POWER FINANCIAL CORPORATION - NINE-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.
TORONTO, Nov. 12 /CNW Telbec/ - Power Financial Corporation's operating earnings for the nine-month period ended September 30, 2010 were $1,281 million or $1.71 per share, compared with $1,149 million or $1.54 per share in the corresponding period in 2009. This represents an 11.1% increase on a per share basis.
The increase in operating earnings reflects primarily the increase in the contribution from the Corporation's subsidiaries.
Other items were a charge of $140 million or $0.20 per share for the nine-month period ended September 30, 2010 and consisted mainly of Power Financial's share of a litigation provision established by Great-West Lifeco Inc. (Lifeco), a subsidiary of Power Financial, as discussed below. In the corresponding nine-month period of 2009, other items were a charge of $50 million or $0.07 per share and consisted of Power Financial's share of non-operating results recorded by Pargesa Holding SA.
As a result, net earnings, including other items, for the nine-month period ended September 30, 2010 were $1,141 million or $1.51 per share, compared with $1,099 million or $1.47 per share in the corresponding period of 2009.
THIRD QUARTER RESULTS
---------------------
For the quarter ended September 30, 2010, operating earnings of the Corporation were $467 million or $0.62 per share, compared with $455 million or $0.61 per share in the third quarter of 2009. This represents an increase of 1.1% on a per share basis.
Other items for the third quarter of 2010 were a charge of $144 million ($0.20 per share), compared with a charge of $3 million (nil per share) for the same quarter in 2009.
As a result, net earnings, including other items, for the quarter were $323 million or $0.42 per share in 2010, compared with $452 million or $0.61 per share in 2009.
RESULTS OF SUBSIDIARIES AND PARJOINTCO
--------------------------------------
Great-West Lifeco Inc.
Lifeco reported operating earnings attributable to common shareholders of $1,353 million for the nine-month period ended September 30, 2010, compared with net earnings attributable to common shareholders of $1,184 million in the corresponding period of 2009. On a per share basis, this represents $1.429 per common share for 2010, compared with $1.254 per common share in the same period in 2009, an increase of 14%.
For the three-month period ended September 30, 2010, Lifeco reported operating earnings attributable to common shareholders of $479 million or $0.505 per share, compared with net earnings attributable to common shareholders of $445 million or $0.471 per share in the same period in 2009. This represents an increase of 7.2% on a per share basis.
Operating earnings exclude the impact of an incremental litigation provision, established in the quarter, in the amount of $225 million after tax ($204 million attributable to Lifeco's common shareholders or $0.216 per common share, and $21 million to Lifeco's non controlling interests).
Net earnings attributable to common shareholders were $1,149 million or $1.213 per share for the nine-month period ended September 30, 2010 and $275 million or $0.289 per share for the three-month period ended September 30, 2010.
For the nine months ended September 30, 2010, the strengthening of the Canadian dollar against the U.S. dollar, the British pound and the euro had a negative currency impact on Lifeco's net earnings of $86 million. For the three months ended September 30, 2010, negative currency impact on net earnings of Lifeco was $22 million. Power Financial's share of this currency effect was $61 million or $0.09 per share for the nine months ended September 30, 2010, and $16 million or $0.02 per share for the three months ended September 30, 2010.
Lifeco's contribution to Power Financial's operating earnings was $929 million for the nine-month period ended September 30, 2010, compared with $815 million for the corresponding period in 2009. For the three-month period ended September 30, 2010, Lifeco's contribution to Power Financial's operating earnings was $328 million, compared with $307 million for the same period in 2009.
IGM Financial Inc.
IGM Financial Inc. (IGM), a subsidiary of Power Financial, reported operating earnings available to common shareholders for the nine months ended September 30, 2010 of $536 million or $2.03 per share on a diluted basis, compared with net earnings available to common shareholders of $445 million or $1.69 per share in the same period in 2009, an increase of 20.1% on a per share basis.
For the three-month period ended September 30, 2010, IGM reported operating earnings available to common shareholders of $178 million or $0.68 per share on a diluted basis, compared with net earnings available to common shareholders of $167 million or $0.63 per share for the same period in 2009, an increase of 7.9% on a per share basis.
Other items for the three and nine months ended September 30, 2010 consisted of an after tax charge of $8 million representing IGM's proportionate share of Lifeco's litigation provision as discussed in the Lifeco section above.
Net earnings available to common shareholders, including other items, for the nine months ended September 30, 2010 were $528 million or $2.00 per share. Net earnings available to common shareholders, including other items, for the three months ended September 30, 2010 were $170 million or $0.65 per share.
For the nine-month and three-month periods ended September 30, 2010, IGM contributed $303 million and $102 million to Power Financial's operating earnings, compared with $248 million and $95 million for the corresponding period 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 SF439 million in the nine-month period ended September 30, 2010, compared with SF504 million in the corresponding period in 2009. The results reflect increased earnings from Imerys offset by the fact that GDF Suez had paid a special one-time dividend in the second quarter of 2009, which represented an amount of SF73 million for Pargesa. For the three-month period ended September 30, 2010, Pargesa's operating earnings were SF219 million, compared with SF262 million in the corresponding period of 2009.
