2014

Power Financial Corporation Reports 2013 Third Quarter and Nine-Month Financial Results and Dividends

Readers are referred to the sections entitled "Non-IFRS Financial Measures" and "Forward-Looking Statements" at the end of this release.

TORONTO, Nov. 14, 2013 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the third quarter and nine months ended September 30, 2013.

THIRD QUARTER RESULTS
Operating earnings (a non-IFRS financial measure) and net earnings attributable to common shareholders for the quarter ended September 30, 2013 were $434 million or $0.61 per share, compared with $458 million or $0.65 per share in the corresponding period in 2012.

Excluding the impact of acquisition and restructuring costs associated with the Irish Life Group Limited (Irish Life) acquisition by Great-West Lifeco Inc. (Lifeco), operating earnings attributable to common shareholders were $476 million or $0.67 per share.

NINE-MONTH RESULTS
Operating earnings attributable to common shareholders for the nine months ended September 30, 2013 were $1,305 million or $1.83 per share, compared with $1,273 million or $1.80 per share in the corresponding period in 2012.

Excluding the impact of acquisition and restructuring costs associated with the Irish Life acquisition by Lifeco, operating earnings attributable to common shareholders were $1,357 million or $1.90 per share.

Including other items, net earnings attributable to common shareholders were $1,303 million or $1.83 per share, compared with $1,341 million or $1.90 per share for the same period in 2012. Additional details on other items can be found in the section entitled "Other Items" below.

RESULTS OF GREAT-WEST LIFECO, IGM FINANCIAL AND PARGESA

GREAT-WEST LIFECO INC.
For the quarter ended September 30, 2013, Lifeco reported operating and net earnings attributable to common shareholders of $523 million or $0.527 per share, compared with $518 million or $0.546 per share in the corresponding period in 2012.

For the nine-month period ended September 30, 2013, Lifeco reported operating and net earnings attributable to common shareholders of $1,561 million or $1.618 per share, compared with $1,455 million or $1.532 per share in the corresponding period in 2012.

In the third quarter of 2013, the acquisition of Irish Life contributed $41 million, excluding restructuring costs, to Lifeco's operating and net earnings. Included in Lifeco's operating and net earnings for the third quarter are restructuring and acquisition costs associated with the Irish Life acquisition of $60 million after tax ($74 million after tax year-to-date).

As at September 30, 2013, Power Financial and IGM Financial Inc. (IGM) held 67.0% and 4.0%, respectively, of Lifeco's common shares. Lifeco's contribution to Power Financial's operating earnings was $353 million for the quarter ended September 30, 2013, compared with $355 million in the same period in 2012. For the nine months ended September 30, 2013, Lifeco's contribution to Power Financial's operating earnings was $1,061 million, compared with $993 million in the corresponding period in 2012.

IGM FINANCIAL INC.
For the quarter ended September 30, 2013, IGM reported operating earnings available to common shareholders of $193 million or $0.77 per share, compared with $186 million or $0.73 per share in the same period in 2012.

For the nine-month period ended September 30, 2013, IGM reported operating earnings available to common shareholders of $565 million or $2.24 per share, compared with $563 million or $2.20 per share in the corresponding period in 2012.

As at September 30, 2013, Power Financial and The Great-West Life Assurance Company, a subsidiary of Lifeco, held 58.7% and 3.7%, respectively, of IGM's common shares. IGM contributed $112 million to Power Financial's operating earnings for the quarter ended September 30, 2013, compared with $109 million for the corresponding period in 2012. For the nine months ended September 30, 2013, IGM's contribution to Power Financial's operating earnings was $331 million, compared with $327 million in the corresponding period in 2012.

PARGESA HOLDING SA
For the quarter ended September 30, 2013, Pargesa Holding SA (Pargesa) reported operating earnings of SF70 million, compared with SF140 million in the corresponding period in 2012. For the nine months ended September 30, 2013, Pargesa reported operating earnings of SF188 million, compared with SF313 million in the same period in 2012.

Operating earnings for the nine-month period ended September 30, 2013, include Pargesa's share of a non-cash charge recorded by its subsidiary Groupe Bruxelles Lambert (GBL) in the amount of SF96 million (SF63 million in the third quarter of 2013). This non-cash charge results from the increase in value of call options on Suez Environnement Company and GDF Suez shares implicitly embedded in the exchangeable debentures issued by GBL in 2012 and 2013. In accordance with IFRS, the change in value of such derivative instruments is recognized in the statement of earnings, whereas the change in value of the corresponding Suez Environnement and GDF Suez shares held by GBL are recognized as other comprehensive income.

Dividends received in the third quarter were lower than in the corresponding period of 2012 as a result of the partial disposal of GDF Suez shares in the second quarter of 2013.

