Power Corporation of Canada Reports 2012 Second 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).

WINNIPEG, Aug. 3, 2012 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported operating earnings attributable to participating shareholders for the six-month period ended June 30, 2012 of $501 million or $1.09 per share, compared with $574 million or $1.24 per share in the corresponding period in 2011. This represents a 12.6% decrease on a per share basis.

Subsidiaries contributed $540 million to Power Corporation's operating earnings, compared with $587 million for the six-month period ended June 30, 2011, a decrease of 8.0%. Results from corporate activities were a charge of $14 million in the six-month period ended June 30, 2012, compared with a contribution of $7 million in the corresponding period in 2011.

For the six-month period ended June 30, 2012, other items represented a contribution of $45 million mainly composed of the Corporation's share of the gains realized by Groupe Bruxelles Lambert (GBL) in the first quarter on the partial disposal of its interest in Pernod Ricard ($30 million) and the disposal of its interest in Arkema ($28 million), as previously disclosed. These gains were partially offset in the second quarter by the Corporation's share ($3 million) of a non-cash income tax charge recorded by IGM Financial Inc. (IGM) resulting from increases in Ontario corporate income tax rates and the Corporation's share of non-operating earnings of Pargesa SA (Pargesa) ($7 million), mainly composed of a charge for goodwill impairment and restructuring charges recorded by Lafarge SA (Lafarge). Other items in the corresponding period in 2011 were a charge of $2 million.

As a result, net earnings attributable to participating shareholders for the six-month period ended June 30, 2012 were $546 million or $1.19 per share, compared with $572 million or $1.24 per share in the corresponding period in 2011.

SECOND QUARTER RESULTS

Operating earnings attributable to participating shareholders for the quarter ended June 30, 2012 were $292 million or $0.64 per share, compared with $356 million or $0.77 per share in the corresponding period in 2011. This represents a decrease of 17.8% on a per share basis.

Power Corporation's share of operating earnings from its subsidiaries was $296 million for the three-month period ended June 30, 2012, compared with $339 million for the same period in 2011, a decrease of 12.7%. Corporate activities represented a contribution of $9 million in the quarter ended June 30, 2012, compared with a contribution of $27 million in the corresponding period in 2011.

Other items represented a charge of $10 million in the three-month period ended June 30, 2012, as described above, compared with nil in the corresponding period of 2011.

As a result, net earnings attributable to participating shareholders for the quarter ended June 30, 2012 were $282 million or $0.62 per share, compared with $356 million or $0.77 per share in the corresponding period in 2011.

RESULTS OF POWER FINANCIAL CORPORATION

Power Financial Corporation reported operating earnings attributable to common shareholders for the six-month period ended June 30, 2012 of $820 million or $1.15 per share, compared with $879 million or $1.24 per share in the corresponding period in 2011, a decrease of 6.7% on a per share basis.

For the six-month period ended June 30, 2012, other items represented a contribution of $68 million mainly composed of Power Financial's share of the gains realized by GBL in the first quarter on the partial disposal of its interest in Pernod Ricard ($46 million) and the disposal of its interest in Arkema ($43 million). These gains were partially offset in the second quarter by Power Financial's share ($4 million) of a non-cash income tax charge recorded by IGM resulting from increases in Ontario corporate income tax rates and Power Financial's share of non-operating earnings of Pargesa ($11 million), mainly composed of a charge for goodwill impairment and restructuring charges recorded by Lafarge. Other items in the corresponding period in 2011 were a charge of $2 million.

As a result, net earnings attributable to common shareholders for the six-month period ended June 30, 2012 were $888 million or $1.25 per share, compared with $877 million or $1.24 per share in the corresponding period in 2011.

For the quarter ended June 30, 2012, Power Financial reported operating earnings of $448 million or $0.63 per share, compared with $507 million or $0.72 per share in the second quarter of 2011. This represents a decrease of 11.6% on a per share basis.

For the three-month period ended June 30, 2012, other items represented a charge of $15 million, compared to nil in the corresponding period in 2011.

As a result, net earnings attributable to common shareholders of Power Financial for the quarter ended June 30, 2012 were $433 million or $0.61 per share, compared with $507 million or $0.72 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  September 24, 2012 October 15, 2012 At a floating rate equal to one quarter of 70% of the average prime rate of two major Canadian chartered banks, in accordance with the articles of the Corporation.
Series A - POW.PR.A September 24, 2012 October 15, 2012 35¢
Series B - POW.PR.B September 24, 2012 October 15, 2012 33.4375¢
Series C - POW.PR.C September 24, 2012 October 15, 2012 36.25¢
Series D - POW.PR.D September 24, 2012 October 15, 2012 31.25¢
Series G - POW.PR.G September 24, 2012 October 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 September 28, 2012 to shareholders of record September 7, 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, reflect 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 list of factors in the prior paragraph, 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 attributable to participating shareholders 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.

