Power Corporation of Canada - Six-month results and dividend



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

    WINNIPEG, July 31 /CNW Telbec/ - Power Corporation of Canada's operating
earnings for the six-month period ended June 30, 2008 were $685 million or
$1.45 per share, compared with $757 million or $1.62 per share in the
corresponding period of 2007.
    For the six-month period ended June 30, 2008, subsidiaries contributed
$692 million to the Corporation's operating earnings, compared with
$665 million in 2007.
    The decrease in operating earnings in 2008 reflects a lower level of
income from investments compared with 2007 when the Corporation recorded
substantial gains generated by its investment in the Sagard 1 Fund in Europe
and its QFII operations in China.
    Other income was $386 million or $0.85 per share in the six-month period
ended June 30, 2008, compared with $2 million or $0.01 per share in the
corresponding period of 2007, and consisted mainly of the Corporation's share
of non-operating earnings recorded by Power Financial as discussed below.
    As a result, net earnings for the period were $1,071 million or $2.30 per
share, compared with $759 million or $1.63 per share in the corresponding
period of 2007.

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

    For the quarter ended June 30, 2008, operating earnings of the
Corporation were $381 million or $0.81 per share, compared with $394 million
or $0.84 per share in the second quarter of 2007. Subsidiaries contributed
$383 million to Power Corporation's operating earnings in the second quarter
of 2008, compared with $363 million in the second quarter of 2007.
    Other income for the second quarter in 2008 was $314 million or $0.69 per
share, compared with $2 million or $0.01 per share in same quarter of 2007.
    Net earnings for the quarter were therefore $695 million or $1.50 per
share in 2008, compared with $396 million or $0.85 per share in 2007.

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

    Power Financial Corporation's operating earnings for the six-month period
ended June 30, 2008 were $1,081 million or $1.48 per share, compared with
$1,052 million or $1.43 per share in the corresponding period in 2007. This
represents a 3.0% increase on a per share basis.
    Growth in operating earnings reflects primarily growth in the
contribution from Power Financial's subsidiaries and Parjointco.
    Other income for the six-month period ended June 30, 2008 was
$572 million or $0.81 per share and consisted of Power Financial's share of
non-operating earnings recorded by both Great-West Lifeco and Pargesa.
    On April 1, 2008, Lifeco announced that GWL&A had completed the sale of
its health care business, Great-West Healthcare. As a result of the sale, a
gain of $649 million after tax or $0.726 per common share was recorded in
Lifeco's net income. Lifeco's 2008 results also include two non-recurring
items that totalled $118 million after tax or $0.132 per common share. A gain
of approximately $176 million was realized in connection with the termination
of a long-standing assumption reinsurance agreement under which GWL&A had
reinsured a block of U.S. participating policies. This gain was partly
mitigated by an increase in policy reserves to provide for an increase in
overhead costs expected to be absorbed as a result of the sale of Great-West
Healthcare.
    Net earnings of Power Financial Corporation, including other income, for
the six-month period ended June 30, 2008 were $1,653 million or $2.29 per
share, compared with $1,055 million or $1.44 per share in 2007.
    For the quarter ended June 30, 2008, Power Financial's operating earnings
were $590 million or $0.81 per share, compared with $570 million or $0.78 per
share in the second quarter of 2007. This represents an increase of 4.0% on a
per share basis.
    Earnings were impacted by the increase in the foreign exchange value of
the Canadian dollar compared with Lifeco's major operating currencies. Based
upon Lifeco's growth in earnings on a constant currency basis, Power
Financial's operating earnings on a per share basis for the quarter would have
increased by 7.3%.
    Other items for the second quarter of 2008 (which include Power
Financial's share of the gain recorded by Lifeco and discussed above) were
$477 million or $0.68 per share, compared with $3 million or $0.01 per share
for the same quarter in 2007.
    Net earnings for the quarter were therefore $1,067 million or $1.49 per
share in 2008, compared with $573 million or $0.79 per share in 2007.

    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, 2008  October 15, 2008  To be determined
                                                           in accordance with
                                                           the articles of
                                                           the Corporation
    -------------------------------------------------------------------------
    Series A         September 24, 2008  October 15, 2008  35 cents
    -------------------------------------------------------------------------
    Series B         September 24, 2008  October 15, 2008  33.4375 cents
    -------------------------------------------------------------------------
    Series C         September 24, 2008  October 15, 2008  36.25 cents
    -------------------------------------------------------------------------
    Series D         September 24, 2008  October 15, 2008  31.25 cents
    -------------------------------------------------------------------------


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

    The Board of Directors also declared a quarterly dividend of 29 cents on
the Participating Preferred and Subordinate Voting Shares of the Corporation,
payable September 30, 2008 to shareholders of record September 9, 2008.

