Power Financial Corporation - 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, MB, Aug. 6 /CNW Telbec/ - 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. This represents an increase of 17.9% on a per share basis.

The increase in operating earnings reflects primarily the increase in the contribution from the Corporation's subsidiaries.

Earnings from other items were $4 million or nil per share for the six-month period ended June 30, 2010, compared with a charge of $47 million or $0.06 per share in the corresponding period of 2009, and consisted mainly of Power Financial's share of non-operating results recorded by Pargesa, as discussed in the Parjointco N.V. section below.

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.

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

For the quarter ended June 30, 2010, operating earnings of the Corporation were $433 million or $0.58 per share, compared with $442 million or $0.60 per share in the second quarter of 2009.

Other items for the second quarter of 2010 represented 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 for the quarter were $429 million or $0.57 per share in 2010, compared with $452 million or $0.61 per share in 2009.

    
    RESULTS OF SUBSIDIARIES AND PARJOINTCO
    --------------------------------------
    

Great-West Lifeco Inc.

Great-West Lifeco reported net earnings attributable to common shareholders of $874 million or $0.923 per share for the six-month period ended June 30, 2010, compared with $739 million or $0.783 per share in the corresponding period of 2009, an increase of 18% on a per share basis. For the three-month period ended June 30, 2010, Lifeco reported net earnings attributable to common shareholders of $433 million or $0.457 per share, compared with $413 million or $0.437 per share in the same period in 2009.

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 Lifeco's net earnings. 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 $45 million or $0.06 per share for the six-month period ended June 30, 2010, and $23 million or $0.03 per share for the three-month period ended June 30, 2010.

Lifeco's contribution to Power Financial's operating earnings was $601 million for the six month period ended June 30, 2010, compared with $508 million for the corresponding period in 2009. For the three-month period ended June 30, 2010, Lifeco's contribution to Power Financial's operating earnings was $297 million, compared with $284 million in 2009.

IGM Financial Inc.

IGM Financial reported net earnings available to common shareholders for the six months ended June 30, 2010 of $358 million or $1.36 per share on a diluted basis, compared with $278 million or $1.05 per share in the same period in 2009, an increase of 29.5% on a per share basis.

For the three months ended June 30, 2010, IGM reported net earnings available to common shareholders of $179 million or $0.68 per share on a diluted basis, compared with $145 million or $0.55 per share in 2009, an increase of 23.6% on a per share basis.

For the six-month and three-month periods ended June 30, 2010, IGM contributed $202 million and $101 million to Power Financial's operating earnings, compared with $153 million and $85 million in 2009.

Parjointco N.V.

Power Financial holds a 50% interest in Parjointco N.V., which in turn holds a 54.1% interest in Pargesa Holding SA. Pargesa reported operating earnings of SF220 million in the six month period ended June 30, 2010, compared with SF243 million for the corresponding period in 2009. For the three-month period ended June 30, 2010, Pargesa's operating earnings were SF228 million, compared with SF312 million in the corresponding period of 2009. The Pargesa results for the second quarter of 2009 included Pargesa's SF73 million share of a special one-time dividend paid by GDF Suez.

Expressed in Canadian dollars, the contribution from this investment at equity to Power Financial's operating earnings was $54 million for the six-month period ended June 30, 2010, compared with $68 million for the corresponding period in 2009. For the second quarter of 2010, the contribution from Pargesa to Power Financial's operating earnings was $57 million, compared with $88 million in the second quarter of 2009.

Pargesa's non-operating results were earnings of SF8 million in the six-month period ended June 30, 2010. This compared with non-operating charges of SF195 million in 2009, which essentially consisted of the charge resulting from the adjustment of the carrying value of Pernod Ricard and Iberdrola recorded in the first quarter of 2009. As a result, net earnings reported by Pargesa were SF228 million in the six-month period ended June 30, 2010, compared with SF47 million in the same period of 2009. For the second quarter of 2010, Pargesa reported net earnings of SF214 million, compared with SF313 million in the second quarter of 2009.

