POWER CORPORATION OF CANADA - NINE-MONTH FINANCIAL RESULTS AND DIVIDENDS
Readers are referred to the sections entitled "Forward-Looking Statements" and "Non-GAAP Financial Measures" at the end of this release.
TORONTO, Nov. 12 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the nine-month period ended September 30, 2010 were $750 million or $1.57 per share, compared with $664 million or $1.39 per share in the corresponding period of 2009, a 13.3% increase on a per share basis.
Subsidiaries contributed $811 million to Power Corporation's operating earnings for the nine-month period ended September 30, 2010, compared with $708 million in the corresponding period in 2009. Results from corporate activities represented a charge of $61 million in the nine-month period ended September 30, 2010, compared with a charge of $44 million in the same period in 2009.
Other items were a charge of $93 million or $0.20 per share in the nine-month period ended September 30, 2010, consisting mainly of Power Corporation's share of a litigation provision established by Great-West Lifeco Inc. (Lifeco), a subsidiary of Power Financial Corporation (Power Financial). For the corresponding period of 2009, other items were a charge of $36 million or $0.08 per share.
As a result, net earnings, including other items, for the nine-month period ended September 30, 2010 were $657 million or $1.37 per share, compared with $628 million or $1.31 per share in the corresponding period of 2009.
THIRD QUARTER RESULTS
---------------------
For the quarter ended September 30, 2010, operating earnings of the Corporation were $274 million or $0.58 per share, compared with $252 million or $0.53 per share in the third quarter of 2009, an increase of 8.8% on a per share basis.
For the three-month period ended September 30, 2010, subsidiaries contributed $293 million to the Corporation's operating earnings, compared with $288 million in the same period of 2009. Results from corporate activities represented a charge of $19 million in the three-month period ended September 30, 2010, compared with a charge of $36 million in the same period in 2009.
Other items for the third quarter of 2010 were a charge of $96 million or $0.21 per share. For the corresponding period in 2009, other items were a charge of $2 million or $0.01 per share.
As a result, net earnings, including other items, for the quarter were $178 million or $0.37 per share in 2010, compared with $250 million or $0.52 per share in the corresponding period of 2009.
RESULTS OF POWER FINANCIAL CORPORATION
--------------------------------------
Power Financial, a subsidiary of Power Corporation, reported operating earnings of $1,281 million or $1.71 per share for the nine-month period ended September 30, 2010, compared with $1,149 million or $1.54 per share in the corresponding period in 2009. This represents an 11.1% increase on a per share basis. The increase in operating earnings reflects primarily the increase in the contribution from Power Financial's subsidiaries, Lifeco and IGM Financial Inc.
Other items were a charge of $140 million or $0.20 per share for the nine-month period ended September 30, 2010 and consisted mainly of Power Financial's share of a litigation provision established by Lifeco. For the corresponding nine-month period of 2009, other items were a charge of $50 million or $0.07 per share and consisted of Power Financial's share of non-operating results recorded by Pargesa Holding SA.
As a result, net earnings, including other items, for the nine-month period ended September 30, 2010 were $1,141 million or $1.51 per share, compared with $1,099 million or $1.47 per share in 2009.
For the quarter ended September 30, 2010, operating earnings of Power Financial were $467 million or $0.62 per share, compared with $455 million or $0.61 per share in the third quarter of 2009. This represents an increase of 1.1% on a per share basis.
Other items for the third quarter of 2010 were a charge of $144 million ($0.20 per share), compared with a charge of $3 million (nil per share) for the same quarter in 2009.
As a result, net earnings, including other items, for the quarter were $323 million or $0.42 per share in 2010, compared with $452 million or $0.61 per share in the corresponding period of 2009.
For the nine months ended September 30, 2010, the strengthening of the Canadian dollar against the U.S. dollar, the British pound and the euro had a negative currency impact on Lifeco's net earnings of $86 million. For the three months ended September 30, 2010, negative currency impact on net earnings of Lifeco was $22 million. Power Financial's share of this currency effect is $61 million or $0.09 per share for the nine months ended September 30, 2010, and $16 million or $0.02 per share for the three-month period ended September 30, 2010.