Other items, not included in operating earnings, for the nine months ended September 30, 2013, were a charge of SF11 million, which mainly consisted of Pargesa's share of an impairment charge recorded by GBL in connection with its investment in GDF Suez, which was offset by the gain on the partial disposal of that investment. Other items for the nine months ended September 30, 2012 were a contribution of SF234 million.

Net earnings for the third quarter of 2013 were SF67 million, compared with SF140 million in the corresponding quarter in 2012. For the nine-month period ended September 30, 2013, net earnings were SF177 million, compared with SF547 million in the corresponding period in 2012.

Power Financial has a 50% interest in Parjointco N.V., which in turn held a 55.6% equity interest in Pargesa at September 30, 2013. Pargesa's contribution to Power Financial's operating earnings, expressed in Canadian dollars, was $20 million for the three-month period ended September 30, 2013, compared with $40 million in the corresponding period in 2012. For the nine-month period ended September 30, 2013, Pargesa's contribution to Power Financial's operating earnings was $55 million, compared with $92 million in the same period in 2012.

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 January 24, 2014 February 15, 2014 At a floating rate equal to one quarter of 70%
of the average prime rate of two major
Canadian chartered banks [1]
Series D - PWF.PR.E January 10, 2014 January 31, 2014 34.375¢
Series E - PWF.PR.F January 10, 2014 January 31, 2014 32.8125¢
Series F - PWF.PR.G January 10, 2014 January 31, 2014 36.875¢
Series H - PWF.PR.H January 10, 2014 January 31, 2014 35.9375¢
Series I - PWF.PR.I January 10, 2014 January 31, 2014 37.50¢
Series K - PWF.PR.K January 10, 2014 January 31, 2014 30.9375¢
Series L - PWF.PR.L January 10, 2014 January 31, 2014 31.875¢
Series M - PWF.PR.M January 10, 2014 January 31, 2014 37.50¢
Series O - PWF.PR.O January 10, 2014 January 31, 2014 36.25¢
Series P - PWF.PR.P January 10, 2014 January 31, 2014 27.50¢
Series R - PWF.PR.R January 10, 2014 January 31, 2014 34.375¢
Series S - PWF.PR.S January 10, 2014 January 31, 2014 30¢

[1] In accordance with the articles of the Corporation

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 January 31, 2014 to shareholders of record on December 31, 2013.

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.

ABOUT POWER FINANCIAL
Power Financial Corporation is a diversified management and holding company that has interests, directly or indirectly, in companies in the financial services sector in Canada, the United States and Europe. It also has substantial holdings in a diversified industrial group based in Europe. Power Financial Corporation is a member of the Power Corporation Group of Companies. To learn more, visit www.powerfinancial.com.

EARNINGS SUMMARY  
(unaudited) Nine months ended   Three months ended
  September 30,
2013
  September 30,
2012(1)
  September 30,
2013
  September 30,
2012(1)
Contribution to operating earnings from subsidiaries and Pargesa              
  Lifeco 1,061   993   353   355
  IGM 331   327   112   109
  Pargesa (2) 55   92   20   40
  1,447   1,412   485   504
Results from corporate activities (44)   (52)   (18)   (17)
Dividends on perpetual preferred shares (98)   (87)   (33)   (29)
Operating earnings attributable to common shareholders 1,305   1,273   434   458
Other items (see below) (2)   68   -   -
Net earnings attributable to common shareholders 1,303   1,341   434   458
Earnings per share              
  (attributable to common shareholders)              
  - operating earnings 1.83   1.80   0.61   0.65
  - non-operating earnings -   0.10   -   -
  - net earnings 1.83   1.90   0.61   0.65
 
OTHER ITEMS  
(unaudited) Nine months ended   Three months ended
  September 30,
2013
  September 30,
2012
  September 30,
2013
  September 30,
2012
Share of IGM's other items              
  Non-cash income tax charge     (4)        
Share of Pargesa's other items              
  Impairment charges on GDF Suez (13)            
  Gain on partial disposal of GDF Suez 15            
  Gain on partial disposal of Pernod Ricard     46        
  Gain on disposal of Arkema     43        
  Other (charge) income (4)   (17)        
  (2)   68   -   -
(1) Effective January 1, 2013, the Corporation adopted revised IAS 19 (IAS 19R), Employee Benefits. In accordance with
the required transitional provisions, the Corporation retrospectively applied the revised standard. The 2012 comparative
financial information in this News Release has been restated accordingly.
(2)  Power Financial has a 50% interest in Parjointco N.V., which in turn held a 55.6% equity interest in Pargesa at September 30, 2013.

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 classified 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 and its jointly controlled corporation, Parjointco.

Management uses these financial measures 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.

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 previous 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

 

 

 

SOURCE Power Financial Corporation




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