Expressed in Canadian dollars, the contribution from the investment at equity to Power Financial's operating earnings was $113 million for the nine-month period ended September 30, 2010, compared with $140 million for the corresponding period in 2009. For the third quarter of 2010, the contribution from Pargesa to Power Financial's operating earnings was $59 million, compared with $72 million in the same period of 2009.
Pargesa's non-operating results were earnings of SF8 million in the nine-month period ended September 30, 2010. This compared with non-operating earnings of SF304 million in the nine month period ended September 30, 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 and a partial reversal in the third quarter of 2009, in the amount of SF509 million, under International Financial Reporting Standards (IFRS) of an impairment charge on Lafarge.
As a result, the net earnings reported by Pargesa were SF446 million in the nine-month period ended September 30, 2010, compared with SF808 million in the same period of 2009. For the third quarter of 2010, Pargesa reported net earnings of SF218 million, compared with SF760 million in the third quarter of 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
-------------------------------------------------------------------------
Series A January 25, 2011 February 15, 2011 To be determined in
accordance with the
articles of the
Corporation
-------------------------------------------------------------------------
Series D January 10, 2011 January 31, 2011 34.375 cents
-------------------------------------------------------------------------
Series E January 10, 2011 January 31, 2011 32.8125 cents
-------------------------------------------------------------------------
Series F January 10, 2011 January 31, 2011 36.875 cents
-------------------------------------------------------------------------
Series H January 10, 2011 January 31, 2011 35.9375 cents
-------------------------------------------------------------------------
Series I January 10, 2011 January 31, 2011 37.50 cents
-------------------------------------------------------------------------
Series K January 10, 2011 January 31, 2011 30.9375 cents
-------------------------------------------------------------------------
Series L January 10, 2011 January 31, 2011 31.875 cents
-------------------------------------------------------------------------
Series M January 10, 2011 January 31, 2011 37.50 cents
-------------------------------------------------------------------------
Series O January 10, 2011 January 31, 2011 36.25 cents
-------------------------------------------------------------------------
Series P January 10, 2011 January 31, 2011 27.50 cents
-------------------------------------------------------------------------
DIVIDEND ON COMMON SHARES
-------------------------
The Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's Common Shares payable February 1, 2011 to shareholders of record December 31, 2010.
For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on 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 its 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.
POWER FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------
September 30, December 31,
2010 2009
(in millions of Canadian dollars) (unaudited)
-------------------------------------------------------------------------
Assets
Cash and cash equivalents 4,439 4,855
-------------------------------------------------------------------------
Investments
Shares 6,758 6,392
Bonds 74,918 67,388
Mortgages and other loans 17,185 17,356
Loans to policyholders 6,926 6,957
Real estate 3,252 3,101
-------------------------------------------------------------------------
109,039 101,194
Funds held by ceding insurers 10,777 10,839
Investment at equity 2,356 2,675
Intangible assets 4,307 4,366
Goodwill 8,674 8,655
Future income taxes 1,187 1,268
Other assets 6,529 6,379
-------------------------------------------------------------------------
147,308 140,231
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Policy liabilities
Actuarial liabilities 103,381 98,059
Other 4,650 4,592
Deposits and certificates 877 907
Funds held under reinsurance contracts 369 186
Debentures and other borrowings 6,238 5,967
Preferred shares of the Corporation 150 300
Preferred shares of subsidiaries - 203
Capital trust securities and debentures 534 540
Future income taxes 1,279 1,098
Other liabilities 7,281 6,294
-------------------------------------------------------------------------
124,759 118,146
-------------------------------------------------------------------------
Non-controlling interests 9,200 8,878
-------------------------------------------------------------------------
Shareholders' Equity
Stated capital
Perpetual preferred shares 2,005 1,725
Common shares 636 605
Contributed surplus 105 102
Retained earnings 11,480 11,165
Accumulated other comprehensive income (loss) (877) (390)
-------------------------------------------------------------------------
13,349 13,207
-------------------------------------------------------------------------
147,308 140,231
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
-------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
-------------------------------------------------------------------------
(unaudited) (in millions of
Canadian dollars, except per
share amounts) 2010 2009 2010 2009
-------------------------------------------------------------------------
Revenues
Premium income 4,313 4,336 13,138 13,709
Net investment income
Regular net investment income 1,507 1,606 4,284 4,820
Change in fair value on held-
for-trading assets 2,607 3,743 5,210 4,019
-------------------------------------------------------------------------
4,114 5,349 9,494 8,839
Fee income 1,276 1,288 3,908 3,650
-------------------------------------------------------------------------
9,703 10,973 26,540 26,198
-------------------------------------------------------------------------
Expenses
Policyholder benefits, dividends
and experience refunds, and
change in actuarial liabilities 7,317 8,687 19,510 19,526
Commissions 554 502 1,661 1,509
Operating expenses 1,232 886 3,013 2,687
Financing charges 109 134 322 391
-------------------------------------------------------------------------
9,212 10,209 24,506 24,113
