 million or $0.01 per share, compared with a positive contribution of $4 million or $0.01 per share in the same quarter of 2009.

Net earnings for the quarter were $255 million or $0.53 per share in 2010, compared with $227 million or $0.48 per share in 2009.

    
    RESULTS OF POWER FINANCIAL CORPORATION
    --------------------------------------
    

Power Financial Corporation's operating earnings for the six-month period ended June 30, 2010 were $814 million or $1.09 per share, compared with $694 million or $0.92 per share in the corresponding period of 2009. The increase in operating earnings reflects primarily the increase in the contribution from Power Financial's subsidiaries, Great-West Lifeco and IGM Financial. For the six months ended June 30, 2010, the strengthening of the Canadian dollar against the U.S. dollar, the British pound and the euro had a negative currency impact of $64 million on Great-West Lifeco's net earnings. Power Financial's share of this currency effect is $45 million or $0.06 per share.

Earnings from other items were $4 million or nil per share for the six-month period ended June 30, 2010. For the six-month period ended June 30, 2009, other items were a charge of $47 million or $0.06 per share and consisted of Power Financial's share of non-operating earnings recorded by Pargesa.

Net earnings, including other items, for the six-month period ended June 30, 2010, were $818 million or $1.09 per share, compared with $647 million or $0.86 per share in 2009.

For the quarter ended June 30, 2010, operating earnings of Power Financial were $433 million or $0.58 per share, compared with $442 million or $0.60 per share in the second quarter of 2009. For the three months ended June 30, 2010, the negative currency impact on net earnings of Lifeco was $33 million. Power Financial's share of this currency effect is $23 million or $0.03 per share.

Other items for the second quarter of 2010 were a charge of $4 million or $0.01 per share, compared with earnings of $10 million or $0.01 per share for the same quarter in 2009.

Net earnings of Power Financial for the quarter were $429 million or $0.57 per share in 2010, compared with $452 million or $0.61 per share in 2009.

    
    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      September 24, 2010    October 15, 2010   To be
                                                              determined in
                                                              accordance
                                                              with the
                                                              articles of
                                                              the Corporation
    -------------------------------------------------------------------------
    Series A         September 24, 2010    October 15, 2010   35 cents
    -------------------------------------------------------------------------
    Series B         September 24, 2010    October 15, 2010   33.4375 cents
    -------------------------------------------------------------------------
    Series C         September 24, 2010    October 15, 2010   36.25 cents
    -------------------------------------------------------------------------
    Series D         September 24, 2010    October 15, 2010   31.25 cents
    -------------------------------------------------------------------------


    DIVIDENDS ON PARTICIPATING SHARES
    ---------------------------------
    

The Board of Directors also declared a quarterly dividend of 29 cents per share on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable September 30, 2010 to shareholders of record on September 9, 2010.

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

    
    Forward-looking Statements
    --------------------------
    

Certain statements in this press release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's and its subsidiaries' current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial position and results of operations 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 (including adoption of International Financial Reporting Standards), 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 base 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 of 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-GAAP 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 item 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-GAAP 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

    -------------------------------------------------------------------------
                                                        June 30,
                                                           2010  December 31,
    (in millions of Canadian dollars)                (unaudited)        2009
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                             5,528        5,385
    -------------------------------------------------------------------------
    Investments
      Shares                                              7,346        7,463
      Bonds                                              71,427       67,942
      Mortgages and other loans                          17,362       17,356
      Loans to policyholders                              7,052        6,957
      Real estate                                         3,110        3,101
    -------------------------------------------------------------------------
                                                        106,297      102,819
    Funds held by ceding insurers                        10,345       10,839
    Investments at equity                                 2,088        2,677
    Intangible assets                                     4,488        4,502
    Goodwill                                              8,776        8,760
    Future income taxes                                   1,265        1,281
    Other assets                                          6,768        6,744
    -------------------------------------------------------------------------
                                                        145,555      143,007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Policy liabilities
      Actuarial liabilities                             100,072       98,059
      Other                                               4,610        4,592
    Deposits and certificates                               863          907
    Funds held under reinsurance contracts                  359          186
    Debentures and other borrowings                       6,515        6,375
    Preferred shares of subsidiaries                        300          503
    Capital trust securities and debentures                 535          540
    Future income taxes                                   1,338        1,136
    Other liabilities                                     6,621        6,402
    -------------------------------------------------------------------------
                                                        121,213      118,700
    -------------------------------------------------------------------------