POWER CORPORATION OF CANADA
 
CONSOLIDATED BALANCE SHEETS
 
 
[in millions of Canadian dollars]   June 30,
2012
(unaudited)
  December 31,
2011
(audited
         
Assets        
Cash and cash equivalents   3,263   3,741
Investments        
  Bonds   83,681   79,186
  Mortgages and other loans   21,870   21,541
  Shares   7,869   7,876
  Investment properties   3,298   3,201
  Loans to policyholders   7,153   7,162
    123,871   118,966
Funds held by ceding insurers   10,121   9,923
Reinsurance assets   1,946   2,061
Investments in associates   2,275   2,341
Owner-occupied properties   583   565
Capital assets   348   340
Derivative financial instruments   1,003   1,056
Other assets   5,171   4,759
Deferred tax assets   1,206   1,227
Intangible assets   5,079   5,107
Goodwill   8,856   8,828
Segregated funds for the risk of unit holders   99,208   96,582
Total assets   262,930   255,496
         
Liabilities        
Insurance contract liabilities   116,985   114,730
Investment contract liabilities   762   782
Deposits and certificates   154   151
Funds held under reinsurance contracts   167   169
Obligations to securitization entities   4,345   3,827
Debentures and other borrowings   6,380   6,296
Capital trust securities   353   533
Derivative financial instruments   498   430
Other liabilities   6,725   5,668
Deferred tax liabilities   1,331   1,293
Insurance and investment contracts on account of unit holders   99,208   96,582
Total liabilities   236,908   230,461
         
Equity        
Stated capital        
  Non-participating shares   978   779
  Participating shares   572   571
Retained earnings   8,383   8,119
Reserves   215   356
Total shareholders' equity   10,148   9,825
Non-controlling interests   15,874   15,210
Total equity   26,022   25,035
Total liabilities and equity   262,930   255,496



CONSOLIDATED STATEMENTS OF EARNINGS
 
    Three months ended June 30   Six months ended June 30
(unaudited) [in millions of Canadian dollars, except per share amounts]   2012   2011   2012   2011
                 
Revenues                
Premium income                
  Gross premiums written   5,233   4,980   10,431   9,921
  Ceded premiums   (709)   (708)   (1,378)   (1,354)
Total net premiums   4,524   4,272   9,053   8,567
Net investment income                
  Regular net investment income   1,477   1,494   2,949   2,961
  Change in fair value   1,109   708   912   510
    2,586   2,202   3,861   3,471
Fee and media income   1,413   1,479   2,833   2,947
Total revenues   8,523   7,953   15,747   14,985
                 
Expenses                
Policyholder benefits                
  Insurance and investment contracts                
    Gross   4,311   4,006   8,917   8,429
    Ceded   (367)   (316)   (754)   (649)
    3,944   3,690   8,163   7,780
Policyholder dividends and experience refunds   367   377   731   730
Change in insurance and investment contract liabilities   1,668   1,231   1,828   1,367
Total paid or credited to policyholders   5,979   5,298   10,722   9,877
Commissions   594   593   1,192   1,178
Operating and administrative expenses   1,053   950   2,108   1,974
Financing charges   108   111   216   226
Total expenses   7,734   6,952   14,238   13,255
    789   1,001   1,509   1,730
Share of earnings of investments in associates   45   63   127   64
Earnings before income taxes - continuing operations   834   1,064   1,636   1,794
Income taxes   131   231   246   365
Net earnings - continuing operations   703   833   1,390   1,429
Net earnings - discontinued operations   -   1   -   2
Net earnings   703   834   1,390   1,431
                 
Attributable to                
  Non-controlling interests   408   468   819   839
  Non-participating shareholders   13   10   25   20
  Participating shareholders   282   356   546   572
    703   834   1,390   1,431
                 
Earnings per participating share                
  Net earnings attributable to participating shareholders                
    - Basic   0.62   0.77   1.19   1.24
    - Diluted   0.62   0.77   1.18   1.23
                 
  Net earnings from continuing operations attributable to participating shareholders                
    - Basic   0.62   0.77   1.19   1.24
    - Diluted   0.62   0.77   1.18   1.23



SEGMENTED INFORMATION
 
INFORMATION ON PROFIT MEASURE
 
Three months ended June 30, 2012   Lifeco   IGM   Parjointco   Other   Total
                     
Revenues                    
Premium income, net   4,524   -   -   -   4,524
Investment income, net   2,534   30   -   22   2,586
Fee and media income   734   608   -   71   1,413
    7,792   638   -   93   8,523
                     