    For purposes of the Income Tax Act (Canada) and any similar provincial
    legislation, all of the above dividends of the Corporation's 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 purpose of presenting
information about management's current expectations and plans relating to the
future and readers are cautioned that such statements may not be appropriate
for other purposes.These statements may include, without limitation,
statements regarding the operations, business, financial condition,
priorities, ongoing objectives, strategies and outlook of Power Corporation
and its subsidiaries 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", "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".
    This information is based upon certain material factors or assumptions
that were applied in drawing a conclusion or making a forecast or projection
as reflected in the forward-looking statements, including the perception of
historical trends, current conditions and expected future developments, as
well as other factors that are believed to be appropriate in the
circumstances.
    By its nature, this information is subject to inherent risks and
uncertainties that may be general or specific. A variety of material 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, 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 and integrate acquisitions, and the
Corporation's and its subsidiaries' success in anticipating and managing the
foregoing factors.
    The reader is cautioned that the foregoing list of factors is not
exhaustive of the factors that may affect any of the Corporation's and its
subsidiaries' forward-looking statements. The reader is also cautioned to
consider these and other factors carefully and not to put undue reliance on
forward-looking statements.
    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 associated with
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.
    Following the announcement in 2007 of GWL&A's sale of its health care
business, which closed on April 1, 2008, the results from Lifeco's U.S. health
care business are presented in the consolidated financial statements as
"discontinued operations", in accordance with GAAP. Power Corporation's share
of these results is included in operating earnings, while the Corporation's
share of the gain realized on the sale is included in Other items.
    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 (unaudited)


                         Power Corporation of Canada

                         CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
                                                       June 30,  December 31,
                                                          2008          2007
    (in millions of Canadian dollars)               (unaudited)
    -------------------------------------------------------------------------
    Assets

    Cash and cash equivalents                            5,799         6,320
    -------------------------------------------------------------------------
    Investments
      Shares                                             8,527         8,426
      Bonds                                             64,611        65,069
      Mortgages and other loans                         17,520        16,423
      Loans to policyholders                             6,618         6,317
      Real estate                                        2,916         2,549
    -------------------------------------------------------------------------
                                                       100,192        98,784

    Funds held by ceding insurers                       13,676         1,512
    Investments at equity                                3,504         3,527
    Assets of operations held for sale                       -           697
    Intangible assets                                    5,139         5,072
    Goodwill                                             9,388         9,343
    Future income taxes                                  1,025           826
    Other assets                                         7,084         7,064
    -------------------------------------------------------------------------
                                                       145,807       133,145
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities

    Policy liabilities
      Actuarial liabilities                            100,462        87,681
      Other                                              4,463         4,385
    Deposits and certificates                              896           857
    Funds held under reinsurance contracts                 162           164
    Liabilities of operations held for sale                  -           428
    Debentures and other borrowings                      5,421         6,875
    Preferred shares of subsidiaries                     1,611         1,603
    Capital trust securities and debentures                640           639
    Future income taxes                                    772           841
    Other liabilities                                    7,270         6,854
    -------------------------------------------------------------------------
                                                       121,697       110,327
    -------------------------------------------------------------------------
    Non-controlling interests                           13,494        12,781
    -------------------------------------------------------------------------

    Shareholders' Equity

    Stated capital
      Non-participating shares                             792           794
      Participating shares                                 509           475
    Contributed surplus                                     95            78
    Retained earnings                                    9,114         8,304
    Accumulated other comprehensive income                 106           386
    -------------------------------------------------------------------------
                                                        10,616        10,037
    -------------------------------------------------------------------------
                                                       145,807       133,145
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
                                      Three months ended    Six months ended
                                             June 30             June 30
    -------------------------------------------------------------------------
    (unaudited) (in millions of
     Canadian dollars, except
     per share amounts)                   2008      2007      2008      2007
    -------------------------------------------------------------------------
    Revenues
      Premium income                     4,523     4,010    21,313     9,352
      Net investment income
        Regular net investment income    1,711     1,579     3,135     3,116
        Change in fair value on
         held-for-trading assets        (1,595)   (1,927)   (2,535)   (2,344)
                                      ---------------------------------------
                                           116      (348)      600       772
       Fee and media income              1,569     1,326     3,111     2,627
    -------------------------------------------------------------------------
                                         6,208     4,988    25,024    12,751
    -------------------------------------------------------------------------
    Expenses

