Power Financial Corporation Reports Fourth Quarter and 2012 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.

MONTREAL, March 13, 2013 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the fourth quarter and the year ended December 31, 2012.

FOURTH QUARTER RESULTS
Operating earnings attributable to common shareholders, a non-IFRS financial measure, for the quarter ended December 31, 2012 were $406 million or $0.57 per share, compared with $422 million or $0.60 per share in the corresponding period in 2011.

Other items, not included in operating earnings, for the fourth quarter of 2012 resulted in a net charge of $128 million, compared with a net contribution of $111 million in the corresponding quarter of 2011. Additional details on other items can be found in this news release and in the Earnings Summary below.

Net earnings attributable to common shareholders for the quarter ended December 31, 2012 were $278 million or $0.39 per share, compared with $533 million or $0.75 per share in the corresponding quarter of 2011.

2012 RESULTS
Operating earnings attributable to common shareholders for the year ended December 31, 2012 were $1,686 million or $2.38 per share, compared with $1,729 million or $2.44 per share in 2011.

Other items, not included in operating earnings, for the year ended December 31, 2012 resulted in a net charge of $60 million, compared with a net charge of $7 million in 2011. Additional details on other items can be found in this news release and in the Earnings Summary below.

Net earnings attributable to common shareholders for the year ended December 31, 2012 were $1,626 million or $2.30 per share, compared with $1,722 million or $2.43 per share in 2011.

RESULTS OF SUBSIDIARIES AND PARGESA

GREAT-WEST LIFECO INC.
For the quarter ended December 31, 2012, Great-West Lifeco Inc. (Lifeco) reported operating earnings attributable to common shareholders of $493 million or $0.520 per share, compared with $500 million or $0.528 per share in the corresponding period of 2011. Operating earnings exclude the impact of a litigation provision adjustment of $140 million after tax. Other items in the fourth quarter of 2011 were a positive contribution of $124 million. Net earnings attributable to common shareholders of Lifeco were $353 million or $0.373 per share for the fourth quarter of 2012, compared with $624 million or $0.657 per share in the corresponding period of 2011.

For the year ended December 31, 2012, Lifeco reported operating earnings attributable to common shareholders of $1,955 million or $2.059 per share, compared with $1,898 million or $2.000 per share in 2011. Operating earnings exclude the impact of the litigation provision adjustment discussed above. Other items in 2011 increased net earnings by $124 million after tax. Net earnings attributable to common shareholders for the year ended December 31, 2012 were $1,815 million or $1.912 per share, compared with $2,022 million or $2.129 per share in 2011.

As at December 31, 2012, Power Financial and IGM Financial Inc. (IGM) held 68.2% and 4.0%, respectively, of Lifeco's common shares. Lifeco's contribution to Power Financial's operating earnings was $337 million for the quarter ended December 31, 2012, compared with $342 million in the same period in 2011. For the year ended December 31, 2012, Lifeco's contribution to Power Financial's operating earnings was $1,335 million, compared with $1,298 million in 2011.

IGM FINANCIAL INC.
For the quarter ended December 31, 2012, IGM reported operating earnings available to common shareholders of $184 million or $0.73 per share, compared with $196 million or $0.76 per share in the same period in 2011. Other items, not included in operating earnings, represented a positive contribution of $19 million and consisted of a favourable change in income tax provision estimates of $24 million related to certain tax filings, offset by IGM's share of litigation provisions established by Lifeco. Net earnings available to common shareholders of IGM for the quarter ended December 31, 2012 were $203 million or $0.80 per share, compared with $231 million or $0.89 per share in the corresponding period of 2011.

For the year ended December 31, 2012, IGM reported operating earnings available to common shareholders of $750 million or $2.94 per share, compared with $833 million or $3.22 per share in 2011. Other items, not included in operating earnings, represented a positive contribution of $12 million. In addition to the items mentioned in the paragraph above, operating earnings exclude a non-cash income tax charge of $6 million resulting from increases in Ontario corporate income tax rates related to prior business acquisitions. For the year ended December 31, 2011, other items represented a positive contribution of $68 million. Net earnings available to common shareholders for the year ended December 31, 2012 were $762 million or $2.99 per share, compared with $901 million or $3.48 per share in 2011.

As at December 31, 2012, 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 $106 million to Power Financial's operating earnings for the quarter ended December 31, 2012, compared with $113 million for the corresponding period in 2011. For the twelve months ended December 31, 2012, IGM's contributed $433 million to Power Financial's operating earnings, compared with $480 million in 2011.