    
    PREFERRED SHARE DIVIDENDS
    -------------------------
    

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

    
    -------------------------------------------------------------------------
    Type of
    Shares       Record Date        Payment Date         Amount
    -------------------------------------------------------------------------
    Series A     October 25, 2010   November 15, 2010    To be determined in
                                                         accordance with the
                                                         articles of the
                                                         Corporation
    -------------------------------------------------------------------------
    Series C     October 8, 2010    October 31, 2010     32.50 cents
    -------------------------------------------------------------------------
    Series D     October 8, 2010    October 31, 2010     34.375 cents
    -------------------------------------------------------------------------
    Series E     October 8, 2010    October 31, 2010     32.8125 cents
    -------------------------------------------------------------------------
    Series F     October 8, 2010    October 31, 2010     36.875 cents
    -------------------------------------------------------------------------
    Series H     October 8, 2010    October 31, 2010     35.9375 cents
    -------------------------------------------------------------------------
    Series I     October 8, 2010    October 31, 2010     37.50 cents
    -------------------------------------------------------------------------
    Series K     October 8, 2010    October 31, 2010     30.9375 cents
    -------------------------------------------------------------------------
    Series L     October 8, 2010    October 31, 2010     31.875 cents
    -------------------------------------------------------------------------
    Series M     October 8, 2010    October 31, 2010     37.50 cents
    -------------------------------------------------------------------------
    Series O     October 8, 2010    October 31, 2010     36.25 cents
    -------------------------------------------------------------------------
    Series P     October 8, 2010    October 31, 2010     37.37 cents
                                                         (initial dividend)
    -------------------------------------------------------------------------

    COMMON SHARE DIVIDEND
    ---------------------
    

The Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's common shares payable November 1, 2010 to shareholders of record on September 30, 2010.

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends of the Corporation's preferred and common 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 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 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 of Operating Results 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 manner by Lifeco or IGM.
    

Management has used these financial measures for many years in its presentation and analysis of the financial performance of Power Financial, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation.

Operating earnings 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 FINANCIAL CORPORATION

                         CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
                                                       June 30,
                                                          2010   December 31,
    (in millions of Canadian dollars)               (unaudited)         2009
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                            4,799         4,855
    -------------------------------------------------------------------------
    Investments
      Shares                                             6,286         6,392
      Bonds                                             71,186        67,388
      Mortgages and other loans                         17,362        17,356
      Loans to policyholders                             7,052         6,957
      Real estate                                        3,110         3,101
    -------------------------------------------------------------------------
                                                       104,996       101,194
    Funds held by ceding insurers                       10,345        10,839
    Investment at equity                                 2,086         2,675
    Intangible assets                                    4,355         4,366
    Goodwill                                             8,672         8,655
    Future income taxes                                  1,256         1,268
    Other assets                                         6,396         6,379
    -------------------------------------------------------------------------
                                                       142,905       140,231
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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                      6,107         5,967
    Preferred shares of the Corporation                    300           300
    Preferred shares of subsidiaries                         -           203
    Capital trust securities and debentures                535           540
    Future income taxes                                  1,301         1,098
    Other liabilities                                    6,532         6,294
    -------------------------------------------------------------------------
                                                       120,679       118,146
    -------------------------------------------------------------------------

    Non-controlling interests                            9,152         8,878
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Perpetual preferred shares                         2,005         1,725
      Common shares                                        636           605
    Contributed surplus                                    103           102
    Retained earnings                                   11,432        11,165
    Accumulated other comprehensive income (loss)       (1,102)         (390)
    -------------------------------------------------------------------------
                                                        13,074        13,207
    -------------------------------------------------------------------------
                                                       142,905       140,231
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     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      1,338     1,669     2,777     3,214
      Change in fair value on
       held-for-trading assets           1,101     2,252     2,603       276
    -------------------------------------------------------------------------
                                         2,439     3,921     5,380     3,490
    Fee income                           1,309     1,192     2,632     2,362
    -------------------------------------------------------------------------
                                         7,963     9,777    16,837    15,225
    -------------------------------------------------------------------------
    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                     889       889     1,781     1,801
    Financing charges                      109       147       213       257
    -------------------------------------------------------------------------
                                         7,174     9,037    15,294    13,904
    -------------------------------------------------------------------------
                                           789       740     1,543     1,321
    Share of earnings of investment
     at equity                              57        87        54        67
    Other income (charges), net             (4)       10         4       (47)
    -------------------------------------------------------------------------
    Earnings before income taxes and
     non-controlling interests             842       837     1,601     1,341
    Income taxes                           171       181       322       311
    Non-controlling interests              242       204       461       383
    -------------------------------------------------------------------------
    Net earnings                           429       452       818       647
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common share
      - Basic                             0.57      0.61      1.09      0.86
    -------------------------------------------------------------------------
      - Diluted                           0.57      0.61      1.09      0.86
    -------------------------------------------------------------------------