    Non-controlling interests                            14,915       14,478
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Non-participating shares                              785          787
      Participating shares                                  538          526
    Contributed surplus                                     124          117
    Retained earnings                                     8,929        8,742
    Accumulated other comprehensive income (loss)          (949)        (343)
    -------------------------------------------------------------------------
                                                          9,427        9,829
    -------------------------------------------------------------------------
                                                        145,555      143,007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
                                      Three months ended   Six months ended
                                            June 30             June 30
    -------------------------------------------------------------------------
    (unaudited) (in millions of
     Canadian dollars, except per
     share amounts)                       2010      2009      2010      2009
    -------------------------------------------------------------------------
    Revenues
    Premium income                       4,215     4,664     8,825     9,373
    Net investment income
      Regular net investment income      1,349     1,654     2,807     3,261
      Change in fair value on
       held-for-trading assets           1,101     2,250     2,603       276
    -------------------------------------------------------------------------
                                         2,450     3,904     5,410     3,537
    Fee and media income                 1,416     1,301     2,841     2,570
    -------------------------------------------------------------------------
                                         8,081     9,869    17,076    15,480
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits, dividends
     and experience refunds, and
     change in actuarial liabilities     5,622     7,473    12,193    10,839
    Commissions                            554       528     1,107     1,007
    Operating expenses                   1,010     1,034     2,029     2,081
    Financing charges                      118       156       231       268
    -------------------------------------------------------------------------
                                         7,304     9,191    15,560    14,195
    -------------------------------------------------------------------------
                                           777       678     1,516     1,285
    Share of earnings of investments
     at equity                              57        83        54        62
    Other income (charges), net             (4)        8         4       (49)
    -------------------------------------------------------------------------
    Earnings before income taxes and
     non-controlling interests             830       769     1,574     1,298
    Income taxes                           173       172       327       290
    Non-controlling interests              402       370       768       630
    -------------------------------------------------------------------------
    Net earnings                           255       227       479       378
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per participating share
      - Basic                             0.53      0.48      1.00      0.78
    -------------------------------------------------------------------------
      - Diluted                           0.53      0.48      1.00      0.78
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    Three months ended                               Par-
     June 30, 2010            Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,215         -         -         -     4,215
    Net investment income
      Regular net investment
       income                  1,342        17         -       (10)    1,349
      Change in fair value
       on held-for-trading
       assets                  1,091        10         -         -     1,101
    -------------------------------------------------------------------------
                               2,433        27         -       (10)    2,450
    Fee and media income         718       617         -        81     1,416
    -------------------------------------------------------------------------
                               7,366       644         -        71     8,081
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities     5,622         -         -         -     5,622
    Commissions                  364       215         -       (25)      554
    Operating expenses           714       161         -       135     1,010
    Financing charges             70        28         -        20       118
    -------------------------------------------------------------------------
                               6,770       404         -       130     7,304
    -------------------------------------------------------------------------
                                 596       240         -       (59)      777
    Share of earnings (losses)
     of investments at equity      -         -        57         -        57
    Other income (charges), net    -         -        (4)        -        (4)
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-controlling
     interests                   596       240        53       (59)      830
    Income taxes                 115        57         -         1       173
    Non-controlling interests    284       116        18       (16)      402
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    197        67        35       (44)      255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Three months ended                               Par-
     June 30, 2009            Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,664         -         -         -     4,664
    Net investment income
      Regular net investment
       income                  1,616        63         -       (25)    1,654
      Change in fair value
       on held-for-trading
       assets                  2,272       (20)        -        (2)    2,250
    -------------------------------------------------------------------------
                               3,888        43         -       (27)    3,904
    Fee and media income         666       549         -        86     1,301
    -------------------------------------------------------------------------
                               9,218       592         -        59     9,869
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities     7,473         -         -         -     7,473
    Commissions                  353       198         -       (23)      528
    Operating expenses           721       158         -       155     1,034
    Financing charges            106        32         -        18       156
    -------------------------------------------------------------------------
                               8,653       388         -       150     9,191
    -------------------------------------------------------------------------
                                 565       204         -       (91)      678
    Share of earnings
     (losses) of investments
     at equity                     -         -        87        (4)       83
    Other income (charges),
     net                           -         -        (2)       10         8
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-controlling
     interests                   565       204        85       (85)      769
    Income taxes                 122        59         -        (9)      172
    Non-controlling interests    255        89        29        (3)      370
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    188        56        56       (73)      227
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Six months ended                                 Par-
     June 30, 2010            Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             8,825         -         -         -     8,825
    Net investment income
      Regular net investment
       income                  2,764        55         -       (12)    2,807
      Change in fair value
       on held-for-trading
       assets                  2,593        10         -         -     2,603
    -------------------------------------------------------------------------
                               5,357        65         -       (12)    5,410
    Fee and media income       1,454     1,228         -       159     2,841
    -------------------------------------------------------------------------
                              15,636     1,293         -       147    17,076
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in actuarial
     liabilities              12,193         -         -         -    12,193
    Commissions                  727       430         -       (50)    1,107
    Operating expenses         1,432       322         -       275     2,029
    Financing charges            139        55         -        37       231
    -------------------------------------------------------------------------
                              14,491       807         -       262    15,560
    -------------------------------------------------------------------------
                               1,145       486         -      (115)    1,516
    Share of earnings
     (losses) of investments
     at equity                     -         -        54         -        54
    Other income (charges),
     net                           -         -         4         -         4
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-control-
     ling interests            1,145       486        58      (115)    1,574
    Income taxes                 201       122         -         4       327
    Non-controlling
     interests                   546       230        20       (28)      768
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    398       134        38       (91)      479
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Six months ended                                 Par-
     June 30, 2009            Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             9,373         -         -         -     9,373
    Net investment income
      Regular net
       investment income       3,127       125         -         9     3,261
      Change in fair value
       on held-for-trading
       assets                    305       (29)        -         -       276
    -------------------------------------------------------------------------
                               3,432        96         -         9     3,537
    Fee and media income       1,346     1,059         -       165     2,570
    -------------------------------------------------------------------------
                              14,151     1,155         -       174    15,480
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities    10,839         -         -         -    10,839
    Commissions                  660       390         -       (43)    1,007
    Operating expenses         1,461       317         -       303     2,081
    Financing charges            181        59         -        28       268
    -------------------------------------------------------------------------
                              13,141       766         -       288    14,195
    -------------------------------------------------------------------------
                               1,010       389         -      (114)    1,285
    Share of earnings
     (losses) of investments
     at equity                     -         -        67        (5)       62
    Other income (charges),
     net                           -         -       (59)       10       (49)
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-control-
     ling interests            1,010       389         8      (109)    1,298
    Income taxes                 200       111         -       (21)      290
    Non-controlling
     interests                   473       177         3       (23)      630
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    337       101         5       (65)      378
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE Power Corporation of Canada

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


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