DIVIDENDS ON PREFERRED SHARES
-----------------------------
The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:
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Type of Shares Record Date Payment Date Amount
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1986 Series December 23, 2010 January 15, 2011 To be determined
in accordance with
the articles of the
Corporation
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Series A December 23, 2010 January 15, 2011 35 cents
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Series B December 23, 2010 January 15, 2011 33.4375 cents
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Series C December 23, 2010 January 15, 2011 36.25 cents
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Series D December 23, 2010 January 15, 2011 31.25 cents
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DIVIDENDS ON PARTICIPATING SHARES
---------------------------------
The Board of Directors also declared a quarterly dividend of 29 cents on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable December 31, 2010 to shareholders of record December 10, 2010.
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 and its subsidiaries' current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial position and results of operations 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 (including adoption of International Financial Reporting Standards), 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 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 is provided in its disclosure materials, including its most recent Management's Discussion and Analysis and its Annual Information Form, filed with the securities regulatory authorities in Canada, available at www.sedar.com.
Non-GAAP Financial Measures
---------------------------
In analysing the financial results of the Corporation and consistent with the presentation in previous years, net earnings are subdivided into the following components:
- operating earnings; and
- other items, 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 and operating earnings per share are non-GAAP 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
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September 30,
2010 December 31,
(in millions of Canadian dollars) (unaudited) 2009
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Assets
Cash and cash equivalents 4,995 5,385
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Investments
Shares 7,880 7,463
Bonds 75,398 67,942
Mortgages and other loans 17,185 17,356
Loans to policyholders 6,926 6,957
Real estate 3,252 3,101
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110,641 102,819
Funds held by ceding insurers 10,777 10,839
Investments at equity 2,358 2,677
Intangible assets 4,438 4,502
Goodwill 8,772 8,760
Future income taxes 1,189 1,281
Other assets 6,873 6,744
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150,043 143,007
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Liabilities
Policy liabilities
Actuarial liabilities 103,381 98,059
Other 4,650 4,592
Deposits and certificates 877 907
Funds held under reinsurance contracts 369 186
Debentures and other borrowings 6,645 6,375
Preferred shares of subsidiaries 150 503
Capital trust securities and debentures 534 540
Future income taxes 1,317 1,136
Other liabilities 7,382 6,402
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125,305 118,700
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Non-controlling interests 15,056 14,478
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Shareholders' Equity
Stated capital
Non-participating shares 784 787
Participating shares 540 526
Contributed surplus 126 117
Retained earnings 8,964 8,742
Accumulated other comprehensive income (loss) (732) (343)
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9,682 9,829
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150,043 143,007
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CONSOLIDATED STATEMENTS OF EARNINGS
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Three months ended Nine months ended
September 30 September 30
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(unaudited) (in millions of
Canadian dollars, except
per share amounts) 2010 2009 2010 2009
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Revenues
Premium income 4,313 4,336 13,138 13,709
Net investment income
Regular net investment income 1,523 1,605 4,330 4,866
Change in fair value on
held-for-trading assets 2,607 3,743 5,210 4,019
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4,130 5,348 9,540 8,885
Fee and media income 1,369 1,375 4,210 3,945
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9,812 11,059 26,888 26,539
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Expenses
Policyholder benefits, dividends
and experience refunds, and
change in actuarial liabilities 7,317 8,687 19,510 19,526
Commissions 553 502 1,660 1,509
Operating expenses 1,347 1,003 3,376 3,084
Financing charges 118 143 349 411
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9,335 10,335 24,895 24,530
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477 724 1,993 2,009
Share of earnings of investments
at equity 59 73 113 135
Other income (charges), net - (3) 4 (52)
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Earnings before income taxes and
non-controlling interests 536 794 2,110 2,092
Income taxes 59 165 386 455
Non-controlling interests 299 379 1,067 1,009
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Net earnings 178 250 657 628
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Earnings per participating share
- Basic 0.37 0.52 1.37 1.31
