Power Financial Corporation Reports 2012 First Quarter Financial Results and Dividends

Readers are referred to the sections entitled "Forward-looking Statements" and "Non-IFRS Financial Measures" at the end of this release. The Corporation's financial results are reported under International Financial Reporting Standards (IFRS).

MONTREAL, May 14, 2012 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported operating earnings attributable to common shareholders for the three-month period ended March 31, 2012 of $372 million or $0.52 per share, the same as in the corresponding period in 2011.

Other items represented a contribution of $83 million, compared with a charge of $2 million in the first quarter of 2011. Other items in the first quarter of 2012 were mainly composed of the Corporation's share of the gains realized by Groupe Bruxelles Lambert (GBL) on the partial disposal of Pernod Ricard (a producer of wines and spirits) shares ($46 million) and the disposal of Arkema (a French chemicals producer) shares ($43 million).

As a result, net earnings attributable to common shareholders for the three-month period ended March 31, 2012 were $455 million or $0.64 per share, compared with $370 million or $0.52 per share in the corresponding period in 2011.

RESULTS OF SUBSIDIARIES AND PARJOINTCO
GREAT-WEST LIFECO INC.
For the three-month period ended March 31, 2012, Great-West Lifeco Inc. (Lifeco) reported operating earnings and net earnings attributable to common shareholders of $451 million or $0.475 per share, compared with $415 million or $0.438 per share in the corresponding period in 2011. This represents an increase of 8.4% on a per share basis.

Included in operating earnings for the first quarter of 2011 was the establishment of catastrophe provisions relating to earthquake events in Japan and New Zealand with an after-tax impact of $75 million. Power Financial's share of these provisions was $53 million.

Lifeco's contribution to Power Financial's operating earnings was $306 million for the three-month period ended March 31, 2012, compared with $284 million for the corresponding period in 2011.

IGM FINANCIAL INC.
For the three-month period ended March 31, 2012, IGM Financial Inc. (IGM) reported operating earnings and net earnings available to common shareholders of $200 million or $0.78 per share, compared with operating earnings available to common shareholders of $211 million or $0.81 per share in the same period in 2011, a decrease of 3.7% on a per share basis. Net earnings available to common shareholders in the first quarter of 2011 were $212 million.

IGM's contribution to Power Financial's operating earnings was $114 million for the three-month period ended March 31, 2012, compared with $121 million for the corresponding period in 2011.

PARJOINTCO N.V.
Power Financial held a 50% interest in Parjointco N.V., which in turn held a 56.5% equity interest in Pargesa SA (Pargesa) at March 31, 2012.

For the three-month period ended March 31, 2012, Pargesa reported an operating loss of SF6 million, compared with operating earnings of SF14 million in the corresponding period in 2011. These results reflect that, although the results of Imerys were 9.8% higher than in the corresponding period in 2011, the contribution from Imerys to Pargesa's earnings decreased by 26.8% in the first quarter of 2012, due to a smaller percentage of ownership as Pargesa's direct interest in Imerys was sold to GBL in April 2011 as previously disclosed.

Including the gains realized by GBL as referred to above, Pargesa's net earnings for the three-month period ended March 31, 2012 were SF266 million, compared with SF6 million in the corresponding period in 2011.

Expressed in Canadian dollars, Pargesa's contribution to Power Financial's operating earnings was a charge of $2 million for the three-month period ended March 31, 2012, compared with earnings of $4 million in the corresponding period in 2011.