Expenses                    
Total paid or credited to policyholders   5,979   -   -   -   5,979
Commissions   415   213   -   (34)   594
Operating and administrative expenses   737   172   -   144   1,053
Financing charges   72   23   -   13   108
    7,203   408   -   123   7,734
    589   230   -   (30)   789
Share of earnings (losses) of investments in associates   -   -   45   -   45
Earnings before income taxes - continuing operations   589   230   45   (30)   834
Income taxes   72   56   -   3   131
Contribution to net earnings - continuing operations   517   174   45   (33)   703
Contribution to net earnings - discontinued operations   -   -   -   -   -
Contribution to net earnings   517   174   45   (33)   703
                     
Attributable to                    
  Non-controlling interests   295   108   15   (10)   408
  Non-participating shareholders   -   -   -   13   13
  Participating shareholders   222   66   30   (36)   282
    517   174   45   (33)   703
                     
                     
Three months ended June 30, 2011   Lifeco   IGM   Parjointco   Other   Total
                     
Revenues                    
Premium income, net   4,272   -   -   -   4,272
Investment income, net   2,123   37   -   42   2,202
Fee and media income   739   663   -   77   1,479
    7,134   700   -   119   7,953
                     
Expenses                    
Total paid or credited to policyholders   5,298   -   -   -   5,298
Commissions   390   229   -   (26)   593
Operating and administrative expenses   651   164   -   135   950
Financing charges   72   26   -   13   111
    6,411   419   -   122   6,952
    723   281   -   (3)   1,001
Share of earnings (losses) of investments in associates   -   -   63   -   63
Earnings before income taxes - continuing operations   723   281   63   (3)   1,064
Income taxes   161   63   -   7   231
Contribution to net earnings - continuing operations   562   218   63   (10)   833
Contribution to net earnings - discontinued operations   -   1   -   -   1
Contribution to net earnings   562   219   63   (10)   834
                     
Attributable to                    
  Non-controlling interests   324   136   21   (13)   468
  Non-participating shareholders   -   -   -   10   10
  Participating shareholders   238   83   42   (7)   356
    562   219   63   (10)   834
                     
                     
Six months ended June 30, 2012   Lifeco   IGM   Parjointco   Other   Total
                     
Revenues                    
Premium income, net   9,053   -   -   -   9,053
Investment income, net   3,777   76   -   8   3,861
Fee and media income   1,458   1,235   -   140   2,833
    14,288   1,311   -   148   15,747
                     
Expenses                    
Total paid or credited to policyholders   10,722   -   -   -   10,722
Commissions   825   435   -   (68)   1,192
Operating and administrative expenses   1,475   343   -   290   2,108
Financing charges   144   46   -   26   216
    13,166   824   -   248   14,238
    1,122   487   -   (100)   1,509
Share of earnings (losses) of investments in associates   -   -   126   1   127
Earnings before income taxes - continuing operations   1,122   487   126   (99)   1,636
Income taxes   129   112   -   5   246
Contribution to net earnings - continuing operations   993   375   126   (104)   1,390
Contribution to net earnings - discontinued operations   -   -   -   -   -
Contribution to net earnings   993   375   126   (104)   1,390
                     
Attributable to                    
  Non-controlling interests   569   234   42   (26)   819
  Non-participating shareholders   -   -   -   25   25
  Participating shareholders   424   141   84   (103)   546
    993   375   126   (104)   1,390
                     
                     
Six months ended June 30, 2011   Lifeco   IGM   Parjointco   Other   Total
                     
Revenues                    
Premium income, net   8,567   -   -   -   8,567
Investment income, net   3,363   76   -   32   3,471
Fee and media income   1,459   1,335   -   153   2,947
    13,389   1,411   -   185   14,985
                     
Expenses                    
Total paid or credited to policyholders   9,877   -   -   -   9,877
Commissions   767   463   -   (52)   1,178
Operating and administrative expenses   1,375   326   -   273   1,974
Financing charges   144   56   -   26   226
    12,163   845   -   247   13,255
    1,226   566   -   (62)   1,730
Share of earnings (losses) of investments in associates   -   -   65   (1)   64
Earnings before income taxes - continuing operations   1,226   566   65   (63)   1,794
Income taxes   230   135   -   -   365
Contribution to net earnings - continuing operations   996   431   65   (63)   1,429
Contribution to net earnings - discontinued operations   -   2   -   -   2
Contribution to net earnings   996   433   65   (63)   1,431
                     
Attributable to                    
  Non-controlling interests   570   270   22   (23)   839
  Non-participating shareholders   -   -   -   20   20
  Participating shareholders   426   163   43   (60)   572
    996   433   65   (63)   1,431

 

 

 

 

SOURCE POWER CORPORATION OF CANADA



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