2014

Power Financial Corporation 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, MB, Aug. 3, 2012 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today 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 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 ($46 million) and the disposal of its interest in Arkema ($43 million), as previously disclosed. These gains were partially offset in the second quarter by the Corporation's share ($4 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) ($11 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 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.

SECOND QUARTER RESULTS
For the quarter ended June 30, 2012, operating earnings were $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, as described above, compared to nil in the corresponding period in 2011.

As a result, net earnings attributable to common shareholders 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.

RESULTS OF SUBSIDIARIES AND PARJOINTCO
GREAT-WEST LIFECO INC.
For the six-month period ended June 30, 2012, Great-West Lifeco Inc. (Lifeco) reported operating earnings attributable to common shareholders of $942 million or $0.992 per share, compared with $941 million or $0.991 per share in the corresponding period in 2011.

For the quarter ended June 30, 2012, Lifeco reported operating earnings attributable to common shareholders of $491 million or $0.517 per share, compared with $526 million or $0.553 per share in the corresponding period of 2011, a decrease of 6.5% on a per share basis.

Lifeco's contribution to Power Financial's operating earnings was $642 million for the six-month period ended June 30, 2012, compared with $644 million for the corresponding period in 2011. For the quarter ended June 30, 2012, Lifeco's contribution to Power Financial's operating earnings was $336 million, compared with $360 million in the same period in 2011.

IGM FINANCIAL INC.
For the six-month period ended June 30, 2012, IGM reported operating earnings available to common shareholders of $379 million or $1.47 per share, compared with $424 million or $1.63 per share in the same period in 2011, a decrease of 9.8% on a per share basis.

For the quarter ended June 30, 2012, IGM reported operating earnings available to common shareholders of $179 million or $0.70 per share, compared with $213 million or $0.82 per share in the same period in 2011, a decrease of 14.6% on a per share basis.

IGM's contribution to Power Financial's operating earnings was $218 million for the six-month period ended June 30, 2012, compared with $246 million for the corresponding period in 2011. For the quarter ended June 30, 2012, IGM's contribution to Power Financial's operating earnings was $104 million, compared with $125 million in the same 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 at June 30, 2012.

For the six-month period ended June 30, 2012, Pargesa reported operating earnings of SF178 million, compared with operating earnings of SF210 million in the corresponding period in 2011. For the quarter ended June 30, 2012, operating earnings were SF184 million, compared with SF196 million in the corresponding period of 2011. The Pargesa results of 2011 included an additional quarterly dividend of SF30 million received from Total as a result of Total paying its dividend quarterly beginning in the second quarter in 2011.

Pargesa's contribution to Power Financial's operating earnings expressed in Canadian dollars was $54 million for the six-month period ended June 30, 2012, compared with a contribution of $67 million in the corresponding period in 2011. For the quarter ended June 30, 2012, Pargesa's contribution to Power Financial's operating earnings was $56 million, compared with a contribution of $63 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 RECORD DATE PAYMENT DATE AMOUNT
Series A - PWF.PR.A October 25, 2012 November 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 D - PWF.PR.E October 10, 2012 October 31, 2012 34.375¢
Series E - PWF.PR.F October 10, 2012 October 31, 2012 32.8125¢
Series F - PWF.PR.G October 10, 2012 October 31, 2012 36.875¢
Series H - PWF.PR.H October 10, 2012 October 31, 2012 35.9375¢
Series I - PWF.PR.I October 10, 2012 October 31, 2012 37.50¢
Series K - PWF.PR.K October 10, 2012 October 31, 2012 30.9375¢
Series L - PWF.PR.L October 10, 2012 October 31, 2012 31.875¢
Series M - PWF.PR.M October 10, 2012 October 31, 2012 37.50¢
Series O - PWF.PR.O October 10, 2012 October 31, 2012 36.25¢
Series P - PWF.PR.P October 10, 2012 October 31, 2012 27.50¢
Series R - PWF.PR.R October 10, 2012 October 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 November 1, 2012 to shareholders of record September 28, 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, 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 common shareholders 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
CONSOLIDATED BALANCE SHEETS
       
[in millions of Canadian dollars] June 30,
2012
(unaudited)
  December 31,
2011
(audited)
Assets      
Cash and cash equivalents 3,000   3,385
Investments      
  Bonds 83,050   78,759
  Mortgages and other loans 21,847   21,518
  Shares 6,362   6,402
  Investment properties 3,298   3,201
  Loans to policyholders 7,153   7,162
  121,710   117,042
Funds held by ceding insurers 10,121   9,923
Reinsurance assets 1,946   2,061
Investment in associate 2,139   2,222
Owner-occupied properties 559   541
Capital assets 211   197
Derivative financial instruments 1,003   1,056
Other assets 5,057   4,653
Deferred tax assets 1,184   1,207
Intangible assets 4,997   5,023
Goodwill 8,814   8,786
Segregated funds for the risk of unit holders 99,208   96,582
Total assets 259,949   252,678
       
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 5,973   5,888
Capital trust securities 353   533
Derivative financial instruments 497   427
Other liabilities 6,586   5,516
Deferred tax liabilities 1,288   1,258
Insurance and investment contracts on account of unit holders 99,208   96,582
Total liabilities 236,318   229,863
       
Equity      
Stated capital      
  Perpetual preferred shares 2,255   2,005
  Common shares 639   639
Retained earnings 11,121   10,743
Reserves (14)   134
Total shareholders' equity 14,001   13,521
Non-controlling interests 9,630   9,294
Total equity 23,631   22,815
Total liabilities and equity 259,949   252,678