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- Diluted 0.37 0.52 1.36 1.30
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SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
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Three months ended Par-
September 30, 2010 Lifeco IGM jointco Other Total
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Revenues
Premium income 4,313 - - - 4,313
Net investment income
Regular net
investment income 1,504 16 - 3 1,523
Change in fair value
on held-for-trading
assets 2,595 12 - - 2,607
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4,099 28 - 3 4,130
Fee and media income 691 609 - 69 1,369
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9,103 637 - 72 9,812
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 7,317 - - - 7,317
Commissions 366 212 - (25) 553
Operating expenses 1,063 155 - 129 1,347
Financing charges 73 28 - 17 118
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8,819 395 - 121 9,335
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284 242 - (49) 477
Share of earnings (losses)
of investments at equity - - 59 - 59
Other income (charges),
net - - - - -
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Earnings before income
taxes and non-controlling
interests 284 242 59 (49) 536
Income taxes (15) 71 - 3 59
Non-controlling interests 175 107 20 (3) 299
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Contribution to
consolidated net earnings 124 64 39 (49) 178
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Three months ended Par-
September 30, 2009 Lifeco IGM jointco Other Total
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Revenues
Premium income 4,336 - - - 4,336
Net investment income
Regular net
investment income 1,591 35 - (21) 1,605
Change in fair value
on held-for-trading
assets 3,734 9 - - 3,743
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5,325 44 - (21) 5,348
Fee and media income 728 582 - 65 1,375
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10,389 626 - 44 11,059
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 8,687 - - - 8,687
Commissions 319 205 - (22) 502
Operating expenses 726 148 - 129 1,003
Financing charges 93 34 - 16 143
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9,825 387 - 123 10,335
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564 239 - (79) 724
Share of earnings (losses)
of investments at equity - - 73 - 73
Other income (charges),
net - - (3) - (3)
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Earnings before income
taxes and non-controlling
interests 564 239 70 (79) 794
Income taxes 98 72 - (5) 165
Non-controlling interests 262 105 24 (12) 379
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Contribution to
consolidated net earnings 204 62 46 (62) 250
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Nine months ended Par-
September 30, 2010 Lifeco IGM jointco Other Total
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Revenues
Premium income 13,138 - - - 13,138
Net investment income
Regular net
investment income 4,268 71 - (9) 4,330
Change in fair value
on held-for-trading
assets 5,188 22 - - 5,210
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9,456 93 - (9) 9,540
Fee and media income 2,145 1,837 - 228 4,210
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24,739 1,930 - 219 26,888
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 19,510 - - - 19,510
Commissions 1,093 642 - (75) 1,660
Operating expenses 2,495 477 - 404 3,376
Financing charges 212 83 - 54 349
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23,310 1,202 - 383 24,895
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1,429 728 - (164) 1,993
Share of earnings (losses)
of investments at equity - - 113 - 113
Other income (charges),
net - - 4 - 4
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Earnings before income
taxes and non-controlling
interests 1,429 728 117 (164) 2,110
Income taxes 186 193 - 7 386
Non-controlling interests 721 337 40 (31) 1,067
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Contribution to
consolidated net earnings 522 198 77 (140) 657
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Nine months ended Par-
September 30, 2009 Lifeco IGM jointco Other Total
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Revenues
Premium income 13,709 - - - 13,709
Net investment income
Regular net
investment income 4,718 160 - (12) 4,866
Change in fair value
on held-for-trading
assets 4,039 (20) - - 4,019
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8,757 140 - (12) 8,885
Fee and media income 2,074 1,641 - 230 3,945
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24,540 1,781 - 218 26,539
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 19,526 - - - 19,526
Commissions 979 595 - (65) 1,509
Operating expenses 2,187 465 - 432 3,084
Financing charges 274 93 - 44 411
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22,966 1,153 - 411 24,530
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1,574 628 - (193) 2,009
Share of earnings (losses)
of investments at equity - - 140 (5) 135
Other income (charges),
net - - (62) 10 (52)
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Earnings before income
taxes and non-controlling
interests 1,574 628 78 (188) 2,092
Income taxes 298 183 - (26) 455
Non-controlling interests 735 282 27 (35) 1,009
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Contribution to
consolidated net earnings 541 163 51 (127) 628
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For further information: Mr. Edward Johnson, Senior Vice-President, General Counsel and Secretary, (514) 286-7400
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