                            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         -       (21)    1,338
      Change in fair value
       on held-for-trading
       assets                  1,091        10         -         -     1,101
    -------------------------------------------------------------------------
                               2,433        27         -       (21)    2,439
    Fee income                   718       617         -       (26)    1,309
    -------------------------------------------------------------------------
                               7,366       644         -       (47)    7,963
    -------------------------------------------------------------------------
    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         -        14       889
    Financing charges             70        28         -        11       109
    -------------------------------------------------------------------------
                               6,770       404         -         -     7,174
    -------------------------------------------------------------------------
                                 596       240         -       (47)      789
    Share of earnings of
     investment at equity          -         -        57         -        57
    Other income (charges),
     net                           -         -        (4)        -        (4)
    -------------------------------------------------------------------------
    Earnings before
     income taxes and
     non-controlling
     interests                   596       240        53       (47)      842
    Income taxes                 115        57         -        (1)      171
    Non-controlling
     interests                   184        82         -       (24)      242
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    297       101        53       (22)      429
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    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         -       (10)    1,669
      Change in fair value
      on held-for-trading
      assets                   2,272       (20)        -         -     2,252
    -------------------------------------------------------------------------
                               3,888        43         -       (10)    3,921
    Fee income                   666       549         -       (23)    1,192
    -------------------------------------------------------------------------
                               9,218       592         -       (33)    9,777
    -------------------------------------------------------------------------
    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         -        10       889
    Financing charges            106        32         -         9       147
    -------------------------------------------------------------------------
                               8,653       388         -        (4)    9,037
    -------------------------------------------------------------------------
                                 565       204         -       (29)      740
    Share of earnings of
     investment at equity          -         -        87         -        87
    Other income (charges),
     net                           -         -        (2)       12        10
    -------------------------------------------------------------------------
    Earnings before
     income taxes and
    non-controlling
     interests                   565       204        85       (17)      837
    Income taxes                 122        59         -         -       181
    Non-controlling
     interests                   159        60         -       (15)      204
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    284        85        85        (2)      452
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    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         -       (42)    2,777
      Change in fair value
       on held-for-trading
       assets                  2,593        10         -         -     2,603
    -------------------------------------------------------------------------
                               5,357        65         -       (42)    5,380
    Fee income                 1,454     1,228         -       (50)    2,632
    -------------------------------------------------------------------------
                              15,636     1,293         -       (92)   16,837
    -------------------------------------------------------------------------
    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         -        27     1,781
    Financing charges            139        55         -        19       213
    -------------------------------------------------------------------------
                              14,491       807         -        (4)   15,294
    -------------------------------------------------------------------------
                               1,145       486         -       (88)    1,543
    Share of earnings of
     investment at equity          -         -        54         -        54
    Other income (charges),
     net                           -         -         4         -         4
    -------------------------------------------------------------------------
    Earnings before
     income taxes and
     non-controlling
     interests                 1,145       486        58       (88)    1,601
    Income taxes                 201       122         -        (1)      322
    Non-controlling
     interests                   343       162         -       (44)      461
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    601       202        58       (43)      818
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    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         -       (38)    3,214
      Change in fair value
       on held-for-trading
       assets                    305       (29)        -         -       276
    -------------------------------------------------------------------------
                               3,432        96         -       (38)    3,490
    Fee income                 1,346     1,059         -       (43)    2,362
    -------------------------------------------------------------------------
                              14,151     1,155         -       (81)   15,225
    -------------------------------------------------------------------------
    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         -        23     1,801
    Financing charges            181        59         -        17       257
    -------------------------------------------------------------------------
                              13,141       766         -        (3)   13,904
    -------------------------------------------------------------------------
                               1,010       389         -       (78)    1,321
    Share of earnings of
     investment at equity          -         -        67         -        67
    Other income (charges),
     net                           -         -       (59)       12       (47)
    -------------------------------------------------------------------------
    Earnings before
     income taxes and
     non-controlling
     interests                 1,010       389         8       (66)    1,341
    Income taxes                 200       111         -         -       311
    Non-controlling
     interests                   302       125         -       (44)      383
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    508       153         8       (22)      647
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE Power Financial Corporation

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


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