Power Corporation of Canada 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 15, 2012 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported operating earnings attributable to participating shareholders for the three-month period ended March 31, 2012 of $209 million or $0.45 per share, compared with $218 million or $0.47 per share in the corresponding period in 2011.

Subsidiaries contributed $244 million to Power Corporation's operating earnings, compared with $248 million for the first quarter of 2011, a decrease of 1.6%. Results from corporate activities were a net charge of $23 million in the three-month period ended March 31, 2012, compared with a net charge of $20 million in the corresponding period in 2011.

Other items not included in operating earnings in the three-month period ended March 31, 2012 were $55 million, compared with a net charge of $2 million in the corresponding period in 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 ($30 million) and the disposal of Arkema (a French chemicals producer) shares ($28 million).

As a result, net earnings attributable to participating shareholders for the three-month period ended March 31, 2012 were $264 million or $0.57 per share, compared with $216 million or $0.47 per share in the corresponding period in 2011.

RESULTS OF POWER FINANCIAL CORPORATION

Power Financial reported operating earnings attributable to common shareholders of $372 million or $0.52 per share for the three-month period ended March 31, 2012, 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 GBL on the partial disposal of Pernod Ricard shares ($46 million) and the disposal of Arkema shares ($43 million).

Included in operating earnings for the first quarter of 2011 was the establishment of catastrophe provisions recorded by Great-West Lifeco Inc., a subsidiary of Power Financial, relating to earthquake events in Japan and New Zealand with an after-tax impact of $75 million which negatively impacted Power Financial's operating earnings by $53 million. Power Corporation's share of these provisions was $35 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.

DIVIDENDS ON NON-PARTICIPATING 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
1986 Series - POW.PR.F  June 22, 2012 July 15, 2012 To be determined in accordance with the articles of the Corporation
Series A - POW.PR.A June 22, 2012 July 15, 2012 35¢
Series B - POW.PR.B June 22, 2012 July 15, 2012 33.4375¢
Series C - POW.PR.C June 22, 2012 July 15, 2012 36.25¢
Series D - POW.PR.D June 22, 2012 July 15, 2012 31.25¢
Series G - POW.PR.G June 22, 2012 July 15, 2012 35¢

DIVIDENDS ON PARTICIPATING SHARES

The Board of Directors also declared a dividend of 29 cents per share on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable June 29, 2012 to shareholders of record June 8, 2012.

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred shares (including the Participating Preferred Shares) and Subordinate Voting 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 this MD&A and its 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 participating 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 Corporation, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation.

Operating earnings attributable to participating 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.

Attachments:
FINANCIAL  INFORMATION


POWER CORPORATION OF CANADA
CONDENSED CONSOLIDATED BALANCE SHEETS
[in millions of Canadian dollars] March 31,
2012
(unaudited)
  December 31,
2011
(audited)
Assets      
Cash and cash equivalents 3,163   3,741
Investments      
  Bonds 80,767   79,186
  Mortgages and other loans 21,763   21,541
  Shares 8,141   7,876
  Investment properties 3,263   3,201
  Loans to policyholders 7,013   7,162
  120,947   118,966
Funds held by ceding insurers 10,127   9,923
Reinsurance assets 1,983   2,061
Investments in associates 2,422   2,341
Owner-occupied properties 575   565
Capital assets 339   340
Derivative financial instruments 997   1,056
Other assets 4,973   4,759
Deferred tax assets 1,201   1,227
Intangible assets 5,076   5,107
Goodwill 8,839   8,828
Segregated funds for the risk of unit holders 100,474   96,582
Total assets 261,116   255,496
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 6,409   6,296
Capital trust securities 534   533
Derivative financial instruments 372   430
Other liabilities 6,309   5,668
Deferred tax liabilities 1,269   1,293
Insurance and investment contracts on account of unit holders 100,474   96,582
Total liabilities 235,262   230,461
Equity      
Stated capital      
  Non-participating shares 979   779
  Participating shares 571   571
Retained earnings 8,239   8,119
Reserves 306   356
Total shareholders' equity 10,095   9,825
Non-controlling interests 15,759   15,210
Total equity 25,854   25,035
Total liabilities and equity 261,116   255,496
       
       
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 1,472   1,467
  Change in fair value (197)   (198)
  1,275   1,269
Fee and media income 1,420   1,468
Total revenues 7,224   7,032
       
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 1,055   1,024
Financing charges 108   115
Total expenses 6,504   6,303
  720   729
Share of earnings of investments in associates 82   1
Earnings before income taxes - continuing operations 802   730
Income taxes 115   134
Net earnings - continuing operations 687   596
Net earnings - discontinued operations -   1
Net earnings 687   597
       
Attributable to      
  Non-controlling interests 411   371
  Non-participating shareholders 12   10
  Participating shareholders 264   216
  687   597
       
Earnings per participating share      
  Net earnings attributable to participating shareholders      
    Basic 0.57   0.47
    Diluted 0.57   0.47
       
  Net earnings from continuing operations attributable to participating shareholders      
    Basic 0.57   0.47
    Diluted 0.57   0.47


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   -   (14)   1,275
Fee and media income 724   627   -   69   1,420
  6,496   673   -   55   7,224
Expenses                  
Total paid or credited to policyholders 4,743   -   -   -   4,743
Commissions 410   222   -   (34)   598
Operating and administrative expenses 738   171   -   146   1,055
Financing charges 72   23   -   13   108
  5,963   416   -   125   6,504
  533   257   -   (70)   720
Share of earnings (losses) of investments in associates -   -   81   1   82
Earnings before income taxes - continuing operations 533   257   81   (69)   802
Income taxes 57   56   -   2   115
Contribution to net earnings - continuing operations 476   201   81   (71)   687
Contribution to net earnings - discontinued operations -   -   -   -   -
Contribution to net earnings 476   201   81   (71)   687
Attributable to                  
  Non-controlling interests 274   126   27   (16)   411
  Non-participating shareholders -   -   -   12   12
  Participating shareholders 202   75   54   (67)   264
  476   201   81   (71)   687
                   
                   
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   -   (10)   1,269
Fee and media income 720   672   -   76   1,468
  6,255   711   -   66   7,032
Expenses                  
Total paid or credited to policyholders 4,579   -   -   -   4,579
Commissions 377   234   -   (26)   585
Operating and administrative expenses 724   162   -   138   1,024
Financing charges 72   30   -   13   115
  5,752   426   -   125   6,303
  503   285   -   (59)   729
Share of earnings (losses) of investments in associates -   -   2   (1)   1
Earnings before income taxes - continuing operations 503   285   2   (60)   730
Income taxes 69   72   -   (7)   134
Contribution to net earnings - continuing operations 434   213   2   (53)   596
Contribution to net earnings - discontinued operations -   1   -   -   1
Contribution to net earnings 434   214   2   (53)   597
Attributable to                  
  Non-controlling interests 246   134   1   (10)   371
  Non-participating shareholders -   -   -   10   10
  Participating shareholders 188   80   1   (53)   216
  434   214   2   (53)   597

  

 

 

SOURCE POWER CORPORATION OF CANADA



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