      Policyholder benefits,
       dividends and experience
       refunds and change in
       actuarial liabilities             3,484     2,550    19,768     7,891
      Commissions                          549       556     1,090     1,110
      Operating expenses                 1,019       795     2,056     1,618
      Financing charges                    112        90       254       176
    -------------------------------------------------------------------------
                                         5,164     3,991    23,168    10,795
    -------------------------------------------------------------------------
                                         1,044       997     1,856     1,956
    Share of earnings of investments
     at equity                              97        75       110        87
    Other income (charges), net              2         3        20         3
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income
     taxes and non-controlling
     interests                           1,143     1,075     1,986     2,046
    Income taxes                           278       243       467       469
    Non-controlling interests              483       463       782       872
    -------------------------------------------------------------------------
    Earnings from continuing
     operations                            382       369       737       705
    Earnings from discontinued
     operations                            313        27       334        54
    -------------------------------------------------------------------------
    Net earnings                           695       396     1,071       759
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per participating share
      Basic                               1.50      0.85      2.30      1.63
    -------------------------------------------------------------------------
      Diluted                             1.49      0.84      2.29      1.62
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

    Information on Profit Measure
    -------------------------------------------------------------------------
    Three months
     ended                                       Par-
     June 30, 2008    Lifeco         IGM     jointco       Other       Total
    -------------------------------------------------------------------------
    Revenues
      Premium income   4,523           -           -           -       4,523
      Net investment
       income
        Regular net
         investment
         income        1,648          56           -           7       1,711
        Change in
         fair value
         on held-
         for-trading
         assets       (1,595)          -           -           -      (1,595)
                    ---------------------------------------------------------
                          53          56           -           7         116
      Fees and
       media income      806         665           -          98       1,569
    -------------------------------------------------------------------------
                       5,382         721           -         105       6,208
    -------------------------------------------------------------------------
    Expenses
      Policyholder
       benefits,
       dividends and
       experience
       refunds and
       change in
       actuarial
       liabilities     3,484           -           -           -       3,484
      Commissions        330         235           -         (16)        549
      Operating
       expenses          698         163           -         158       1,019
      Financing
       charges            77          22           -          13         112
    -------------------------------------------------------------------------
                       4,589         420           -         155       5,164
    -------------------------------------------------------------------------
                         793         301           -         (50)      1,044
    Share of earnings
     of investments
     at equity             -           -         100          (3)         97
    Other income
     (charges), net        -           -           4          (2)          2
    -------------------------------------------------------------------------
    Earnings from
     continuing
     operations
     before income
     taxes and
     non-controlling
     interests           793         301           104       (55)      1,143
    Income taxes         188          85             -         5         278
    Non-controlling
     interests           351         128            35       (31)        483
    -------------------------------------------------------------------------
    Contribution to
     consolidated
     earnings from
     continuing
     operating           254          88            69       (29)        382
    Contribution to
     consolidated
     earnings from
     discontinued
     operations          313           -             -         -         313
    -------------------------------------------------------------------------
    Contribution to
     consolidated
     net earnings        567          88            69       (29)        695
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Information on Profit Measure
    -------------------------------------------------------------------------
    Three months
     ended                                       Par-
     June 30, 2007    Lifeco         IGM     jointco     Other         Total
    -------------------------------------------------------------------------
    Revenues
      Premium income   4,010           -           -         -         4,010
      Net investment
       income
        Regular net
         investment
         income        1,465          45           -        69         1,579
        Change in
         fair value
         on held-
         for-trading
         assets       (1,927)          -           -         -        (1,927)
                    ---------------------------------------------------------
                        (462)         45           -        69          (348)
      Fee and
       media income      554         677           -        95         1,326
    -------------------------------------------------------------------------
                       4,102         722           -       164         4,988
    -------------------------------------------------------------------------
    Expenses
      Policyholder
       benefits,
       dividends and
       experience
       refunds and
       change in
       actuarial
       liabilities     2,550            -          -           -       2,550
      Commissions        336          237          -         (17)        556
      Operating
       expenses          485          154          -         156         795
      Financing
       charges            53           22          -          15          90
    -------------------------------------------------------------------------
                       3,424          413          -         154       3,991
    -------------------------------------------------------------------------
                         678          309          -          10         997
    Share of earnings
     of investments
     at equity             -            -         80          (5)         75
    Other income
     (charges), net        -            -          3           -           3
    -------------------------------------------------------------------------
    Earnings from
     continuing