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

SERIES - STOCK SYMBOL	RECORD DATE	PAYMENT DATE	AMOUNT
Series A - PWF.PR.A	July 25, 2012	August 15, 2012	To be determined in accordance with the articles of the Corporation
Series D - PWF.PR.E	July 10, 2012	July 31, 2012	34.375¢
Series E - PWF.PR.F	July 10, 2012	July 31, 2012	32.8125¢
Series F - PWF.PR.G	July 10, 2012	July 31, 2012	36.875¢
Series H - PWF.PR.H	July 10, 2012	July 31, 2012	35.9375¢
Series I - PWF.PR.I	July 10, 2012	July 31, 2012	37.50¢
Series K - PWF.PR.K	July 10, 2012	July 31, 2012	30.9375¢
Series L - PWF.PR.L	July 10, 2012	July 31, 2012	31.875¢
Series M - PWF.PR.M	July 10, 2012	July 31, 2012	37.50¢
Series O - PWF.PR.O	July 10, 2012	July 31, 2012	36.25¢
Series P - PWF.PR.P	July 10, 2012	July 31, 2012	27.50¢
Series R - PWF.PR.R	July 10, 2012	July 31, 2012	34.375¢

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 August 1, 2012 to shareholders of record June 29, 2012.

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 current expectations, or with respect to disclosure regarding the Corporation's public subsidiaries, reflects such subsidiaries' disclosed current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Corporation and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Corporation's and its subsidiaries' control, affect the operations, performance and results of the Corporation and its subsidiaries and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates), the effect of applying future accounting changes, business competition, operational and reputational risks, technological change, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors.

The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the foregoing list of factors, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

Other than as specifically required by applicable Canadian law, the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Corporation's business and material factors or assumptions on which information contained in forward-looking statements is based is provided in its disclosure materials, including its most recent Management's Discussion and Analysis and Annual Information Form, filed with the securities regulatory authorities in Canada and available at www.sedar.com.

Non-IFRS Financial Measures

In analyzing the financial results of the Corporation and consistent with the presentation in previous years, net earnings are subdivided into the following components:

• operating earnings attributable to common shareholders; and
• other items or non-operating earnings, which include the after-tax impact of any item that management considers to be of a non-recurring nature or that could make the period-over-period comparison of results from operations less meaningful, and also include the Corporation's share of any such item presented in a comparable manner by its subsidiaries.

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

Operating earnings attributable to common shareholders and operating earnings per share are non-IFRS financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.

 

POWER FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
[in millions of Canadian dollars]			March  31, 2012 (unaudited)		December 31, 2011 (audited)
Assets
Cash and cash equivalents			2,829		3,385
Investments
	Bonds		80,196		78,759
	Mortgages and other loans		21,740		21,518
	Shares		6,612		6,402
	Investment properties		3,263		3,201
	Loans to policyholders		7,013		7,162
			118,824		117,042
Funds held by ceding insurers			10,127		9,923
Reinsurance assets			1,983		2,061
Investment in associates			2,294		2,222
Owner-occupied properties			551		541
Capital assets			201		197
Derivative financial instruments			997		1,056
Other assets			4,858		4,653
Deferred tax assets			1,179		1,207
Intangible assets			4,993		5,023
Goodwill			8,798		8,786
Segregated funds for the risk of unit holders			100,474		96,582
Total assets			258,108		252,678
Liabilities
Insurance contract liabilities			114,798		114,730
Investment contract liabilities			763		782
Deposits and certificates			147		151
Funds held under reinsurance contracts			169		169
Obligation to securitization entities			4,018		3,827
Debentures and other borrowings			6,001		5,888
Capital trust securities			534		533
Derivative financial instruments			370		427
Other liabilities			6,157		5,516
Deferred tax liabilities			1,228		1,258
Insurance and investment contracts on account of unit holders			100,474		96,582
Total liabilities			234,659		229,863
Equity
Stated capital
	Perpetual preferred shares		2,255		2,005
	Common shares		639		639
Retained earnings			10,943		10,743
Reserves			64		134
Total shareholders' equity			13,901		13,521
Non-controlling interests			9,548		9,294
Total equity			23,449		22,815
Total liabilities and equity			258,108		252,678
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended March 31 (unaudited) [in millions of Canadian dollars, except per share amounts]			2012		2011
Revenues
Premium income
	Gross premiums written		5,198		4,941
	Ceded premiums		(669)		(646)
Total net premiums			4,529		4,295
Net investment income
	Regular net investment income		1,460		1,456
	Change in fair value		(197)		(198)
			1,263		1,258
Fee income			1,318		1,366
Total revenues			7,110		6,919
Expenses
Policyholder benefits
	Insurance and investment contracts
		Gross	4,606		4,423
		Ceded	(387)		(333)
			4,219		4,090
Policyholder dividends and experience refunds			364		353
Change in insurance and investment contract liabilities			160		136
Total paid or credited to policyholders			4,743		4,579
Commissions			598		585
Operating and administrative expenses			924		899
Financing charges			99		107
Total expenses			6,364		6,170
			746		749
Share of earnings of investment in associates			81		2
Earnings before income taxes - continuing operations			827		751
Income taxes			115		136
Net earnings - continuing operations			712		615
Net earnings - discontinued operations			-		1
Net earnings			712		616
Attributable to
	Non-controlling interests		228		220
	Perpetual preferred shareholders		29		26
	Common shareholders		455		370
			712		616
Earnings per common share
	Net earnings attributable to common shareholders
		- Basic	0.64		0.52
		- Diluted	0.64		0.52
	Net earnings from continuing operations attributable to common shareholders
		- Basic	0.64		0.52
		- Diluted	0.64		0.52