-------------------------------------------------------------------------
491 764 2,034 2,085
Share of earnings of investment
at equity 59 73 113 140
Other income (charges), net - (3) 4 (50)
-------------------------------------------------------------------------
Earnings before income taxes and
non-controlling interests 550 834 2,151 2,175
Income taxes 56 170 378 481
Non-controlling interests 171 212 632 595
-------------------------------------------------------------------------
Net earnings 323 452 1,141 1,099
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per common share
- Basic 0.42 0.61 1.51 1.47
-------------------------------------------------------------------------
- Diluted 0.42 0.61 1.51 1.46
-------------------------------------------------------------------------
SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
-------------------------------------------------------------------------
Three months ended Par-
September 30, 2010 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 4,313 - - - 4,313
Net investment income
Regular net investment
income 1,504 16 - (13) 1,507
Change in fair value
on held-for-trading
assets 2,595 12 - - 2,607
-------------------------------------------------------------------------
4,099 28 (13) 4,114
Fee income 691 609 - (24) 1,276
-------------------------------------------------------------------------
9,103 637 - (37) 9,703
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 7,317 - - - 7,317
Commissions 366 212 - (24) 554
Operating expenses 1,063 155 - 14 1,232
Financing charges 73 28 - 8 109
-------------------------------------------------------------------------
8,819 395 - (2) 9,212
-------------------------------------------------------------------------
284 242 - (35) 491
Share of earnings of
investment at equity - - 59 - 59
Other income (charges),
net - - - - -
-------------------------------------------------------------------------
Earnings before income
taxes and non-control-
ling interests 284 242 59 (35) 550
Income taxes (15) 71 - - 56
Non-controlling
interests 111 74 - (14) 171
-------------------------------------------------------------------------
Contribution to
consolidated net earnings 188 97 59 (21) 323
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Par-
September 30, 2009 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 4,336 - - - 4,336
Net investment income
Regular net investment
income 1,591 35 - (20) 1,606
Change in fair value
on held-for-trading
assets 3,734 9 - - 3,743
-------------------------------------------------------------------------
5,325 44 - (20) 5,349
Fee income 728 582 - (22) 1,288
-------------------------------------------------------------------------
10,389 626 - (42) 10,973
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 8,687 - - - 8,687
Commissions 319 205 - (22) 502
Operating expenses 726 148 - 12 886
Financing charges 93 34 - 7 134
-------------------------------------------------------------------------
9,825 387 - (3) 10,209
-------------------------------------------------------------------------
564 239 - (39) 764
Share of earnings of
investment at equity - - 73 - 73
Other income (charges),
net - - (3) - (3)
-------------------------------------------------------------------------
Earnings before income
taxes and non-control-
ling interests 564 239 70 (39) 834
Income taxes 98 72 - - 170
Non-controlling
interests 158 73 - (19) 212
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 308 94 70 (20) 452
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nine months ended Par-
September 30, 2010 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 13,138 - - - 13,138
Net investment income
Regular net
investment income 4,268 71 - (55) 4,284
Change in fair value
on held-for-trading
assets 5,188 22 - - 5,210
-------------------------------------------------------------------------
9,456 93 - (55) 9,494
Fee income 2,145 1,837 - (74) 3,908
-------------------------------------------------------------------------
24,739 1,930 - (129) 26,540
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 19,510 - - - 19,510
Commissions 1,093 642 - (74) 1,661
Operating expenses 2,495 477 - 41 3,013
Financing charges 212 83 - 27 322
-------------------------------------------------------------------------
23,310 1,202 - (6) 24,506
-------------------------------------------------------------------------
1,429 728 - (123) 2,034
Share of earnings of
investment at equity - - 113 - 113
Other income (charges),
net - - 4 - 4
-------------------------------------------------------------------------
Earnings before income
taxes and non-control-
ling interests 1,429 728 117 (123) 2,151
Income taxes 186 193 - (1) 378
Non-controlling
interests 454 236 - (58) 632
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 789 299 117 (64) 1,141
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nine months ended Par-
September 30, 2009 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 13,709 - - - 13,709
Net investment income
Regular net investment
income 4,718 160 - (58) 4,820
Change in fair value
on held-for-trading
assets 4,039 (20) - - 4,019
-------------------------------------------------------------------------
8,757 140 - (58) 8,839
Fee income 2,074 1,641 - (65) 3,650
-------------------------------------------------------------------------
24,540 1,781 - (123) 26,198
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 19,526 - - - 19,526
Commissions 979 595 - (65) 1,509
Operating expenses 2,187 465 - 35 2,687
Financing charges 274 93 - 24 391
-------------------------------------------------------------------------
22,966 1,153 - (6) 24,113
-------------------------------------------------------------------------
1,574 628 - (117) 2,085
Share of earnings of
investment at equity - - 140 - 140
Other income (charges),
net - - (62) 12 (50)
-------------------------------------------------------------------------
Earnings before income
taxes and non-control-
ling interests 1,574 628 78 (105) 2,175
Income taxes 298 183 - - 481
Non-controlling
interests 460 198 - (63) 595
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 816 247 78 (42) 1,099
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For further information: Mr. Edward Johnson, Senior Vice-President, General Counsel and Secretary, (514) 286-7400
Share this article