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 1,434   1,428   2,894   2,884
  Change in fair value 1,109   708   912   510
  2,543   2,136   3,806   3,394
Fee income 1,307   1,376   2,625   2,742
Total revenues 8,374   7,784   15,484   14,703
               
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 923   827   1,847   1,726
Financing charges 99   102   198   209
Total expenses 7,595   6,820   13,959   12,990
  779   964   1,525   1,713
Share of earnings of investment in associate 45   63   126   65
Earnings before income taxes - continuing operations 824   1,027   1,651   1,778
Income taxes 129   225   244   361
Net earnings - continuing operations 695   802   1,407   1,417
Net earnings - discontinued operations -   1   -   2
Net earnings 695   803   1,407   1,419
               
Attributable to              
  Non-controlling interests 233   270   461   490
  Perpetual preferred shareholders 29   26   58   52
  Common shareholders 433   507   888   877
  695   803   1,407   1,419
               
Earnings per common share              
  Net earnings attributable to common shareholders              
    - Basic 0.61   0.72   1.25   1.24
    - Diluted 0.61   0.71   1.25   1.23
               
  Net earnings from continuing operations attributable to common shareholders              
    - Basic 0.61   0.72   1.25   1.24
    - Diluted 0.61   0.71   1.25   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   -   (21)   2,543
Fee income 734   608   -   (35)   1,307
  7,792   638   -   (56)   8,374
Expenses                  
Total paid or credited to policyholders 5,979   -   -   -   5,979
Commissions 415   213   -   (34)   594
Operating and administrative expenses 737   172   -   14   923
Financing charges 72   23   -   4   99
  7,203   408   -   (16)   7,595
  589   230   -   (40)   779
Share of earnings of investment in associate -   -   45   -   45
Earnings before income taxes - continuing operations 589   230   45   (40)   824
Income taxes 72   56   -   1   129
Contribution to net earnings - continuing operations 517   174   45   (41)   695
Contribution to net earnings - discontinued operations -   -   -   -   -
Contribution to net earnings 517   174   45   (41)   695
Attributable to                  
  Non-controlling interests 181   74   -   (22)   233
  Perpetual preferred shareholders -   -   -   29   29
  Common shareholders 336   100   45   (48)   433
  517   174   45   (41)   695
                   
                   
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   -   (24)   2,136
Fee income 739   663   -   (26)   1,376
  7,134   700   -   (50)   7,784
Expenses                  
Total paid or credited to policyholders 5,298   -   -   -   5,298
Commissions 390   229   -   (26)   593
Operating and administrative expenses 651   164   -   12   827
Financing charges 72   26   -   4   102
  6,411   419   -   (10)   6,820
  723   281   -   (40)   964
Share of earnings of investment in associate -   -   63   -   63
Earnings before income taxes - continuing operations 723   281   63   (40)   1,027
Income taxes 161   63   -   1   225
Contribution to net earnings - continuing operations 562   218   63   (41)   802
Contribution to net earnings - discontinued operations -   1   -   -   1
Contribution to net earnings 562   219   63   (41)   803
Attributable to                  
  Non-controlling interests 202   94   -   (26)   270
  Perpetual preferred shareholders -   -   -   26   26
  Common shareholders 360   125   63   (41)   507
  562   219   63   (41)   803
                   
                   
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   -   (47)   3,806
Fee income 1,458   1,235   -   (68)   2,625
  14,288   1,311   -   (115)   15,484
Expenses                  
Total paid or credited to policyholders 10,722   -   -   -   10,722
Commissions 825   435   -   (68)   1,192
Operating and administrative expenses 1,475   343   -   29   1,847
Financing charges 144   46   -   8   198
  13,166   824   -   (31)   13,959
  1,122   487   -   (84)   1,525
Share of earnings of investment in associate -   -   126   -   126
Earnings before income taxes - continuing operations 1,122   487   126   (84)   1,651
Income taxes 129   112   -   3   244
Contribution to net earnings - continuing operations 993   375   126   (87)   1,407
Contribution to net earnings - discontinued operations -   -   -   -   -
Contribution to net earnings 993   375   126   (87)   1,407
Attributable to                  
  Non-controlling interests 351   161   -   (51)   461
  Perpetual preferred shareholders -   -   -   58   58
  Common shareholders 642   214   126   (94)   888
  993   375   126   (87)   1,407
                   
                   
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   -   (45)   3,394
Fee income 1,459   1,335   -   (52)   2,742
  13,389   1,411   -   (97)   14,703
Expenses                  
Total paid or credited to policyholders 9,877   -   -   -   9,877
Commissions 767   463   -   (52)   1,178
Operating and administrative expenses 1,375   326   -   25   1,726
Financing charges 144   56   -   9   209
  12,163   845   -   (18)   12,990
  1,226   566   -   (79)   1,713
Share of earnings of investment in associate -   -   65   -   65
Earnings before income taxes - continuing operations 1,226   566   65   (79)   1,778
Income taxes 230   135   -   (4)   361
Contribution to net earnings - continuing operations 996   431   65   (75)   1,417
Contribution to net earnings - discontinued operations -   2   -   -   2
Contribution to net earnings 996   433   65   (75)   1,419
Attributable to                  
  Non-controlling interests 352   187   -   (49)   490
  Perpetual preferred shareholders -   -   -   52   52
  Common shareholders 644   246   65   (78)   877
  996   433   65   (75)   1,419

 

SOURCE POWER FINANCIAL CORPORATION




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