     operations
     before income
     taxes and
     non-controlling
     interests           678         309          83           5       1,075
    Income taxes         131          93           -          19         243
    Non-controlling
     interests           319         135          28         (19)        463
    -------------------------------------------------------------------------
    Contribution to
     consolidated
     earnings from
     continuing
     operations          228          81          55           5         369
    Contribution to
     consolidated
     earnings from
     discontinued
     operations           27           -           -           -          27
    -------------------------------------------------------------------------
    Contribution to
     consolidated
     net earnings        255          81          55           5         396
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Information on Profit Measure
    -------------------------------------------------------------------------
    Six months
     ended                                       Par-
     June 30, 2008    Lifeco        IGM      jointco       Other       Total
    -------------------------------------------------------------------------
    Revenues
      Premium income  21,313           -           -           -      21,313
      Net investment
       income
        Regular net
         investment
         income        3,000         117           -          18       3,135
        Change in
         fair value
         on held-
         for-trading
         assets       (2,535)          -           -           -      (2,535)
                    ---------------------------------------------------------
                         465         117           -          18         600
      Fees and
       media income    1,603       1,319           -         189       3,111
    -------------------------------------------------------------------------
                      23,381       1,436           -         207      25,024
    -------------------------------------------------------------------------
    Expenses
      Policyholder
       benefits,
       dividends and
       experience
       refunds and
       change in
       actuarial
       liabilities    19,768           -           -           -      19,768
      Commissions        652         470           -         (32)      1,090
      Operating
       expenses        1,408         330           -         318       2,056
      Financing
       charges           183          44           -          27         254
    -------------------------------------------------------------------------
                      22,011         844           -         313      23,168
    -------------------------------------------------------------------------
                       1,370         592           -        (106)      1,856
    Share of earnings
     of investments
     at equity             -           -         117          (7)        110
    Other income
     (charges), net        -           -          13           7          20
    -------------------------------------------------------------------------
    Earnings from
     continuing
     operations
     before income
     taxes and
     non-controlling
     interests         1,370         592         130        (106)      1,986
    Income taxes         297         164           -           6         467
    Non-controlling
     interests           534         259          44         (55)        782
    -------------------------------------------------------------------------
    Contribution to
     consolidated
     earnings from
     continuing
     operations          539         169          86         (57)        737
    Contribution to
     consolidated
     earnings from
     discontinued
     operations          334           -           -           -         334
    -------------------------------------------------------------------------
    Contribution to
     consolidated
     net earnings        873         169          86         (57)      1,071
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Information on Profit Measure
    -------------------------------------------------------------------------
    Six months
     ended                                       Par-
     June 30, 2007    Lifeco         IGM     jointco       Other       Total
    -------------------------------------------------------------------------
    Revenues
      Premium income   9,352           -           -           -       9,352
      Net investment
       income
        Regular net
         investment
         income        2,859         108           -         149       3,116
        Change in
         fair value
         on held-
         for-trading
         assets       (2,344)          -           -           -      (2,344)
                     --------------------------------------------------------
                         515         108           -         149         772
      Fee and
       media income    1,107       1,335           -         185       2,627
    -------------------------------------------------------------------------
                      10,974       1,443           -         334      12,751
    -------------------------------------------------------------------------
    Expenses
      Policyholder
       benefits,
       dividends and
       experience
       refunds and
       change in
       actuarial
       liabilities     7,891           -           -           -       7,891
      Commissions        676         468           -         (34)      1,110
      Operating
       expenses        1,007         311           -         300       1,618
      Financing
       charges           104          44           -          28         176
    -------------------------------------------------------------------------
                       9,678         823           -         294      10,795
    -------------------------------------------------------------------------
                       1,296         620           -          40       1,956
    Share of earnings
     of investments
     at equity             -           -          98         (11)         87
    Other income
     (charges), net        -           -           3           -           3
    -------------------------------------------------------------------------
    Earnings from
     continuing
     operations
     before income
     taxes and
     non-controlling
     interests         1,296         620         101          29       2,046
    Income taxes         244         192           -          33         469
    Non-controlling
     interests           610         269          34         (41)        872
    -------------------------------------------------------------------------
    Contribution to
     consolidated
     earnings from
     continuing
     operations          442         159          67          37         705
    Contribution to
     consolidated
     earnings from
     discontinued
     operations           54           -           -           -          54
    -------------------------------------------------------------------------
    Contribution to
     consolidated
     net earnings        496         159          67          37         759
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    






For further information:

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


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