SEGMENTED INFORMATION

INFORMATION ON PROFIT MEASURE

Three months ended March 31, 2012		Lifeco		IGM		Parjointco		Other		Total
Revenues
Premium income, net		4,529		-		-		-		4,529
Investment income, net		1,243		46		-		(26)		1,263
Fee income		724		627		-		(33)		1,318
		6,496		673		-		(59)		7,110
Expenses
Total paid or credited to policyholders		4,743		-		-		-		4,743
Commissions		410		222		-		(34)		598
Operating and administrative expenses		738		171		-		15		924
Financing charges		72		23		-		4		99
		5,963		416		-		(15)		6,364
		533		257		-		(44)		746
Share of earnings of investment in associates		-		-		81		-		81
Earnings before income taxes - continuing operations		533		257		81		(44)		827
Income taxes		57		56		-		2		115
Contribution to net earnings - continuing operations		476		201		81		(46)		712
Contribution to net earnings - discontinued operations		-		-		-		-		-
Contribution to net earnings		476		201		81		(46)		712
Attributable to
	Non-controlling interests	170		87		-		(29)		228
	Perpetual preferred shareholders	-		-		-		29		29
	Common shareholders	306		114		81		(46)		455
		476		201		81		(46)		712
Three months ended March 31, 2011		Lifeco		IGM		Parjointco		Other		Total
Revenues
Premium income, net		4,295		-		-		-		4,295
Investment income, net		1,240		39		-		(21)		1,258
Fee income		720		672		-		(26)		1,366
		6,255		711		-		(47)		6,919
Expenses
Total paid or credited to policyholders		4,579		-		-		-		4,579
Commissions		377		234		-		(26)		585
Operating and administrative expenses		724		162		-		13		899
Financing charges		72		30		-		5		107
		5,752		426		-		(8)		6,170
		503		285		-		(39)		749
Share of earnings of investment in associates		-		-		2		-		2
Earnings before income taxes - continuing operations		503		285		2		(39)		751
Income taxes		69		72		-		(5)		136
Contribution to net earnings - continuing operations		434		213		2		(34)		615
Contribution to net earnings - discontinued operations		-		1		-		-		1
Contribution to net earnings		434		214		2		(34)		616
Attributable to
	Non-controlling interests	150		93		-		(23)		220
	Perpetual preferred shareholders	-		-		-		26		26
	Common shareholders	284		121		2		(37)		370
		434		214		2		(34)		616

 

 

Attachments: Financial Information

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