PARGESA
For the quarter ended December 31, 2012, Pargesa reported operating earnings of SF37 million, compared with operating earnings of SF23 million in the corresponding period in 2011. Other items, not included in operating earnings, in the fourth quarter of 2012 resulted in a charge of SF176 million, which was Pargesa's share of an impairment charge recorded by its subsidiary Groupe Bruxelles Lambert (GBL) on its investment in GDF Suez. In the fourth quarter of 2011, other items represented a contribution of SF16 million. Net loss for the last quarter of 2012 was SF139 million, compared with net earnings of SF39 million in the corresponding quarter of 2011.

For the year ended December 31, 2012, operating earnings were SF359 million, compared with SF343 million in 2011. Other items, not included in operating earnings, for the year ended December 31, 2012 were a contribution of SF59 million and, in addition to the other item mentioned in the paragraph above, included a share of the gains realized by GBL in the first quarter of 2012 on the partial disposal of its interest in Pernod Ricard and on the disposal of its interest in Arkema. For the year ended December 31, 2011, other items were a net charge of SF408 million. Net earnings for the year ended December 31, 2012 were SF418 million, compared with a net loss of SF65 million in 2011.

Power Financial has a 50% interest in Parjointco N.V., which in turn held a 55.6% equity interest in Pargesa at December 31, 2012. Pargesa's contribution to Power Financial's operating earnings, expressed in Canadian dollars, was $11 million for the three-month period ended December 31, 2012, compared with a contribution of $7 million in the corresponding period in 2011. For the year ended December 31, 2012, Pargesa's contribution to Power Financial's operating earnings was $106 million, compared with a contribution of $110 million 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 April 24, 2013 May 15, 2013 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 April 9, 2013 April 30, 2013 34.375¢
Series E - PWF.PR.F April 9, 2013 April 30, 2013 32.8125¢
Series F - PWF.PR.G April 9, 2013 April 30, 2013 36.875¢
Series H - PWF.PR.H April 9, 2013 April 30, 2013 35.9375¢
Series I - PWF.PR.I April 9, 2013 April 30, 2013 37.50¢
Series K - PWF.PR.K April 9, 2013 April 30, 2013 30.9375¢
Series L - PWF.PR.L April 9, 2013 April 30, 2013 31.875¢
Series M - PWF.PR.M April 9, 2013 April 30, 2013 37.50¢
Series O - PWF.PR.O April 9, 2013 April 30, 2013 36.25¢
Series P - PWF.PR.P April 9, 2013 April 30, 2013 27.50¢
Series R - PWF.PR.R April 9, 2013 April 30, 2013 34.375¢
Series S - PWF.PR.S April 9, 2013 April 30, 2013 20.055¢

[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 May 1, 2013 to shareholders of record March 28, 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.

EARNINGS SUMMARY

           
(unaudited) Twelve months ended Three months ended
  December 31,
2012
December 31,
2011
December 31,
2012
December 31,
2011
Contribution to operating earnings from subsidiaries and Parjointco        
  Lifeco 1,335 1,298 337 342
  IGM (1) 433 480 106 113
  Pargesa (2) 106 110 11 7
  1,874 1,888 454 462
Results from corporate activities (71) (55) (18) (14)
Dividends on perpetual preferred shares (117) (104) (30) (26)
Operating earnings attributable to common shareholders 1,686 1,729 406 422
Other items (see below) (60) (7) (128) 111
Net earnings attributable to common shareholders 1,626 1,722 278 533
Earnings per share (attributable to common shareholders)        
  - operating earnings 2.38 2.44 0.57 0.60
  - non-operating earnings (0.08) (0.01) (0.18) 0.15
  - net earnings 2.30 2.43 0.39 0.75

OTHER ITEMS

         
(unaudited) Twelve months ended Three months ended
  December 31,
2012
December 31,
2011
December 31,
2012
December 31,
2011
Share of Lifeco's other items        
  Litigation provisions (charge) reversal (99) 88 (99) 88
Share of IGM's other items (1)        
  Non-cash income tax charge (4)      
  Gain on disposal of M.R.S. Trust Company and M.R.S. Inc   18   18
  Changes in the status of certain income tax filings 15 17 15  
Share of Pargesa's other items        
  Impairment charges (48) (133) (48)  
  Gain on partial disposal of Pernod Ricard 46      
  Gain on disposal of Arkema 43      
  Other (expense) income (13) (3) 4 5
  (60) (7) (128) 111

(1) The gain on the disposal of M.R.S. Trust Company and M.R.S. Inc. is an other item not included in operating earnings. However, earnings from discontinued operations are included in operating earnings.
(2) Power Financial has a 50% interest in Parjointco N.V., which in turn held a 55.6% equity interest in Pargesa at December 31, 2012.

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 and jointly controlled corporation.

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.

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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